<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[MORNINGSTAR RATINGS LOGO]
Seeking total return, a combination of capital growth and income, principally
through an internationally diversified portfolio of equity securities
KEMPER
INTERNATIONAL FUND
"... Kemper International Fund looks quite different today than it did six
months ago. The biggest move we've made has been gradually adding more Japanese
and emerging market holdings while easing back our European position. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
Contents
3
Economic Overview
5
Performance Update
7
Terms to Know
8
Largest Holdings
9
Portfolio of Investments
15
Financial Statements
17
Notes to Financial Statements
21
Financial Highlights
23
Shareholders' Meeting
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER INTERNATIONAL FUND
TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 11.73%
CLASS B 11.12%
CLASS C 11.13%
LIPPER INTERNATIONAL FUNDS CATEGORY AVERAGE* 15.11%
</TABLE>
Returns and rankings are historical and do not guarantee future results.
investment returns and principal values will fluctuate so that shares, when
redeemed, may be worth more or less than original cost.
* 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
4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INTERNATIONAL FUND CLASS A $11.62 $12.10
KEMPER INTERNATIONAL FUND CLASS B $11.33 $11.90
KEMPER INTERNATIONAL FUND CLASS C $11.34 $11.91
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER INTERNATIONAL FUND
LIPPER RANKINGS AS OF 4/30/99*
- --------------------------------------------------------------------------------
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 #468 of 565 funds #486 of 565 funds #485 of 565 funds
- --------------------------------------------------------------------------------
5-YEAR #74 of 175 funds N/A N/A
- --------------------------------------------------------------------------------
10-YEAR #22 of 37 funds N/A N/A
- --------------------------------------------------------------------------------
15-YEAR #10 of 14 funds N/A N/A
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
DURING THE SIX-MONTH PERIOD, KEMPER INTERNATIONAL FUND PAID THE FOLLOWING
DIVIDEND PER SHARE:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM CAPITAL GAIN $1.81 $1.81 $1.81
- --------------------------------------------------------------------------------
</TABLE>
Investment in foreign securities presents special risk considerations including
fluctuating currency exchange rates, government regulation and differences in
liquidity.
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[MORNINGSTAR EQUITY STYLE BOX]
Source: Morningstar, Inc. Chicago, IL. (312) 696-6000. The Equity Style Box
placement is based on two variables: a fund's market capitalization relative to
the movements of the market and a fund's valuation, which is calculated by
comparing the stocks in the fund's portfolio with the most relevant of the three
market-cap groups.
The stylebox represents a snapshot of the fund's portfolio on
a single day. It is not an exact assessment of risk and does not represent
future performance. The fund's portfolio changes from day-to-day. A longer-term
view is represented by the fund's Morningstar category, which is based on its
actual investment style as measured by its underlying portfolio holdings over
the past three years. Category placements of new funds are estimated.
Morningstar has placed Kemper International Fund in the foreign stock
category. Please consult the prospectus for a description of investment
policies.
<PAGE> 3
ECONOMIC OVERVIEW
[SILVIA PHOTO]
DR. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS.
SILVIA HOLDS A BACHELOR'S DEGREE AND PH.D. IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND A MASTER'S DEGREE IN ECONOMICS FROM BROWN UNIVERSITY IN
PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER INVESTMENTS, HE WAS WITH
THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $280 BILLION IN ASSETS FOR INSTITUTIONAL AND CORPORATE
CLIENTS, RETIREMENT AND PENSION PLANS, INSURANCE COMPANIES, MUTUAL FUND
INVESTORS AND INDIVIDUALS. SCUDDER KEMPER INVESTMENTS OFFERS A FULL RANGE OF
INVESTMENT COUNSEL AND ASSET MANAGEMENT CAPABILITIES BASED ON A COMBINATION OF
PROPRIETARY RESEARCH AND DISCIPLINED, LONG-TERM INVESTMENT STRATEGIES.
DEAR KEMPER FUNDS SHAREHOLDER:
In April, investor enthusiasm drove the market to its second milestone in a
year -- the Dow Jones Industrial Average rose to 11,000 just a month after it
broke 10,000 for the first time. In May, expectations of rising inflation and
higher short-term interest rates led to a slowdown. But in early June, the
market rallied again. What drove the market rallies, and what, at the same time,
led to investor anxiety?
Inflation worries have been seeping into the market for months. The growing
conviction that Asian and Latin American economies are recovering is raising
commodity prices, particularly oil. The price of West Texas Intermediate oil
surged from less than $12 in February to almost $19 in early May. That alone
almost guarantees a rise in the "headline" inflation rate this year, which is
the rate of inflation as measured by the entire CPI. But it's important to note
that the Federal Reserve Board looks primarily at the core inflation rate, which
is the CPI minus food and energy -- and the core inflation rate looks at if it
will remain low at about 2 percent this year. Investors should note, however,
that the Federal Reserve Board also considers what will happen to inflation next
year -- and all indications are that the Fed expects inflation to increase in
2000.
As a result, the Fed is considering a change in monetary policy. Recent Fed
policy has been reactive, not proactive, which means that the Fed tends to
respond to inflation only when it picks up. That may change as the Fed tries to
preemptively halt inflation momentum. Such a change in monetary policy would
likely lead to an increase in short-term interest rates before the end of the
year. However, the change is likely to be small. Because we don't see pressure
toward sustained inflation, there's no reason for the Fed to want a sharp
slowdown in the overall economy.
The long-term economic situation, however, appears to be positive. The
federal budget surplus continues to benefit from good revenue gains (which are
based on good income gains, especially for households), good capital gains and
continued restraint in federal spending. The surplus this year is expected to
approach $100 billion.
This positive environment is exactly what sometimes poses risk for
investors, and is key to understanding recent volatility in the market. A strong
economy has the potential to feed inflation fears and drive up interest rates.
Indeed, recent market events illustrate the domino effect of investors reacting
to positive economic news, which they consider troubling at this point, more
than eight years into the economic expansion. In April, the steady stream of
positive economic news led to a sell-off in the financial markets based on fears
that the strong pace of economic growth would eventually lead to higher
inflation. The benchmark 30-year Treasury bond yield rose, which pulled stocks
lower.
Where can we expect to go from here? The fundamentals by which we judge the
health of the economy suggest continued growth as we move into the second half
of 1999. For example, the gross domestic product (GDP), the value of all goods
and services produced in the U.S., rose at an annual rate of 4.5 percent in the
first quarter, following a tremendous fourth-quarter surge of 6 percent. This is
very much in line with what we've grown accustomed to over the past year -- over
the four quarters of 1998, the U.S. economy expanded by 4.3 percent. Some people
aren't surprised at all by strong GDP growth that once would have alarmed them.
That's partially because we've grown accustomed to a strong economy. But it's
also because we've been able to absorb growth without driving up inflation.
