<PAGE> 1
SEMI-ANNUAL
REPORT
KEMPER
ADVANTAGE III
Periodic and Flexible Payment
Variable Annuity Contract
--
Modified Guaranteed and
Variable Annuity Contracts
--
KILICO Variable Annuity Separate Account
--
Kemper Investors Fund
Period ended [ZURICH KEMPER
June 30, 1996 LIFE LOGO]
<PAGE> 2
DEAR KILICO POLICY OWNER:
- ------------------------------------------
GENERAL ECONOMIC OVERVIEW
We have just completed a period of some discomfort for bond and stock market
traders. Concerns about rising interest rates, the possibility of higher price
inflation and Federal Reserve tightening of credit contributed to considerable
market volatility. But while the professional investors tend to fret over every
economic release, individuals who invest in variable annuities for the long term
were wise to stay the course -- at least until the direction of the economy
became clearer. Indeed, several recent economic measures are quite reassuring
and argue in favor of a continued healthy economy with low inflation.
The economy expanded at a 4.2% annual rate in the second quarter, the fastest
pace since the second quarter of 1994. This robust growth is welcome in general
but has tended to roil markets, which fear strong growth will lead to
overheating and inflationary pressures. So far, however, such fears have been
largely unwarranted. With the exception of food prices, which increases were
weather-related, there have been no significant signs of inflationary pressures.
The economy, as it has done so recently, is in the process of slowing itself
down. While the Federal Reserve Board stands ready to attempt to moderate
economic growth with either interest rate cuts or increases, such intervention
can run the risk of going too far in one direction. It appears that our economy
today is self-regulating.
MARKET OUTLOOK
Based on these snapshots of the economy, we look for a relatively calmer second
half of 1996. Our forecast calls for growth to slow down in the third and fourth
quarters, resulting in an advance of about 2.5% for the entire year. Assuming
that bond and stock market investors concur that there is no chance of an
overheating economy or significantly rising interest rates, the markets should
also relax.
The market volatility that we experienced in May, June and July was caused by
investors who were nervous about the broad economy and some disappointing
earnings reports which made them pessimistic. Yet, the markets performed the way
that history suggests they should: an overall correction in the stock market was
accentuated in technology and small capitalization stocks--the industry sectors
which performance tends to be the most volatile. Once the stock market
corrected, the bond market rallied. Finally, while not producing spectacular
results, international markets provided a stabilizing influence when compared to
U.S. markets.
Our market forecast eight months into the year is not much different from what
we forecasted in January. The bond market, which is climbing back from a decline
this year, may provide a 5% total return in 1996. The stock market, after the
correction is completed, may advance 5% to 10% for the year. However, future
market conditions can not be predicted with assurance.
In addition, we are projecting that long-term (30-year) interest rates will
hover in the 6.5% to 7.5% range, while short-term interest rates may drop below
their current levels. Finally, we would be surprised if the Federal Reserve
Board moved to adjust interest rates more than 25 basis points either way for
the remainder of the year.
Given the economic environment, we do not look for an upset in the upcoming
presidential election. Much more interesting will be which party wins the most
congressional seats. If the Democrats regain control of Congress, a bond market
selloff could be expected.
While U.S. markets are expected to provide modest returns, we continue to
advocate the benefits of diversification into alternate markets. Many overseas
markets are forecasted to grow at a rate well above our 2.5% growth expectation
for the U.S., and there are many equity and fixed-income opportunities abroad.
The value of the U.S. dollar, always a concern to international investors, will
probably not strengthen much against other currencies for the foreseeable
future.
1
<PAGE> 3
We would like now to direct your attention to the performance of the Subaccounts
which are investment options available through your annuity contract. Also,
please take a moment to review the market summaries prepared by the Kemper
Investors Fund (KINF) portfolio managers.
<TABLE>
<CAPTION>
MONEY MARKET PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- --------------------------------------------------------------
<S> <C> <C>
PERIODIC FLEXIBLE
--------- ---------
Six Months Ended 6/30/96 1.85% 2.00%
- --------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------
CURRENT NET YIELDS++
For Week Ended 6/30/96
- ----------------------------------------------------------------
<S> <C> <C>
CURRENT COMPOUNDED
ANNUALIZED YIELD EFFECTIVE YIELD
----------------- ----------------
ADVANTAGE III 3.49% 3.55%
- ----------------------------------------------------------------
</TABLE>
The current annualized yield was 3.42% for the week ended July 31, 1996; the
compounded effective yield was 3.47%.
In the last six-months the economy and expectations have completely shifted. The
period began with sluggish economic growth and a moderate decrease in the
Federal Funds Rate by the Federal Reserve (Fed). However, the strong first
quarter Gross Domestic Product number surprised many given the obstacles faced
at the end of 1995 and beginning of 1996, including a temporary government
shutdown, brutal weather in the East and the General Motors strike. Now, at the
end of June with strong economic growth, it appears that it's just a matter of
time before the Fed increases rates.
Along with the market's swift change, we have switched from extending to
shortening the KINF Money Market Portfolio's average maturity. This should allow
us to benefit from any rise in interest rates.
Frank Rachwalski
Portfolio Manager June 30, 1996
<TABLE>
<CAPTION>
TOTAL RETURN PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- --------------------------------------------------------------
<S> <C> <C>
PERIODIC FLEXIBLE
--------- ---------
Six Months Ended 6/30/96 4.86% 5.02%
- --------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/96
- ---------------------------------------------------------------
<S> <C>
1 YEAR 4.78%
5 YEAR 6.21%
10 YEAR 7.38%
INCEPTION (4-14-82) TO DATE 10.86%
- ---------------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one year (6%) and five-year (2%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
The first six months of 1996 were characterized by volatility in the stock
market and depressed performance from an apprehensive bond market. Concerns
about the direction of interest rates, the pace of economic growth and the
return of price inflation dominated during the period. In response, we took
advantage of the significant flexibility afforded by KINF Total Return
Portfolio's investment strategy and made several adjustments.
Within the equity portion, weakness in the technology sector and mixed
performance in capital goods companies negatively impacted the overall results.
During this period, we maintained a commitment to the technology sector. Still
believers in the earnings potential of technology providers, we have reoriented
the Portfolio's exposure toward companies that provide technology services, as
well as buying selected component providers at depressed prices.
In the fixed-income sector, only high yield bonds showed strength. Early in the
year, we increased the Portfolio's exposure to high yield and high-grade
corporate bonds while reducing its U.S. Treasuries holdings.
We continue to expect high quality technology companies to do well.
Additionally, we look for the Portfolio's interest rate-sensitive and consumer
nondurable stocks to enhance performance in what
2
<PAGE> 4
we expect to be a weakening economy. The bond market should react well to a
slowdown.
Gary Langbaum
Portfolio Manager June 30, 1996
<TABLE>
<CAPTION>
HIGH YIELD PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- --------------------------------------------------------------
<S> <C> <C>
PERIODIC FLEXIBLE
--------- ---------
Six Months Ended 6/30/96 3.84% 4.00%
- --------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/96
- ---------------------------------------------------------------
<S> <C>
1 YEAR 1.84%
5 YEAR 10.24%
10 YEAR 8.53%
INCEPTION (4-14-82) TO DATE 11.72%
- ---------------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one year (6%) and five-year (2%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
High yield bonds performed positively despite a turbulent six months for the
overall bond market. During the period, economic growth began gaining momentum.
Although this upturn in the economy hurt returns in the government and high
grade corporate markets, it did not have the same impact in the high yield bond
market. When the economy is growing, credit quality becomes less of a concern to
investors in high yield corporate bonds. A stronger economy assumes that more
growth in corporate earnings will occur. Solid earnings are essential for
companies to continue paying the interest on their outstanding bond issues.
Over the past six months, we maintained an even balance between "cyclical" and
"defensive" investments. During this time, our "cyclical" investments included
issues from the energy sector and "gaming" industry, while we purchased media
investments to fulfill our "defensive" position.
The Portfolio experienced relatively few credit concerns and the quality of
issues remained relatively stable. Lower B-rated bonds represented approximately
two-thirds of the investments, while higher quality BB-rated bonds comprised
about one quarter. This positioning provided a good level of income for the
Portfolio, while mitigating some potential risk. As Treasuries and higher
quality bonds rallied late in June this positioning inhibited the Portfolio's
performance slightly.
We look for more positive high yield market performance. However, we don't
anticipate that corporate earnings will keep pace with their 1994 and 1995
levels. Our investment focus will continue to be on healthy companies that are
positioned to perform well in the current moderate growth economy.
