<PAGE> 1
KEMPER
INTERNATIONAL FUND
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED OCTOBER 31, 1996
Seeking total return, a combination of capital growth and income, principally
through an internationally diversified portfolio of equity securities
" . . . International markets had strong returns within a long-term
context. The EAFE Index return was a very competitive historical return for
equities . . ."
[KEMPER FUNDS LOGO]
<PAGE> 2
Table of
Contents
2
At a Glance
Terms to Know
3
Economic Overview
5
Performance Update
9
Country Concentrations
10
Largest Holdings
11
Portfolio of
Investments
18
Report of
Independent Auditors
19
Financial Statements
21
Notes to
Financial Statements
25
Financial Highlights
At a Glance
- -------------------------------------------------------------------------------
KEMPER INTERNATIONAL FUND TOTAL RETURNS
- -------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 1996
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<S> <C>
Class A 14.70%
Class B 13.59%
Class C 13.59%
Lipper International
Funds Category Average* 10.73%
</TABLE>
Returns and rankings are historical and do not represent future performance.
Returns and net asset value fluctuate. Shares are redeemable at current net
asset value, which may be more or less than original cost. Investment in foreign
securities presents special risk considerations including fluctuating currency
exchange rates, government regulation and differences in liquidity.
*Lipper Analytical Services, Inc. returns and rankings are based upon changes in
net asset value with all dividends reinvested and do not include the effect of
sales charges and, if they had, results may have been less favorable.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NET ASSET VALUE
- -------------------------------------------------------------------------------
AS OF AS OF
10/31/96 10/31/95
- -------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INTERNATIONAL FUND
CLASS A $11.96 $10.59
KEMPER INTERNATIONAL FUND
CLASS B $11.81 $10.46
KEMPER INTERNATIONAL FUND
CLASS C $11.81 $10.46
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
KEMPER INTERNATIONAL FUND
LIPPER RANKINGS*
- -------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER
INTERNATIONAL FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #59 OF #81 OF #81 OF
324 FUNDS 324 FUNDS 324 FUNDS
5-YEAR #32 OF N/A N/A
69 FUNDS
10-YEAR #15 OF N/A N/A
25 FUNDS
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
DIVIDEND REVIEW
- -------------------------------------------------------------------------------
DURING THE FISCAL YEAR, KEMPER INTERNATIONAL
FUND PAID THE FOLLOWING DIVIDENDS PER SHARE
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME DIVIDEND: $ 0.115 $0.0141 $0.0141
LONG-TERM CAPITAL
GAIN: $ 0.05 $0.05 $0.05
- -------------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
CONGLOMERATE A corporation composed of companies in a variety of businesses.
EMERGING MARKETS A developing or emerging country in the initial stages of its
industrial cycle. Developing or "emerging" markets involve exposure to economic
structures and political systems that are generally less diverse, mature and
stable than in the United States.
INDEX An unmanaged group of securities that is considered representative of the
stock or bond markets. An index does not take into account any fees or expenses
related to the individual securities that it tracks. However, for performance
comparisons, the index is adjusted to reflect reinvestment of the securities'
dividends.
MARKET CAPITALIZATION A measure of the size of a publicly traded company, as
determined by multiplying the current price per share by the number of shares
outstanding. The market capitalization of a company has bearing on its perceived
earnings potential and risk. Small cap companies (less than $1 billion) may
present the potential for greater growth than larger, more established
companies. On the other hand, the stock of small cap companies may be expected
to be more volatile and, therefore, a greater risk to capital.
YIELD CURVE A graph showing the term structure of interest rates by plotting the
yields of all bonds of the same quality with maturities ranging from shortest to
longest available. The resulting curve shows if short-term interest rates are
higher or lower than long-term rates.
<PAGE> 3
ECONOMIC OVERVIEW
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER OF
ZURICH KEMPER INVESTMENTS, INC. (ZKI). ZKI AND ITS AFFILIATES MANAGE
APPROXIMATELY $76 BILLION IN ASSETS, INCLUDING $42 BILLION IN RETAIL
MUTUAL FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR SHAREHOLDER:
As we approach the close of 1996, it's remarkable how eventful the year has been
and yet, economically, we are essentially where we were one year ago.
The fundamentals of the economy are remarkably similar today to what they
were in 1995. Long-term interest rates are approximately 6.5% compared to 6.3%
in November 1995. The economy is growing at a rate of approximately 2.2%.
Inflation continues to be well under control, at about 3.0%.
One significant difference between today and one year ago is that prices of
the stocks are on average up 20%. While price movements were more volatile in
1996 than in the past few years, the patient investor was amply rewarded. The
prime element sending the stock market higher was strong positive cash flows.
This liquidity in an environment of modestly increasing corporate profits and
relatively stable interest rates pushed stocks higher for most of the year.
This higher stock market has caused many market observers to worry. While
we cannot ignore what has happened, we find no reason to be bearish over the
long term. The environment is benign to favorable for financial assets. Given
steady interest rates, moderate economic growth and continued moderate corporate
earnings growth, there are few excesses in the system. In fact, real interest
rates are probably too high considering our outlook for inflation, and we may
see them decline over time.
Naturally, we cannot rule out the possibility of a market correction. But,
in our belief, the downside would appear to be limited to 5% to 8%, which is the
size of a typical correction based on historical data. As we have said in
previous outlooks, three elements tend to move the market:
- EARNINGS. We forecast corporate earnings to range between 0% and 5% on
average for the Standard & Poor's 500* in 1997 -- not as high as in
recent years but positive nonetheless.
- INTEREST RATES. Rates should remain stable, and short-term interest rates
may even decline.
- LIQUIDITY. Investors, through mutual funds, 401(k)s and qualified
contribution plans in particular, will continue to create strong demand
for securities.
In order to move the market more than would be expected in a typical
decline, one or more of these elements will have to turn negative in 1997, and,
while future market conditions cannot be predicted with certainty, we fail to
see what would materially change our outlook. Our outlook going forward is that
1997 should be a lot like 1996.
While the economy continued along a relatively consistent path, the United
States took some politically significant steps in 1996. First, of course,
President Bill Clinton and a Republican Congress were re-elected by the voters.
In the first few days after the general election, especially, investors
demonstrated their support for such a balance in our leadership. But of much
greater long-term significance is the expressed commitment by both parties to
balance the federal budget and address certain entitlement programs. The first
year after an election can be a fertile time to accomplish major initiatives,
and we are hopeful that progress can be made.
The future of the Social Security system, which many experts believe will
run out of money about 20 years from now, will be a subject in which you can
expect Zurich Kemper Investments, Inc. to play a leadership role. The possible
solutions for "fixing Social Security" are finite: raise Social Security taxes,
reduce benefits, raise the retirement age, change inflation assumptions or
pursue a higher rate of return on assets contributed by workers. We believe that
a bipartisan solution will be worked out, which will include giving individuals
the option of investing a portion of their Social Security contributions in an
account earmarked for them. This change is needed to return credibility to the
system, which many Americans have lost faith in.
