<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 2000
Seeking total return, a combination of capital growth and income, principally
through an internationally diversified portfolio of equity securities.
KEMPER INTERNATIONAL
RESEARCH FUND
"... Whereas previously the fund was limited to investing in stocks issued by
companies located in Spain and Portugal, the new objective broadens the scope of
investment opportunity to include most developed and emerging international
markets. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
2
TERMS TO KNOW
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
14
FINANCIAL STATEMENTS
17
FINANCIAL HIGHLIGHTS
19
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
ABOUT YOUR REPORT
THIS FUND BEGAN OPERATIONS ON FEBRUARY 14, 1990, AS THE CLOSED-END GROWTH FUND
OF SPAIN. IT CONVERTED TO AN OPEN-END FUND AND EXCHANGED ITS SHARES FOR A SHARES
ON DECEMBER 14, 1998. ON APRIL 6, 2000, THE FUND'S MANDATE WAS MODIFIED,
ALLOWING FOR INVESTMENT BEYOND THE IBERIAN PENINSULA WHILE RESTRICTING PORTFOLIO
HOLDINGS TO THE INVESTMENT ADVISOR'S TOP PICKS. THE FUND'S NAME THEN CHANGED
ACCORDINGLY TO KEMPER INTERNATIONAL RESEARCH FUND. ALL CLASSES HAVE THE SAME
UNDERLYING PORTFOLIO. PLEASE NOTE THAT RETURNS DEPICTED FOR CLASS A, B AND C
SHARES PRIOR TO APRIL 6, 2000, ARE DERIVED FROM HISTORICAL PERFORMANCE OF THE
FUND WHEN IT WAS LESS DIVERSIFIED, AND ALSO REFLECT PERFORMANCE OF THE
CLOSED-END PORTFOLIO FROM FEBRUARY 14, 1990, TO DECEMBER 14, 1998, ADJUSTED FOR
EXPENSE DIFFERENCES.
KEMPER INTERNATIONAL RESEARCH FUND TOTAL RETURNS
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2000 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER INTERNATIONAL KEMPER INTERNATIONAL LIPPER EUROPEAN REGION
KEMPER INTERNATIONAL RESEARCH FUND CLASS A RESEARCH FUND CLASS B RESEARCH FUND CLASS C FUNDS AVERAGE*
------------------------------------------ --------------------- --------------------- ----------------------
<S> <C> <C> <C>
14.52% 13.89% 14.01% 21.51%
</TABLE>
RETURNS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURNS
AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN ORIGINAL COST.
INVESTMENT IN FOREIGN SECURITIES PRESENTS SPECIAL RISK CONSIDERATIONS INCLUDING
FLUCTUATING CURRENCY EXCHANGE RATES, GOVERNMENT REGULATIONS AND DIFFERENCES IN
LIQUIDITY.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
4/30/00 10/31/99
..........................................................
<S> <C> <C> <C> <C>
KEMPER INTERNATIONAL RESEARCH
FUND CLASS A $15.49 $20.86
..........................................................
KEMPER INTERNATIONAL RESEARCH
FUND CLASS B $15.18 $20.67
..........................................................
KEMPER INTERNATIONAL RESEARCH
FUND CLASS C $15.20 $20.67
..........................................................
</TABLE>
KEMPER INTERNATIONAL RESEARCH FUND
LIPPER RANKINGS AS OF 4/30/00*
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER EUROPEAN REGION FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
....................................................................................
<S> <C> <C> <C> <C> <C>
1-YEAR #115 of 151 funds #122 of 151 funds #121 of 151 funds
....................................................................................
</TABLE>
*LIPPER, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES IN NET ASSET VALUE
WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF SALES CHARGE; IF
SALES CHARGE HAD BEEN INCLUDED, RESULTS MAY HAVE BEEN LESS FAVORABLE.
TERMS TO KNOW
BOTTOM-UP INVESTMENT STYLE An investment style that assesses the performance of
individual companies before considering the impact of economic trends. The
companies may be identified from research reports, stock screens or personal
knowledge of the products and services. This approach, which is the opposite of
"top-down" investing, assumes that individual companies can do well even if the
industry as a whole may not be performing well.
OVERWEIGHTING/UNDERWEIGHTING The allocation of assets -- usually in terms of
sector, industry or country -- within a portfolio relative to the portfolio's
benchmark index or investment universe.
RESTRUCTURING Implementation of major corporate changes aimed at greater
efficiency and adaptation to changing markets. Cost-cutting initiatives, debt
retirement, management realignments and the sale of noncore businesses are all
developments frequently associated with corporate restructuring.
<PAGE> 3
ECONOMIC OVERVIEW
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 $290 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,
As we enter summer, there isn't much to complain about. For all the yammering
about the "new" economy, the old economy is doing pretty well. Consumers may
hanker for a new GPS handset or a Palm Pilot, but they lust after a suburban
mansion with a garage big enough to hold their luxury car and SUV -- and state
and local governments are laying old-fashioned asphalt almost as fast as
businesses are building the information superhighway. Satisfying both old and
new desires got the economy off to a fast start in the new century -- GDP growth
rose at an annual rate of more than 5 percent in the first quarter. Even with a
modest slowdown possible in the second half, growth for the year 2000 is likely
to be close to 5 percent.
So everyone is happy, right? Well, almost everyone. Consumers seldom have felt
so confident; businesspeople seldom have behaved so expansively. But there's
still one grump: Federal Reserve Board Chairman Alan Greenspan, who's become
increasingly worried that rapid growth will bring on inflation, and raised
interest rates by half a percentage point (0.50%) accordingly on May 16. The
Fed's move puts the benchmark federal funds rate at 6.5 percent, its highest
level since February 1991, and the more symbolic discount rate at 6.0 percent.
Despite Greenspan's attempt to slow spending by raising interest rates,
consumers are still splurging, and they show few signs of stopping. We know this
because shoppers are buying the big-ticket items they usually purchase early in
a cycle -- items such as personal computers, mobile phones, jewelry, fancy
kitchen appliances, exercise equipment and big boats. Why are consumers still
buying despite Greenspan's attempts to slow their splurging? There are three
answers: deflation, wealth and easy credit.
Falling prices have made big-ticket items almost irresistible. Since 1997,
prices of kitchen appliances have fallen 4.5 percent, TVs and VCRs 16 percent
and sporting equipment 6.5 percent. Even auto showrooms no longer produce
sticker shock, and drivers have responded with gusto, buying a record 16.9
million cars and light trucks in 1999. 2000 is likely to be the first year in
which automotive sales top 17 million.
Some of that spending has been made possible by stock market gains: Wall
Street has handed out windfalls to almost anyone holding equities in the past
few years. But consumers who don't own stocks are also spending, thanks to a
decade of debt. Young, poor or new to America? In the 1990s, it didn't matter;
lenders still loved you. While high-income families have been borrowing less,
those lower on the income scale have been borrowing more.