Michael McNamara
Harry Resis
Portfolio Co-Managers June 30, 1996
<TABLE>
<CAPTION>
GROWTH PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- --------------------------------------------------------------
<S> <C> <C>
PERIODIC FLEXIBLE
--------- ---------
Six Months Ended 6/30/96 9.79% 9.96%
- --------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/96
- ---------------------------------------------------------------
<S> <C>
1 YEAR 14.75%
5 YEAR 13.72%
10 YEAR 10.02%
INCEPTION (12-13-83) TO DATE 12.66%
- ---------------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one year (6%) and five-year (2%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
In late 1995, we had broadened the Portfolio to include exposure to more
economically-sensitive issues such as retail, oil, housing-related stocks and
selected industrial cyclical issues. These are sectors one would expect to
outperform in a period of strong economic growth and our positions did
contribute positive returns. In March we added a small "basket" of international
stocks that are managed with the help of Zurich Kemper's international
investment team based in London. In light of accelerating growth in foreign
economies, we believe the international markets offer potential for good
relative performance going forward.
3
<PAGE> 5
More recently, we've seen increased concerns about a slowdown in earnings growth
and the potential for a general market correction. In this environment, the
challenge is to recognize where the new opportunities are, and our research and
valuation models have been effective in doing that.
Looking ahead, we see an upward bias for the market as a whole. Gains will
probably be achieved with additional sector rotation and a much greater level of
volatility than we saw last year. Policy owners can expect more rotation of the
Portfolio based on where our research suggests the new opportunities will be.
Overall, we see good potential for growth stocks, which aren't as dependent on
prevailing economic conditions to maintain and expand earnings.
Steven H. Reynolds
Portfolio Manager,
Chief Investment Officer--Equities June 30, 1996
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- --------------------------------------------------------------
<S> <C> <C>
PERIODIC FLEXIBLE
--------- ---------
Six Months Ended 6/30/96 (2.65)% (2.51)%
- --------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/96
- ------------------------------------------------------------
<S> <C>
1 Year (4.61)%
5 Year 4.07 %
Inception (11-3-89) to Date 5.15 %
- ------------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one-year (6%) and five-year (2%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
The last six months were a difficult period for the government market. After
1995's slow economic growth and declining interest rates, the economic
environment began to change in January. Federal budget negotiations stalled, and
an impasse developed, which effectively eliminated the chances for a balanced
budget in the first half of 1996. In addition, economic data released throughout
the period showed stronger than anticipated economic growth and strong
employment figures.
These events caused a sell-off in the market, which resulted in higher market
yields. It wasn't until late in June that the market rallied as indicators of
inflation remained tame and technical conditions improved. Although positive,
the rally occurred too late to make a material impact in KINF Government
Securities Portfolio's six-month performance.
At the start of the year, the Portfolio was positioned with a longer than
average duration to take advantage of the then declining interest rate
environment. Duration is a measurement of a portfolio's sensitivity to interest
rates. The longer the duration, the more sensitive it is to interest rate
changes. As rates rose unexpectedly, the Portfolio's longer duration hurt
performance. We shortened duration to a defensive position and added
mortgage-backed investments to the Portfolio. Mortgage-backed investments were
added because they tend to outperform Treasuries as interest rates rise.
The poor overall performance of the market, however, continued to inhibit
performance until June, when the government market and Treasuries in particular,
rallied. We plan to maintain the Portfolio's defensive position until interest
rates stabilize and the direction of the economy becomes more clear.
J. Patrick Beimford, Chief
Investment Officer--Fixed Income
Richard Vandenberg
Portfolio Co-Managers June 30, 1996
<TABLE>
<CAPTION>
INTERNATIONAL PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- --------------------------------------------------------------
<S> <C> <C>
PERIODIC FLEXIBLE
--------- ---------
Six Months Ended 6/30/96 10.39% 10.55%
- --------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/96
- ------------------------------------------------------------
<S> <C>
1 Year 10.73%
Inception (1-6-92) to Date 7.73%
- ------------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one year (6%) and lifetime (2%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
4
<PAGE> 6
Over the past six months, KINF International Portfolio continued to focus on
diversification. Diversifying into multiple markets provided the opportunity to
always have some portion of the equity holdings moving forward. The Netherlands,
Australia, Japan and France were top performing markets during this time frame.
Pharmaceuticals, technology, telecommunications and work force management
providers were favored industry sectors.
We made moves to heighten the Portfolio's exposure to Japan early in the year,
encouraged by signs that an economic recovery was finally underway. Because a
strengthened Japanese market affects all of Asia, the Portfolio's exposure to
Southeast Asia was also increased, with an emphasis on Malaysia.
European holdings continued to perform well as industrial production picked up
and consumer spending continued to rise. Small- and mid-capitalization holdings
in Ireland, Spain and the Netherlands were among the strongest performers. Due
to the impressive performance of the smaller companies in continental Europe, we
are considering increasing the 20% weighting in European small- and mid-caps in
the coming months.
Dennis Ferro
Portfolio Manager June 30, 1996
<TABLE>
<CAPTION>
SMALL CAP GROWTH PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- --------------------------------------------------------------
<S> <C> <C>
PERIODIC FLEXIBLE
--------- ---------
Six Months Ended 6/30/96 15.08% 15.25%
- --------------------------------------------------------------
- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/96
- ---------------------------------------------------------------
1 Year 20.25%
Inception (5-1-94) to Date 17.58%
- ---------------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one year (6%) and lifetime (4%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
During the first half of 1996, health care, information services and consumer
oriented stocks were among the top performers in the KINF Small Cap Growth
Portfolio. Trading during the period emphasized portfolio consolidation,
trimming large positions that enjoyed strong gains and eliminating small
positions that were not contributing meaningful performance. We also added to
selected positions in which our small cap analysts hold strong conviction.
In light of current uncertainty in the market, we intend to stay with the "bread
and butter" stocks--stable service companies that can deliver consistent revenue
growth despite changes in the economy. In that vein, we've added to our position
in Omnicare, a company that distributes pharmacy supplies and drugs to nursing
homes. We also added a new position, Executive Risk, a director/officer
liability insurance company.
Gary Langbaum
Portfolio Manager June 30, 1996
INVESTMENT GRADE BOND SUBACCOUNT
The last six months was a difficult period for bonds. After slow economic growth
and declining interest rates in 1995, the economic environment began to change
in January. Federal budget negotiations stalled, and an impasse developed, which
effectively eliminated the chances for a balanced budget in the first half of
1996. In addition, economic data released throughout the period showed stronger
than anticipated economic growth and strong employment figures. These events
caused a sell-off in the market, which resulted in higher market yields. The
high grade corporate bond market struggled through most of the period, but
rallied late in June as indicators of inflation remained tame and technical
conditions improved. Although positive, the rally occurred too late to make a
material impact in KINF Investment Grade Bond Portfolio's performance in its
first two months.
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<PAGE> 7
Going forward, we plan to concentrate on finding value in the market--bond
issues with cash flow growth and debt reduction potential that may be
undervalued today. We expect to maintain a neutral to defensive duration until
interest rates stabilize and the economy's direction becomes more clear.
Robert Cessine
Portfolio Manager June 30, 1996
VALUE SUBACCOUNT
During KINF Value Portfolio's first two months, we have adopted a "wait-and-see
attitude" to the crosscurrents in the increasingly volatile stock market.
Increased oil prices this year have renewed our interest in selected oil stocks,
whose prices continued to be depressed. Conversely, significant appreciation of
many drug stocks in the Portfolio has driven us to pare back on those holdings.
Continued market volatility should benefit the Portfolio, which seeks attractive
opportunities among stocks that are out of favor with investors. We are
optimistic despite the possibility of rising interest rates. Generally, rising
rates don't hurt nearly as much as people think. Instead, it's the psychology
that can create a problem.
David N. Dreman
Portfolio Manager June 30, 1996
SMALL CAP VALUE SUBACCOUNT
NOTE: Portfolio Manager Michael Berry resigned his position effective July 1.
The KINF Small Cap Value Portfolio is now being managed by Steve Stokes and
Chris Bertelsen, Chief Investment Officer at Dreman Value Advisors, Inc. (DVA),
a subsidiary of Zurich Kemper Investments, Inc. The Portfolio will continue to
be managed under DVA's contrarian investment style which was pioneered by David
N. Dreman and concentrates on low price/earning value criteria for stock
selection.
The KINF Small Cap Value Portfolio performance in its first two months reflected
the general outperformance of large cap stocks as well as several
company-specific setbacks. Gains in Cullen Frost Bankers, Bally Entertainment
and KCS Energy were offset by declines in AK Steel, Electroglas and Haggar
Apparel.
Despite a temporary setback, we believe the Portfolio is well positioned for
growth during the coming months. However, given the uncertainty in the market,
we're maintaining a somewhat cautious stance. The Portfolio's more volatile
positions have been trimmed and we've added stocks that provide attractive
yields, which should provide a cushion for the Portfolio's total return in the
event of a market downturn.
