Kemper Large Company Growth Fund
Semiannual Report to Shareholders
February 28, 1999
<PAGE>
Kemper Large Company 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-2.1% (a) MCI WorldCom, Inc. 500 41,250
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Consumer discretionary-13.7% (a) Consolidated Stores Corp. 1,100 27,706
(a) Costco Companies, Inc. 400 32,125
Dayton Hudson Corp. 700 43,794
(a) Electronic Arts, Inc. 400 15,950
Home Depot, Inc. 1,200 71,625
Rite Aid Corp. 700 28,963
Wal-Mart Stores, Inc. 600 51,825
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271,988
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Consumer staples-12.3% Coca-Cola Co., Inc. 700 44,756
Colgate-Palmolive Co. 400 33,950
Estee Lauder Companies "A" 350 30,384
H.J. Heinz Co. 600 32,663
(a) Kroger Co. 500 32,344
Philip Morris Companies, Inc. 900 35,212
Procter & Gamble Co. 400 35,800
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245,109
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Durables-4.6% (a) Ascend Communications, Inc. 400 30,775
Lucent Technologies, Inc. 600 60,938
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91,713
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Finance-6.1% Allstate Corp. 600 22,500
American International Group, Inc. 400 45,575
Charles Schwab Corp. 100 7,456
Federal Home Loan Mortgage Corp. 300 17,662
Federal National Mortgage Association 400 28,000
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121,193
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Health care-16.9% Eli Lilly & Co. 400 37,875
IMS Health, Inc. 500 17,750
Johnson & Johnson 230 19,636
Medtronic, Inc. 640 45,200
Merck & Co., Inc. 640 52,320
Pfizer, Inc. 600 79,163
Schering-Plough Corp. 500 27,969
SmithKline Beecham PLC (ADR) 400 28,450
Warner-Lambert Co. 400 27,625
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335,988
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Manufacturing-6.9% General Electric Co. 750 75,234
Textron, Inc. 400 31,200
Tyco International, Ltd. 400 29,775
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136,209
<PAGE>
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Number of shares Value ($)
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Media-7.5% (a) Clear Channel Communications, Inc. 700 42,000
(a) Infinity Broadcasting Corp. 700 16,625
Omnicom Group, Inc. 500 33,125
(a) Outdoor Systems, Inc. 1,050 29,334
(a) Univision Communication, Inc. 700 28,525
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149,609
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Technology-24.8% (a) America Online, Inc. 440 39,132
(a) Applied Materials, Inc. 400 22,250
(a) Cisco Systems, Inc. 800 78,250
Computer Associates International, Inc. 450 18,900
(a) Dell Computer Corp. 500 40,063
(a) EMC Corp. 300 30,713
Intel Corp. 700 83,956
Linear Technology Corp. 600 26,288
(a) Microsoft Corp. 700 105,087
(a) Oracle Systems Corp. 350 19,556
(a) Sun Microsystems, Inc. 300 29,194
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493,389
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TOTAL COMMON STOCKS-94.9%
(Cost: $1,856,558) 1,886,448
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Principal amount ($) Value ($)
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(b) Repurchase agreement-5.1% State Street Bank, dated 2/28/99, 4.74% due 3/1/99
(Cost: $101,000) 101,000 101,000
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TOTAL INVESTMENT PORTFOLIO - 100%
(Cost: $1,957,558) 1,987,448
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Notes to Portfolio of Investments
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</TABLE>
(a) Non-income producing security.
(b) Repurchase agreement is fully collateralized by U.S. Treasury or Government
agency securities. The collateral is monitored daily by the fund so that its
market value exceeds the carrying value of the repurchase agreement.
Based on the cost of investments of $1,957,558 for federal income tax purposes
at February 28, 1999, the gross unrealized appreciation was $82,662, the gross
unrealized depreciation was $52,772 and the net unrealized appreciation on
investments was $29,890.