But it's not just consumers that Greenspan is concerned about; businesses are
splurging as well. During 1999, businesses increased spending on computers and
peripherals by 35 percent and spending on communications equipment by 25 percent
(both after adjusting for price declines). Far from slowing down this year, we
expect investment in these two categories to accelerate -- to 40 percent growth
for computers and 30 percent growth for communications equipment.
And just like consumers, businesses are borrowing to buy. You may think that
with booming sales, entrepreneurs are cash-rich and can afford it. But while
1999 saw economy-wide earnings jump 10 percent and profits of Standard and
Poor's (S&P) 500 companies leap nearly 14 percent, internal cash covered less
than 84 percent of capital spending. With the exception of 1998, that's the
lowest on record. Last year alone, corporate debt shot up by more than 11
percent to $560 billion. And new economy companies are no exception; they have
more debt than most people realize, issuing more than half of all convertible
bonds.
All this debt could cause problems. Although we've increased our 2001
inflation outlook to nearly 3 percent -- an entire percentage point higher than
our prediction three months ago -- we're not particularly worried about
inflation. It's the heavy borrowing we're concerned about. Debt continues to
exceed income growth, and when Greenspan succeeds in slowing the economy with
higher interest rates (which he will succeed in doing), all of the debt American
consumers and businesses are taking on could be tricky to handle. Private
financial obligations must be paid with personal income and corporate profits.
When the economy slows, personal income stagnates and corporate profits often
fall -- which makes it harder to pay off those debts. Consumers and businesses
may have to sell their assets to pay off the debt, and they may risk going into
default.
That being the case, a gradual economic slowdown may be in everyone's best
interest. But "gradual" is the key. Both the old and new economy have a lot
riding on the Fed's ability to rein in growth softly and smoothly, because
abrupt slowdowns encourage consumers and businesses to sell assets -- and
perhaps risk bankruptcy -- to pay off debt, as described above.
A gradual slowdown seems to be what the Fed is seeking, but for all of
Greenspan's semi-tough talk, some indicators suggest that monetary policy has
actually been lax. Broad money and credit creation have vastly exceeded
economic activity since 1995, and no central bank can allow that to continue
indefinitely without creating
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 (5/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.40 6.00 5.50 5.60
Prime rate (2) 9.50 8.50 7.75 8.50
Inflation rate (3)* 3.00 2.60 2.30 1.50
The U.S. dollar (4) 4.30 -0.70 -0.90 6.40
Capital goods orders (5)* 17.00 12.30 2.50 14.50
Industrial production (5)* 6.10 3.70 2.90 5.20
Employment growth (6) 2.60 2.20 2.30 2.60
</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 4/30/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
inflation. If we begin to see higher core inflation, the Fed will have to deal
with all that money it's created in a less gradualist manner -- and that could
get tricky. Financial turmoil accompanied each of the Fed's last two efforts to
slow the economy down. In 1994, there was a bond market meltdown that resulted
in a Mexican debt crisis. After a more timid Fed tightening in 1997, crises in
Asia were followed by problems with Russian debt, Brazilian debt and a large
American hedge fund. We don't think this is a coincidence: The global debt
market is so vast and interconnected that it's highly vulnerable to a rise in
the cost of its basic raw material -- short-term funds.
Let's hope, then, that the Fed can slow the economy without upsetting the
financial applecart, because that could affect everyone. After all, the old
economy and the new economy are wedded in many ways. Much of the money that
flows to IPOs is available because mature industries have borrowed to carry out
mergers and share buybacks. Old economy companies are the biggest customers of
new economy products. And e-commerce sites are all about moving traditional
goods over old-fashioned highways. Despite a lot of talk about old and new,
we're all in this economy together.
Happily, financial markets got some better news along that front in late May
and early June. A range of economic data, from retail sales to mortgage
applications to the all-important employment report, began to point to somewhat
softer economic growth. If the Fed believes that the economy is finally slowing
in response to its tightening, the end of the rate hikes could be in sight.
Markets certainly were willing to believe, and they staged a strong relief rally
in late May and early June. While we don't expect a quick end to market
volatility, a slowdown in growth would be most welcome, and would make the
outlook for both stocks and bonds better for the remainder of the year.
Sincerely,
Scudder Kemper Investments Economics Group
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 THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF JUNE 6, 2000, 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
[Jennifer Bloomfield]
JENNIFER BLOOMFIELD JOINED THE FIRM IN 1995 AND CURRENTLY SERVES AS STRATEGIST
ON SCUDDER KEMPER'S INVESTMENT COMMITTEE. SHE HAS ALSO SERVED AS A RESEARCH
ANALYST COVERING SOUTH EAST ASIAN COUNTRIES. JENNIFER HAS A TOTAL OF EIGHT YEARS
OF INVESTMENT EXPERIENCE AND HOLDS A BACHELOR'S DEGREE FROM CORNELL UNIVERSITY.
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.
ON APRIL 10, 2000, SHAREHOLDERS APPROVED A PROPOSAL TO EXPAND THE INVESTMENT
MANDATE OF GROWTH FUND OF SPAIN, RESULTING IN A MORE DIVERSIFIED AND
ANALYST-DRIVEN PORTFOLIO. DURING THE SEMIANNUAL PERIOD, THE FUND'S MANAGEMENT
TEAM OF ROUGHLY 20 ANALYSTS BEGAN THE EXCITING PROCESS OF RESTRUCTURING THE FUND
ACCORDING TO ITS NEW MANDATE. FOLLOWING, TEAM COORDINATOR AND LEAD PORTFOLIO
MANAGER JENNIFER BLOOMFIELD ADDRESSES THE TEAM'S STRATEGY FOR THE NEW FUND AND
HER IMPRESSIONS OF THE FUND'S PAST AND ITS FUTURE.
Q WHEN AND WHY WAS GROWTH FUND OF SPAIN TRANSFORMED INTO KEMPER
INTERNATIONAL RESEARCH FUND?
A Growth Fund Of Spain officially became Kemper International Research Fund
on April 6, 2000. The change was made primarily due to asset base instability.
When the fund converted from the closed-end format to an open-end fund on
December 14, 1998, the enthusiastic profit taking that followed -- despite a 2
percent redemption fee -- took its toll. Purchasing and maintaining stocks that
would benefit shareholders became increasingly difficult. What's more, the
fund's shrinking asset base resulted in disproportionately high expenses for
shareholders.
While the fund's investment objective remains absolutely the same -- to seek
long-term capital appreciation primarily from international equity securities,
or stocks -- its policy was greatly changed. Previously, the fund allowed
investment only in companies based in the Iberian peninsula. After the
conversion, we were given free rein to look for investment opportunities around
the globe, except for the United States and Canada. A new, analyst-driven
investment process is the foundation for this new freedom. It is our hope that
by broadening portfolio diversification, we can help improve fund performance
and attract new investors, which ultimately should help decrease fund expenses.