That's important for investors. If prices had been rising as the economy was
growing, the Fed would have most likely raised short-term interest rates by now,
and that would have changed the financial market outlook.
However, we do see some vulnerability on the economic front. Trade is a weak
spot in the economy right now. Exports of U.S. goods and services dropped in the
first quarter while imports soared. This reflects the fact that the U.S. is one
of the few countries financially fit enough to buy goods produced elsewhere in
the world. But for as long as less vibrant international economies are unable to
buy U.S. goods, the profitability of U.S. companies trying to export will be
challenged.
When you think about it, vulnerability in regard to the international
economy is nothing new. Globally, the outlook is slightly more positive than it
was a few months ago. For example, the European markets are slowing down, which
has already led to the European Central Bank lowering interest rates in order to
boost domestic spending. In many countries in Europe there are no fixed-rate
mortgages, only adjustable-rate mortgages. When interest rates go down, mortgage
payments are reduced and homeowners can spend money elsewhere. This has a huge
impact on consumer spending, and will help European equities over time.
Additionally, the situation in Japan remains unchanged. And, problems in the
emerging markets haven't had the negative impact many people expected -- both
the Mexican and Brazilian stock markets have actually risen in the past two
months.
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 (5/31/99) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10 Year Treasury Rate(1) 5.54 5.34 5.57 6.42
Prime Rate(2) 7.75 8.5 8.5 8.25
Inflation Rate(3)* 2.28 1.68 1.63 3.04
The U.S. Dollar(4) -1.22 8.17 5.05 7.67
Capital goods orders(5)* 11.67 3.05 12.61 3.93
Industrial production (5)* 2.01 2.71 5.92 6.44
Employment growth(6) 2.14 2.67 2.76 2.44
</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 PERCENT. 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 APRIL 30, 1999.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
But don't forget that international crises have the potential to affect the
U.S. markets dramatically. An increase in military spending on Kosovo by the 11
European Monetary Union (EMU) countries could force them to spend less in other
areas, which could have economic implications, including higher interest rates.
That's because many European countries have small economies and little leeway in
their budgets. Consequently, those countries finance unplanned military
expenditures by selling government bonds -- which, in Europe's small bond
market, typically raises interest rates. As an example, consider Italy, which
recently asked for more leeway on its deficit targets. When leeway was granted,
this led to a further sell-off in the eurodollar.
The international situation alone, however, is by no means an indicator of
a U.S. slowdown -- and without any such indications, complacency may be our
greatest concern. It's easy to look at the current U.S. economic situation and
behave as if no risk exists. But when you see the market soaring and are tempted
to jump in, note that the bull market grew to records on the strength of just a
few dozen stocks, while most other stock prices were flat or actually declined.
In summary, there are concerns that the current economy is unsustainable and
we soon could see an abrupt end. In many cases, however, people are looking for
a slowdown because they are fearful growth will drive up inflation these are
particularly older investors who are accustomed to inflation accompanying
growth. But again, sustained inflation seems unlikely, so a sharp slowdown is
not necessary. In the short term, we expect a modest economic slowdown but no
recession. The best approach now, as in any market, is to diversify and invest
for the long term.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
/s/ JOHN E. SILVIA
John E. Silvia
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF DR. JOHN SILVIA AS OF JUNE 9, 1999, AND MAY
NOT ACTUALLY COME TO PASS. THIS INFORMATION IS SUBJECT TO CHANGE. NO PART OF
THIS MATERIAL IS INTENDED AS AN INVESTMENT RECOMMENDATION.
TO OBTAIN A KEMPER FUNDS PROSPECTUS, DOWNLOAD ONE FROM WWW.KEMPER.COM, TALK TO
YOUR FINANCIAL REPRESENTATIVE OR CALL SHAREHOLDER SERVICES AT (800) 621-1048.
THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING MANAGEMENT FEES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
4
<PAGE> 5
PERFORMANCE UPDATE
[CHENG PHOTO]
LEAD PORTFOLIO MANAGER IRENE CHENG IS A MEMBER OF THE FIRM'S GLOBAL EQUITY
GROUP, FOCUSING ON PORTFOLIO MANAGEMENT AND RESEARCH FOR INTERNATIONAL EQUITY
ACCOUNTS. PRIOR TO JOINING SCUDDER KEMPER INVESTMENTS IN 1993, CHENG SPENT THREE
YEARS IN MERCHANT BANKING ACTIVITIES AT THE BLACKSTONE GROUP AND THREE YEARS AS
AN EQUITY ANALYST AT SANFORD C. BERNSTEIN & CO. SHE ALSO HAS SEVERAL YEARS OF
EXPERIENCE IN OPERATIONS, FINANCE AND CORPORATE PLANNING FOR EXXON CORPORATION.
[SLENDERBROEK PHOTO]
MARC SLENDEBROEK JOINED SCUDDER KEMPER INVESTMENTS IN 1994 AND IS BASED IN OUR
LONDON OFFICE. AS A PORTFOLIO MANAGER OF KEMPER INTERNATIONAL FUND HE FOCUSES ON
THE EUROPEAN REGION. PRIOR TO JOINING SCUDDER KEMPER INVESTMENTS, MARC WAS WITH
KLEINWORT BENSON SECURITIES IN LONDON WHERE HE WAS MANAGER OF DUTCH RESEARCH. HE
ALSO WORKED FOR ENSKILDA SECURITIES IN LONDON AS AN EQUITY ANALYST.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
THE INTERNATIONAL EQUITIES ENVIRONMENT LOOKS VERY DIFFERENT TODAY THAN IT DID
SIX MONTHS AGO. PREVIOUSLY FOUNDERING JAPANESE AND EMERGING MARKETS ARE TURNING
IN HUGE RETURNS, AND ECONOMIC AND POLITICAL ISSUES HAVE PUT THE PROMISING
EUROPEAN REGION ON HOLD. KEMPER INTERNATIONAL FUND'S MANAGEMENT TEAM DISCUSSES
THE REASONS FOR THE CHANGE, AND WHAT THEY SEE AHEAD.
Q SIX MONTHS AGO, WE REPORTED ON AN INTERNATIONAL ENVIRONMENT THAT WAS
EXTREMELY VOLATILE. MARKETS WERE SWINGING WILDLY AND WITHOUT OBVIOUS REASON. THE
WORLD MARKETS HAVE CALMED DOWN A BIT SINCE THEN. CAN YOU DESCRIBE WHAT WAS
HAPPENING IN INTERNATIONAL EQUITY MARKETS FROM NOVEMBER 1, 1998 THROUGH APRIL
30, 1999?