What to do with Social Security is a debate that spans generations and
promises to occupy much attention in the coming years. As we hope to help
advance constructive debate, we'll be advocating partial privatization for this
federal program while maintaining a safety net for many low-wage earners and
providing a seamless transition for seniors near or in retirement.
3
<PAGE> 4
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
- --------------------------------------------------------------------------------
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The 10-year
Treasury rate and the prime rate are prevailing interest rates. The other data
report year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (11/30/96) 6 MONTHS AGO 1 YEAR AGO 2 YEAR AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 6.2 6.91 5.71 7.81
PRIME RATE(2) 8.25 8.25 8.65 8.5
INFLATION RATE(3) 3.19 2.75 2.6 2.67
THE U.S. DOLLAR(4) 3.46 9.15 -2.58 -4.52
CAPITAL GOODS ORDERS(5)* 7.61 3.93 11.3 12.38
INDUSTRIAL PRODUCTION(5)* 3.6 3.35 1.71 6.58
EMPLOYMENT GROWTH(6) 2.11 2.08 1.92 3.4
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and
the value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on family income and retail sales.
* Data as of October 31, 1996.
SOURCE: ECONOMICS DEPARTMENT, ZURICK KEMPER INVESTMENTS, INC.
With this letter as an economic backdrop, we encourage you to read the
following detailed report of your fund, including an interview with your fund's
portfolio management. Thank you for your continued support. We appreciate the
opportunity to serve your investment needs.
Sincerely,
/s/ Stephen B. Timbers
STEPHEN B. TIMBERS
PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER
Zurich Kemper Investments, Inc.
December 10, 1996
*THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET.
4
<PAGE> 5
PERFORMANCE UPDATE
[FERRO PHOTO]
DENNIS FERRO JOINED ZURICH INVESTMENT MANAGEMENT LIMITED (ZIML), A LONDON BASED
SUBSIDIARY OF ZURICH KEMPER INVESTMENTS, INC. IN 1994 AND IS A MANAGING DIRECTOR
OF ZIML AND A VICE PRESIDENT AND PORTFOLIO MANAGER OF KEMPER INTERNATIONAL FUND.
FERRO HOLDS AN M.B.A. IN FINANCE FROM ST. JOHN'S UNIVERSITY IN NEW YORK AND A
BACHELOR'S DEGREE FROM VILLANOVA UNIVERSITY IN PENNSYLVANIA. HE IS A CHARTERED
FINANCIAL ANALYST.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
OPTIMUM WEIGHTINGS IN THE TOP PERFORMING INTERNATIONAL MARKETS HELPED KEMPER
INTERNATIONAL FUND OUTPERFORM ITS BENCHMARK.
Q. AT THE CLOSE OF THE FUND'S FISCAL YEAR IN 1995, THE MORGAN STANLEY
CAPITAL INTERNATIONAL EUROPE AUSTRALASIA FAR EAST INDEX (EAFE)* WAS AT -0.07%.
THIS YEAR, THE EAFE ENDED THE FUND'S FISCAL YEAR (NOVEMBER 1, 1995, THROUGH
OCTOBER 31, 1996) AT 10.8%. WHAT LED TO THIS MUCH IMPROVED MARKET PERFORMANCE?
A. The markets overseas, especially in Europe, have benefited from
declining interest rates, positively sloped yield curves, and very low levels
of inflation. These factors have combined to create a positive monetary
environment for financial assets. We have seen strength in the bond market
that has spilled over and caused a general improvement in economic activity.
This strong equity market performance seems to indicate that an economic
recovery is underway.
International markets had strong returns within a long-term context.
The 10.8% EAFE Index return was a very competitive historical return for
equities but pales in comparison to the shorter term returns in the bullish
U.S. market. Because Japan has such a heavy weighting in the EAFE Index,
this index return is somewhat masked by the weak performance of that market.
European markets in general provided attractive returns as did markets in
Canada, Southeast Asia and certain countries in Latin America. Our broadly
based portfolio with exposure in these markets and an underweighted position in
Japan, proved an effective approach during this period and helped us to
outperform the index with a 14.7% return (Class A shares, unadjusted for any
sales charge).
*THE EAFE INDEX IS AN UNMANAGED INDEX GENERALLY ACCEPTED AS THE BENCHMARK FOR
MAJOR OVERSEAS MARKETS.
Q. YOU MENTIONED THE FUND BEING UNDERWEIGHTED IN JAPAN. HOW WAS THE FUND
WEIGHTED IN THE OTHER REGIONS?
A. During the majority of the year, the fund had been overweighted in
Europe with an emphasis on the Netherlands, Sweden, France, Germany and Spain.
We've also benefited from the growth of the United Kingdom by having exposure
in both England and Ireland. In Southeast Asia, we were overweighted at the
beginning of this fiscal year and remained that way through the first half of
the fiscal period. Midyear, we did pull in our weightings a bit while
maintaining a focus in Hong Kong and Malaysia.
We've had an increasing exposure in Canada because we were able to find
companies that combined attractive growth characteristics at reasonable
valuations. In Australia and New Zealand, we had larger exposures at the
beginning of the fiscal year and maintained an overweighted position throughout
most of the year.
In midsummer we added some exposure to Latin America. This was due to
improved economic performance and confirmation by the equity markets that they
were ready to move upward. Our primary emphasis in this region is
5
<PAGE> 6
PERFORMANCE UPDATE
on Mexico where we believe the economy has made a strong recovery after its
fiscal and currency problems. Many inexpensive companies there will benefit from
the economic improvement which should increase performance in the long term.
Q. AND WITHIN THESE REGIONS, WHICH INDUSTRIES OFFERED THE GREATEST
OPPORTUNITIES DURING THIS TIMEFRAME?
A. In Europe, the focus was on pharmaceutical, retail and technology
stocks. While our pharmaceuticals weren't dominant performers during the
period, the restructuring in this sector seems to indicate they are poised for
growth. Retail stocks performed extremely well as the improved economic
environment in Europe resulted in an improvement in consumer spending,
especially in the United Kingdom. Technology companies, mainly computer
services and software companies, also did quite well.
In Southeast Asia we focused on the broad-based conglomerates that are
in a position to take advantage of growth across the region. In Japan our focus
was on a few specific sectors of the Japanese economy that are growing at
an above-average rate. These industries included autos, electronics and select
retailers.
In Canada our investments cut across a broad spectrum of industries,
including Philip Environmental, an industrial waste management company,
Canadian National Railway and Petro-Canada, an oil and energy company. In
Latin America we focused our investments on selected niche companies because
they appeared to have greater upside potential than the large capitalization
cyclicals.
Q. IT HAS BEEN SUGGESTED THAT OVERSEAS MARKETS ARE TRAILING U.S. MARKET
PERFORMANCE AND THAT THESE MARKETS CAN BE EXPECTED TO PERFORM IN MUCH THE SAME
WAY THE U.S. MARKET DID AS THE U.S. ECONOMY EVOLVED. WHAT INDICATORS ARE YOU
SEEING TO SUPPORT OR DISCREDIT THIS THEORY?