Q WILL YOU PLEASE PROVIDE AN OVERVIEW OF FUND PERFORMANCE DURING THE PERIOD?
A Because of the major changes to the fund's portfolio, measuring fund
performance for the period as a whole is problematic. Comparing relative
performance is even more difficult; no one benchmark provides an appropriate
measure. It is important to consider the period as one of transition, and to
evaluate performance accordingly.
Fund performance was, overall, positive for the six months ended April 30,
2000. The fund gained 14.52 percent (Class A shares, unadjusted for any sales
charges). However, from November 1, 1999, through March 31, 2000, during which
the fund was invested solely in Spanish companies, the fund gained 13.55 percent
(Class A shares, unadjusted for any sales charges). This compares with the
benchmark IBEX 35, which returned 22.52 percent, during the same time period.
The IBEX comprises the 35 most actively traded stocks in cash (pesetas), among
the securities on the Joint Stock Exchange System, which comprises the four
Spanish stock exchanges. The
5
<PAGE> 6
PERFORMANCE UPDATE
fund also lagged its average peer in Lipper's European regional funds category,
which was up 28.65 percent for the period.
During that time, the market was driven almost entirely by strong moves in TMT
(technology, media and telecommunications) stocks, while nearly all other
sectors showed absolute declines -- most markedly, banks, retailers and food
producers. Fund performance was hampered by an underweight (in comparison with
the benchmark) in telecommunications stocks, which registered robust gains,
especially in continental Europe. On balance, the portfolio was buoyed by
exposure to yellow-page publisher TPI, stainless-steel manufacturer Acerinox and
select utilities holdings. And even though the Spanish market had been rattled
by inflation fears and liquidity woes, many Spanish companies continued to
report healthy earnings.
From April 1, 2000, through April 30, 2000, the fund was relatively flat, with
a return of 0.85 percent (Class A shares, unadjusted for any sales charges).
This compares with a marked loss of 5.67 percent for the fund's new benchmark,
the Morgan Stanley Capital International Europe, Australasia, Far East plus
Emerging Markets Free Index, or MSCI EAFE+EMF index. There are roughly 45
countries included in this index, which tracks performance of stocks in Europe,
Japan, the Pacific Rim, Latin America and other emerging markets, including
Eastern Europe, the Middle East and Africa. The fund also proved more resilient
than Lipper's average broad international fund, which lost 6.31 percent for the
month.
Q WILL YOU PLEASE PROVIDE AN OVERVIEW OF MANAGEMENT ACTIVITY THROUGHOUT THE
PERIOD?
A Knowing that eventually we would be diversifying the portfolio out of
Spain, we prudently focused on highly liquid names and securities. When the
liquidity requirement was met, we explored opportunities in many sectors,
especially Spanish media companies. In general, these firms appear poised for
growth as they embrace globalization, branching out not only into Latin America
but into the United States as well, where the Spanish language is taking a
significant foothold. Spanish communications conglomerate Telefonica de Espana,
for example, which accounted for roughly one-quarter of the portfolio, was up
sharply following an announcement that it would buy out minority holdings in its
Latin American subsidiaries.
In April, Growth Fund Of Spain officially became Kemper International Research
Fund. We set about restructuring the fund according to its new objective and
"bottom-up" investment strategy.
Q HOW HAVE THE FUND'S OBJECTIVE AND INVESTMENT APPROACH CHANGED?
A The fund continues to seek long-term capital appreciation, primarily
through investments in equity securities, or stocks. Whereas previously the fund
was limited to investing in stocks issued by companies located in Spain and
Portugal, the new objective broadens the scope of investment opportunity to
include most developed and emerging international markets. We use the fund's new
benchmark index as a general guide for creating a portfolio that's thoroughly
diversified geographically, rebalancing quarterly to reinstate regional
neutrality.
That said, the fund's investment approach is strictly "bottom up." By that we
mean that it is research driven. A bottom-up approach entails thorough analysis
of the fundamental strengths of each stock. Within any given region, the
analysts' best ideas with the greatest upside potential are chosen for the
portfolio. The portfolio does not use any regional rotation in order to target
outperformance, but rather seeks to maintain regional neutrality in order to
manage risk.
Normally, the fund will invest at least 65 percent of its total assets in the
common stocks of large foreign-based companies. In general, these will have a
market capitalization of $1 billion or more. Other investments may include
convertible or preferred stocks and investment-grade -- or
high-quality -- bonds.
Q HOW DO YOU CHOOSE INDIVIDUAL STOCKS IN WHICH TO INVEST?
A Our research analysts examine each potential holding to determine which
issuers have strong balance sheets and effective management in place, among
other things. These may be companies that appear to offer the potential for
sustainable above-average earnings growth or revenues, as well as those whose
stock prices appear to be low with respect to other measures of their worth,
such as price-to-earnings ratios.
Analysts examine the economies and business climates in the countries in which
companies are based, or where their products are sold. We're always looking for
change and hoping to spot emerging trends that may hurt or benefit whole
industries. Therefore, at any given time, we may favor securities from different
countries and industries, although we do attempt to manage risk by limiting
sector bets.
Finally, analysts rank the stocks according to the stocks' projected upside
potential. The analysts coordinate to ensure that the most
6
<PAGE> 7
PERFORMANCE UPDATE
favorable stocks within a region or sector get the largest representation. The
goal is to construct a portfolio roster of only the very best stocks, as
determined by the entire international and emerging-markets analyst team.
Q HOW WAS YOUR SELL DISCIPLINE PUT INTO EFFECT DURING THE TRANSITION
PROCESS?
A Normally we will sell a stock when we believe that it has reached fair
value, when there is a major change in its fundamentals or when other
investments appear to offer better opportunities. We also will sell a stock to
reduce our exposure to a geographic area or industry sector if we believe we
have become too heavily weighted. In converting the portfolio, we sold off
nearly all the previous holdings, retaining a 3 percent weighting in Spanish
stocks as of, then end of.
Q HOW HAVE THE MAJOR ECONOMIC TRENDS AND POLITICAL EVENTS THAT SHAPED THE
MARKETS THROUGHOUT THE PERIOD AFFECTED YOUR DECISIONS TO PURCHASE NEW STOCKS FOR
THE PORTFOLIO?
A Overall, Europe and Japan provided the greatest investment opportunities.
We believe that the market volatility, which outside the United States has
affected Europe most acutely, will return to more normal levels and that the
growing equity culture in both Europe and Japan should have an enormous impact
on the profitability of companies there.
In addition, in Europe we are seeing the emergence of several long-term trends
that should provide a positive backdrop to the region's markets for years to
come. Merger and acquisition activity is increasing, governments are making
meaningful strides toward deregulation, and individual companies are becoming
more innovative, which should help drive earnings growth. Despite the likelihood
of a continued rise in interest rates, we expect economic growth to remain
strong.