A The irrational volatility seems to be behind us for the moment. The most
dramatic development during the period has been the strong recovery in the
Japanese market and in emerging markets worldwide. These two recoveries occurred
for different reasons. The U.S. Federal Reserve Board cut interest rates in
October and November, and European banks followed in December. On this news,
Asian and Latin American emerging market governments cut their own rates. The
ensuing flood of liquidity provided a big support to the emerging markets, which
had been looking very poor just last summer. To share a few examples, for the
six-month period Thailand's market is up 85.5 percent, Indonesia is up 75.1
percent, Singapore 58.1 percent and Mexico 45.2 percent.*
Japan is up 25.3 percent over the period, quite a change from the mediocre
and negative performance numbers that had been coming out of that country for
the past four years. Despite record unemployment and a shrinking gross domestic
product (GDP), investors poured money into the Japanese stock market in 1999.
They are optimistic about a corporate restructuring trend and the Bank of
Japan's loose monetary policy. We believe that Japan is in the early stages of a
recovery from the recession that has been plaguing the country for the last
several years.*
* SOURCE FOR THE COUNTRY INDICES IS DATASTREAM AND FT/S&P WORLD INDICES. THESE
INDICES PROVIDE A GENERAL REPRESENTATION OF THE PERFORMANCE OF THESE MARKETS.
Q THE FUND WAS UP 11.73 PERCENT (CLASS A SHARES UNADJUSTED FOR ANY SALES
CHARGES) FOR THE SIX-MONTH PERIOD, COMPARED TO A RETURN OF 15.44 PERCENT FOR THE
MSCI EAFE INDEX** AND 15.11 PERCENT RETURN FOR ITS LIPPER PEER GROUP (SEE PAGE
2). WHAT CAUSED THIS RECENT UNDER-PERFORMANCE?
A A primary reason the fund underperformed its peer group was its limited
exposure to emerging markets. Kemper International Fund is not an emerging
market fund and, therefore does not allocate a large percentage of assets in
those markets. Some of our international fund peers do take large positions in
these risky areas, and although those funds are generally more volatile than
ours, the strategy served them well this period.
That having been said, we certainly wish we had gotten into the emerging
markets we do invest in, such as Mexico and Brazil, sooner than we did and had
taken a stronger position. The recovery
5
<PAGE> 6
PERFORMANCE UPDATE
happened very quickly, and we were simply too conservative, trying to protect
money instead of putting it into these markets that had performed so terribly up
to this point.
Because the EAFE has a very low weighting in emerging markets, it wasn't
strongly affected by the run in those markets. Where the EAFE outperformed us
was in its large weighting in the Japanese market. As mentioned, Japan is up
more than 25 percent since October 31, 1998. We started the period with a 7
percent weighting, and brought that up to 20 percent by April 30. So although we
are now positioned to take advantage of future appreciation in the market, and
we do believe the market will continue its upward direction, we should have
reached this weighting sooner.
** THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST INDEX
(MSCI EAFE) IS AN UNMANAGED INDEX THAT IS A GENERALLY ACCEPTED BENCHMARK FOR
MAJOR OVERSEAS MARKETS. SOURCE IS LIPPER ANALYTICAL INC.
Q WHERE IS THE FUND INVESTED TODAY, AND HOW HAVE THOSE WEIGHTINGS CHANGED
SINCE OCTOBER 31, 1998?
THE FOLLOWING CHART PROVIDES A CLEAR COMPARISON OF WHERE WE WERE INVESTED SIX
MONTHS AGO BASED ON COMMON STOCKS, AND WHERE WE WERE AT THE END OF THE PERIOD
COMPARED TO THE INDEX. (IN THE CHART BELOW, THE FUND IS ABBREVIATED AS KIF.)
<TABLE>
<CAPTION>
10/31/98 4/30/99 4/30/99
KIF KIF EAFE
- ------------------------------------------------------
<S> <C> <C> <C>
UNITED KINGDOM 24% 19% 23%
- ------------------------------------------------------
JAPAN 8% 22% 23%
- ------------------------------------------------------
NETHERLANDS 15% 9% 6%
- ------------------------------------------------------
AUSTRALIA 2% 9% 3%
- ------------------------------------------------------
GERMANY 11% 5% 10%
- ------------------------------------------------------
ITALY 7% 3% 5%
- ------------------------------------------------------
FRANCE 12% 5% 9%
- ------------------------------------------------------
SWITZERLAND 5% 5% 7%
- ------------------------------------------------------
CANADA 4% 5% --
- ------------------------------------------------------
SPAIN 4% 4% 3%
- ------------------------------------------------------
HONG KONG -- 3% 3%
- ------------------------------------------------------
SINGAPORE -- 5% 1%
- ------------------------------------------------------
TAIWAN -- 1% --
- ------------------------------------------------------
</TABLE>
Kemper International Fund looks quite different today than it did six
months ago. The biggest move we've made has been gradually adding more Japanese
and emerging market holdings while easing back our European position.
In Japan, the long awaited economic recovery appears to be finally
underway. Most of the bad news affecting companies has already been discounted
into stock prices, and we see some very attractive valuations. Corporate Japan
is finally talking about restructuring in an American style and is beginning to
pay attention to stockholders. We expect the Japanese recovery to happen
gradually, so there will be investment opportunities there for some time to
come.
We've invested about 9 percent of the portfolio in Southeast Asia. Our
move into Southeast Asia comes because of lower interest rates and a better
outlook for global growth for these countries. Their performance has been
dramatic since their turnaround began last fall, and we expect it to continue.
For several years we have been overweighted in Europe, and early on in
this period we held about 80 percent of the portfolio there, versus 73 percent
of the EAFE. The positive outlook for Europe has gradually been eroded by
several factors. The region has made little economic progress, and isn't likely
to do so in the near future. Most economies have sharply decelerated due to a
fall in exports to the Far East, a fall in business investments and little
growth in consumer demand.
The second reason for the anemic outlook is the changing political climate
in the region. Recent elections have brought center-left or social democrat
governments into power in all major European countries. Much needed reforms that
could help business interests progress are likely to slow or be de-emphasized by
the new governments. In fact, anti-business legislation seems to be the order of
the day in some countries, and this has lead to a weakness in business
confidence.
Q IS THE SITUATION IN EUROPE SO GRAVE THAT YOU PLAN TO FURTHER CUT BACK THE
FUND'S EXPOSURE, OR DOES OPPORTUNITY STILL EXIST?
A European economies across the board have suffered recently, some worse
than others. Germany has faced an exceptionally difficult time. But there are
some compelling reasons to be hopeful about this region. As business confidence
has weakened, the European currency has weakened against the U.S. dollar. This
gives European companies a pricing advantage against their American competitors.
If you look at the trade account deficit in the United States, you can see that
it is having an effect.
We're not abandoning European stocks, we're simply moving from a very
overweight position to a more
6
<PAGE> 7
PERFORMANCE UPDATE
neutral one. We are focusing on sectors that can perform well in any economic
environment. Business services outsourcing, telecommunications and
pharmaceuticals are three areas we like. While we still see long-term
opportunity in Europe, there are other areas of the world where we expect
performance to be stronger in the short-term, and we want to employ our money
where we see the most potential. We will build our position back up again if we
spot some attractive stocks.