A. We do believe the international markets are mimicking in many ways the
activity of the U.S. market. At this point Europe and Japan appear to be at the
same place the U.S. was in 1980, which, if you recall, was the beginning of the
longest running U.S. bull market in history. Latin America and the Asian markets
seem to parallel the U.S. from the 1950s to the 1970s when new home starts were
at a record high and consumer spending increased dramatically. Emerging markets
are at nearly the same point the U.S. was at the turn of the century -- the
beginning of the U.S. industrial revolution. Noting these similarities, it is
easy to see the opportunities that lie ahead in these markets.
The restructuring we are currently seeing overseas is being driven by
several different factors. One is globalization. Products move between markets
faster and more efficiently than ever before because trade-friendly agreements
(such as GATT and NAFTA) have been enacted over the last six or seven years.
Competitive products are finding new markets in this world marketplace that has
fewer trade barriers.
Another factor promoting international growth is the reduction in
government subsidies to support businesses. Governments have recognized that
they alone cannot be the solution to unemployment problems. Fostering a
business environment that encourages innovation and growth will lead to higher
private sector employment. So, in trying to solve unemployment problems
overseas, governments are trying to encourage companies to be more efficient
and competitive. One way they are doing this is by reducing government rules
and regulations designed to discourage mergers and acquisitions. This relaxing
of government control has led to significant new merger and acquisition
activity overseas, both in Europe and Japan.
Companies are recognizing that to continue to grow, they need to be
able to attract capital. Since capital tends to seek the highest returns,
companies need to show they can be highly competitive and financially
productive. This has made overseas companies more conscious of their need to
restructure and their need to have returns on capital that attract investor
interest. A global marketplace for capital is consistent with a global
marketplace for goods and services.
6
<PAGE> 7
PERFORMANCE UPDATE
Q. BY OUTPERFORMING THE INDEX BY NEARLY 4 PERCENT, IT SEEMS YOU AND YOUR
TEAM DID NEARLY EVERYTHING RIGHT THIS YEAR, BUT WERE THERE ANY OPPORTUNITIES YOU
MISSED?
A. Well, we really were expecting things to turn around for Japan, but we
didn't get the type of growth we expected there. While we were underweighted in
this market throughout the period, looking back we probably would have benefited
from having even less exposure there.
Another slight miss was in our hesitation to jump into Latin American
markets earlier than we did. We exercised a lot of patience before going in
because we wanted to see a confirmation that the economies were on a firm
footing. Being a little more aggressive there probably would have resulted in
some incremental return. Overall, we feel pretty comfortable with the results
relative to the opportunity in the international marketplace and the amount of
risk that we took in the portfolio. We feel good about the quality of our
holdings and the consistency of our results.
Q. WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
A. We continue to be very optimistic. We are seeing continued support on
the monetary side in most economies, especially in the major economies in
Europe and in Japan. Both have low interest rates, positive yield curves and
very low inflation levels. There seems to be a pickup in economic activity as
measured by improvements in industrial production, and we do see earnings at
attractive levels for focused growth companies. Our belief that the overseas
markets are trailing the U.S. in their economic recovery leads us to expect
attractive growth from nearly all of the international markets.
7
<PAGE> 8
PERFORMANCE UPDATE
- -------------------------------------------------------------------------------
KEMPER INTERNATIONAL FUND
AVERAGE ANNUAL TOTAL RETURNS*
- -------------------------------------------------------------------------------
FOR PERIODS ENDED OCTOBER 31, 1996 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR CLASS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEMPER INTERNATIONAL FUND CLASS A 8.07% 8.33% 8.98% 12.11% (since 5/21/81)
- ------------------------------------------------------------------------------------------------------
KEMPER INTERNATIONAL FUND CLASS B 10.59 N/A N/A 6.73 (since 5/31/94)
- ------------------------------------------------------------------------------------------------------
KEMPER INTERNATIONAL FUND CLASS C 13.59 N/A N/A 7.85 (since 5/31/94)
- ------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper International Fund
Class A from 5/21/81 through 10/31/96
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5/21/81 12/31/84 12/31/90 10/31/96
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper International Fund Class A(1) 10,000 17,515 34,564 58,502
EAFE Index(+) 10,000 20,830 48,392 79,654
Consumer Price Index(++) 10,000 12,172 14,900 17,628
</TABLE>
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper International Fund
Class B from 5/31/94 through 10/31/96
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5/31/94 12/31/94 12/31/95 10/31/96
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper International Fund Class B(1) 10,000 9,762 10,929 11,707
EAFE Index(+) 10,000 10,063 11,226 11,627
Consumer Price Index(++) 10,000 10,149 10.407 10,732
</TABLE>
- -------------------------------------------------------------------------------
growth of an assumed $10,000 investment in Kemper International Fund
class c from 5/31/94 through 10/31/96
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5/31/94 12/31/94 12/31/95 10/31/96
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper International Fund Class C(1) 10,000 9,761 10,929 12,007
EAFE Index(+) 10,000 10,063 11,226 11,627
Consumer Price Index(++) 10,000 10,149 10,407 10,732
</TABLE>
Returns are historical and do not
represent future performance. Returns
and net asset value fluctuate. Shares
are redeemable at current net asset
value, which may be more or less than
original cost.
*Average annual total return measures net investment income and capital gain
or loss from portfolio investments, assuming reinvestment of all dividends and
for Class A shares adjustment for the maximum sales charge of 5.75%, for
Class B shares adjustment for the applicable contingent deferred sales charge
(CDSC) of 3% and for Class C shares no adjustment for sales charge. The
maximum B share CDSC is 4%. For C shares purchased on or after April 1, 1996
there is a 1% CDSC on certain redemptions within the first year of purchase.
During the periods noted, securities prices fluctuated. For additional
information, see the Prospectus and Statement of Additional Information and the
Financial Highlights at the end of this report.
(1)Performance includes reinvestment of dividends and adjustment for the
maximum sales charge for A shares and the contingent deferred sales charge
in effect at the end of the period for B shares. In comparing Kemper
International Fund to the EAFE Index, you should also note that the fund's
performance reflects the maximum sales charge, while no such charge is
reflected in the performance of the index.
+The EAFE Index (Morgan Stanley Capital International Europe, Australasia,
Far East Index) is an unmanaged index generally accepted as a benchmark for
major overseas markets. Source is Towers Data Systems.
++The Consumer Price Index is a statistical measure of change, over time, in
the prices of goods and services in major expenditure groups for all urban
consumers. Source is Towers Data Systems.