Steve Stokes
Chris Bertelsen
Portfolio Co-Managers June 30, 1996
VALUE + GROWTH SUBACCOUNT
Rising interest rates and several disappointing earnings announcements led to a
widespread sell-off in the technology sector which created some attractive
buying opportunities as well as contributed to KINF Value + Growth Portfolio's
positive performance during its first two months. Thanks to our strong research
capabilities, we were able to identify some very solid companies and purchase
them at attractive valuations. In addition to selected technology stocks, we
currently favor companies in the financial, health care and consumer non-durable
sectors.
6
<PAGE> 8
Approximately 60% of the Portfolio is currently invested in growth stocks, with
40% in value stocks. Normally, a strong economy and higher interest rates would
urge a cautious tone with regard to our growth stock bias, and it may be reduced
slightly in the coming months. However, the cyclical strength demonstrated by
the economy hasn't been reflected in corporate profits as measured by the
Standard and Poor's Stock Index (S&P). Sub-par earnings growth in the S&P argues
for a continued overweight in growth versus value, which we expect to maintain
for the near-term.
Daniel J. Bukowski
David N. Dreman
Steven Reynolds
Portfolio Co-Managers June 30, 1996
HORIZON 20+ SUBACCOUNT
KINF Horizon 20+ Portfolio during its first two months performed in line with
our expectations. The volatility in the stock market during this period provided
us with ample opportunity to build the Portfolio by acquiring desirable stocks
at attractive prices. This has contributed to a larger exposure to technology
and financial stocks than the Portfolio's S&P benchmark.
Midway through the year, we look for market volatility to continue, if not pick
up. A diversified portfolio with U.S. and foreign stocks, as well as various
types of equities (large capitalization and small capitalization, growth and
value-style), should help the Portfolio continue to be an "all-weather
portfolio." Weakness in various industry sectors, including health care
delivery, should provide attractive opportunities.
Thomas M. Regner
Portfolio Manager June 30, 1996
HORIZON 10+ SUBACCOUNT
The KINF Horizon 10+ Portfolio's performance on days of extreme volatility and
trade volume, proved its ability to weather real-life stress tests. Volatility
in the stock market provided us with ample opportunity to build the Portfolio by
acquiring desirable stocks at attractive prices. This has contributed to a
larger exposure to technology and financial stocks than the Portfolio's S&P
benchmark.
A diversified portfolio with U.S. and foreign stocks, as well as various types
of equities (large capitalization and small capitalization, growth and value-
style), should help the Portfolio continue to be an "all-weather portfolio."
Weakness in various industry sectors, including health care delivery, should
provide attractive opportunities.
Thomas M. Regner
Portfolio Manager June 30, 1996
HORIZON 5 SUBACCOUNT
Making its debut in a period that reintroduced volatility to the stock market,
KINF Horizon 5 Portfolio performed in line with our expectations. The
Portfolio's performance on days of extreme volatility and trade volume, in
particular, proved its ability to weather real-life stress tests. Such
volatility provided us with ample opportunity to build the Portfolio by
acquiring desirable stocks at attractive prices.
Midway through the year, we look for market volatility to continue, if not pick
up. A diversified portfolio with U.S. and foreign stocks, as well as various
types of equities (large capitalization and small
7
<PAGE> 9
capitalization, growth and value-style), should help the Portfolio continue to
be an "all-weather portfolio." Weakness in various industry sectors, including
health care delivery, should provide attractive opportunities.
Thomas M. Regner
Portfolio Manager June 30, 1996
We appreciate the opportunity to serve your insurance needs.
Sincerely,
<TABLE>
<S> <C>
John B. Scott Stephen B. Timbers
John B. Scott Stephen B. Timbers
President President
Chief Executive Chief Investment and
Officer Executive Officer
Kemper Investors Life Zurich Kemper
Insurance Company Investments, Inc.
Scott Photo Timber Photo
August 2, 1996
</TABLE>
All listed Subaccounts may not be available to you for investing. Please
check your prospectus for which specific Subaccounts are available to you.
+ The percent change in accumulation unit value is net of mortality and expense
risk charges. No adjustment has been made for the annual records maintenance
charge or surrender charges. No withdrawals are assumed.
++ On November 3, 1989, the four KILICO Separate Accounts of Kemper ADVANTAGE
III were restructured into four subaccounts of KILICO Variable Annuity
Separate Account (KVASA), which invests in corresponding portfolios of the
Kemper Investors Fund. A new Government Securities Subaccount was also
created for investing in the Government Securities Portfolio of KINF. Because
the KILICO Separate Accounts had significantly greater assets and a longer
history of operations than the KINF portfolios, this financial and
statistical information reflects the experience of the predecessor KILICO
Separate Accounts where appropriate.
In determining performance for Kemper ADVANTAGE III, the fund expenses
including management fees of .50% for the Money Market Portfolio, .55% for
the Government Securities and Total Return Portfolios, .60% for the Growth
and High Yield Portfolios, .65% for the Small Cap Growth Portfolio, .75% for
the International Portfolio are deducted. In addition, Kemper ADVANTAGE III
assesses a daily asset charge, which amounts to 1.30% per annum for mortality
and expense risk and administrative costs, and a prorated portion of the $36
records maintenance charge (assessed quarterly).
A $1,000 payment is used to calculate average annual total return. Average
annual total return measures the change in the value of an investment in the
Subaccount. Average annual total return reflects annualized change, and
figures are net of all fees and charges including early withdrawal and
surrender charges as follows: Kemper ADVANTAGE III Money Market, Total
Return, Growth, Government Securities, High Yield and International
Subaccounts one year (6%) and lifetime (2%); Small Cap Growth Subaccount 1
year (6%) and lifetime (4%).
The Money Market Subaccount's current annualized yield is the seven-day
annualized net investment income per share as of the date specified. Gains or
losses are not included. The effective yield reflects compounding of income.
There can be no assurance that the Money Market Portfolio will be able to
maintain a stable net asset value of $1.00 per share. The Subaccount is not
insured or guaranteed by the U.S. Government.
The returns are based upon historical results and are not representative of
future results. Factors affecting performance include portfolio management;
general market, economic and fiscal conditions; and operating expenses.
Investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost. With
respect to the High Yield Subaccount, investment in lower-rated and non-rated
securities present greater risk of loss to principal and interest than
higher-rated securities. With respect to the International Subaccount, there
are special risk considerations associated with investing in non-U.S.
companies, including fluctuating foreign exchange rates, foreign governmental
regulations and differing degrees of liquidity that may affect portfolio
securities. With respect to the Small Cap Growth Subaccount, investment in
small companies presents greater risk than investment in larger, more
established companies.
Non-qualified Kemper ADVANTAGE III plans issued in 1984 and prior years
realized a corporate tax on realized gains and losses than was in effect at
that time. Under current law, this no longer applies.