In Japan, the past 12 months have been extremely positive from a corporate
perspective. Restructuring activity continues to thrive. Overall, while worry
persists regarding Japan's progress on economic reform, many of the leading
indicators appear to be headed in the right direction. We are very optimistic
about a macroeconomic recovery in Japan, and we expect to see the return of
higher levels of consumer confidence and more positive investor sentiment.
Korea is the fund's only significant stake outside of Europe and Japan. While
the process of corporate restructuring there is and has been painful, we believe
that ultimately it will help to further edify the Korean economy, which has been
among the fastest growing in Asia. We are very encouraged by the strength of
investor demand and will look for selective opportunities to broaden our
holdings there.
As we mentioned earlier, the fund also invests in emerging markets; we will
continue to look for opportunities in these growing and dynamic economies. We
believe the strength of today's global economy will provide a distinct advantage
to the emerging markets, which in some ways can be considered a leveraged play
on global growth.
Q WHAT ARE YOUR EXPECTATIONS FOR THE INVESTMENT ENVIRONMENT IN THE NEAR
FUTURE?
A In the markets of the recent past, a rising tide carried all boats. The
gains of a single stock could benefit an entire sector. By the end of the
period, we were seeing downside momentum that was as fast and furious as the
upside momentum had been. None of it had much to do with the strength of the
companies themselves. It seems that investors may be starting to refocus on
company fundamentals. In the near future, we believe that competitiveness will
return to the markets and that there will be clear winners and losers as
investors become more selective. Because our investment strategy favors
individual stocks with strong fundamentals, we believe this shift should benefit
the fund.
Q DO YOU HAVE ANY CLOSING THOUGHTS FOR SHAREHOLDERS?
A While risk is inherent in investing, it is our goal to manage it as much
as possible via thorough research and a commitment to disciplined stock
selection and sale. We've worked side by side with the members of Scudder Kemper
Investments' quantitative research team for years, and we have great confidence
that their experience and expertise will provide very fine ideas. We believe
that our process of matching bottom-up research with regional neutrality and
limited sector bets should provide greater and more consistent returns over
time.
7
<PAGE> 8
LARGEST HOLDINGS
KEMPER INTERNATIONAL RESEARCH FUND'S TOP 10 HOLDINGS*
Representing 25.7 percent of the fund's total investment portfolio on April 30,
2000.
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
------------------------------------------------------------------------------------
1. VODAFONE AIRTOUCH PLC United Kingdom 3.9%
------------------------------------------------------------------------------------
2. NOKIA OYJ Finland 3.7%
------------------------------------------------------------------------------------
3. SAMSUNG ELECTRONICS Korea 3.2%
------------------------------------------------------------------------------------
4. FRANCE TELECOM S.A. France 2.5%
------------------------------------------------------------------------------------
5. ROYAL DUTCH PETROLEUM Netherlands 2.4%
------------------------------------------------------------------------------------
6. LM ERICSON AB Sweden 2.4%
------------------------------------------------------------------------------------
7. SONERA OYJ Finland 2.2%
------------------------------------------------------------------------------------
8. DAIWA SECURITIES GROUP Japan 1.9%
------------------------------------------------------------------------------------
9. TOTAL FINA Spain 1.8%
ELF S.A.
------------------------------------------------------------------------------------
10. ROYAL & SUN ALLIANCE INSURANCE United Kingdom 1.7%
GROUP
------------------------------------------------------------------------------------
</TABLE>
*REFERENCES TO PORTFOLIO HOLDINGS SHOULD NOT BE DEEMED A RECOMMENDATION.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER INTERNATIONAL RESEARCH FUND
Portfolio of Investments at April 30, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM NOTES--5.0% AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
Federal Home Loan Bank, 5.880%, 05/01/2000** $2,000,000 $ 2,000,000
Chase Euro Time Deposit, 5.750%, 05/01/2000** 360,000 360,000
---------------------------------------------------------------------------------
TOTAL SHORT-TERM NOTES
(Cost $2,360,000) 2,360,000
---------------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS--95.0% SHARES
<S> <C> <C> <C> <C> <C>
BRAZIL--1.0%
Embratel Participacoes S.A. (ADR)
(PROVIDER OF TELECOMMUNICATION SERVICES) 21,300 479,250
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
FINLAND--7.1%
Nokia Oyj
(INTERNATIONAL TELECOMMUNICATIONS COMPANY) 30,500 1,749,993
Sonera Oyj
(PROVIDER OF TELECOMMUNICATION SERVICES) 19,200 1,056,243
Tietoenator Oyj
(INFORMATION TECHNOLOGY SERVICE COMPANY) 11,100 534,941
---------------------------------------------------------------------------------
3,341,177
------------------------------------------------------------------------------------------------------------------------
FRANCE--11.4%
AXA S.A.
(INSURANCE GROUP PROVIDING INSURANCE, FINANCE
AND REAL ESTATE SERVICES) 4,900 726,704
Aventis S.A.
(MANUFACTURES LIFE SCIENCE PRODUCTS) 13,000 715,164
Compagnie Generale des Etablissements Michelin "B"
(LEADING TIRE MANUFACTURER) 4,500 149,353
France Telecom S.A.
(PROVIDER OF TELECOMMUNICATION SERVICES) 7,800 1,207,150
Renault S.A.
(MANUFACTURER OF AUTOMOBILES, BUSES, INDUSTRIAL
AND AGRICULTURAL VEHICLES) 6,300 286,430
Societe Television Francaise 1
(TELEVISION BROADCASTING) 980 671,009
Suez Lyonnaise des Eaux S.A.
(WATER AND ELECTRIC UTILITY) 2,100 329,394
Total Fina ELF S.A. "B"
(EXPLORER, DEVELOPER, PRODUCER, TRANSPORTER AND
TRANSPORTER AND MARKETER OF OIL AND NATURAL
GAS) 5,500 834,692
Usinor S.A.
(PRODUCER OF FLAT STEEL AND STAINLESS STEEL
SHEETS) 21,700 285,125
Vivendi
(PROVIDER OF INDUSTRIAL SERVICES) 2,200 217,650
---------------------------------------------------------------------------------
5,422,671
------------------------------------------------------------------------------------------------------------------------
GERMANY--2.5%
Deutsche Bank AG (Registered)
(PROVIDER OF FINANCIAL SERVICES) 7,300 490,540
Deutsche Lufthansa AG
(PROVIDER OF AIRLINE SERVICES) 6,500 135,645
SAP AG
(COMPUTER SOFTWARE MANUFACTURER) 1,140 534,887
---------------------------------------------------------------------------------
1,161,072
</TABLE>
The accompanying notes are an integral part of the financial statements. 9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C>
HONG KONG--1.8%
China Telecom Ltd. (ADR)*
(PROVIDER OF CELLULAR TELECOMMUNICATIONS
SERVICES) 3,200 $ 469,400
Legend Holdings Ltd.
