Kemper Small Cap Value + Growth Fund
Semiannual Report to Shareholders
February 28, 1999
<PAGE>
Kemper Small Cap Value + Growth Fund
Portfolio of Investments at February 28, 1999 (unaudited)
<TABLE>
<CAPTION>
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Common stocks Number of shares Value ( $)
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<S> <C> <C>
Communications-1.6% (a) MasTec, Inc. 300 7,538
North Pittsburgh Systems, Inc. 500 6,969
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14,507
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Construction-8.6% Ameron International Corp. 300 11,775
Florida Rock Industries, Inc. 200 5,600
(a) Genlyte Group, Inc. 500 9,047
(a) Holophane Corp. 300 6,900
Lone Star Industries, Inc. 300 9,900
MDC Holdings, Inc. 400 7,125
(a) Nortek, Inc. 300 7,800
Ryland Group, Inc. 300 7,650
(a) U.S. Home Corp. 300 10,350
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76,147
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Consumer discretionary-18.1% (a) Acclaim Entertainment Inc. 600 4,688
(a) Action Performance Companies, Inc. 250 8,969
(a) Bally Total Fitness Centers Corp. 300 6,750
Casey's General Stores, Inc. 700 9,013
(a) CEC Entertainment Inc. 400 12,000
Churchill Downs Inc. 200 6,850
(a) Consolidated Products 400 6,775
(a) Dave & Buster's, Inc. 400 7,875
(a) Fossil, Inc. 200 6,300
(a) Genesco Inc. 1,300 10,075
Haverty Furniture Co., Inc. 300 6,750
(a) IHOP Corp. 200 8,175
(a) Kenneth Cole Productions, Inc. 400 9,100
(a) Lone Star Steakhouse/Saloon 800 7,250
(a) Musicland Stores Corp. 600 7,087
OshKosh B'Gosh "A" 400 7,600
Oxford Industries, Inc. 300 6,975
(a) Rent-Way, Inc. 400 9,050
(a) Ryan's Family Steak Houses, Inc. 600 6,825
(a) Trans World Entertainment Corp. 400 5,525
(a) Wet Seal, Inc. "A" 200 7,762
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161,394
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Consumer staples-4.0% (a) Chattem, Inc. 200 6,025
Farmer Brothers Co. 30 5,370
(a) Hartmarx Corp. 1,300 5,606
Imperial Sugar Co. 800 5,750
Kellwood Company 300 7,669
(a) Polymer Group, Inc. 500 5,031
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35,451
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Durables-5.2% Coachmen Industries, Inc. 300 6,075
Ducommun, Inc. 500 6,250
Excel Industries Inc. 400 9,450
Kaman Corp. "A" 700 9,450
(a) Terex Corp. 300 7,687
Wynn's International, Inc. 400 7,400
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46,312
<PAGE>
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Number of shares Value ( $)
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Energy-1.4% (a) Seacor Smit Inc. 200 7,875
Tesoro Petroleum Corp. 600 4,800
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12,675
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Finance-14.4% Advest Group, Inc. 400 7,950
Brenton Banks 600 9,375
Chartwell Re Corporation 300 6,488
(a) Columbia Banking System, Inc. 600 10,275
First Source Corp. 330 10,189
(a) Grubb & Ellis Co. 800 5,250
JSB Financial, Inc. 200 11,175
Kansas City Life Insurance Co. 100 8,275
MAF Bancorp, Inc. 300 7,059
Midland Company 300 7,163
Morgan Keegan 300 4,950
Pacific Capital Bancorp 400 9,200
Riggs National Corp. 400 7,400
SCPIE Holdings Inc. 300 8,925
Stewart Information Services Corp. 200 6,662
Trust Company of N.J. 300 7,275
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127,611
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Health care-4.1% (a) Bio-Rad Laboratories, Inc. "A" 300 6,000
(a) Bio-Technology Corp. 1,100 6,841
Hooper Holmes 600 9,000
(a) Res-Care, Inc. 400 9,500
(a) Wesley Jessen VisionCare, Inc. 200 5,200
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36,541
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Manufacturing-18.1% Ametek, Inc. 500 8,469
DT Industries, Inc. 400 4,400
Franklin Electric Co. 100 6,200
(a) Gardner Denver Inc. 400 5,100
Gleason Corp. 300 4,931
(a) Griffon Corp. 700 6,300
Hardinge, Inc. 400 5,775
Hughes Supply, Inc. 200 4,038
Justin Industries 500 5,344
Matthews International Corp. 300 8,588
Milacron Inc. 400 7,125
(a) Mueller Industries, Inc. 500 10,562
(a) National R.V. Holdings, Inc. 400 8,825
(a) O'Sullivan Industries Holdings, Inc. 600 6,300
P.H. Glatfelter Company 900 9,619
Reliance Steel & Aluminum Co. 300 7,669
(a) Sequa Corp. "A" 150 7,059
(a) SPS Technologies, Inc. 200 8,250
(a) Stoneridge, Inc. 300 5,081
(a) Techne Corp. 400 10,000
TJ International, Inc. 300 6,487
Varlen Corp. 300 6,300
Woodward Governor Co. 400 8,650
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161,072
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Media-2.1% Grey Advertising, Inc. 30 11,100
Value Line, Inc. 200 7,625
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18,725
<PAGE>
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Number of shares Value ($)
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Metals and minerals-2.2% (a) Armco, Inc. 1,500 $7,500
Commercial Metals Co. 400 9,125
National Steel Corp. "B" 400 3,300
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19,925
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Service industries-10.3% (a) AHL Services, Inc. 100 2,612
(a) Barnett, Inc. 300 3,131
(a) BARRA, Inc. 400 8,800
(a) Berlitz International, Inc. 200 4,963
Computer Task Group Inc. 400 8,100
(a) Cotelligent Group, Inc. 300 3,975
Duff & Phelps Credit Rating Co. 200 10,913
Eaton Vance Corp. 500 9,844
(a) Franklin Covey Co. 400 4,775
(a) INSpire Insurance Solutions, Inc. 400 6,500
(a) Morrison Knudsen Corp. 600 5,813
(a) Plexus Corp. 200 6,537
Schawk Inc. 500 4,750
(a) URS Corp. 300 5,887
(a) West Teleservices Corp. 500 4,937
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91,537
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Technology-4.8% (a) Aavid Thermal Technologies, Inc. 500 7,094