8
<PAGE> 9
COUNTRY CONCENTRATIONS
KEMPER INTERNATIONAL FUND BENEFITED FROM AN UNDERWEIGHTED POSITION IN JAPAN
Data show the geographic composition of the EAFE Index (Morgan Stanley Capital
International Europe, Australasia, Far East Index, the unmanaged index that is a
generally accepted benchmark for major overseas markets) and the corresponding
percentage for Kemper International Fund at October 31, 1996. Differences in the
composition help explain the differences in the performance of each. Please
note, the fund also invests in other countries not reflected in the EAFE index.
<TABLE>
<CAPTION>
KEMPER
INTERNATIONAL EAFE
FUND* INDEX
<S> <C> <C>
JAPAN 21.9% 35.4%
UNITED KINGDOM 14.5% 18.2%
GERMANY 3.4% 7.3%
FRANCE 5.2% 6.8%
SWITZERLAND 5.6% 5.9%
NETHERLANDS 11.9% 4.5%
HONG KONG 4.3% 3.6%
AUSTRALIA 1.5% 3.0%
ITALY 1.4% 2.7%
MALAYSIA 2.4% 2.6%
</TABLE>
Kemper International Fund EAFE Index
*Portfolio composition is subject to change.
9
<PAGE> 10
LARGEST HOLDINGS
KEMPER INTERNATIONAL FUND'S
TOP 5 HOLDINGS FOCUS ON GROWTH*
A comparison of the fund's top five holdings on October 31, 1996 with its top
five holdings on October 31, 1995
<TABLE>
<CAPTION>
AT AT
Holdings 10/31/96 10/31/95
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. CIBA-GEIGY 2.8% ROCHE HOLDING 4.5%
SWITZERLAND SWITZERLAND
- ------------------------------------------------------------------------------
2. ROCHE HOLDING 2.4% L.M. ERICSSON TELEPHONE 3.6%
SWITZERLAND SWEDEN
- ------------------------------------------------------------------------------
3. ASTRA 1.9% POLYGRAM 3.5%
SWEDEN NETHERLANDS
- ------------------------------------------------------------------------------
4. BRITISH PETROLEUM 1.8% CARREFOUR 3.2%
UNITED KINGDOM FRANCE
- ------------------------------------------------------------------------------
5. PHILIP ENVIRONMENTAL 1.8% ASTRA 3.0%
CANADA SWEDEN
- ------------------------------------------------------------------------------
</TABLE>
*Portfolio holdings are subject to change.
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
KEMPER INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPE
- ----------------------------------------------------------------------------------------------------------------
BELGIUM--.7% Generale de Banque
BANKING 10,000 $ 3,495
- ----------------------------------------------------------------------------------------------------------------
DENMARK--.6% Copenhagen Airports
AIRPORT OPERATOR 27,000 2,811
- ----------------------------------------------------------------------------------------------------------------
FINLAND--.3% (a)Tietotehdas Oy
INFORMATION TECHNOLOGY 23,075 1,546
- ----------------------------------------------------------------------------------------------------------------
FRANCE--5.2% Carrefour S.A.
FOOD RETAILER 10,500 5,831
Christian Dior S.A.
LUXURY GOODS MANUFACTURER 7,500 998
Clarins, with rights expiring November 1996
COSMETIC PRODUCTS 21,700 3,365
Elf Aquitaine
OIL AND GAS PRODUCER 99,000 7,923
Grand Optical Photoservice
PHOTO DEVELOPING AND PRESCRIPTION OPTICAL
MANUFACTURING 13,000 1,891
Technip S.A.
ENGINEERING COMPANY 50,000 4,374
-------------------------------------------------------------------------------
24,382
- ----------------------------------------------------------------------------------------------------------------
GERMANY--3.4% Bayer A.G.
CHEMICAL COMPANY 155,000 5,861
Mannesmann A.G.
CAPITAL GOODS PRODUCER 11,000 4,274
SGL CARBON A.G.
CHEMICAL COMPANY 15,000 1,690
Veba, A.G.
ELECTRIC UTILITY 84,000 4,484
-------------------------------------------------------------------------------
16,309
- ----------------------------------------------------------------------------------------------------------------
IRELAND--5.1% Bank of Ireland
BANKING 801,559 6,623
Greencore Group PLC
FOOD PRODUCER 868,562 4,998
Independent Newspapers PLC
PUBLISHER 1,200,000 6,300
Kerry Group PLC
FOOD PROCESSING 296,070 3,181
Waterford Wedgewood PLC
FINE CHINA AND CRYSTAL MANUFACTURER 2,300,000 2,801
-------------------------------------------------------------------------------
23,903
- ----------------------------------------------------------------------------------------------------------------
ITALY--1.4% Bulgari SpA
LUXURY GOODS MANUFACTURER 155,000 2,688
Telecom Italia Mobile
MOBILE TELECOMMUNICATIONS PROVIDER 1,980,000 4,094
-------------------------------------------------------------------------------
6,782
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NETHERLANDS--11.9% Aalberts Industries N.V.
CAPITAL GOODS AND COMPONENTS 28,809 $ 3,381
Aegon N.V.
INSURANCE COMPANY 141,828 7,217
GTI Holding
ENGINEERING SERVICES 28,200 3,775
Goudsmit N.V.
TEMPORARY EMPLOYMENT AGENCY 20,000 1,651
Gucci Group N.V.
LUXURY GOODS MANUFACTURER 41,250 2,826
Internationale Nederlanden Groep
BANKING AND INSURANCE 193,075 6,023
Koninklijke Ahold N.V.
FOOD RETAILER 118,255 6,903
Nutricia Verenigde Bedryven
FOOD RETAILER 18,000 2,526
Randstad Holding N.V.
BUSINESS SERVICES 43,500 3,519
Royal Dutch Petroleum
PETROLEUM PRODUCER 30,760 5,082
Schuttersveld Holding N.V.
CONGLOMERATE 95,125 3,842
Vendex International N.V.
BUSINESS SERVICES 87,500 3,534
Wolters Kluwer
PUBLISHER 45,000 5,787
-------------------------------------------------------------------------------
56,066
- ----------------------------------------------------------------------------------------------------------------
NORWAY--.3% Schibsted A/S
PUBLISHER 88,460 1,353
- ----------------------------------------------------------------------------------------------------------------
SPAIN--4.1% Banco Bilbao Vizcaya
BANKING 114,380 5,563
Empresa Nacional de Electricidad S.A.
ELECTRIC UTILITY 91,000 5,575
Iberdrola, S.A.
ELECTRIC UTILITY 300,000 3,189
PRYCA Centros, S.A.