(MANUFACTURER OF COMPUTERS AND RELATED
PRODUCTS) 350,000 406,658
---------------------------------------------------------------------------------
876,058
------------------------------------------------------------------------------------------------------------------------
HUNGARY--1.3%
Magyar Tavkozlesi Rt (ADR)
(TELECOMMUNICATIONS COMPANY) 17,500 609,219
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
ISRAEL--0.7%
Check Point Software Technologies, Ltd.*
(DEVELOPER, MARKETER AND SUPPORTER OF
MANAGEMENT SOLUTIONS FOR ACTIVE NETWORKS) 2,000 346,000
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
ITALY--3.3%
Assicurazioni Generali
(MULTI-LINE INSURANCE AND FINANCIAL SERVICES
COMPANY) 15,200 432,609
Mediaset SpA
(BROADCASTING AND TELEVISION NETWORKS) 18,500 300,274
San Paolo - IMI S.p.A.
(PERSONAL, INVESTMENT AND COMMERCIAL BANKING) 8,100 113,426
Seat Pagine Gialle SpA
(PUBLISHER OF TELECOMMUNICATION DIRECTORIES AND
PROVIDER OF ADVERTISING SERVICES) 235,100 703,324
---------------------------------------------------------------------------------
1,549,633
------------------------------------------------------------------------------------------------------------------------
JAPAN--22.8%
Asahi Chemical Industry Co., Ltd.
(PRODUCER OF SYNTHETIC FIBERS, INDUSTRIAL
CHEMICALS PETROCHEMICALS, PLASTICS, RUBBER AND
FOOD PRODUCTS) 66,000 379,268
Asahi Glass Co., Ltd.
(DIVERSIFIED CHEMICAL COMPANY) 50,000 437,916
Bank of Yokohama, Ltd.
(FINANCIAL SERVICES) 125,000 478,104
Benesse Corp.
(PROVIDER OF EDUCATIONAL SERVICES) 5,500 479,167
Canon, Inc.
(PRODUCER OF VISUAL IMAGE AND INFORMATION
EQUIPMENT) 11,000 502,033
Chugai Pharmaceutical Co., Ltd.
(PHARMACEUTICAL COMPANY) 17,000 326,681
Daikin Industries, Ltd.
(MANUFACTURER OF AIR CONDITIONING EQUIPMENT) 31,000 588,553
Daiwa Securities Group, Inc.
(PROVIDER OF BROKERAGE AND OTHER FINANCIAL
SERVICES) 59,000 899,390
Fujitsu, Ltd.
(MANUFACTURER OF COMPUTERS) 16,000 452,328
Matsushita Electric Works, Ltd.
(MANUFACTURER OF BUILDING MATERIALS AND
LIGHTING EQUIPMENT) 40,000 443,089
Murata Manufacturing Co., Ltd.
(MANUFACTURER OF CERAMIC APPLIED ELECTRONIC
COMPUTERS) 2,000 388,027
NEC Corp.
(MANUFACTURER OF TELECOMMUNICATION AND COMPUTER
EQUIPMENT) 23,000 624,723
NTT Mobile Communications Network, Inc.
(PROVIDER OF VARIOUS TELECOMMUNICATION SERVICES
AND EQUIPMENT) 18 600,333
Nippon Telegraph & Telephone Corp.
(PROVIDER OF TELECOMMUNICATION SERVICES) 39 482,816
</TABLE>
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C>
Sakura Bank, Ltd.
(PROVIDER OF BANKING SERVICES) 107,000 $ 749,316
Sankyo Co., Ltd.
(LEADING ETHICAL DRUG PRODUCER) 14,000 307,834
Shin-Etsu Chemical Co., Ltd.
(PRODUCER AND DISTRIBUTOR OF SYNTHETIC REINS
AND CHEMICALS) 10,000 527,531
Sony Corp.
(MANUFACTURER OF CONSUMER AND INDUSTRIAL
ELECTRONIC EQUIPMENT) 6,300 722,312
Toyota Motor Corp.
(LEADING MANUFACTURER AND MARKETER OF
DIVERSIFIED AUTOMOTIVE PRODUCTS) 14,000 694,568
Yamada Denki Co., Ltd.
(SELLS AND REPAIRS CONSUMER ELECTRONIC
EQUIPMENT) 5,000 415,743
Yamanouchi Pharmaceutical Co., Ltd.
(MANUFACTURES AND MARKETS A WIDE VARIETY OF
PHARMACEUTICALS) 6,000 316,519
---------------------------------------------------------------------------------
10,816,251
------------------------------------------------------------------------------------------------------------------------
KOREA--5.2%
Korea Telecom Corp. (ADR)*
(PROVIDER OF TELECOMMUNICATIONS SERVICES) 6,500 224,250
SK Telecom Co., Ltd.
(PROVIDER OF TELECOMMUNICATION SERVICES) 22,000 705,375
Samsung Electronics (GDR)
(DIVERSIFIED ELECTRONICS MANUFACTURER) 9,500 1,531,875
---------------------------------------------------------------------------------
2,461,500
------------------------------------------------------------------------------------------------------------------------
MEXICO--1.8%
Corporacion GEO, S.A. de C.V.*
(DESIGNER AND DEVELOPER OF HOUSING DEVELOPMENTS) 89,000 204,619
Fomento Economico Mexicano, S.A. de C.V. (ADR)
(PRODUCER OF BEER, SOFT DRINKS AND MINERAL WATER) 5,500 226,875
Grupo Televisa S.A. de C.V. (GDR)*
(MEDIA COMPANY) 6,600 418,688
---------------------------------------------------------------------------------
850,182
------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--5.4%
ABN AMRO Holding N.V.
(DIVERSIFIED FINANCIAL SERVICES) 21,100 434,568
Akzo Nobel N.V.
(PRODUCER AND MARKETER OF HEALTHCARE PRODUCTS,
COATINGS, CHEMICALS AND FIBERS) 5,100 208,823
Equant N.V.*
(PROVIDER OF INTERNATIONAL DATA NETWORK
SERVICES) 2,800 216,795
Heineken Holding N.V. "A"
(PRODUCER AND DISTRIBUTOR OF BEERS, SPIRITS,
WINES AND SOFT DRINKS) 16,700 562,616
Royal Dutch Petroleum Co.
(PETROLEUM COMPANY) 19,700 1,135,698
---------------------------------------------------------------------------------
2,558,500
------------------------------------------------------------------------------------------------------------------------
SPAIN--2.8%
Banco Bilbao Vizcaya, S.A.
(COMMERCIAL BANK) 15,900 216,868
Telefonica S.A.*
(PROVIDER OF TELECOMMUNICATION SERVICES) 35,700 794,670
Union Electrica Fenosa S.A.