(a) Esterline Technologies Corp. 400 6,850
Harmon Industries, Inc. 500 10,375
(a) MAPICS, Inc. 500 5,406
(a) Structural Dynamics Research Corp. 300 5,850
Technitrol, Inc. 300 6,975
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42,550
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Transportation-2.2% (a) Avondale Industries, Inc. 200 6,175
(a) Offshore Logistics, Inc. 600 5,231
Roadway Express, Inc. 500 7,687
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19,093
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Utilities-2.9% (a) El Paso Electric Co. 1,100 7,906
NUI Corp. 400 9,175
TNP Enterprises, Inc. 300 8,775
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25,856
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TOTAL INVESTMENT PORTFOLIO -100%
(Cost: $ 983,691) 889,396
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Notes to Portfolio of Investments
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</TABLE>
(a) Non-income producing security.
Based on the cost of investments of $983,691 for federal income tax purposes at
February 28, 1999, the gross unrealized appreciation was $18,855, the gross
unrealized depreciation was $113,150 and the net unrealized depreciation on
investments was $94,295.
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Assets and Liabilities
February 28, 1999 (unaudited)
<TABLE>
<CAPTION>
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Assets
- ---------------------------------------------------------------------------------------------------------------
Investments, at value
<S> <C>
(Cost: $983,691) $ 889,396
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Cash 16,697
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Dividends receivable 704
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Total assets 906,797
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Liabilities and net assets
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Payable for:
Custodian, accounting and transfer agent fees and related expenses 367
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Other 1,064
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Total liabilities 1,431
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Net assets $ 905,366
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Analysis of net assets
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Paid-in capital $1,000,180
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Undistributed net realized gain on investments 600
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Net unrealized depreciation on investments (94,295)
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Accumulated net investment loss (1,119)
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Net assets applicable to shares outstanding $ 905,366
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The pricing of shares
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Class A Shares
Net asset value and redemption price per share
($302,058 / 35,094 shares outstanding) $8.61
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Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $9.14
- ---------------------------------------------------------------------------------------------------------------
Class B Shares
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($301,654 / 35,094 shares outstanding) $8.60
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Class C Shares
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($301,654 / 35,094 shares outstanding) $8.60
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations
For the period from December 31, 1998 (commencement of operations) to February
28, 1999 (unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Investment income
- -----------------------------------------------------------------------------------------------
<S> <C>
Dividends $ 1,546
- -----------------------------------------------------------------------------------------------
Interest 536
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Total investment income 2,082
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Expenses:
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Management fee 1,080
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Distribution services fee 720
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Administrative services fee 360
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Custodian, accounting and transfer agent fees and related expenses 1,690
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Professional fees 1,563
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Other 94
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Total expenses before expense waiver 5,507
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Less expense waived and absorbed by investment manager (2,306)
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Total expenses after expense waiver 3,201
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Net investment loss (1,119)
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- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
- -----------------------------------------------------------------------------------------------
Net realized gain on sales of investments 600
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Change in net unrealized depreciation on investments (94,295)
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Net loss on investments (93,695)
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Net decrease in net assets resulting from operations $(94,814)
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</TABLE>
<PAGE>
Statement of Changes in Net Assets