Q CAN YOU TALK ABOUT SOME INDIVIDUAL STOCKS THAT HAVE DONE WELL FOR THE
FUND, AND SOME THAT DIDN'T PERFORM?
A In previous reports, we've discussed the trend in Europe toward hiring
outside providers to execute certain tasks traditionally handled within the
organization. During the six-month period we saw some terrific performance from
our major outsourcing companies in both Europe and Japan. Fujitsu Support and
Services, a Japanese information technology outsourcing firm and Bellsystem 24,
a Japanese call center outsourcing firm, were both up substantially for the
period. In Europe, Select Appointments, a UK temporary employment service firm,
also performed very well. Some other top performers were Restaurant Brands, a
fast food franchise holder in New Zealand, and Murata Manufacturing, a Japanese
electronics components manufacturer.
On the downside, Novartis, a Swiss pharmaceutical company that we have
owned for a long time was down. Bayerische Vereinsbank, a large German bank
holding company, also didn't perform well. The drop in the bank stock was
induced by a real estate scandal that occurred some time ago but that has been
recently revealed. We continue to hold Bayerische Vereinsbank, as it has a low
valuation and we believe it will resume its growth track.
Q WHAT DO YOU THINK INTERNATIONAL STOCKS CAN OFFER THAT INVESTORS CAN'T FIND
IN THE U.S. MARKETS TODAY?
A There is still tremendous opportunity around the world to benefit from the
kind of corporate restructuring that we've seen in the United States for well
over a decade. The same restructuring trend that helped boost the U.S. stock
market so strongly in the 1980s and 1990s is now spreading around the globe. For
the first time ever, companies are changing the entire focuses of their business
and making shareholder value a prime consideration. European companies are a few
years into the process, and it is just getting underway in Japan. It is
especially surprising to find it occurring in some of the fast growth economies
like Southeast Asia.
Also, valuations outside of the United States seem to be more attractive
today. That has been a result of the strong performance of the U.S. market
pushing valuations up.
TERMS TO KNOW
CURRENCY DEVALUATION
A significant decline of a currency's value relative to
other currencies, such as the U.S. dollar. This may be prompted by trading or
central bank intervention (or the lack of intervention) in the currency markets.
For U.S. investors who are investing overseas, a devaluation of a foreign
currency can have the effect of reducing an investment's total return, because
when investments are converted back into U.S. dollars it takes more of the
foreign currency to purchase U.S. dollars.
FUNDAMENTAL RESEARCH
Analysis of a company's financial statements to project
future stock price changes. Considers past records of sales and earnings as well
as the future impact of products, consumer markets, and management in weighting
a company's prospects. This is distinct from TECHNICAL ANALYSIS, which evaluates
the attractiveness of a stock based on historical price and trading volume
movements.
SOURCE: SCUDDER KEMPER INVESTMENTS, INC. AND BARRON'S DICTIONARY OF FINANCE AND
INVESTMENT TERMS
7
<PAGE> 8
LARGEST HOLDINGS
KEMPER INTERNATIONAL FUND'S TOP 20 HOLDINGS*
Following is a list of the top 20 holdings in the fund as of April 30, 1999 and
the percentage of common stocks for each holding.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
HOLDINGS COUNTRY PERCENT
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. AAPT LIMITED Australia 3.2%
- --------------------------------------------------------------------------------------
2. UBS Switzerland 2.9%
- --------------------------------------------------------------------------------------
3. ING GROEP Netherlands 2.5%
- --------------------------------------------------------------------------------------
4. FUJI BANK Japan 2.4%
- --------------------------------------------------------------------------------------
5. NOVARTIS Switzerland 2.4%
- --------------------------------------------------------------------------------------
6. VEDIOR Netherlands 2.4%
- --------------------------------------------------------------------------------------
7. NTT MOBILE COMMUNICATIONS Japan 2.3%
- --------------------------------------------------------------------------------------
8. BRITISH TELECOM United Kingdom 2.2%
- --------------------------------------------------------------------------------------
9. TELEFONICA Spain 2.1%
- --------------------------------------------------------------------------------------
10. OVERSEA-CHINESE BANKING CORP. Singapore 2.0%
- --------------------------------------------------------------------------------------
11. GLAXO WELLCOME United Kingdom 1.9%
- --------------------------------------------------------------------------------------
12. BAYERISCHE VEREINSBANK Germany 1.9%
- --------------------------------------------------------------------------------------
13. BELLSYSTEM 24 INC. Japan 1.9%
- --------------------------------------------------------------------------------------
14. CITY DEVELOPMENTS Singapore 1.9%
- --------------------------------------------------------------------------------------
15. BP AMOCO United Kingdom 1.8%
- --------------------------------------------------------------------------------------
16. BANK OF IRELAND Ireland 1.8%
- --------------------------------------------------------------------------------------
17. CABLE & WIRELESS OPTUS Australia 1.8%
- --------------------------------------------------------------------------------------
18. NIKKO SECURITIES CO. Japan 1.7%
- --------------------------------------------------------------------------------------
19. SUN HUNG KAI PROPERTIES Hong Kong 1.7%
- --------------------------------------------------------------------------------------
20. ROHM COMPANY Japan 1.7%
- --------------------------------------------------------------------------------------
</TABLE>
*Portfolio holdings are subject to change.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER INTERNATIONAL FUND
Portfolio of Investments at April 30, 1999 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPE
- ----------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--18.1%
AstraZeneca Group PLC