8
<PAGE> 10
KEMPER INVESTORS FUND
FINANCIAL STATEMENTS
9
<PAGE> 11
KEMPER INVESTORS FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small
Money Total High Government Cap
Market Return Yield Growth Securities International Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost:
$67,177, $597,889, $253,027,
$390,598, $97,260, $137,325,
$43,015, $379, $3,437, $3,969,
$1,751, $583, $1,295 and $703,
respectively):.................. $67,177 671,577 251,850 449,091 96,685 158,640 52,544
Cash.............................. 667 4,376 979 384 788 -- 751
Receivable for:
Investments sold................ -- 5,408 1,880 6,430 5,530 3,909 1,769
Interest and dividends.......... 193 5,488 4,604 588 927 482 6
-------- -------- -------- -------- -------- -------- -------
Total assets................ 68,037 686,849 259,313 456,493 103,930 163,031 55,070
LIABILITIES AND NET ASSETS
Cash overdraft.................... -- -- -- -- -- 2,780 --
Payable for:
Investments purchased........... -- 8,807 5,571 4,720 16,510 1,647 2,058
Dividends....................... 99 -- -- -- -- -- --
Management fee.................. 26 311 126 225 40 98 29
Custodian and transfer agent
fees and related expenses..... 4 23 13 17 14 31 9
Other........................... 29 66 23 24 22 22 11
-------- -------- -------- -------- -------- -------- -------
Total liabilities........... 158 9,207 5,733 4,986 16,586 4,578 2,107
-------- -------- -------- -------- -------- -------- -------
Net assets........................ $67,879 677,642 253,580 451,507 87,344 158,453 52,963
======== ======== ======== ======== ======== ======== =======
ANALYSIS OF NET ASSETS
Paid-in capital................... $68,729 554,799 271,864 345,391 79,109 126,792 42,070
Undistributed net realized gain
(loss) on investments and
foreign currency transactions... (850) 37,870 (22,184) 43,361 (4,140) 7,913 1,030
Net unrealized appreciation
(depreciation) on investments
and assets and liabilities in
foreign currencies.............. -- 73,716 (1,177) 58,556 (575) 22,011 9,529
Undistributed net investment
income.......................... -- 11,257 5,077 4,199 12,950 1,737 334
-------- -------- -------- -------- -------- -------- -------
Net assets applicable to shares
outstanding..................... $67,879 677,642 253,580 451,507 87,344 158,453 52,963
======== ======== ======== ======== ======== ======== =======
THE PRICING OF SHARES
Shares outstanding................ 67,879 266,285 216,084 147,416 75,731 106,206 34,921
======== ======== ======== ======== ======== ======== =======
Net asset value and redemption
price per share (Net
assets divided by shares $ 1.00 2.545 1.174 3.063 1.153 1.492 1.517
outstanding).... ======== ======== ======== ======== ======== ======== =======
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 12
<TABLE>
<CAPTION>
Investment Small
Grade Cap Value+
Bond Value Value Growth Horizon 20+ Horizon 10+ Horizon 5
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
379 3,451 3,828 1,726 576 1,283 699
61 70 24 44 54 66 65
-- -- 52 -- -- -- --
-- 6 4 1 1 1 --
------ ------ ------ ------ ------ ------
440 3,527 3,908 1,771 631 1,350 764
-- -- -- -- -- -- --
-- 326 16 127 47 38 12
-- -- -- -- -- -- --
-- 2 2 1 -- 1 --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
------ ------ ------ ------ ------ ------
-- 328 18 128 47 39 12
------ ------ ------ ------ ------ ------
440 3,199 3,890 1,643 584 1,311 752
====== ====== ====== ====== ====== ======
437 3,177 4,110 1,664 588 1,317 752
-- (3) (103) -- 1 -- --
-- 14 (141) (25) (7) (12) (4)
3 11 24 4 2 6 4
------ ------ ------ ------ ------ ------
440 3,199 3,890 1,643 584 1,311 752
====== ====== ====== ====== ====== ======
437 3,143 4,185 1,620 576 1,298 744
====== ====== ====== ====== ====== ======
1.006 1.018 .930 1.015 1.013 1.010 1.010
====== ====== ====== ====== ====== ======
</TABLE>
11
<PAGE> 13
KEMPER INVESTORS FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small
Money Total High Government Cap
Market Return Yield Growth Securities International Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest.......................... $ 1,973 9,537 12,694 1,635 3,390 138 170
Dividends......................... -- 2,947 101 2,306 -- 1,922 38
-------- -------- -------- -------- -------- ------ ------
1,973 12,484 12,795 3,941 3,390 2,060 208
Less foreign taxes withheld....... -- -- -- -- -- 233 --
-------- -------- -------- -------- -------- ------ ------
Total investment income......... 1,973 12,484 12,795 3,941 3,390 1,827 208
Expenses:
Management fee.................... 179 1,847 745 1,300 250 558 145
Custodian and transfer agent fees
and related expenses............ 8 37 28 39 34 126 19
Professional fees................. 5 36 14 21 5 11 2
Trustees' fees and other.......... 22 33 18 24 12 13 9
-------- -------- -------- -------- -------- ------ ------
Total expenses.................. 214 1,953 805 1,384 301 708 175
-------- -------- -------- -------- -------- ------ ------
Net investment income............... 1,759 10,531 11,990 2,557 3,089 1,119 33
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on sales
of investments and foreign
currency transactions........... (850) 38,614 (18) 44,333 203 8,070 1,190
Net realized gain (loss) from
futures transactions............ -- 143 (4) -- 134 -- --
-------- -------- -------- -------- -------- ------ ------
Net realized gain (loss)........ (850) 38,757 (22) 44,333 337 8,070 1,190
Change in net unrealized
appreciation (depreciation) on
investments and assets and
liabilities in foreign
currencies...................... 850 (13,178) (898) (3,880) (5,241) 6,203 4,866
-------- -------- -------- -------- -------- ------ ------
Net gain (loss) on investments...... -- 25,579 (920) 40,453 (4,904) 14,273 6,056
-------- -------- -------- -------- -------- ------ ------
Net increase (decrease) in net
assets resulting from
operations........................ $ 1,759 36,110 11,070 43,010 (1,815) 15,392 6,089
======= ======== ======== ======== ======== ====== ======
</TABLE>
(a) For the period from May 1, 1996 (commencement of operations) to June 30,
1996.
See accompanying notes to financial statements.
12
<PAGE> 14
<TABLE>
<CAPTION>
Investment Small
Grade Cap Value+
Bond Value Value Growth Horizon 20+ Horizon 10+ Horizon 5
Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a)
------------ ------------ ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
2 4 6 1 -- 3 2
-- 10 21 3 2 1 1
------ ---------- ------ ------ --------- --------- -----
2 14 27 4 2 4 3
-- -- -- -- -- -- --
------ ---------- ------ ------ --------- --------- -----
2 14 27 4 2 4 3
-- 2 3 1 1 1 1
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- 1 -- 1 -- -- --
------ ---------- ------ ------ --------- --------- -----
-- 3 3 2 1 1 1
------ ---------- ------ ------ --------- --------- -----
2 11 24 2 1 3 2
-- (3) (103) -- 1 -- --
-- -- -- -- -- -- --
------ ---------- ------ ------ --------- --------- -----
-- (3) (103) -- 1 -- --
-- 14 (141) (25) (7) (12) (4)
------ ---------- ------ ------ --------- --------- -----
-- 11 (244) (25) (6) (12) (4)
------ ---------- ------ ------ --------- --------- -----
2 22 (220) (23) (5) (9) (2)
====== ========== ========= ====== ========= ========= =========
</TABLE>
13
<PAGE> 15
KEMPER INVESTORS FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Money Market Total Return
Portfolio Portfolio
--------------------- ---------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Operations:
Net investment income................................................. $ 1,759 4,123 10,531 22,128
Net realized gain (loss).............................................. (850) -- 38,757 47,119
Change in unrealized appreciation (depreciation)...................... 850 (355) (13,178) 74,735
Capital contribution from investment manager.......................... -- 355 -- --
------- ------- ------- -------
Net increase (decrease) in net assets resulting from operations..... 1,759 4,123 36,110 143,982
Equalization credits (charges).......................................... -- -- 78 (1,827)
Dividends to shareholders:
Distribution from net investment income............................... (1,759) (4,123) (22,873) (18,740)
Distribution from net realized gain on investments.................... -- -- (20,332) --
------- ------- ------- -------
Total dividends to shareholders......................................... (1,759) (4,123) (43,205) (18,740)
Net increase (decrease) from capital share transactions................. 6,801 (22,743) 24,765 (50,115)
------- ------- ------- -------
Total increase (decrease) in net assets................................. 6,801 (22,743) 17,748 73,300
Net assets:
Beginning of period................................................... 61,078 83,821 659,894 586,594
------- ------- ------- -------
End of period......................................................... $67,879 61,078 677,642 659,894
======= ======= ======= =======
Undistributed net investment income at end of period.................... $ -- -- 11,257 23,521
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 16
<TABLE>
<CAPTION>
Government
High Yield Growth Securities International Small Cap
Portfolio Portfolio Portfolio Portfolio Growth Portfolio
- ------------------- ------------------- ----------------- ------------------- ------------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
- ------- ------- ------- ------- ------ ------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11,990 25,037 2,557 4,087 3,089 6,923 1,119 1,758 33 97
(22) (2,027) 44,333 58,852 337 2,908 8,070 1,344 1,190 1,186
(898) 15,859 (3,880) 36,452 (5,241) 7,318 6,203 12,368 4,866 4,361
-- -- -- -- -- -- -- -- -- --
- ------- ------- ------- ------- ------ ------ ------- ------- ------- ------
11,070 38,869 43,010 99,391 (1,815) 17,149 15,392 15,470 6,089 5,644
(3,301) 36 472 249 (118) (2,310) 115 (37) 77 97
(24,806) (22,165) (5,021) (1,120) (6,507) (6,202) (2,089) (970) -- (76)
-- -- (58,998) (24,649) -- -- (1,044) (1,941) (1,209) --
- ------- ------- ------- ------- ------ ------ ------- ------- ------- ------
(24,806) (22,165) (64,019) (25,769) (6,507) (6,202) (3,133) (2,911) (1,209) (76)
13,240 21,222 57,511 18,954 599 (9,234) 11,598 (751) 12,633 16,799
- ------- ------- ------- ------- ------ ------ ------- ------- ------- ------
(3,797) 37,962 36,974 92,825 (7,841) (597) 23,972 11,771 17,590 22,464
257,377 219,415 414,533 321,708 95,185 95,782 134,481 122,710 35,373 12,909
- ------- ------- ------- ------- ------ ------ ------- ------- ------- ------
253,580 257,377 451,507 414,533 87,344 95,185 158,453 134,481 52,963 35,373
======= ======= ======= ======= ====== ====== ======= ======= ======= ======
5,077 21,194 4,199 6,191 12,950 16,486 1,737 2,592 334 224