For the period from December 31, 1998 (commencement of operations) to February
28, 1999 (unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Operations and capital share activity
- -----------------------------------------------------------------------------------------------
<S> <C>
Net investment loss $ (1,119)
- -----------------------------------------------------------------------------------------------
Net realized gain 600
- -----------------------------------------------------------------------------------------------
Change in net unrealized depreciation (94,295)
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Net decrease in net assets resulting from operations (94,814)
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Net increase from capital share transactions 966,846
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Total increase in net assets 872,032
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Net assets
- -----------------------------------------------------------------------------------------------
Beginning of period 33,334
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End of period $905,366
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</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Notes to financial statements
1. Description of the fund
Kemper Small Cap Value + Growth Fund (the fund) is a series of Kemper Funds
Trust (the trust), an open-end management investment company organized as a
business trust under the laws of Massachusetts. The fund commenced operations on
December 31, 1998. The fund currently offers three classes of shares. Class A
shares are sold to investors subject to an initial sales charge. Class B shares
are sold without an initial sales charge but are subject to higher ongoing
expenses than Class A shares and a contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically convert to Class A shares six
years after issuance. Class C shares are sold without an initial sales charge
but are subject to higher ongoing expenses than Class A shares and a contingent
deferred sales charge payable upon certain redemptions within one year of
purchase. Class C shares do not convert into another class. Differences in class
expenses will result in the payment of different per share income dividends by
class. All shares of the fund have equal rights with respect to voting,
dividends and assets, subject to class specific preferences.
2. Significant accounting polices
Security valuation. Investments are stated at value. Portfolio securities which
are traded on U.S. or foreign stock exchanges are valued at the most recent sale
price reported on the exchange on which the security is traded most extensively.
If no sale occurred, the security is then valued at the calculated mean between
the most recent bid and asked quotations. If there are no such bid and asked
quotations, the most recent bid quotation is used. Securities quoted on the
Nasdaq Stock Market (Nasdaq), for which there have been sales, are valued at the
most recent sale price reported. If there are no such sales, the value is the
most recent bid quotation. Securities which are not quoted on Nasdaq but are
traded in another over-the-counter market are valued at the most recent sale
price on such market. If no sale occurred, the security is then valued at the
calculated mean between the most recent bid and asked quotations. If there are
no such bid and asked quotations, the most recent bid quotation shall be used.
All other securities are valued at their fair market value as determined in good
faith by the Valuation Committee of the Board of Trustees.
Investment transactions and investment income. Investment transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date, and interest income is recorded on the accrual basis. Realized gains and
losses from investment transactions are reported on an identified cost basis.
Fund share valuation. Fund shares are sold and redeemed on a continuous basis at
net asset value (plus an initial sales charge on most sales of Class A shares).
Proceeds payable on redemption of Class B and Class C shares will be reduced by
the amount of any applicable contingent deferred sales charge. On each day the
New York Stock Exchange is open for trading, the net asset value per share is
determined as of the close of the Exchange. The net asset value per share is
determined separately for each class by dividing the fund's net assets
attributable to that class by the number of shares of the class outstanding.
Federal income taxes. The fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies, and to distribute all of its taxable income to its
shareholders. Accordingly, the fund paid no federal income taxes and no federal
income tax provision was required.
Dividends to shareholders. The fund declares and pays dividends of net
investment income and net realized capital gains annually, which are recorded on
the ex-dividend date. Dividends are determined in accordance with income tax
principles which may treat certain transactions differently from generally
accepted accounting principles.
<PAGE>
3. Transactions with affiliates
Management agreement. The fund has a management agreement with Scudder Kemper
Investments, Inc. (Scudder Kemper) and pays a monthly investment management fee
of 1/12 of the annual rate of .75% of the first $250 million of average daily
net assets declining to .68% of average daily net assets in excess of $2.5
billion. However, the fund incurred a management fee of $576 for the period
ended February 28, 1999, after a fee waiver by Scudder Kemper.
In addition, Scudder Kemper has agreed to temporarily absorb certain operating
expenses of the fund. Under these arrangements, Scudder Kemper waived and
absorbed expenses of $2,306 for the period ended February 28, 1999.