(HOLDING COMPANY THAT MANUFACTURE AND
SELL SPECIALTY CHEMICALS) 198,318 $ 7,733
(a)BP Amoco PLC
(MAJOR INTEGRATED WORLD OIL COMPANY) 531,514 10,089
British Telecom PLC
(TELECOMMUNICATION SERVICES) 717,569 11,981
Compass Group PLC
(INTERNATIONAL CATERING GROUP) 339,094 3,491
Glaxo Wellcome PLC
(PHARMACEUTICAL COMPANY) 365,355 10,826
Hays PLC
(BUSINESS SERVICES) 417,665 4,636
J Sainsbury plc
(RETAIL DISTRIBUTOR OF FOOD THROUGH
SUPERMARKETS) 895,000 5,683
Marks & Spencer, plc
(RETAILER OF CONSUMER GOODS AND FOODS) 1,000,000 6,857
National Westminster Bank
(PROVIDER OF BANKING AND FINANCIAL
SERVICES) 221,151 5,318
(a)Orange plc
(OPERATOR OF DIGITAL MOBILE TELEPHONE
NETWORK) 523,600 7,075
Reed International PLC
(PUBLISHER OF SCIENTIFIC, PROFESSIONAL
AND BUSINESS TO BUSINESS MATERIALS) 921,850 8,386
Rentokil Initial PLC
(ENVIRONMENTAL SERVICES COMPANY) 924,550 5,425
Select Appointments Holdings PLC
(RECRUITMENT SERVICES COMPANY) 440,000 5,606
Unilever PLC
(MANUFACTURER OF BRANDED AND PACKAGED
CONSUMER GOODS, FOOD, DETERGENTS AND
PERSONAL CARE PRODUCTS) 460,740 4,095
Vodafone Group plc
(TELECOMMUNICATION SERVICES) 430,454 7,928
----------------------------------------------------------------------------
105,129
- ----------------------------------------------------------------------------------------------------------------------
NETHERLANDS--8.7%
Aalberts Industries
(CAPITAL GOODS AND COMPONENTS) 251,170 5,971
ING Groep NV
(INSURANCE AND FINANCIAL SERVICES) 229,930 14,163
Koninklijke Ahold NV
(INTERNATIONAL FOOD RETAILER) 143,156 5,316
Koninklijke Numico
(NUTRITIONAL FOOD MANUFACTURER) 109,589 4,122
Nedcon Groep
(MANUFACTURER OF RACKING SYSTEMS) 83,195 1,297
</TABLE>
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unique International NV
(OPERATOR OF RETAIL CLOTHING STORES,
EMPLOYMENT AGENCIES, TECHNICAL TRADE
SCHOOLS, ENGINEERING SERVICES) 250,711 $ 6,688
Vedior NV CVA
(TEMPORARY EMPLOYMENT SERVICES) 580,287 13,059
----------------------------------------------------------------------------
50,616
- ----------------------------------------------------------------------------------------------------------------------
GERMANY--5.2%
Allianz AG
(MULTI-LINE INSURANCE COMPANY) 17,753 5,655
Bayerische Vereinsbank AG
(COMMERCIAL BANK) 164,900 10,750
Gehe AG
(PHARMACEUTICALS DISTRIBUTOR) 166,000 7,629
Mannesmann AG
(DIVERSIFIED CONSTRUCTION AND
TECHNOLOGY COMPANY) 48,800 6,424
----------------------------------------------------------------------------
30,458
- ----------------------------------------------------------------------------------------------------------------------
SWITZERLAND--5.0%
Novartis AG
(PHARMACEUTICAL COMPANY) 8,925 13,063
UBS AG
(PROVIDER OF BANKING AND ASSET
MANAGEMENT SERVICES) 47,090 15,988
----------------------------------------------------------------------------
29,051
- ----------------------------------------------------------------------------------------------------------------------
FRANCE--4.4%
AXA SA
(INSURANCE GROUP PROVIDING INSURANCE,
FINANCE AND REAL ESTATE SERVICES) 59,903 7,734
Groupe Danone
(PRODUCER OF PACKAGED FOODS AND
BEVERAGES) 24,033 6,424
Sanofi SA
(RESEARCHER AND MANUFACTURER OF HEALTH
CARE PRODUCTS AND BEAUTY AIDS) 34,010 5,329
Television Francaise
(TELEVISION BROADCASTING) 30,600 5,981
----------------------------------------------------------------------------
25,468
- ----------------------------------------------------------------------------------------------------------------------
SPAIN--3.8%
Argentaria SA
(BANK) 286,000 6,726
Compania Telefonica Nacional de Espana SA
(TELECOMMUNICATION SERVICES) 245,640 11,510
Endesa S.A.
(ELECTRIC POWER UTILITY) 167,938 3,733
Telefonica S.A. (Rights)
(TELECOMMUNICATION SERVICES) 245,640 228
----------------------------------------------------------------------------
22,197
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ITALY--3.3%
Assicurazioni Generali
(LIFE AND PROPERTY INSURANCE COMPANY) 156,425 $ 6,090
Istituto Bancario San Paolo di Torino
(COMMERCIAL BANK) 367,580 5,515
Telecom Italia SpA
(PROVIDER OF TELECOMMUNICATIONS,
ELECTRONICS AND NETWORK CONSTRUCTION) 685,000 7,288
----------------------------------------------------------------------------
18,893
- ----------------------------------------------------------------------------------------------------------------------
IRELAND--1.7%
Bank of Ireland PLC
(BANK) 501,775 10,046
----------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
SWEDEN--1.1%
(a)Industri-Matematik International Corp.
(SERVICE SOFTWARE APPLICATIONS) 56,780 106
Securitas AB
(INSTALLS SECURITY SYSTEMS AND PROVIDER
OF GUARD SERVICES) 408,800 6,057
(b)TeleLarm Care AB
(ELECTRONIC SECURITY DEVICES) 4,088 48
----------------------------------------------------------------------------
6,211
----------------------------------------------------------------------------
TOTAL EUROPEAN COUNTRIES--51.3% 298,069
- ----------------------------------------------------------------------------------------------------------------------
PACIFIC REGION
- ----------------------------------------------------------------------------------------------------------------------
JAPAN--20.9%
Asahi Glass Co., Ltd.
(MANUFACTURER OF GLASS PRODUCTS) 928,000 7,101
Bellsystem 24, Inc.
(TELEMARKETING FIRM) 27,000 10,646
Fuji Bank, Ltd.
(PROVIDER OF COMMERCIAL AND
INSTITUTIONAL BANKING SERVICES) 1,729,000 13,490
Fujisawa Pharmaceutical Co.
(MANUFACTURER OF MARKETER OF
ANTIBIOTICS) 360,000 5,907
Fujitsu Support and Service Inc.
(PROVIDER OF INFORMATION SERVICES) 60,000 7,334
Murata Manufacturing Co., Ltd.
(LEADING MANUFACTURER OF CERAMIC
APPLIED ELECTRONIC COMPUTERS) 99,000 5,661
NTT Mobile Communication Network, Inc.
(PROVIDER OF VARIOUS TELECOMMUNICATION
SERVICES AND EQUIPMENT) 221 12,951
Nidec Corp.
(MANUFACTURER OF SMALL-SCALE MOTORS FOR
HARD DISC DRIVES) 44,500 5,774
Nikko Securities Co., Ltd.
(SECURITIES BROKER AND DEALER) 1,630,000 9,347
Nippon Telegraph & Telephone Corp.
(TELECOMMUNICATIONS SERVICES) 620 6,748
Rohm Company Ltd.
(MAKER OF LINEAR ICS AND
SEMICONDUCTORS) 77,000 9,283
Sanwa Bank, Ltd.
(BANK) 617,000 6,922
Sony Corp.
(MANUFACTURER OF CONSUMER ELECTRONIC
PRODUCTS) 83,000 7,748
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sumitomo Trust & Banking Co., Ltd.
(COMMERCIAL BANK) 1,255,000 $ 6,157
TDK Corp.