======= ======= ======= ======= ====== ====== ======= ======= ======= ======
</TABLE>
15
<PAGE> 17
KEMPER INVESTORS FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MAY 1, 1996 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Investment Small
Grade Bond Value Cap Value
Portfolio Portfolio Portfolio
---------- --------- ---------
<S> <C> <C> <C>
Operations:
Net investment income............................................................. $ 2 11 24
Net realized gain (loss).......................................................... -- (3) (103)
Change in unrealized appreciation (depreciation).................................. -- 14 (141)
----- --------- ---------
Net increase (decrease) in net assets resulting from operations................. 2 22 (220)
Equalization credits................................................................ 1 -- --
Net increase from capital share transactions........................................ 337 3,077 4,010
----- --------- ---------
Total increase in net assets........................................................ 340 3,099 3,790
Net assets:
Beginning of period............................................................... 100 100 100
----- --------- ---------
End of period..................................................................... $440 3,199 3,890
=========== ======== =========
Undistributed net investment income at end of period................................ $ 3 11 24
=========== ======== =========
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 18
<TABLE>
<CAPTION>
Value+
Growth Horizon 20+ Horizon 10+ Horizon 5
Portfolio Portfolio Portfolio Portfolio
- --------- ----------- ----------- ---------
<S> <C> <C> <C>
2 1 3 2
-- 1 -- --
(25) (7) (12) (4)
- ------- --- ----- ---
(23) (5) (9) (2)
2 1 3 2
1,564 488 1,217 652
- ------- --- ----- ---
1,543 484 1,211 652
100 100 100 100
- ------- --- ----- ---
1,643 584 1,311 752
======= ======= ======== =======
4 2 6 4
======= ======= ======== =======
</TABLE>
17
<PAGE> 19
KEMPER INVESTORS FUND
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE FUND
Kemper Investors Fund (the "Fund") is an open-end, diversified management
investment company organized as a business trust under the laws of
Massachusetts. The Fund offers multiple Portfolios, currently consisting of the
Money Market, Total Return, High Yield, Growth, Government Securities,
International, Small Cap Growth, Investment Grade Bond, Value, Small Cap Value,
Value + Growth, Horizon 20+, Horizon 10+ and Horizon 5 Portfolios.
(2) SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION.
Investments are stated at value.
The securities of the Portfolios (excluding the Money Market Portfolio) that are
traded on a domestic securities exchange or securities listed on the NASDAQ
National Market are valued at the last sale price on the exchange or market
where primarily traded or listed or, if there is no recent sale, at the last
current bid quotation. Portfolio securities that are primarily traded on foreign
securities exchanges are generally valued at the preceding closing values of
such securities on their respective exchanges where primarily traded. A security
that is listed or traded on more than one exchange is valued at the quotation on
the exchange determined to be the primary market for that security by the Board
of Trustees or its delegates. Securities not so traded or listed are valued at
the last current bid quotation if market quotations are available. Fixed income
securities are valued by using market quotations, or independent pricing
services that use prices provided by market makers or estimates of market values
obtained from yield data relating to instruments or securities with similar
characteristics. Equity options are valued at the last sale price unless the bid
price is higher or the asked price is lower, in which event such bid or asked
price is used. Exchange traded fixed income options are valued at the last sale
price unless there is no sale price, in which event prices provided by market
makers are used. Over-the-counter traded fixed income options are valued based
upon prices provided by market makers. Financial futures and options thereon are
valued at the settlement price established each day by the board of trade or
exchange on which they are traded. Forward foreign currency contracts and
foreign currencies are valued at the forward and current exchange rates,
respectively, prevailing on the day of valuation. Other securities and assets
are valued at fair value as determined in good faith by the Board of Trustees.
The securities of the Money Market Portfolio are stated at amortized cost, which
approximates market value. In the event that a deviation of 1/2 of 1% or more
exists between the Portfolio's $1.00 per share net asset value, calculated at
amortized cost, and the net asset value calculated by reference to market
quotations, or if there is any other deviation that the Board of Trustees
believes would result in a material dilution to shareholders or purchasers, the
Board of Trustees will promptly consider what action, if any, should be
initiated.
CURRENCY TRANSLATION.
The books and records of the Fund are maintained in U.S. Dollars. All assets and
liabilities initially expressed in foreign currency values are converted into
U.S. Dollars at the mean between the bid and offered quotations of such
currencies against the U.S. Dollar as last quoted by a recognized dealer. If
such quotations are not readily available, the rate of exchange is determined in
good faith by the Board of Trustees. Income and expenses and purchases and sales
of investments are translated into U.S. Dollars at the rate of exchange
prevailing on the respective dates of such transactions. The Portfolios include
that portion of the results of operations resulting from changes in foreign
exchange rates with the net realized and unrealized gain (loss) on investments,
as appropriate.
18
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon as
the information is available to the Fund. Interest income is recorded on the
accrual basis and includes discount amortization on all fixed income securities
and premium amortization on mortgage-backed securities. Realized gains and
losses from investment transactions are reported on an identified cost basis.
Several of the Portfolios may purchase securities with delivery or payment to
occur at a later date. At the time a Portfolio enters into a commitment to
purchase a security, the transaction is recorded and the value of the security
is reflected in the net asset value. The value of the security may vary with
market fluctuations. No interest accrues to the Portfolio until payment takes
place. At the time the Portfolio enters into this type of transaction it is
required to segregate cash or other liquid assets equal to the value of the
securities purchased. At June 30, 1996, the Government Securities Portfolio had
$16,252,000 of purchase commitments outstanding (19% of net assets) with a
corresponding amount of assets segregated.
EXPENSES.
Expenses arising in connection with a Portfolio are allocated to that Portfolio.
Other Fund expenses are allocated among the Portfolios in proportion to their
relative net assets.
FUND SHARE VALUATION.
Shares of each Portfolio of the Fund are offered on a continuous basis to the
separate accounts of participating insurance companies where permitted by law.
On each day the New York Stock Exchange is open for trading, each Portfolio
determines its net asset value per share (NAV) by dividing the total value of
the Portfolio's investments and other assets, less liabilities, by the number of
Portfolio shares outstanding. The NAV is determined as of the earlier of 3:00
p.m. Chicago time or the close of the Exchange for all Portfolios except the
Money Market Portfolio, and at 11:00 a.m. and as of the earlier of 3:00 p.m.
Chicago time or the close of the Exchange for the Money Market Portfolio.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of net asset value for the
International Portfolio does not take place contemporaneously with the
determination of prices of the Fund's foreign securities.
FEDERAL INCOME TAXES.
Each Portfolio has complied or intends to comply with the special provisions of
the Internal Revenue Code available to investment companies for the six months
ended June 30, 1996. The accumulated net realized loss on sales of investments
for federal income tax purposes at June 30, 1996 amounted to approximately
$22,163,000 in the High Yield Portfolio and $3,567,000 in the Government
Securities Portfolio. These losses are available to offset future taxable gains
in the respective Portfolios and, if not applied, expire during the period 1998
through 2004.
DIVIDENDS TO SHAREHOLDERS.
All Portfolios except the Money Market Portfolio declare and pay dividends of
net investment income and net realized capital gains annually, which are
recorded on the ex-dividend date. The Money Market Portfolio declares a daily
dividend equal to its net investment income for that day, payable monthly.
Shareholders will receive dividends in additional shares.
19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
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, if applicable.
EQUALIZATION ACCOUNTING.
A portion of proceeds from sales and cost of redemptions of Fund shares in all
Portfolios except the Money Market Portfolio is credited or charged to
undistributed net investment income so that income per share available for
distribution is not affected by sales or redemptions of shares.
(3) TRANSACTIONS WITH AFFILIATES
The Fund has a management agreement with Zurich Kemper Investments, Inc. (ZKI),
the Fund's investment manager for each Portfolio except the Value and Small Cap
Value Portfolios. For management services and facilities furnished, the Fund
pays a fee, based on average daily net assets, at an annual rate of .50% for the
Money Market Portfolio, .55% for the Total Return and Government Securities
Portfolios, .60% for the High Yield, Growth, Investment Grade Bond, Horizon 20+,
Horizon 10+ and Horizon 5 Portfolios, .65% for the Small Cap Growth Portfolio
and .75% for the International and Value + Growth Portfolios. Dreman Value
Advisors, Inc. (DVA), a wholly owned subsidiary of ZKI, serves as the investment
manager for the Value and the Small Cap Value Portfolios and is paid a
management fee at an annual rate of .75% of average daily net assets of such
Portfolios. DVA also serves as sub-adviser for the Value + Growth and Horizon
Portfolios. For the six months ended June 30, 1996, the Fund incurred management
fees of $5,033,000. Kemper Distributors, Inc., an affiliate of ZKI, is the
distributor and principal underwriter for shares of the Fund.