FOOD RETAILER 220,000 5,057
-------------------------------------------------------------------------------
19,384
- ----------------------------------------------------------------------------------------------------------------
SWEDEN--4.1% Astra AB
PHARMACEUTICAL COMPANY 200,000 9,201
L.M. Ericsson Telephone Co., "B"
TELECOMMUNICATIONS EQUIPMENT MANUFACTURER 100,000 2,712
Getinge Industrier AB
MEDICAL SUPPLY COMPANY 165,600 3,027
Hoganas AB
ENGINEERING COMPANY 136,000 4,206
-------------------------------------------------------------------------------
19,146
- ----------------------------------------------------------------------------------------------------------------
SWITZERLAND--5.6% Alusuisee-Lonza Holding
ALUMINUM, CHEMICALS AND PACKAGING MANUFACTURER 3,000 2,181
Ciba-Geigy Limited
PHARMACEUTICAL COMPANY 10,500 12,988
Roche Holding AG, with warrants expiring May 1998
PHARMACEUTICAL COMPANY 1,487 11,334
-------------------------------------------------------------------------------
26,503
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED KINGDOM--14.5% BBA Group PLC
DIVERSIFIED ENGINEERING COMPANY 729,400 $ 4,258
(a)British Bio-Technology Group
PHARMACEUTICAL COMPANY 1,397,500 5,154
British Petroleum
PETROLEUM PRODUCER 800,000 8,611
Burton Group PLC
RETAILER 3,200,000 7,777
Dixons Group PLC
ELECTRONICS RETAILER 620,687 5,544
Glaxo Wellcome
PHARMACEUTICAL COMPANY 350,000 5,494
Granada Group PLC
ENTERTAINMENT AND COMMUNICATIONS COMPANY 345,200 4,972
Laura Ashley Holdings PLC
RETAILER 1,000,000 3,232
Next PLC
RETAILER 290,000 2,645
Pearson PLC
MEDIA AND ENTERTAINMENT COMPANY 124,100 1,538
Reed International PLC
PUBLISHER 440,000 8,190
Rentokil Group PLC
SERVICES COMPANY 720,000 4,836
Zeneca Group PLC
CHEMICAL AND PHARMACEUTICAL COMPANY 220,000 5,990
-------------------------------------------------------------------------------
68,241
-------------------------------------------------------------------------------
TOTAL EUROPEAN COUNTRIES--57.2% 269,921
- ----------------------------------------------------------------------------------------------------------------
PACIFIC REGION
- ----------------------------------------------------------------------------------------------------------------
HONG KONG--4.3% CITIC Pacific Ltd.
CONGLOMERATE 600,000 2,918
Cheung Kong Holdings Ltd.
REAL ESTATE 450,000 3,608
Cosco Pacific
TRADING, SHIPPING AND FREIGHT 284,000 272
Henderson Land Development Co., Ltd.
PROPERTY DEVELOPER 315,000 2,801
Hongkong & Shanghai Hotels, Limited
HOTEL OPERATOR 280,000 514
HSBC Holdings PLC
BANKING 136,101 2,772
Hysan Development Co., Ltd.
PROPERTY DEVELOPER 700,000 2,245
Regal Hotels International Holdings
HOTEL OPERATOR 8,800,000 2,418
Swire Pacific Ltd., "A"
CONGLOMERATE 290,000 2,560
-------------------------------------------------------------------------------
20,108
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JAPAN--21.9% Bank of Tokyo-Mitsubishi Ltd.
BANKING 240,000 $ 4,895
Bridgestone Corp.
RUBBER RELATED PRODUCTS MANUFACTURER 270,000 4,558
Canon Inc.
PRECISION INSTRUMENTS MANUFACTURER 300,000 5,750
Circle K Japan
CONVENIENCE RETAILER 75,000 3,046
Daicel Chemical Industries, Ltd.
CHEMICAL COMPANY 650,000 3,292
Daifuku Co., Ltd
DIVERSIFIED MACHINERY MANUFACTURER 210,000 2,585
Honda Motor Co., Ltd.
AUTOMOBILE MANUFACTURER 167,000 3,994
Ishikawajima-Harima Heavy Industries
HEAVY MACHINERY MANUFACTURER 930,000 4,293
Kyocera Corp.
ELECTRONICS MANUFACTURER 90,000 5,943
Mabuchi Motor Co., Ltd.
ENGINE MANUFACTURER 64,400 3,284
Matsushita Electric Industrial Co., Ltd.
ELECTRONICS MANUFACTURER 420,000 6,721
Mitsubishi Heavy Industries
INDUSTRIAL EQUIPMENT MANUFACTURER 500,000 3,846
Mitsui & Co. Ltd.
CONGLOMERATE 575,000 4,651
Mitsui Fudosan Co., Ltd.
REAL ESTATE 365,000 4,525
Miura Co., Ltd.
BOILER MAKER 120,000 1,836
Murata Manufacturing
ELECTRONICS COMPONENTS MANUFACTURER 185,000 5,953
Nippon Express
TRANSPORTATION COMPANY 150,000 1,220
Olympus Optical Co., Ltd.
CAMERA AND OPTICAL EQUIPMENT MANUFACTURER 425,000 3,811
Sakura Bank, Ltd.
BANKING 120 691
Seven Eleven Japan Co., Ltd.
CONVENIENCE RETAILER 56,000 3,259
Shimizu Corp.
CONSTRUCTION COMPANY 190,000 1,721
Sumitomo Metal Industries
STEEL MANUFACTURER 1,540,000 4,238
Taisei Corp.
CONSTRUCTION COMPANY 370,000 2,277
Tokyo Style
WOMEN'S APPAREL MANUFACTURER 275,000 4,183
Toray Industries
TEXTILE MANUFACTURER 850,000 5,134
Toyota Motor Corp.
AUTOMOBILE MANUFACTURER 200,000 4,730
Tsubakimoto Chain Co.
CHAIN AND CONVEYOR MANUFACTURER 500,000 3,073
-----------------------------------------------------------------------------
103,509
</TABLE>
14
<PAGE> 15
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MALAYSIA--2.4% DCB Holdings Bhd
BANKING 720,000 $ 2,465
Edaran Otomobil Nasional Berhad
AUTOMOBILE DISTRIBUTOR 150,000 1,401
Hume Industries Bhd
CONSTRUCTION MATERIAL MANUFACTURER 351,000 2,209
Kedah Cement Berhad
CEMENT MANUFACTURER 312,000 578
Magnum Corporation Berhad
ENTERTAINMENT AND GAMING 1,006,000 1,736
Sungei Way Holdings Berhad
BUILDING MATERIALS COMPANY 352,000 2,006
U M W Holdings Bhd
EQUIPMENT MANUFACTURER 227,000 1,042
-------------------------------------------------------------------------------
11,437
- ----------------------------------------------------------------------------------------------------------------
SINGAPORE--.7% Development Bank of Singapore
BANKING 159,000 1,907
Fraser & Neave Ltd.
BEER AND SOFT DRINK MANUFACTURER 110,000 1,093
Keppel Corp. Ltd.
CONGLOMERATE 23,000 171
-------------------------------------------------------------------------------
3,171
- ----------------------------------------------------------------------------------------------------------------
THAILAND--.3% Advanced Info Service Ltd.
TELECOMMUNICATION SERVICES 72,300 981
Krung Thai Bank Ltd.