(MANUFACTURER OF MAGNETIC TAPES AND
FLOPPY DISCS) 78,600 5,942
----------------------------------------------------------------------------
121,011
- ----------------------------------------------------------------------------------------------------------------------
SINGAPORE--4.8%
City Developments Ltd.
(DEVELOPER OF RESIDENTIAL, INDUSTRIAL,
RETAIL AND INVESTMENT PROPERTIES, OWNER
AND OPERATOR OF HOTELS) 1,581,000 10,532
Oversea-Chinese Banking Corp., Ltd.
(COMMERCIAL BANK) 1,164,000 10,911
Singapore Airlines Ltd.
(SCHEDULED AIRLINE) 719,000 6,612
----------------------------------------------------------------------------
28,055
- ----------------------------------------------------------------------------------------------------------------------
HONG KONG--2.9%
Dao Heng Bank Group Ltd.
(COMMERCIAL BANK HOLDING COMPANY) 1,848,000 7,510
Sun Hung Kai Properties Ltd.
(REAL ESTATE DEVELOPER AND FINANCE
COMPANY) 1,065,000 9,309
----------------------------------------------------------------------------
16,819
- ----------------------------------------------------------------------------------------------------------------------
TAIWAN--.9%
(a)Winbond Electronics Corp. (GDR)
(DESIGNER, MANUFACTURER AND RETAILER OF
INTEGRATED CIRCUITS AND RELATED
PRODUCTS) 500,000 5,150
----------------------------------------------------------------------------
TOTAL PACIFIC REGION--29.5% 171,035
- ----------------------------------------------------------------------------------------------------------------------
COMMONWEALTH COUNTRIES
- ----------------------------------------------------------------------------------------------------------------------
AUSTRALIA--8.7%
AAPT Limited
(TELECOMMUNICATIONS CARRIER) 4,945,000 17,671
Cable & Wireless Optus Ltd.
(PROVIDER OF COMMUNICATION AND
TELECOMMUNICATION SERVICES) 4,450,000 10,012
St. George Bank Ltd.
(COMMERCIAL BANK) 1,059,850 7,820
WMC Ltd.
(MINERAL EXPLORATION AND PRODUCTION) 1,800,000 7,778
Westpac Banking Corp.
(BANK) 902,000 6,886
----------------------------------------------------------------------------
50,167
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CANADA--5.1%
BCE, Inc.
(TELECOMMUNICATION SERVICES) 167,000 $ 7,617
BioChem Pharma, Inc.
(RESEARCH AND DEVELOPMENT OF
THERAPEUTIC PRODUCTS) 226,000 4,690
Petro-Canada
(OIL AND GAS COMPANY) 429,600 5,907
Rogers Communications Inc. "B"
(CABLE TV OPERATOR IN CANADA, U.S. AND
IRELAND) 320,200 5,996
Royal Bank of Canada
(BANK) 115,000 5,608
----------------------------------------------------------------------------
29,818
- ----------------------------------------------------------------------------------------------------------------------
NEW ZEALAND--1.1%
Restaurant Brands
(FAST FOOD RESTAURANT CHAIN) 4,024,900 3,134
Sky City Ltd.
(CASINO AND HOTEL OPERATOR) 1,324,000 3,307
----------------------------------------------------------------------------
6,441
----------------------------------------------------------------------------
TOTAL COMMONWEALTH COUNTRIES--14.9% 86,426
----------------------------------------------------------------------------
TOTAL COMMON STOCKS--95.7%
(Cost: $478,596) 555,530
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET INSTRUMENTS--4.3%
Yield -- 4.67%
Due -- May 1999
(Cost: $24,938) $ 25,000 24,938
----------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $503,534) $580,468
----------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
At April 30, 1999, the fund's portfolio of investments had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- ---------------------------------------------------------------------------------
<S> <C> <C>
Finance $182,478 31.5
- ---------------------------------------------------------------------------------
Communications 101,058 17.4
- ---------------------------------------------------------------------------------
Service Industries 67,836 11.7
- ---------------------------------------------------------------------------------
Health Care 47,443 8.2
- ---------------------------------------------------------------------------------
Manufacturing 33,676 5.8
- ---------------------------------------------------------------------------------
Consumer Staples 26,814 4.6
- ---------------------------------------------------------------------------------
Technology 26,766 4.6
- ---------------------------------------------------------------------------------
Consumer Discretionary 23,363 4.0
- ---------------------------------------------------------------------------------
Energy 15,996 2.8
- ---------------------------------------------------------------------------------
Media 11,977 2.1
- ---------------------------------------------------------------------------------
Metals and Minerals 7,778 1.3
- ---------------------------------------------------------------------------------
Transportation 6,612 1.1
- ---------------------------------------------------------------------------------
Utilities 3,733 0.6
- ---------------------------------------------------------------------------------
TOTAL COMMON STOCKS 555,530 95.7
- ---------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS 24,938 4.3
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS $580,468 100.0
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Trustees at fair value amounted to $48,000 (.01% of net assets). Their values
have been estimated by the Valuation Committee in the absence of readily
ascertainable market values. however, because of the inherent uncertainty of
valuation, those estimated values may differ significantly from the values that
would have been used had a ready market for the securities existed, and the
difference could be material. The cost of these securities at April 30, 1999
aggregated $50,000. These securities may also have certain restrictions as to
resale.
Based on the cost of investments of $503,534,000 for federal income tax purposes
at April 30, 1999, the gross unrealized appreciation was $95,291,000, the gross
unrealized depreciation was $18,357,000 and the net unrealized appreciation on
investments was $76,934,000.
See accompanying notes to financial statements.