Underwriting and distribution services agreement. The fund has an underwriting
and distribution services agreement with Kemper Distributors, Inc. (KDI). For
services under the distribution services agreement, the fund pays KDI a fee of
.75% of average daily net assets of Class B and Class C shares pursuant to
separate Rule 12b-1 plans for the Class B and Class C shares. Pursuant to the
agreement, KDI enters into related selling group agreements with various firms
at various rates for sales of Class B and Class C shares. In addition, KDI
receives any contingent deferred sales charges from redemptions of Class B and
Class C shares. Distribution fees received by KDI for the period ended February
28, 1999 are $720.
Administrative services agreement. The fund has an administrative services
agreement with KDI. For providing information and administrative services to
shareholders, the fund pays KDI a fee at an annual rate of up to .25% of average
daily net assets of each class. KDI in turn has various agreements with
financial services firms that provide these services and pays these firms based
on assets of fund accounts the firms service. The fund incurred no
administrative services fees for the period ended February 28, 1999, after an
expense absorption by Scudder Kemper.
Shareholder services agreement. Pursuant to a services agreement with the fund's
transfer agent, Kemper Service Company (KSvC) is the shareholder service agent
of the fund. Under the agreement, KSvC earned shareholder services fees of $219
for the period ended February 28, 1999, all of which is unpaid.
Fund accounting agent. Scudder Fund Accounting Corporation (SFAC) is responsible
for determining the daily net asset value per share and maintaining the
portfolio and general accounting records of the fund. The fund incurred
accounting fees of $791 after a partial fee waiver by Scudder Kemper for the
period ended February 28, 1999, of which $267 is unpaid.
Officers and trustees. Certain officers or trustees of the fund are also
officers or directors of Scudder Kemper. During the period ended February 28,
1999, the fund made no payments to its officers or trustees.
4. Investment transactions
For the period ended February 28, 1999, investment transactions (excluding
short-term instruments) are as follows:
Purchases $990,166
Proceeds from sales 7,075
<PAGE>
5. Capital share transactions
The following table summarizes the activity in capital shares of the fund:
<TABLE>
<CAPTION>
December 31, 1998
to February 28, 1999
--------------------
Shares Amount
- -----------------------------------------------------------------------------------------------------------
Shares sold
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 33,924 $322,282
- -----------------------------------------------------------------------------------------------------------
Class B 33,924 322,282
- -----------------------------------------------------------------------------------------------------------
Class C 33,924 322,282
- -----------------------------------------------------------------------------------------------------------
Net increase from
capital share transactions $966,846
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
For the period from December 31, 1998 (commencement of operations) to February 28, 1999 (unaudited)
Class A Class B Class C
- ------------------------------------------------------------------------------- -------------- --------------------
Per share operating performance
- ------------------------------------------------------------------------------- -------------- --------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.50 9.50 9.50
- ------------------------------------------------------------------------------- -------------- --------------------
Income from investment operations:
Net investment loss - (.01) (.01)
- ------------------------------------------------------------------------------- -------------- --------------------
Net realized and unrealized loss (.89) (.89) (.89)
- ------------------------------------------------------------------------------- -------------- --------------------
Total from investment operations (.89) (.90) (.90)
- ------------------------------------------------------------------------------- -------------- --------------------
Net asset value, end of period $8.61 8.60 8.60
- ------------------------------------------------------------------------------- -------------- --------------------
Total return (not annualized) (9.37)% (9.47) (9.47)
- ------------------------------------------------------------------------------- -------------- --------------------
- ------------------------------------------------------------------------------- -------------- --------------------
Ratios to average net assets (annualized)
- ------------------------------------------------------------------------------- -------------- --------------------
Expenses 1.62% 2.51 2.51
- ------------------------------------------------------------------------------- -------------- --------------------
Net investment loss (.18)% (1.07) (1.07)
- ------------------------------------------------------------------------------- -------------- --------------------
- ------------------------------------------------------------------------------- -------------- --------------------
Other ratios to average net assets (annualized)
- ------------------------------------------------------------------------------- -------------- --------------------
Expenses 3.22% 4.11 4.11
- ------------------------------------------------------------------------------- -------------- --------------------
Net investment loss (1.78)% (2.67) (2.67)
- ------------------------------------------------------------------------------- -------------- --------------------
- -------------------------------------------------------------------------------------------------------------------------
Supplemental data for all classes
- -------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $905,366
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 7%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Total return does not reflect the effect of any sales charges. Scudder
Kemper Investments, Inc. has agreed to temporarily waive its management fee and
absorb certain operating expenses of the fund. The other ratios to average net
assets are computed without this expense wavier or absorption.