BANKING 233,500 632
-------------------------------------------------------------------------------
1,613
-------------------------------------------------------------------------------
TOTAL PACIFIC REGION--29.6% 139,838
- ----------------------------------------------------------------------------------------------------------------
COMMONWEALTH COUNTRIES
- ----------------------------------------------------------------------------------------------------------------
AUSTRALIA--1.5% Aristocrat
ENTERTAINMENT 445,225 1,324
Tabcorp Holdings Ltd.
ENTERTAINMENT AND GAMING 1,193,700 5,633
-------------------------------------------------------------------------------
6,957
- ----------------------------------------------------------------------------------------------------------------
CANADA--5.5% CAE Inc.
FLIGHT SIMULATOR MANUFACTURER 514,300 4,318
Canadian National Railway Company
RAILWAY COMPANY 233,700 6,427
Petro-Canada
OIL AND GAS COMPANY 645,300 6,614
(a)Philip Environmental
WASTE COLLECTION AND RECYCLING COMPANY 804,700 8,349
-------------------------------------------------------------------------------
25,708
- ----------------------------------------------------------------------------------------------------------------
NEW ZEALAND--.6% Tranz Rail Holdings Ltd.
TRANSPORTATION 185,400 3,036
-------------------------------------------------------------------------------
TOTAL COMMONWEALTH COUNTRIES--7.6% 35,701
</TABLE>
15
<PAGE> 16
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LATIN AMERICA
- ----------------------------------------------------------------------------------------------------------------
BRAZIL--.3% (a)Iochpe-Maxion
AUTO PARTS AND MACHINERY MANUFACTURER 17,600,000 $ 1,559
- ----------------------------------------------------------------------------------------------------------------
MEXICO--3.0% Cementos Mexicanos, S.A. de C.V., "B", ADR
CEMENT PRODUCER 1,068,000 3,838
Fomento Economico Mexicano de C.V., "B", ADR
BEER AND SOFT DRINK MANUFACTURER 690,000 2,070
Grupo Carso, S.A. de C.V., ADR
INDUSTRIAL CONGLOMERATE 452,700 2,037
Grupo Televisa, S.A., GDR
MEDIA AND BROADCASTING COMPANY 70,000 1,838
Tubos de Acero de Mexico, S.A., ADR
STEEL MANUFACTURER 399,900 4,449
-------------------------------------------------------------------------------
14,232
- ----------------------------------------------------------------------------------------------------------------
PERU--.5% Telefonica del Peru S.A., ADS
TELECOMMUNICATION SERVICES 114,400 2,360
-------------------------------------------------------------------------------
TOTAL LATIN AMERICAN COUNTRIES--3.8% 18,151
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS--98.2%
(Cost: $396,705) 463,611
-------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.35% to 5.46%
INSTRUMENTS--1.3% Due--November and December 1996
(Cost: $6,410) $6,437 6,411
-------------------------------------------------------------------------------
TOTAL INVESTMENTS--99.5%
(Cost: $403,115) 470,022
-------------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--.5% 2,221
-------------------------------------------------------------------------------
NET ASSETS--100% $472,243
-------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
PORTFOLIO OF INVESTMENTS
At October 31, 1996, the Fund's portfolio of investments had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclicals $ 85,266 18.1
- -----------------------------------------------------------------------------------------------------------
Finance 76,657 16.2
- -----------------------------------------------------------------------------------------------------------
Basic Industries 59,061 12.5
- -----------------------------------------------------------------------------------------------------------
Capital Goods 58,570 12.4
- -----------------------------------------------------------------------------------------------------------
Health Care 49,089 10.4
- -----------------------------------------------------------------------------------------------------------
Technology 39,061 8.3
- -----------------------------------------------------------------------------------------------------------
Consumer Staples 36,569 7.7
- -----------------------------------------------------------------------------------------------------------
Energy 28,230 6.0
- -----------------------------------------------------------------------------------------------------------
Utilities 17,342 3.7
- -----------------------------------------------------------------------------------------------------------
Transportation 13,766 2.9
- -----------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 463,611 98.2
- -----------------------------------------------------------------------------------------------------------
OTHER NET ASSETS 8,632 1.8
- -----------------------------------------------------------------------------------------------------------
NET ASSETS $472,243 100.0
- -----------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $403,115,000 for federal income tax
purposes at October 31, 1996, the gross unrealized appreciation was
$78,921,000, the gross unrealized depreciation was $12,014,000 and the net
unrealized appreciation on investments was $66,907,000.
See accompanying Notes to Financial Statements.
17
<PAGE> 18
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER INTERNATIONAL FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper International Fund as of
October 31, 1996, the related statements of operations for the year then ended
and changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the fiscal periods since 1992. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Kemper International Fund at October 31, 1996, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the fiscal periods since 1992, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
December 17, 1996
18
<PAGE> 19
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $403,115) $470,022
- -------------------------------------------------------------------------------------------------------
Cash 773
- -------------------------------------------------------------------------------------------------------
Receivable for:
Fund shares sold 684
- -------------------------------------------------------------------------------------------------------
Investments sold 1,148
- -------------------------------------------------------------------------------------------------------
Dividends 950
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS 473,577
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------------
Payable for:
Fund shares redeemed 409
- -------------------------------------------------------------------------------------------------------
Investments purchased 56
- -------------------------------------------------------------------------------------------------------
Management fee 321
- -------------------------------------------------------------------------------------------------------
Distribution services fee 72
- -------------------------------------------------------------------------------------------------------
Administrative services fee 92
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 340
- -------------------------------------------------------------------------------------------------------
Trustees and other 44
- -------------------------------------------------------------------------------------------------------
Total liabilities 1,334
- -------------------------------------------------------------------------------------------------------
NET ASSETS $472,243
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------------
Paid-in capital $374,166
- -------------------------------------------------------------------------------------------------------
Undistributed net realized gain on investments and foreign currency transactions 26,552
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and assets and liabilities in foreign currencies 66,984
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income 4,541
- -------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $472,243
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($352,961 / 29,513 shares outstanding) $11.96
- -------------------------------------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $12.69
- -------------------------------------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($96,369 / 8,160 shares outstanding) $11.81
- -------------------------------------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($7,320 / 620 shares outstanding) $11.81
- -------------------------------------------------------------------------------------------------------
CLASS I SHARES
Net asset value and redemption price per share
($15,593 / 1,300 shares outstanding) $11.99
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
19
<PAGE> 20
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended October 31, 1996
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------
Dividends $ 8,427
- -------------------------------------------------------------------------------------------------------
Interest 947
- -------------------------------------------------------------------------------------------------------
9,374
- -------------------------------------------------------------------------------------------------------
Less foreign taxes withheld 916
- -------------------------------------------------------------------------------------------------------
Total investment income 8,458