14
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (unaudited)
(IN THOUSANDS)
<TABLE>
<S> <C>
- ------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------
Investments, at value (Cost: $503,534) $580,468
- ------------------------------------------------------------------------
Receivable for:
Fund shares sold 120
- ------------------------------------------------------------------------
Dividends 1,111
- ------------------------------------------------------------------------
Foreign taxes 687
- ------------------------------------------------------------------------
Unrealized appreciation on forward currency exchange
contracts 8
- ------------------------------------------------------------------------
TOTAL ASSETS 582,394
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------
Cash overdraft 2,639
- ------------------------------------------------------------------------
Payable for:
Investments purchased 6,201
- ------------------------------------------------------------------------
Fund shares redeemed 584
- ------------------------------------------------------------------------
Management fee 360
- ------------------------------------------------------------------------
Distribution services fee 105
- ------------------------------------------------------------------------
Administrative services fee 110
- ------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 817
- ------------------------------------------------------------------------
Trustees' fees and other 628
- ------------------------------------------------------------------------
Total liabilities 11,444
- ------------------------------------------------------------------------
NET ASSETS $570,950
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------------------
Paid-in capital $467,765
- ------------------------------------------------------------------------
Undistributed net realized gain on investments and foreign
currency transactions 26,263
- ------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 76,934
- ------------------------------------------------------------------------
Foreign currency related transactions (12)
- ------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $570,950
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share ($396,092 /
34,078 shares outstanding) $11.62
- ------------------------------------------------------------------------
Maximum offering price per share (net asset value, plus
6.10% of net asset value or 5.75% of offering price) $12.33
- ------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($134,576 /
11,874 shares outstanding) $11.33
- ------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($26,739 /
2,358 shares outstanding) $11.34
- ------------------------------------------------------------------------
CLASS I SHARES
Net asset value and redemption price per share ($13,543 /
1,154 shares outstanding) $11.74
- ------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended April 30, 1999 (unaudited)
(IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $397) $ 3,072
- -----------------------------------------------------------------------
Interest income 648
- -----------------------------------------------------------------------
Total investment income 3,720
- -----------------------------------------------------------------------
Expenses:
Management fee 2,236
- -----------------------------------------------------------------------
Distribution services fee 621
- -----------------------------------------------------------------------
Administrative services fee 710
- -----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1,837
- -----------------------------------------------------------------------
Professional fees 74
- -----------------------------------------------------------------------
Reports to shareholders 376
- -----------------------------------------------------------------------
Registration fees 108
- -----------------------------------------------------------------------
Trustees' fees and other 223
- -----------------------------------------------------------------------
Total expenses 6,185
- -----------------------------------------------------------------------
NET INVESTMENT LOSS (2,465)
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- -----------------------------------------------------------------------
Net realized gain from:
Investments 27,023
- -----------------------------------------------------------------------
Foreign currency related transactions 80
- -----------------------------------------------------------------------
27,103
- -----------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on:
Investments 47,256
- -----------------------------------------------------------------------
Foreign currency related transactions (97)
- -----------------------------------------------------------------------
47,159
- -----------------------------------------------------------------------
Net gain on investments 74,262
- -----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $71,797
- -----------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 (unaudited) and the year ended
October 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
- -------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -------------------------------------------------------------------------------------------
Net investment income (loss) $ (2,465) 462
- -------------------------------------------------------------------------------------------
Net realized gain 27,103 88,163
- -------------------------------------------------------------------------------------------
Change in net unrealized appreciation 47,159 (74,800)
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 71,797 13,825
- -------------------------------------------------------------------------------------------
Distribution from net investment income -- (2,673)
- -------------------------------------------------------------------------------------------
Distribution from net realized gain (88,452) (25,096)
- -------------------------------------------------------------------------------------------
Total dividends to shareholders (88,452) (27,769)
- -------------------------------------------------------------------------------------------
Net increase (decrease) from capital share transactions (17,079) 30,559
- -------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (33,734) 16,615
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------
Beginning of period 604,684 588,069
- -------------------------------------------------------------------------------------------
END OF PERIOD $570,950 604,684
- -------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
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 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 generally
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 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. Forward foreign currency exchange
contracts are valued at the prevailing forward
exchange rate of the underlying currencies on that
day. Money market instruments purchased with an
original maturity of sixty days or less are valued
at amortized cost. All other securities are valued
at their fair market value as determined in good
faith by the Valuation Committee of the Board of
Trustees.
FOREIGN CURRENCY TRANSLATIONS. The books and
records of the fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing
rates of exchange. Purchases and sales of
investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rates on the respective dates of the
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.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses from sales and maturities of forward
foreign currency exchange contracts, disposition of
foreign currencies, and the difference between the
amount of net investment income accrued and the
U.S. dollar amount actually received. That portion
of both realized and unrealized
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
gains and losses on investments that result from
fluctuations in foreign currency exchange rates is
not separately disclosed.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date. 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. 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. These
differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment
management fee of 1/12 of the annual rate of .75%
of the first $250 million of average daily net
assets declining to .62% of average daily net
assets in excess of $12.5 billion. The fund
incurred a management fee of $2,236,000 for the six
months ended April 30, 1999. Scudder Investments
(U.K.) Ltd, an affiliate of Scudder Kemper serves
as sub-advisor for the fund and is paid by Scudder
Kemper for its services.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI). Underwriting commissions retained by KDI in
connection with the distribution of Class A for the
six months ended April 30, 1999 are $44,000.
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 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
(CDSC) from redemptions of Class B and Class C
shares. Distribution fees and CDSC received by KDI
for the six months ended April 30, 1999 are
$828,000.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
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 paid by the
fund to KDI for the six months ended April 30, 1999
are $710,000, of which $1,000 was paid by KDI to
affiliates.
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 $922,000
for the six months ended April 30, 1999.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the fund are also officers or directors of
Scudder Kemper. For the six months ended April 30,
1999, the fund made no payments to its officers and
incurred trustees' fees of $53,000 to independent
trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended April 30, 1999, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
Purchases $317,404
Proceeds from sales 388,985
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the fund (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, 1998
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------
SHARES SOLD
--------------------------------------------------------------------------------
Class A 89,082 $ 1,022,437 99,055 $ 1,307,871
--------------------------------------------------------------------------------
Class B 2,457 27,974 6,108 79,630
--------------------------------------------------------------------------------
Class C 9,481 106,994 6,453 83,701
--------------------------------------------------------------------------------
Class I 270 3,451 837 11,244
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
--------------------------------------------------------------------------------
Class A 5,045 55,843 1,539 18,354
--------------------------------------------------------------------------------
Class B 1,808 19,575 504 5,970
--------------------------------------------------------------------------------
Class C 309 3,349 57 669
--------------------------------------------------------------------------------
Class I 204 2,276 81 964
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHARES REDEEMED
--------------------------------------------------------------------------------
Class A (95,568) (1,102,000) (98,869) (1,319,184)
--------------------------------------------------------------------------------
Class B (3,455) (39,183) (5,480) (71,226)
--------------------------------------------------------------------------------
Class C (9,644) (109,252) (5,630) (73,743)
--------------------------------------------------------------------------------
Class I (693) (8,543) (1,023) (13,696)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONVERSION OF SHARES
--------------------------------------------------------------------------------
Class A 455 5,259 1,040 13,786
--------------------------------------------------------------------------------
Class B (465) (5,259) (1,053) (13,781)
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM
CAPITAL SHARE TRANSACTIONS $ (17,079) $ 30,559
--------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6 FORWARD FOREIGN
CURRENCY CONTRACTS In order to protect itself against a decline in the
value of a particular foreign currency 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 or loss on those contracts are reflected in
the accompanying financial statements. The fund
also bears the credit risk (which is limited to the
unrealized gain, if any) if the counterparty fails
to perform under the contract. At April 30, 1999,
the fund had the following forward foreign currency
contracts outstanding with a settlement date in May
1999.