(PRODUCER AND DISTRIBUTOR OF ELECTRICAL ENERGY) 17,200 329,534
---------------------------------------------------------------------------------
1,341,072
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C>
SWEDEN--2.4%
Telefonektiebolaget LM Ericson AB "B"
(MANUFACTURER OF TELECOMMUNICATIONS EQUIPMENT) 12,600 $ 1,124,219
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
SWITZERLAND--4.2%
Credit Suisse Group (Registered)
(PROVIDER OF UNIVERSAL BANKING AND FINANCIAL
SERVICES) 1,493 269,856
Nestle SA (Registered)
(FOOD MANUFACTURER) 388 684,415
Roche Holding AG*
(DEVELOPS AND MANUFACTURES PHARMACEUTICAL AND
CHEMICAL PRODUCTS) 56 585,215
UBS AG (Registered)
(PROVIDER OF GLOBAL BANKING AND FINANCIAL
SERVICES) 1,840 451,085
---------------------------------------------------------------------------------
1,990,571
------------------------------------------------------------------------------------------------------------------------
TAIWAN--2.4%
Asustek Computer, Inc.
(MANUFACTURER OF MAINBOARDS) 22,200 291,375
GigaMedia Ltd.*
(PROVIDER OF BROADBAND INTERNET ACCESS SERVICES
AND CONTENT) 8,000 192,000
Hon Hai Precision Industry Co., Ltd (GDR)*
(MANUFACTURES AND MARKETS ELECTRONIC CONNECTORS
AND CABLE ASSEMBLIES) 9,700 271,600
Taiwan Semiconductor Manufacturing Co.
(MANUFACTURER OF INTEGRATED CIRCUITS) 7,200 376,650
---------------------------------------------------------------------------------
1,131,625
------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--18.9%
BOC Group plc
(DIVERSIFIED CHEMICAL COMPANY) 13,600 223,161
Barclays PLC
(COMMERCIAL AND INVESTMENT BANKING, INSURANCE
AND OTHER FINANCIAL SERVICES) 8,000 204,047
British Aerospace PLC
(PRODUCER OF MILITARY AIRCRAFT) 101,100 619,943
Compass Group PLC
(INTERNATIONAL CATERING GROUP) 43,900 630,391
Glaxo Wellcome PLC
(PHARMACEUTICAL COMPANY) 23,200 714,911
HSBC Holdings plc
(DIVERSIFIED INTERNATIONAL BANKING AND
FINANCIAL SERVICES COMPANY) 58,100 640,380
Halifax Group plc
(PROVIDER OF PERSONAL FINANCIAL SERVICES) 12,900 120,556
J Sainsbury plc
(RETAIL DISTRIBUTOR OF FOOD THROUGH
SUPERMARKETS) 49,500 257,427
Lloyds TSB Group plc
(BANKING AND FINANCIAL SERVICES) 35,500 345,541
Prudential Corp. PLC
(PROVIDER OF A BROAD RANGE OF FINANCIAL
SERVICES) 43,200 660,577
RMC Group plc
(PRODUCES AND SUPPLIES BUILDING AND
CONSTRUCTION MATERIALS) 34,400 405,859
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C>
Railtrack Group PLC
(OPERATOR OF RAILWAY INFRASTRUCTURE) 8,900 $ 113,985
Royal & Sun Alliance Insurance Group plc
(INSURANCE COMPANY) 146,100 816,500
SmithKline Beecham PLC
(MANUFACTURER OF ETHICAL DRUGS AND HEALTHCARE
PRODUCTS) 50,300 687,154
Tesco, plc
(FOOD RETAILER) 200,000 678,399
Vodafone AirTouch PLC
(PROVIDER OF MOBILE TELECOMMUNICATION SERVICES) 403,500 1,841,596
---------------------------------------------------------------------------------
8,960,427
---------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost $43,860,593) 45,019,427
---------------------------------------------------------------------------------
TOTAL INVESTMENT
(Cost $46,220,593)(a) $47,379,427
---------------------------------------------------------------------------------
</TABLE>
At April 30, 2000, the Fund's portfolio of investments had the following
industry diversification:
<TABLE>
<CAPTION>
VALUE($) %
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Communications 11,344,514 23.9
--------------------------------------------------------------------------------------------
Financial 8,050,067 17.0
--------------------------------------------------------------------------------------------
Technology 4,866,417 10.3
--------------------------------------------------------------------------------------------
Health 3,862,301 8.2
--------------------------------------------------------------------------------------------
Durable 3,553,769 7.5
--------------------------------------------------------------------------------------------
Services Industry 2,581,920 5.4
--------------------------------------------------------------------------------------------
Consumer Staples 2,409,732 5.1
--------------------------------------------------------------------------------------------
Energy 1,970,390 4.2
--------------------------------------------------------------------------------------------
Chemicals, Metal & Minerals 1,567,876 3.3
--------------------------------------------------------------------------------------------
Media 1,389,971 2.9
--------------------------------------------------------------------------------------------
Manufacturing 1,316,767 2.8
--------------------------------------------------------------------------------------------
Consumer Discretionary 722,312 1.5
--------------------------------------------------------------------------------------------
Utilities 658,928 1.4
--------------------------------------------------------------------------------------------
Construction 610,478 1.3
--------------------------------------------------------------------------------------------
Transportation 113,985 0.2
--------------------------------------------------------------------------------------------
TOTAL COMMON STOCK 45,019,427 95.0
--------------------------------------------------------------------------------------------
SHORT-TERM NOTES 2,360,000 5.0
--------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 47,379,427 100.0
--------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $46,220,593. At April 30, 2000,
net unrealized appreciation for all securities based on tax cost was
$1,158,834. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$2,099,219 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $940,385.