Certain officers or trustees of the Fund are also officers or directors of ZKI
or DVA. During the six months ended June 30, 1996, the Fund made no direct
payments to its officers and incurred trustees' fees of $83,000 to independent
trustees.
(4) INVESTMENT TRANSACTIONS
For the six months ended June 30, 1996, investment transactions (excluding
short-term investments) are as follows (in thousands):
<TABLE>
<CAPTION>
Total High Government Small
Return Yield Growth Securities International Cap Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Purchases............................... $ 331,820 166,110 276,247 149,993 94,601 36,156
Proceeds from sales..................... 319,171 160,608 245,379 144,791 77,687 23,905
</TABLE>
For the period from May 1, 1996 to June 30, 1996, investment transactions
(excluding short-term investments) are as follows (in thousands):
<TABLE>
<CAPTION>
Investment
Grade Small Value + Horizon Horizon Horizon
Bond Value Cap Value Growth 20+ 10+ 5
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases........................ $ 30 4,632 5,995 1,651 488 802 305
Proceeds from sales.............. -- 1,849 2,601 -- 6 6 --
</TABLE>
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) CAPITAL SHARE TRANSACTIONS
The following tables summarize the activity in capital shares of the Fund (in
thousands):
<TABLE>
<CAPTION>
Six months ended June 30, 1996
---------------------------------------------------------------------------------------------------------
Money
Market Total Return High Yield Growth
Portfolio Portfolio Portfolio Portfolio
--------- ------------------------- ----------------------- ------------------------
(a) Shares Amount Shares Amount Shares Amount
--------- ------- --------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares
sold... $ 70,069 20,334 $ 50,834 44,753 $ 51,926 14,881 $ 46,625
Shares
issued
in
reinvestment
of
dividends...
1,819 17,682 43,205 21,456 24,806 22,196 64,019
-------- ------- -------- ------- -------- ------- --------
71,888 38,016 94,039 66,209 76,732 37,077 110,644
Shares
redeemed... (65,087) (27,609) (69,274) (54,582) (63,492) (16,747) (53,133)
-------- ------- -------- ------- -------- ------- --------
Net
increase
from
capital
share
transactions... $ 6,801 10,407 $ 24,765 11,627 $ 13,240 20,330 $ 57,511
======== ======= ======== ======= ======== ======= ========
<CAPTION>
Six months ended June 30, 1996
---------------------------------------------------------------------------------------------------------
Government
Securities International Small Cap
Portfolio Portfolio Growth Portfolio
------------------------- --------------------- -----------------------
Shares Amount Shares Amount Shares Amount
-------- -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares
sold...
Shares
issued 5,932 $ 5,151 20,085 $ 28,825 13,927 $ 20,354
in reinvestment
of
dividends...
5,657 6,507 2,155 3,133 840 1,209
------- -------- ------- -------- ------ -------
11,589 11,658 22,240 31,958 14,767 21,563
Shares (10,850) (11,059) (14,153) (20,360) (6,129) (8,930)
redeemed... ------- -------- ------- -------- ------ -------
Net
increase
from
capital
share
transactions... 739 $ 599 8,087 $ 11,598 8,638 $ 12,633
======= ======== ======== ======== ====== ========
</TABLE>
(a) For the Money Market Portfolio, dollar amounts and number of shares are the
same.
<TABLE>
<CAPTION>
May 1, 1996 to June 30, 1996
------------------------------------------------------
Investment
Grade Bond Value Small Cap
Portfolio Portfolio Value Portfolio
----------------- ----------------- ----------------
Shares Amount Shares Amount Shares Amount
------- -------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............................................................. 345 $ 345 3,053 $ 3,088 4,095 $ 4,020
Shares redeemed......................................................... (8) (8) (10) (11) (10) (10)
--- -------- ----- -------- ----- --------
Net increase from capital share transactions............................ 337 $ 337 3,043 $ 3,077 4,085 $ 4,010
=== ======== ===== ======== ===== ========
</TABLE>
<TABLE>
<CAPTION>
May 1, 1996 to June 30, 1996
-------------------------------------------------------------------------
Value+Growth Horizon 20+ Horizon 10+ Horizon 5
Portfolio Portfolio Portfolio Portfolio
----------------- ----------------- ----------------- ----------------
Shares Amount Shares Amount Shares Amount Shares Amount
------- -------- ------- -------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............................................ 1,604 $ 1,651 496 $ 509 1,201 $ 1,220 697 $ 705
Shares redeemed........................................ (84) (87) (20) (21) (3) (3) (53) (53)
----- -------- --- -------- ----- -------- --- --------
Net increase from capital share transactions........... 1,520 $ 1,564 476 $ 488 1,198 $ 1,217 644 $ 652
===== ======== === ======== ===== ======== === ========
</TABLE>
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
Year ended December 31, 1995
----------------------------------------------------------------------------------------------------------
Money
Market Total Return High Yield Growth
Portfolio Portfolio Portfolio Portfolio
--------- -------------------------- ----------------------- -------------------------
(a) Shares Amount Shares Amount Shares Amount
--------- ------- --------- ------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares
sold... $ 122,960 35,774 $ 81,265 74,793 $ 84,004 40,308 $ 117,495
Shares
issued
in
reinvestment
of
dividends... 4,191 8,512 18,740 19,366 22,165 9,679 25,769
--------- ------- --------- ------- -------- ------- ---------
127,151 44,286 100,005 94,159 106,169 49,987 143,264
Shares
redeemed... (149,894) (66,098) (150,120) (74,907) (84,947) (43,622) (124,310)
--------- ------- --------- ------- -------- ------- ---------
Net
increase
(decrease)
from
capital
share
transactions... $ (22,743) (21,812) $ (50,115) 19,252 $ 21,222 6,365 $ 18,954
========= ======= ========= ======= ======== ======= =========
<CAPTION>
Year ended December 31, 1995
----------------------------------------------------------------------------------------------------------
Government
Securities International Small Cap
Portfolio Portfolio Growth Portfolio
------------------------ -------------------- ----------------------
Shares Amount Shares Amount Shares Amount
------- -------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares
sold... 38,793 $ 36,895 29,450 $ 37,549 22,379 $ 26,856
Shares
issued
in
reinvestment
of
dividends... 5,447 6,202 2,361 2,911 71 76
------- -------- ------- ------- ------ --------
44,240 43,097 31,811 40,460 22,450 26,932
Shares
redeemed... (53,140) (52,331) (32,312) (41,211) (8,586) (10,133)
------- ------- ------- ------- ------ -------
Net
increase
(decrease)
from
capital
share
transactions... (8,900) $ (9,234) (501) $ (751) 13,864 $ 16,799
======= ======== ======= ======= ======= ========
</TABLE>
(a) For the Money Market Portfolio, dollar amounts and number of shares are the
same.
(6) FINANCIAL FUTURES CONTRACTS
The Total Return, High Yield and Government Securities Portfolios have entered
into exchange traded financial futures contracts in order to help protect
themselves from anticipated market conditions and, as such, bear the risk that
arises from owning these contracts. At the time a Portfolio enters into a
futures contract, it is required to make a margin deposit with its custodian.
Subsequently, gain or loss is recognized and payments are made on a daily basis
between the Portfolios and the broker as the market value of the futures
contract fluctuates. At June 30, 1996, the market value of assets pledged by the
Portfolios to cover margin requirements for open futures positions were
$135,000, $26,000 and $1,055,000 for the Total Return, High Yield and Government
Securities Portfolios, respectively. The Portfolios also had liquid securities
in their portfolio sufficient to cover the following short Treasury futures
positions open at June 30, 1996 that expire in September, 1996.