- -------------------------------------------------------------------------------------------------------
Expenses:
Management fee 3,177
- -------------------------------------------------------------------------------------------------------
Administrative services fee 962
- -------------------------------------------------------------------------------------------------------
Distribution services fee 573
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 2,671
- -------------------------------------------------------------------------------------------------------
Professional fees 80
- -------------------------------------------------------------------------------------------------------
Reports to shareholders 115
- -------------------------------------------------------------------------------------------------------
Trustees' fees and other 33
- -------------------------------------------------------------------------------------------------------
Total expenses 7,611
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 847
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------
Net realized gain on sales of investments and foreign currency transactions 32,629
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on investments and assets and liabilities in foreign
currencies 21,127
- -------------------------------------------------------------------------------------------------------
Net gain on investments 53,756
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $54,603
- -------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995
<S> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
Net investment income $ 847 2,166
- ---------------------------------------------------------------------------------------------------------
Net realized gain 32,629 1,123
- ---------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 21,127 (655)
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 54,603 2,634
- ---------------------------------------------------------------------------------------------------------
Net equalization credits (charges) 399 (332)
- ---------------------------------------------------------------------------------------------------------
Distribution from net investment income (3,561) --
- ---------------------------------------------------------------------------------------------------------
Distribution from net realized gain (1,726) (24,455)
- ---------------------------------------------------------------------------------------------------------
Total dividends to shareholders (5,287) (24,455)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share transactions 57,820 (31,421)
- ---------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 107,535 (53,574)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------
Beginning of year 364,708 418,282
- ---------------------------------------------------------------------------------------------------------
END OF YEAR (including undistributed
net investment income of
$4,541 and $1,320, respectively) $472,243 364,708
- ---------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE FUND Kemper International Fund is an open-end management
investment company organized as a business trust
under the laws of Massachusetts. The Fund currently
offers four 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, for shares sold on or after April 1,
1996, a contingent deferred sales charge payable
upon certain redemptions within one year of
purchase. Class C shares do not convert into
another class. Class I shares are sold to a limited
group of investors, are not subject to initial or
contingent deferred sales charges and have lower
ongoing expenses than other classes. 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 POLICIES INVESTMENT VALUATION. Investments are stated at
value. Portfolio securities that are traded on a
domestic securities exchange are valued at the last
sale price on that exchange or, if there is no
recent last sale price available, at the last
current bid quotation. Portfolio securities that
are primarily traded on foreign securities
exchanges are generally valued at the preceding
closing values of such securities on their
respective exchanges where primarily traded. A
security that is listed or traded on more than one
exchange is valued at the quotation on the exchange
determined to be the primary market for such
security by the Board of Trustees or its delegates.
All other securities not so traded are valued at
the last current bid quotation if market quotations
are available. Fixed income securities are valued
by using market quotations, or independent pricing
services that use prices provided by market makers
or estimates of market values obtained from yield
data relating to instruments or securities with
similar characteristics. Equity options are valued
at the last sale price unless the bid price is
higher or the asked price is lower, in which event
such bid or asked price is used. Exchange traded
fixed income options are valued at the last sale
price unless there is no sale price, in which event
prices provided by market makers are used.
Financial futures and options thereon are valued at
the settlement price established each day by the
board of trade or exchange on which they are
traded. Forward foreign currency contracts and
foreign currencies are valued at the forward and
current exchange rates, respectively, prevailing on
the day of valuation. Other securities and assets
are valued at fair value as determined in good
faith by the Board of Trustees.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency
values are converted into U.S. dollar values at the
mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by a
recognized dealer. If such quotations are not
readily available,
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
the rate of exchange is determined in good faith by
the Board of Trustees. Income and expenses and
purchases and sales of investments are translated
into U.S. dollars at the rates of exchange
prevailing on the respective dates of such
transactions. The Fund includes that portion of the
results of operations resulting from changes in
foreign exchange rates with net realized and
unrealized gain (loss) on investments, as
appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, except that certain dividends
from foreign securities are recorded as soon as the
information is available to the Fund. Interest
income is recorded on the accrual basis and
includes discount amortization on money market
instruments. 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 earlier of 3:00 p.m. Chicago
time or 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. Because of the need to
obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of
net asset value does not take place
contemporaneously with the determination of the
prices of the majority of the portfolio securities.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies and therefore no
federal income tax provision is required. The Fund
may make an election under the Internal Revenue
Code so that shareholders may claim a tax credit or
deduction for their share of foreign taxes paid by
the Fund.
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. These
differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
EQUALIZATION ACCOUNTING. A portion of proceeds from
sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment
income so that income per share available for
distribution is not affected by sales or
redemptions of shares.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Zurich Kemper Investments, Inc.
(ZKI) and pays a management fee at an annual rate
of .75% of the first $250 million of average daily
net assets declining to .62% of average daily net
assets in excess of $12.5 billion.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
The Fund incurred a management fee of $3,177,000
for the year ended October 31, 1996.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI). Underwriting commissions paid in connection
with the distribution of Class A shares are as
follows:
<TABLE>
<CAPTION>
COMMISSIONS
ALLOWED BY KDI
COMMISSIONS ---------------------------------
RETAINED BY KDI TO ALL FIRMS TO AFFILIATES
--------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1996 $95,000 714,000 26,000
</TABLE>
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of 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 (CDSC) from redemptions of
Class B and Class C shares. Distribution fees and
commissions paid in connection with the sale of
Class B and Class C shares and the CDSC received in
connection with the redemption of such shares are
as follows:
<TABLE>
<CAPTION>
COMMISSIONS AND
DISTRIBUTION DISTRIBUTION FEES
FEES PAID BY KDI
AND CDSC ------------------------------
RECEIVED BY KDI TO ALL FIRMS TO AFFILIATES
---------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1996 $700,000 1,018,000 15,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to Class A, Class B and Class C 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. Administrative services fees (ASF) paid
are as follows:
<TABLE>
<CAPTION>
ASF PAID BY KDI
ASF PAID BY ------------------------------
THE FUND TO KDI TO ALL FIRMS TO AFFILIATES
---------------- ------------- -------------
<S> <C> <C> <C>
Year ended October 31, 1996 $962,000 984,000 16,000
</TABLE>
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 received shareholder services fees of
$1,512,000 for the year ended October 31, 1996.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of ZKI.