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF ASSETS & LIABILITIES
As of April 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value, (cost $46,220,593) $47,379,427
---------------------------------------------------------------------------
Cash 49,461
---------------------------------------------------------------------------
Foreign currency, at value, (cost: $42,370) 42,275
---------------------------------------------------------------------------
Dividend receivable 21,088
---------------------------------------------------------------------------
Interest receivable 172
---------------------------------------------------------------------------
Foreign taxes recoverable 88,861
---------------------------------------------------------------------------
Due from Adviser 44,127
---------------------------------------------------------------------------
Other assets 2,000
---------------------------------------------------------------------------
TOTAL ASSETS 47,627,411
---------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 22,971
---------------------------------------------------------------------------
Payable for Fund shares redeemed 88,903
---------------------------------------------------------------------------
Accrued management fee 39,997
---------------------------------------------------------------------------
Other accrued expenses 473,216
---------------------------------------------------------------------------
Total liabilities 625,087
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $47,002,324
---------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
Undistributed net investment income (loss) $ 191,062
---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investment securities 1,158,834
---------------------------------------------------------------------------
Foreign currency related transactions (11,189)
---------------------------------------------------------------------------
Accumulated net realized gain (loss) 18,647,478
---------------------------------------------------------------------------
Paid-in capital 27,016,139
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $47,002,324
---------------------------------------------------------------------------
NET ASSETS VALUE
CLASS A SHARES
Net asset value and redemption price per share
($46,532,327 / 3,003,532 shares of capital stock
outstanding $.01 par value, 33,333,333 number of shares
authorized) $15.49
---------------------------------------------------------------------------
Maximum offering price per share (100/94.25 of $15.49) $16.44
---------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($312,425 /
20,578 shares of capital stock outstanding $.01 par value,
33,333,333 number of shares authorized) $15.18
---------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($157,572 /
10,367 shares of capital stock outstanding $.01 par value,
33,333,334 number of shares authorized) $15.20
---------------------------------------------------------------------------
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended April 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $64,199) $ 317,790
----------------------------------------------------------------------------
Interest 306,568
----------------------------------------------------------------------------
Total income 624,358
----------------------------------------------------------------------------
Expenses:
Management fee 196,348
----------------------------------------------------------------------------
Services to shareholders 44,782
----------------------------------------------------------------------------
Custodian and accounting fees 77,032
----------------------------------------------------------------------------
Distribution services fees 1,562
----------------------------------------------------------------------------
Administrative service fees 65,449
----------------------------------------------------------------------------
Auditing 47,000
----------------------------------------------------------------------------
Legal 43,500
----------------------------------------------------------------------------
Directors fees and expenses 12,000
----------------------------------------------------------------------------
Reports to shareholders 37,000
----------------------------------------------------------------------------
Registration fees 3,660
----------------------------------------------------------------------------
Other 493
----------------------------------------------------------------------------
Total expenses before expense reductions 528,826
----------------------------------------------------------------------------
Expense reductions (46,141)
----------------------------------------------------------------------------
Total expenses, after expense reductions 482,685
----------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 141,673
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments 19,040,569
----------------------------------------------------------------------------
Foreign currency related transactions (136,457)
----------------------------------------------------------------------------
18,904,112
----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments (11,383,003)
----------------------------------------------------------------------------
Futures 5,889
----------------------------------------------------------------------------
(11,377,114)
----------------------------------------------------------------------------
Net gain (loss) on investment transactions 7,526,998
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 7,668,671
----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
APRIL 30, ENDED
2000 OCTOBER 31,
(UNAUDITED) 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ 141,673 360,978
----------------------------------------------------------------------------------------------------
Net realized gain (loss) 18,904,112 187,809,690
----------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period (11,377,114) (161,013,241)
----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 7,668,671 27,157,427
----------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A -- (2,231,590)
----------------------------------------------------------------------------------------------------
Class B -- --
----------------------------------------------------------------------------------------------------
Class C -- --
----------------------------------------------------------------------------------------------------
From net realized gains
Class A (23,864,396) (28,432,104)
----------------------------------------------------------------------------------------------------
Class B (56,041) --
----------------------------------------------------------------------------------------------------
Class C (41,783) --
----------------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 2,190,046 117,717,382
----------------------------------------------------------------------------------------------------
Reinvestment of distributions 6,080,578 --
----------------------------------------------------------------------------------------------------
Cost of shares redeemed (11,242,850) (435,069,016)
----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions (2,972,226) (317,351,634)
----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (19,265,775) (320,857,901)
----------------------------------------------------------------------------------------------------
Net assets at beginning of period 66,268,099 387,126,000
----------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including undistributed net
investment income of $191,062 and $49,389, respectively) $ 47,002,324 66,268,099
----------------------------------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLES INCLUDE SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
CLASS A
SIX
MONTHS ELEVEN
ENDED YEAR MONTHS
APRIL 30, ENDED ENDED YEAR ENDED NOVEMBER 30,
2000(F) OCTOBER 31, OCTOBER 31, -------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $20.86 23.42 19.06 15.67 13.33 12.40 10.67
--------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.04(e) 0.05(e) 0.11 0.24 0.36 0.37 0.32
--------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 2.24 (0.75) 5.72 4.15 2.69 1.01 1.41
--------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.28 (0.70) 5.83 4.39 3.05 1.38 1.73
--------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (0.14) (0.11) (0.17) (0.42) (0.45) --
--------------------------------------------------------------------------------------------------------------------------
Net realized gains on investment
transactions (7.65) (1.72) (1.36) (0.83) (0.29) -- --
--------------------------------------------------------------------------------------------------------------------------
Total distributions (7.65) (1.86) (1.47) (1.00) (0.71) (0.45) --
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.49 20.86 23.42 19.06 15.67 13.33 12.40
--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN %(A)(B) 14.52** (3.38) 32.90(C)** 29.86(C) 24.12(C) 11.62(C) 16.21(C)
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in
thousands) 46,532 66,005 387,126 315,059 263,935 227,997 213,972
--------------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 2.01* 1.97 1.43* 1.22 1.25 1.22 1.23
--------------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 1.84* 1.96 1.43* 1.22 1.25 1.22 1.23
--------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) 0.55* 0.29 0.58* 1.29 2.46 2.89 2.57
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 198* 76 10* 29 45 69 85
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
SIX
MONTHS
ENDED PERIOD
APRIL 30, ENDED
2000(F) OCTOBER 31,
(UNAUDITED) 1999 (D)
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $20.67 22.98
----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(e) (0.04) (0.16)
----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 2.20 (2.15)
----------------------------------------------------------------------------------------------------
Total from investment operations 2.16 (2.31)
----------------------------------------------------------------------------------------------------
Less distributions from:
Net realized gains on investment transactions (7.65) --
----------------------------------------------------------------------------------------------------
Total distributions (7.65) --
----------------------------------------------------------------------------------------------------
Net asset value, end of period $15.18 20.67
----------------------------------------------------------------------------------------------------
TOTAL RETURN %(A)(B) 13.89** (10.05)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) $ 312 151
----------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 2.87* 2.86*
----------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 2.85* 2.84*
----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (0.46)* (0.84)*
----------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 198* 76*
----------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
SIX MONTHS
ENDED PERIOD
APRIL 30, ENDED
2000(F) OCTOBER 31,
(UNAUDITED) 1999(D)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $20.67 22.98
-------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss)(e) (0.03) (0.14)
-------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 2.21 (2.17)
-------------------------------------------------------------------------
Total from investment operations 2.18 (2.31)
-------------------------------------------------------------------------
Less distributions from:
Net realized gains on investment
transactions (7.65) --
-------------------------------------------------------------------------
Total distributions (7.65) --
-------------------------------------------------------------------------
Net asset value, end of period $15.20 20.67
-------------------------------------------------------------------------
TOTAL RETURN %(A)(B) 14.01%** (10.05)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) $ 158 112
-------------------------------------------------------------------------
Ratio of expenses before expense reductions
(%) 2.82* 2.81*
-------------------------------------------------------------------------
Ratio of expenses after expense reductions
(%) 2.80* 2.79*
-------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (0.41)* (0.79)*
-------------------------------------------------------------------------
Portfolio turnover rate (%) 198* 76*
-------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized
** Not annualized
(a) Total return does not reflect the effect of sales charges.
(b) The Fund's total return would have been lower had certain
expenses not been reduced.
(c) The performance of Class A reflects performance of the Fund
in closed-end form. The Fund's performance may have been
lower if it had operated as an open-end fund during these
periods.