<TABLE>
<CAPTION>
Face Loss at
Portfolio amount 6/30/96
<S> <C> <C>
- -----------------------------------------------------
Total Return $ 3,517,000 $ (31,000)
- -----------------------------------------------------
High Yield 1,591,000 (22,000)
- -----------------------------------------------------
Government Securities 97,266,000 (1,153,000)
- -----------------------------------------------------
</TABLE>
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) FORWARD FOREIGN CURRENCY CONTRACTS
In order to protect themselves against a decline in the value of particular
foreign currencies against the U.S. Dollar, the Total Return, Growth and
International Portfolios have entered into forward contracts to deliver foreign
currency in exchange for U.S. Dollars as described below. The Portfolios bear
the market risk that arises from changes in foreign exchange rates, and
accordingly, the net unrealized gain on these contracts is reflected in the
accompanying financial statements. The Portfolios also bear the credit risk if
the counterparty fails to perform under the contract. At June 30, 1996, the
Portfolios had the following forward foreign currency contracts outstanding with
settlement dates in July, 1996:
TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
Unrealized
Contract gain
Foreign Currency amount in (loss)
to be delivered U.S. dollars at 6/30/96
<S> <C> <C>
- ------------------------------------------------------------
130,000 British Pounds $ 196,000 $ (6,000)
- ------------------------------------------------------------
285,000 Dutch Guilders 170,000 3,000
- ------------------------------------------------------------
1,320,000 French Francs 259,000 3,000
- ------------------------------------------------------------
80,565,000 Japanese Yen 760,000 24,000
- ------------------------------------------------------------
148,000 Swiss Francs 122,000 4,000
- ------------------------------------------------------------
Net unrealized
gain $ 28,000
- ------------------------------------------------------------
</TABLE>
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Unrealized
Contract gain
Foreign Currency amount in (loss)
to be delivered U.S. dollars at 6/30/96
<S> <C> <C>
- ------------------------------------------------------------
385,000 British Pounds $ 582,000 $ (15,000)
- ------------------------------------------------------------
609,000 Dutch Guilders 356,000 (1,000)
- ------------------------------------------------------------
2,100,000 French Francs 405,000 (3,000)
- ------------------------------------------------------------
255,354,000 Japanese Yen 2,414,000 82,000
- ------------------------------------------------------------
463,000 Swiss Francs 372,000 --
- ------------------------------------------------------------
Net unrealized
gain $ 63,000
- ------------------------------------------------------------
</TABLE>
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
Unrealized
Contract gain
Foreign Currency amount in (loss)
to be delivered U.S. dollars at 6/30/96
<S> <C> <C>
- ------------------------------------------------------------
3,022,000 British Pounds $ 4,565,000 $ (130,000)
- ------------------------------------------------------------
13,530,000 Dutch Guilders 7,998,000 64,000
- ------------------------------------------------------------
25,750,000 French Francs 5,013,000 9,000
- ------------------------------------------------------------
2,551,000,000 Japanese Yen 23,962,000 662,000
- ------------------------------------------------------------
4,909,000 Swiss Francs 4,006,000 80,000
- ------------------------------------------------------------
Net unrealized
gain $ 685,000
- ------------------------------------------------------------
</TABLE>
23
<PAGE> 25
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended
June 30, Year ended December 31,
1996 1995 1994 1993 1992
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............................. $ 1.00 1.00 1.00 1.00 1.00
Net investment income and dividends declared...................... .02 .06 .04 .03 .03
---------- ------- ------- ------- -------
Net asset value, end of period.................................... $ 1.00 1.00 1.00 1.00 1.00
========== ======= ======= ======= =======
TOTAL RETURN (NOT ANNUALIZED)..................................... 2.50% 5.66 3.96 2.83 3.43
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses.......................................................... .59% .55 .53 .56 .57
Net investment income............................................. 4.89% 5.52 3.95 2.79 3.38
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)........................ $ 67,879 61,078 83,821 68,177 75,270
</TABLE>
NOTE TO MONEY MARKET PORTFOLIO:
The total returns for 1995 and 1994 include the effect of a capital contribution
from the investment manager. Without the capital contribution, the total returns
would have been 5.11% and 3.47%, respectively.
TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended
June 30, Year ended December 31,
1996 1995 1994 1993 1992
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............................. $ 2.579 2.112 2.586 2.473 2.658
Income from investment operations:
Net investment income........................................... .040 .084 .069 .069 .061
Net realized and unrealized gain (loss)......................... .096 .453 (.313) .214 (.026)
---------- ------- ------- ------- -------
Total from investment operations.................................. .136 .537 (.244) .283 .035
Less dividends:
Distribution from net investment income......................... .090 .070 .060 .050 .080
Distribution from net realized gain............................. .080 -- .170 .120 .140
---------- ------- ------- ------- -------
Total dividends................................................... .170 .070 .230 .170 .220
---------- ------- ------- ------- -------
Net asset value, end of period.................................... $ 2.545 2.579 2.112 2.586 2.473
========== ======= ======= ======= =======
TOTAL RETURN (NOT ANNUALIZED)..................................... 5.54% 25.97 (9.50) 12.13 1.69
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses.......................................................... .58% .60 .61 .59 .60
Net investment income............................................. 3.14% 3.52 3.13 3.19 3.41
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)........................ $677,642 659,894 586,594 643,830 528,007
Portfolio turnover rate (annualized).............................. 94% 118 128 191 160
</TABLE>
Average commission rate paid per share on stock transactions for the six months
ended June 30, 1996 was $.0576.
24
<PAGE> 26
FINANCIAL HIGHLIGHTS--(CONTINUED)
HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
Six months
ended June
30, 1996 1995 1994 1993 1992
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............................. $ 1.259 1.185 1.338 1.209 1.144
Income from investment operations:
Net investment income........................................... .060 .125 .116 .120 .125
Net realized and unrealized gain (loss)......................... (.005) .069 (.149) .109 .070
---------- ------- ------- ------- -------
Total from investment operations.................................. .055 .194 (.033) .229 .195
Less distribution from net investment income...................... .140 .120 .120 .100 .130
---------- ------- ------- ------- -------
Net asset value, end of period.................................... $ 1.174 1.259 1.185 1.338 1.209
========== ======= ======= ======= =======
TOTAL RETURN (NOT ANNUALIZED)..................................... 4.51% 17.40 (2.25) 20.00 17.76
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses.......................................................... .65% .65 .65 .63 .64
Net investment income............................................. 9.66% 10.27 9.49 9.54 10.44
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)........................ $253,580 257,377 219,415 233,964 162,158
Portfolio turnover rate (annualized).............................. 121% 90 98 84 57
</TABLE>
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
Six months
ended
June 30,
1996 1995 1994 1993 1992
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............................. $ 3.262 2.665 2.935 2.631 2.642
Income from investment operations:
Net investment income........................................... .019 .034 .018 .004 .007
Net realized and unrealized gain (loss)......................... .292 .793 (.138) .370 .082
---------- ------- ------- ------- -------
Total from investment operations.................................. .311 .827 (.120) .374 .089
Less dividends:
Distribution from net investment income......................... .040 .010 -- .010 .005
Distribution from net realized gain............................. .470 .220 .150 .060 .095
---------- ------- ------- ------- -------
Total dividends................................................... .510 .230 .150 .070 .100
---------- ------- ------- ------- -------
Net asset value, end of period.................................... $ 3.063 3.262 2.665 2.935 2.631
========== ======= ======= ======= =======
TOTAL RETURN (NOT ANNUALIZED)..................................... 10.50% 32.97 (4.02) 14.63 3.57
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses.......................................................... .64% .64 .66 .64 .64
Net investment income............................................. 1.18% 1.15 .69 .30 .65
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)........................ $451,507 414,533 321,708 284,461 203,624
Portfolio turnover rate (annualized).............................. 124% 88 106 78 78
</TABLE>
Average commission rate paid per share on stock transactions for the six months
ended June 30, 1996 was $.0477.