During the year ended October 31, 1996, the Fund
made no payments to its officers and incurred
trustees' fees of $26,000 to independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended October 31, 1996, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
Purchases $495,641
Proceeds from sales 441,127
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD
---------------------------------------------------------------------------
Class A 9,032 $ 103,622 7,931 $ 80,769
---------------------------------------------------------------------------
Class B 6,520 75,871 3,584 37,196
---------------------------------------------------------------------------
Class C 558 6,539 258 2,721
---------------------------------------------------------------------------
Class I 922 10,499 1,261 12,905
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
---------------------------------------------------------------------------
Class A 432 4,573 2,270 21,800
---------------------------------------------------------------------------
Class B 27 288 184 1,759
---------------------------------------------------------------------------
Class C 1 15 7 71
---------------------------------------------------------------------------
Class I 23 243 -- --
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SHARES REDEEMED
---------------------------------------------------------------------------
Class A (9,179) (104,837) (16,162) (163,479)
---------------------------------------------------------------------------
Class B (2,290) (28,074) (2,182) (22,527)
---------------------------------------------------------------------------
Class C (145) (1,808) (130) (1,375)
---------------------------------------------------------------------------
Class I (787) (9,111) (119) (1,261)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
CONVERSION OF SHARES
---------------------------------------------------------------------------
Class A 139 1,595 113 1,125
---------------------------------------------------------------------------
Class B (140) (1,595) (114) (1,125)
---------------------------------------------------------------------------
NET INCREASE (DECREASE)
FROM CAPITAL SHARE
TRANSACTIONS $ 57,820 $ (31,421)
---------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6 FORWARD FOREIGN
CURRENCY In order to protect itself against a decline in the
value of particular foreign currencies against the
U.S. Dollar, the Fund has entered into forward
contracts to deliver foreign currency in exchange
for U.S. Dollars as described below. The Fund bears
the market risk that arises from changes in foreign
exchange rates, and accordingly, the net unrealized
gain on these contracts is reflected in the
accompanying financial statements. The Fund also
bears the credit risk if the counterparty fails to
perform under the contract. At October 31, 1996,
the Fund had the following forward foreign currency
contract outstanding with a settlement date in
January 1997.
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY AMOUNT IN GAIN
TO BE DELIVERED U.S. DOLLARS AT 10/31/96
-----------------------------------------------------------
<S> <C> <C> <C>
2,605,900,000 Japanese Yen $ 23,265,000 $81,000
-----------------------------------------------------------
</TABLE>
24
<PAGE> 25
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------------------------
CLASS A
---------------------------------------------------
YEAR ENDED OCTOBER 31,
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of year $10.59 11.13 10.56 8.17 8.76
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .07 -- .03 .22
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.50 .05 .86 2.54 (.67)
- -------------------------------------------------------------------------------------------------
Total from investment operations 1.54 .12 .86 2.57 (.45)
- -------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .12 -- -- .18 --
- -------------------------------------------------------------------------------------------------
Distribution from net realized gain .05 .66 .29 -- .14
- -------------------------------------------------------------------------------------------------
Total dividends .17 .66 .29 .18 .14
- -------------------------------------------------------------------------------------------------
Net asset value, end of year $11.96 10.59 11.13 10.56 8.17
- -------------------------------------------------------------------------------------------------
TOTAL RETURN 14.70% 1.69 8.32 32.08 (5.17)
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------------
Expenses 1.64% 1.57 1.54 1.69 1.36
- -------------------------------------------------------------------------------------------------
Net investment income .34% .83 .02 .37 2.61
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------
CLASS B
------------------------------------
YEAR ENDED MAY 31 TO
OCTOBER 31, OCTOBER 31,
1996 1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------
Net asset value, beginning of period $10.46 11.09 10.58
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.06) (.02) (.04)
- -----------------------------------------------------------------------------------
Net realized and unrealized gain 1.47 .05 .55
- -----------------------------------------------------------------------------------
Total from investment operations 1.41 .03 .51
- -----------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .01 -- --
- -----------------------------------------------------------------------------------
Distribution from net realized gain .05 .66 --
- -----------------------------------------------------------------------------------
Total dividends .06 .66 --
- -----------------------------------------------------------------------------------
Net asset value, end of period $11.81 10.46 11.09
- -----------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 13.59% .84 4.82
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------------
Expenses 2.53% 2.50 2.58
- -----------------------------------------------------------------------------------
Net investment loss (.55)% (.10) (.97)
- -----------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 26
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------- --------------------------------
CLASS C CLASS I
---------------------------------- --------------------------------
YEAR ENDED MAY 31 TO YEAR ENDED JULY 3 TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994 1996 1995
- ------------------------------------------------------------------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------- --------------------------------
Net asset value, beginning of period $10.46 11.09 10.58 10.61 10.09
- ------------------------------------------------------------------------------------------- --------------------------------
Income from investment operations:
Net investment income (loss) (.06) (.02) (.04) .10 .04
- ------------------------------------------------------------------------------------------- --------------------------------
Net realized and unrealized gain 1.47 .05 .55 1.48 .48
- ------------------------------------------------------------------------------------------- --------------------------------
Total from investment operations 1.41 .03 .51 1.58 .52
- ------------------------------------------------------------------------------------------- --------------------------------
Less dividends:
Distribution from net investment income .01 -- -- .15 --
- ------------------------------------------------------------------------------------------- --------------------------------
Distribution from net realized gain .05 .66 -- .05 --
- ------------------------------------------------------------------------------------------- --------------------------------
Total dividends .06 .66 -- .20 --
- ------------------------------------------------------------------------------------------- --------------------------------
Net asset value, end of period $11.81 10.46 11.09 11.99 10.61
- ------------------------------------------------------------------------------------------- --------------------------------
TOTAL RETURN (NOT ANNUALIZED) 13.59% .84 4.82 15.19 5.15
- ------------------------------------------------------------------------------------------- --------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ------------------------------------------------------------------------------------------- --------------------------------
Expenses 2.50% 2.50 2.52 1.10 .85
- ------------------------------------------------------------------------------------------- --------------------------------
Net investment income (loss) (.52)% (.10) (.91) .88 1.32
- ------------------------------------------------------------------------------------------- --------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $472,243 364,708 418,282 289,898 165,890
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 104% 114 103 156 143
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Average commission rate paid per share on stock transactions for the year ended
October 31, 1996 was $.0182. Foreign commissions usually are lower than U.S.
commissions when expressed as cents per share due to the lower per share price
of many non-U.S. securities.
- --------------------------------------------------------------------------------
NOTES: Total return does not reflect the effect of any sales charges. Per share
data for 1996 and 1995 were determined based on average shares outstanding.
26
<PAGE> 27
NOTES
27
<PAGE> 28
TRUSTEES&OFFICERS
TRUSTEES OFFICERS
STEPHEN B. TIMBERS DENNIS H. FERRO
President and Trustee Vice President
DAVID W. BELIN CHARLES R. MANZONI, JR.
Trustee Vice President
LEWIS A. BURNHAM JOHN E. NEAL
Trustee Vice President
DONALD L. DUNAWAY STEVEN H. REYNOLDS
Trustee Vice President
ROBERT B. HOFFMAN PHILIP J. COLLORA
Trustee Vice President
and Secretary
DONALD R. JONES
Trustee JEROME L. DUFFY
Treasurer
DOMINIQUE P. MORAX
Trustee ELIZABETH C. WERTH
Assistant Secretary
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
1-800-621-1048
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
FOREIGN CUSTODIAN THE CHASE MANHATTAN BANK
Chase Metro Center
Brooklyn, NY 11245
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER ZURICH KEMPER INVESTMENTS, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
http://www.kemper.com
(RECYCLE LOGO)
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by a
Kemper International Fund prospectus.
KIF - 2 (12/96)
KEMPER MUTUAL FUNDS LOGO
1025980
Printed in the U.S.A.