(d) For the period December 14, 1998 (commencement of Class) to
October 31, 1999
(e) Based on monthly average shares outstanding during the
period.
(f) On April 6, 2000, the Fund adopted its current name and
objectives. Prior to that date, the Fund was known as Growth
Fund of Spain and its investment objective was to seek
long-term capital appreciation by investing primarily in
equity securities of Spanish companies. Financial
information prior to April 6, 2000 should not be considered
representative of the present Fund.
</TABLE>
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Kemper International Research Fund (the "Fund") is
a diversified series of Kemper Global/International
Series, Inc. (the "Corporation") which is
registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a
Maryland corporation. Until December 11, 1998, the
fund was organized as a single series of The Growth
Fund of Spain, Inc. ("GSP"), a Maryland Corporation
and was registered under the 1940 Act as a
diversified, closed-end management investment
company. Effective December 14, 1998, all of the
common stock of GSP was exchanged for Class A
shares of the fund and, on December 14, 1998, the
fund commenced a public offering of its Class A,
Class B and Class C shares. Prior to April 6, 2000,
the Fund was known as Growth Fund of Spain, an
open-end non-diversified Series of the corporation.
The Fund offers multiple classes of shares. Class A
shares are offered to investors subject to an
initial sales charge. Class B shares are offered
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 offered 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 (none sold
through April 30, 2000) are offered to a limited
group of investors, are not subject to initial or
contingent deferred sales charges and have lower
ongoing expenses than other classes.
Investment income, realized and unrealized gains
and losses, and certain fund-level expenses and
expense reductions, if any, are borne pro rata on
the basis of relative net assets by the holders of
all classes of shares except that each class bears
certain expenses unique to that class such as
distribution services, shareholder services,
administrative services and certain other class
specific expenses. Differences in class expenses
may result in payment of different per share
dividends by class. All shares of the Fund have
equal rights with respect to voting subject to
class specific arrangements.
The Fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Investments are stated at value
determined as of the close of regular trading on
the New York Stock Exchange. 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, or if no sale occurred, at the
calculated mean between the most recent bid
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
and asked quotations on such market. If there are
no such bid and asked quotations, the most recent
bid quotation shall be used. 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 value
as determined in good faith by the Valuation
Committee of the Board of Directors.
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.
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 income accrued and the U.S. dollar
amount actually received. That portion of both
realized and unrealized gains and losses on
investments that result from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with the net realized and
unrealized gains and losses on investment
securities.
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.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made annually.
Net realized gains from investment transactions, in
excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders
at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the Fund.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Dividend income is recorded on
the ex-dividend date. Certain dividends from
foreign securities may be recorded subsequent to
the ex-dividend date as soon as the fund is
informed of such dividends. Realized gains and
losses from investment transactions are recorded on
an identified cost basis. All discounts are
accreted for both tax and financial reporting
purposes.
EXPENSES. Expenses arising in connection with a
specific Fund are allocated to that Fund. Other
Trust expenses are allocated between the Funds in
proportion to their relative net assets.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
2 PURCHASE & SALES
OF SECURITIES For the six months ended April 30, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $43,341,643
Proceeds from sales 48,279,439
--------------------------------------------------------------------------------
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 $196,348 for the six
months ended April 30, 2000.
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 shares for the six months
ended April 30, 2000 are $245.
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
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 charge
("CDSC") from redemptions of Class B and Class C
shares. Distribution fees and CDSC received by KDI
for the six months ended April 30, 2000 are $1,578,
of which $100 was unpaid at April 30, 2000.
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 KDI
for the six months ended April 30, 2000 were
$21,323 after an expense waiver of $44,127, of
which $21,323 was unpaid at April 30, 2000.
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 $35,407
for the six months ended April 30, 2000, of which
$5,901 was unpaid at April 30, 2000.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation is responsible for determining the
daily net asset value per share and maintaining the
portfolio and general accounting records of the
Fund. The Fund incurred accounting fees of $42,000
for the six months ended April 30, 2000, of which
$22,000 was unpaid at April 30, 2000.
OFFICERS AND DIRECTORS. Certain officers or
directors of the Fund are also officers or
directors of Scudder Kemper. During the six months
ended April 30, 2000, the Fund made no payments to
is officers and incurred directors' fees of $12,000
to independent trustees.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
------------------------ ----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 139,740 $ 1,988,104 33,243 $ 117,006,901
-------------------------------------------------------------------------------
Class B 11,682 168,079 7,678 410,654
-------------------------------------------------------------------------------
Class C 2,289 33,863 5,551 299,827
-------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 469,353 5,982,771 -- --
-------------------------------------------------------------------------------
Class B 4,034 56,033 -- --
-------------------------------------------------------------------------------
Class C 3,005 41,774 -- --
-------------------------------------------------------------------------------
SHARES REDEEMED
Class A (770,453) (11,204,217) (13,399,091) (435,057,994)
-------------------------------------------------------------------------------
Class B (2,232) (33,526) (500) (8,084)
-------------------------------------------------------------------------------
Class C (340) (5,107) (500) (2,938)
-------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 225 $ 3,396 -- --
-------------------------------------------------------------------------------
Class B (229) (3,396) -- --
-------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM
CAPITAL SHARE TRANSACTIONS $ (2,972,226) $(317,351,634)
-------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
5 EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian and transfer agent whereby credits
realized as a result of uninvested cash balances
were used to reduce a portion of the Fund's
expenses. During the period, the Fund's custodian
and transfer agent fees were reduced by $32 and
$1,982, respectively, under these arrangements.
--------------------------------------------------------------------------------
6 LINE OF CREDIT The Fund and several Kemper Funds (the "the
Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemptions
requests that otherwise might require the untimely
disposition of securities. The Participants are
changed an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under this
agreement.
22
<PAGE> 23
NOTES
23
<PAGE> 24
DIRECTORS&OFFICERS
<TABLE>
<S> <C> <C>
DIRECTORS OFFICERS
JAMES E. AKINS MARK S. CASADY THOMAS W. LITTAUER
Director President Vice President
JAMES R. EDGAR PHILIP J. COLLORA ANN M. MCCREARY
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK WILLIAM F. TRUSCOTT
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY LINDA J. WONDRACK
Director JOYCE E. CORNELL Vice President
Vice President
KATHRYN L. QUIRK MAUREEN E. KANE
Director and Vice President DIEGO ESPINOSA Assistant Secretary
Vice President
FRED B. RENWICK CAROLINE PEARSON
Director JOAN R. GREGORY Assistant Secretary
Vice President
JOHN G. WEITHERS BRENDA LYONS
Director TARA C. KENNEY Assistant Treasurer
Vice President
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
.............................................................................................
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
.............................................................................................
CUSTODIAN THE CHASE MANHATTAN BANK
Chase Metro Center
Brooklyn, NY 11245
.............................................................................................
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
.............................................................................................
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
</TABLE>
[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.
KIRF-3 (6/25/00) 1114196
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