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY AMOUNT IN GAIN AT
TO BE DELIVERED U.S. DOLLARS 4/30/99
<S> <C> <C>
-----------------------------------------------------------------------------
740,726,000 Japanese Yen $6,206,000 $8,000
-----------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------
CLASS A
----------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------
Net asset value, beginning of period
$12.10 12.68 11.96 10.59 11.13
- -----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.03) .04 -- .04 .07
- -----------------------------------------------------------------------------------------
Net realized and unrealized gain 1.36 .01 1.52 1.50 .05
- -----------------------------------------------------------------------------------------
Total from investment operations 1.33 .05 1.52 1.54 .12
- -----------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .08 .12 .12 --
- -----------------------------------------------------------------------------------------
Distribution from net realized gain 1.81 .55 .68 .05 .66
- -----------------------------------------------------------------------------------------
Total dividends 1.81 .63 .80 .17 .66
- -----------------------------------------------------------------------------------------
Net asset value, end of period $11.62 12.10 12.68 11.96 10.59
- -----------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 11.73% .45 13.49 14.70 1.69
- -----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------------------
Expenses 1.78% 1.64 1.57 1.64 1.57
- -----------------------------------------------------------------------------------------
Net investment income (loss) (.56)% .36 .16 .34 .83
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
CLASS B
----------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ---------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------
Net asset value, beginning of period
$11.90 12.50 11.81 10.46 11.09
- -----------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.09) (.08) (.12) (.06) (.02)
- -----------------------------------------------------------------------------------------
Net realized and unrealized gain 1.33 .03 1.51 1.47 .05
- -----------------------------------------------------------------------------------------
Total from investment operations 1.24 (.05) 1.39 1.41 .03
- -----------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- -- .02 .01 --
- -----------------------------------------------------------------------------------------
Distribution from net realized gain 1.81 .55 .68 .05 .66
- -----------------------------------------------------------------------------------------
Total dividends 1.81 .55 .70 .06 .66
- -----------------------------------------------------------------------------------------
Net asset value, end of period $11.33 11.90 12.50 11.81 10.46
- -----------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 11.12% (.37) 12.32 13.59 .84
- -----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------------------
Expenses 2.88% 2.62 2.57 2.53 2.50
- -----------------------------------------------------------------------------------------
Net investment loss (1.66)% (.62) (.84) (.55) (.10)
- -----------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
--------------------------------------------------
CLASS C
--------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.91 12.51 11.81 10.46 11.09
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.09) (.08) (.09) (.06) (.02)
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.33 .03 1.49 1.47 .05
- ---------------------------------------------------------------------------------------------
Total from investment operations 1.24 (.05) 1.40 1.41 .03
- ---------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- -- .02 .01 --
- ---------------------------------------------------------------------------------------------
Distribution from net realized gain 1.81 .55 .68 .05 .66
- ---------------------------------------------------------------------------------------------
Total dividends 1.81 .55 .70 .06 .66
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $11.34 11.91 12.51 11.81 10.46
- ---------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 11.13% (.37) 12.45 13.59 .84
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------
Expenses 2.88% 2.55 2.49 2.50 2.50
- ---------------------------------------------------------------------------------------------
Net investment loss (1.66)% (.55) (.76) (.52) (.10)
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
CLASS I
--------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31, JULY 3 TO
APRIL 30, --------------------------------------- OCTOBER 31,
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.16 12.72 11.99 10.61 10.09
- ----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .02 .11 .07 .10 .04
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.37 .03 1.53 1.48 .48
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.39 .14 1.60 1.58 .52
- ----------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .15 .19 .15 --
- ----------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain 1.81 .55 .68 .05 --
- ----------------------------------------------------------------------------------------------------------------------
Total dividends 1.81 .70 .87 .20 --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.74 12.16 12.72 11.99 10.61
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 12.20% 1.18 14.19 15.19 5.15
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ----------------------------------------------------------------------------------------------------------------------
Expenses .95% 1.00 1.04 1.10 .85
- ----------------------------------------------------------------------------------------------------------------------
Net investment income .27% 1.00 .69 .88 1.32
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ---------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $570,950 604,684 588,069 472,243 364,708
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 110% 105 76 104 114
- ---------------------------------------------------------------------------------------------
</TABLE>
NOTES: Total return does not reflect the effect of any sales charges. Per share
data was determined based on average shares outstanding for the years ended
1995, 1996, 1998 and the six months ended April 30, 1999, respectively. Data for
the six months ended April 30, 1999 is unaudited.
22
<PAGE> 23
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 17, 1998, a special shareholders' meeting was held and adjourned to
January 15, 1999. Kemper International Fund shareholders were asked to vote on
three separate issues: approval of the new Investment Management Agreement
between the fund and Scudder Kemper Investments, Inc., approval of the new
Sub-Advisory Agreement for the fund with Scudder Investments (U.K.) Limited and
to modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. The following are the
results.
1) Approval of the new Investment Management Agreement between the fund and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
26,605,477 642,479 984,821
</TABLE>
2) To approve the new Sub-Advisory Agreement for the fund with Scudder
Investments (U.K.). This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
26,387,250 491,413 1,354,115
</TABLE>
3) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment Objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,850,625 1,376,506 2,199,343
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,847,725 1,379,293 2,199,456
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,888,344 1,338,787 2,199,343
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,855,744 1,371,387 2,199,343
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,883,117 1,344,014 2,199,343
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,879,254 1,347,877 2,199,343
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,884,845 1,342,286 2,199,343
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,879,894 1,347,237 2,199,343
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,873,770 1,353,361 2,199,343
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,874,304 1,352,827 2,199,343
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,825,336 1,401,795 2,199,343
</TABLE>
Pledging of assets
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,795,549 1,431,582 2,199,343
</TABLE>
Purchases of options and warrants
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,856,215 1,370,916 2,199,343
</TABLE>
23
<PAGE> 24
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY MAUREEN E. KANE
Chairman and Trustee President Assistant Secretary
JOHN W. BALLANTINE PHILIP J. COLLORA CAROLINE PEARSON
Trustee Vice President and Assistant Secretary
Secretary
LEWIS A. BURNHAM ELIZABETH C. WERTH
Trustee JOHN R. HEBBLE Assistant Secretary
Treasurer
DONALD L. DUNAWAY BRENDA LYONS
Trustee ANN M. MCCREARY Assistant Treasurer
Vice President
ROBERT B. HOFFMAN
Trustee KATHRYN L. QUIRK
Vice President
DONALD R. JONES
Trustee CORNELIA SMALL
Vice President
THOMAS W. LITTAUER
Trustee and Vice President LINDA J. WONDRACK
Vice President
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN THE CHASE MANHATTAN BANK
Chase Metro Center
Brooklyn, NY 11245
- --------------------------------------------------------------------------------
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
[KEMPER FUNDS LOGO]
Long-term investing in a short-term world(SM)
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Global and International Funds prospectus.
KIF - 3(6/21/99) 1076840