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Assets and Liabilities
February 28, 1999 (unaudited)
<TABLE>
<CAPTION>
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Assets
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Investments, at value
<S> <C> <C>
(Cost: $1,957,558) $1,987,448
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Cash 788
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Receivable for:
Investments sold 16,881
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Dividends and interest 894
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Total assets 2,006,011
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Liabilities and net assets
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Payable for:
Investments purchased 10,949
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Management fee 1,087
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Distribution services fee 777
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Custodian, accounting and transfer agent fees and related expenses 1,541
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Other 1,208
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Total liabilities 15,562
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Net assets $1,990,449
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Analysis of net assets
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Paid-in capital $2,000,330
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Accumulated net realized loss on investments (34,739)
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Net unrealized appreciation on investments 29,890
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Accumulated net investment loss (5,032)
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Net assets applicable to shares outstanding $1,990,449
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The pricing of shares
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Class A Shares
Net asset value and redemption price per share
($664,211 / 70,197 shares outstanding) $9.46
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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) $10.04
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Class B Shares
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($663,113 / 70,181 shares outstanding) $9.45
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Class C Shares
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($663,125 / 70,182 shares outstanding) $9.45
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</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
For the period from December 31, 1998 (commencement of operations) to February 28, 1999
(unaudited)
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Investment income
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<S> <C>
Dividends $ 1,566
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Interest 914
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Total investment income 2,480
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Expenses:
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Management fee 2,128
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Distribution services fee 1,520
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Administrative services fee 760
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Custodian, accounting and transfer agent fees and related expenses 2,076
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Professional fees 1,685
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Other 103
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Total expenses before expense waiver 8,272
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Less expenses waived and absorbed by investment manager (760)
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Total expenses after expense waiver 7,512
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Net investment loss (5,032)
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Net realized and unrealized gain (loss) on investments
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Net realized loss on sales of investments (34,739)
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Change in net unrealized appreciation on investments 29,890
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Net loss on investments (4,849)
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Net decrease in net assets resulting from operations $(9,881)
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</TABLE>
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the period from December 31, 1998 (commencement of operations) to February 28, 1999
(unaudited)
- ----------------------------------------------------------------------------------------------------
Operations and capital share activity
- ----------------------------------------------------------------------------------------------------
<S> <C>
Net investment loss $ (5,032)
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Net realized loss (34,739)
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Change in net unrealized appreciation 29,890
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Net decrease in net assets resulting from operations (9,881)
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Net increase from capital share transactions 1,966,997
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Total increase in net assets 1,957,116
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Net assets
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Beginning of period 33,333
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End of period $1,990,449
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</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Notes to financial statements
1. Description of the fund
Kemper Large Company 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 .70% of the first $250 million of average daily
net assets declining to .63% of average daily net assets in excess of $2.5
billion. The fund incurred a management fee of $2,128 for the period ended
February 28, 1999.
Scudder Kemper has agreed to temporarily absorb certain operating expenses of
the fund. Under this arrangement, Scudder Kemper absorbed expenses of $760 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 $1,520.
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 $421
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 $1,650 for the period ended February 28, 1999, of which
$1,115 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 $2,088,917
Proceeds from sales 197,620
<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 69,027 $ 655,766
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Class B 69,011 655,615
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Class C 69,012 655,616
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Net increase from
capital share transactions $1,966,997
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</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 (.02) (.03) (.03)
- --------------------------------------------------------------------------------- --------------- ------------------
Net realized and unrealized loss (.02) (.02) (.02)
- --------------------------------------------------------------------------------- --------------- ------------------
Total from investment operations (.04) (.05) (.05)
- --------------------------------------------------------------------------------- --------------- ------------------
Net asset value, end of period $9.46 9.45 9.45
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Total return (not annualized) (.42)% (.53) (.53)
- --------------------------------------------------------------------------------- --------------- ------------------
- --------------------------------------------------------------------------------- --------------- ------------------
Ratios to average net assets (annualized)
- --------------------------------------------------------------------------------- --------------- ------------------
Expenses 1.85% 2.77 2.77
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Net investment loss (1.03)% (1.95) (1.95)
- --------------------------------------------------------------------------------- --------------- ------------------
- --------------------------------------------------------------------------------- --------------- ------------------
Other ratios to average net assets (annualized)
- --------------------------------------------------------------------------------- --------------- ------------------
Expenses 2.10% 3.02 3.02
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Net investment loss (1.28)% (2.20) (2.20)
- --------------------------------------------------------------------------------- --------------- ------------------
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Supplemental data for all classes
- ---------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,990,449
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Portfolio turnover rate (annualized) 61%
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</TABLE>
Note: Total return does not reflect the effect of any sales charges. Scudder
Kemper Investments, Inc. has agreed to temporarily waive and absorb certain
operating expenses of the fund. The other ratios to average net assets are
computed without this expense absorption.