25
<PAGE> 27
FINANCIAL HIGHLIGHTS--(CONTINUED)
GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended
June 30, Year ended December 31,
1996 1995 1994 1993 1992
---------- ------ ------ ------------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................... $ 1.269 1.142 1.267 1.277 1.287
Income from investment operations:
Net investment income................................... .041 .084 .067 .060 .064
Net realized and unrealized gain (loss)................. (.067) .123 (.102) .020 .006
---------- ------ ------ ---------- ------
Total from investment operations.......................... (.026) .207 (.035) .080 .070
Less dividends:
Distribution from net investment income................. .090 .080 .060 .060 .050
Distribution from net realized gain..................... -- -- .030 .030 .030
---------- ------ ------ ---------- ------
Total dividends........................................... .090 .080 .090 .090 .080
---------- ------ ------ ---------- ------
Net asset value, end of period............................ $ 1.153 1.269 1.142 1.267 1.277
========== ====== ====== ========== ======
TOTAL RETURN (NOT ANNUALIZED)............................. (2.02)% 18.98 (2.74) 6.48 5.90
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses.................................................. .66% .65 .63 .60 .61
Net investment income..................................... 6.80% 7.08 5.69 5.05 6.08
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)................ $ 87,344 95,185 95,782 121,912 98,814
Portfolio turnover rate (annualized)...................... 290% 275 606 534 492
</TABLE>
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
Six months January 6,
ended 1992 to
June 30, Year ended December 31, December 31,
1996 1995 1994 1993 1992
---------- ------- ------- ------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $ 1.371 1.244 1.306 .993 1.000
Income from investment operations:
Net investment income..................................... .010 .018 .009 .010 .010
Net realized and unrealized gain (loss)................... .141 .139 (.056) .313 (.017)
---------- ------- ------- ------ ------
Total from investment operations............................ .151 .157 (.047) .323 (.007)
Less dividends:
Distribution from net investment income................... .020 .010 -- .009 --
Distribution from net realized gain....................... .010 .020 .015 .001 --
---------- ------- ------- ------ ------
Total dividends............................................. .030 .030 .015 .010 --
---------- ------- ------- ------ ------
Net asset value, end of period.............................. $ 1.492 1.371 1.244 1.306 .993
========== ======= ======= ====== =========
TOTAL RETURN (NOT ANNUALIZED)............................... 11.10% 12.83 (3.59) 32.83 (.72)
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses.................................................... .95% .92 .93 .92 1.11
Net investment income....................................... 1.51% 1.39 .74 .86 1.01
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands).................. $158,453 134,481 122,710 88,880 19,447
Portfolio turnover rate (annualized)........................ 101% 126 107 116 129
</TABLE>
Average commission rate paid per share on stock transactions for the six months
ended June 30, 1996 was $.0199. Foreign commissions usually are lower than U.S.
commissions when expressed as cents per share due to the lower per share price
of many non-U.S. securities.
26
<PAGE> 28
FINANCIAL HIGHLIGHTS--(CONTINUED)
SMALL CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Six months May 2, 1994
ended Year ended to
June 30, 1996 December 31, 1995 December 31, 1994
------------- ----------------- -----------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................ $ 1.346 1.039 1.000
Income from investment operations:
Net investment income......................................... .041 .005 .008
Net realized and unrealized gain.............................. .170 .307 .031
------- ----- -----
Total from investment operations................................ .211 .312 .039
Less dividends:
Distribution from net investment income....................... -- .005 --
Distribution from net realized gain........................... .040 -- --
------- ----- -----
Total dividends................................................. .040 .005 --
------- ----- -----
Net asset value, end of period.................................. $ 1.517 1.346 1.039
======= ===== =====
TOTAL RETURN (NOT ANNUALIZED)................................... 15.82% 30.07 3.95
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses........................................................ .78% .87 1.25
Net investment income........................................... .15% .42 .91
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)...................... $52,963 35,373 12,909
Portfolio turnover rate (annualized)............................ 123% 81 58
</TABLE>
Average commission rate paid per share on stock transactions for the six months
ended June 30, 1996 was $.0561.
27
<PAGE> 29
FINANCIAL HIGHLIGHTS--(CONTINUED)
FOR THE PERIOD MAY 1, 1996 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1996
<TABLE>
<CAPTION>
Investment Small Value+
Grade Bond Value Cap Value Growth Horizon 20+ Horizon 10+ Horizon 5
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
---------- --------- --------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $1.000 1.000 1.000 1.000 1.000 1.000 1.000
Income from investment operations:
Net investment income............. .006 .004 .006 .003 .024 .019 .015
Net realized and unrealized
gain (loss)..................... -- .014 (.076) .012 (.011) (.009) (.005)
------ ----- ----- ----- ----- ----- -----
Total from investment operations.... .006 .018 (.070) .015 .013 .010 .010
Net asset value, end of period...... $1.006 1.018 .930 1.015 1.013 1.010 1.010
====== ===== ===== ===== ===== ===== =====
TOTAL RETURN (NOT ANNUALIZED)....... .62% 1.79 (7.05) 1.45 1.26 1.03 .99
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Expenses............................ .74% .90 .85 .89 .74 .74 .74
Net investment income............... 3.61% 4.19 5.94 1.53 3.11 2.61 2.96
SUPPLEMENTAL DATA:
Net assets at end of period
(in thousands).................... $ 440 3,199 3,890 1,643 584 1,311 752
Portfolio turnover rate
(annualized)...................... --% 520 568 -- 15 9 --
Average commission rate paid per
share on stock transactions....... $ -- .0500 .0500 .0595 .0597 .0595 .0592
</TABLE>
28
<PAGE> 30
KEMPER INVESTORS FUND
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Value
-------
<S> <C>
CORPORATE OBLIGATIONS
CAPITAL AND MORTGAGE LENDING--8.8%
Countrywide Funding Corporation
5.51%, 7/31/96................................. $ 2,001
PHH Corporation
5.38%, 7/23/96................................. 1,993
SRD Finance Inc.
5.47%, 7/18/96................................. 1,994
-------
5,988
CAPTIVE AUTO FINANCE--8.8%
Ford Motor Credit Company
5.36%, 7/19/96................................. 1,994
General Motors Acceptance Corp.
5.36%, 7/3/96.................................. 1,999
Mitsubishi Motors Credit of America, Inc.
5.47%, 8/1/96.................................. 1,990
-------
5,983
CAPTIVE BUSINESS FINANCE--20.6%
B.A.T Capital Corp.
5.38%, 7/26/96................................. 1,992
CSW Credit, Inc.
5.39%, 7/26/96................................. 1,992
(a)Finova Capital Corporation
5.56%, 7/15/96................................. 2,000
Orix America Inc.
5.43%-5.62%, 7/1/96-9/3/96..................... 3,979
(a)USL Capital Corporation
5.62%, 8/29/96................................. 2,001
Xerox Credit Corporation
5.37%, 7/23/96................................. 1,993
-------
13,957
CONSUMER PRODUCTS AND SERVICES--5.9%
American Home Products Corporation
5.45%, 8/15/96................................. 1,986
Sony Capital Corporation
5.38%, 7/17/96................................. 1,995
-------
3,981
CORPORATE FINANCING--14.7%
Astro Capital Corp.
5.50%, 8/30/96................................. 1,981
B I Funding Inc.
5.38%, 7/17/96................................. 1,995
Broadway Capital Corp.
5.52%, 7/1/96.................................. 1,999
Ranger Funding Corporation
5.40%, 7/3/96.................................. 1,999
Windmill Funding Corporation
5.38%, 7/22/96................................. 1,993
-------
9,967
<CAPTION>
Value
-------
<S> <C>
ENERGY AND UTILITIES--7.9%
DIC Americas, Inc.
5.47%, 7/11/96................................. $ 1,996
New England Power Co.
5.42%, 7/18/96................................. 3,340
-------
5,336
FINANCIAL SERVICES--8.8%
(a)Bear Stearns Companies Inc.
5.51%, 7/19/96................................. 2,000
Dean Witter, Discover & Co.
5.39%, 7/9/96.................................. 1,997
(a)Goldman, Sachs & Co.
5.55%, 7/25/96................................. 2,000
-------
5,997
INFORMATION SERVICES--5.9%
International Business Machines Corp.
5.26%, 2/28/97................................. 1,997
Nynex Corporation
5.43%, 8/9/96.................................. 1,988
-------
3,985
MANUFACTURING AND INDUSTRIAL PRODUCTS--2.9%
Bridgestone/Firestone, Inc.
5.45%, 7/22/96................................. 1,993
RECEIVABLES FINANCING--11.7%
(a)Heller Financial, Inc.
5.66%, 7/1/96.................................. 2,002
Jet Funding Corporation
5.54%, 9/30/96................................. 1,972
Old Line Funding Corp.
5.43%, 7/18/96................................. 1,994
Receivables Capital Corp.
5.35%, 7/16/96................................. 1,995
-------
7,963
-------
TOTAL CORPORATE OBLIGATIONS--96.0%
(average maturity: 31 days)....................... 65,150
U.S. TREASURY NOTE--3.0%
(average maturity: 214 days)
5.04%, 1/31/97................................... 2,027
-------
TOTAL INVESTMENTS--99.0%
(average maturity: 36 days)....................... 67,177
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.0%............................ 702
-------
NET ASSETS--100%.................................. $67,879
=======
</TABLE>
See accompanying notes to Money Market Portfolio of Investments.
29
<PAGE> 31
NOTES TO MONEY MARKET PORTFOLIO OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at June 30,
1996. The dates shown represent the demand date or next interest rate change
date.
See accompanying notes to financial statements.
30
<PAGE> 32
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount or
Number
of Shares Value
---------- --------
<S> <C> <C>
GOVERNMENT OBLIGATIONS
U.S. Treasury Notes
7.75%, 2000..................... $ 10,000 $ 10,430
7.875%, 2001.................... 7,000 7,416
7.75%, 2001..................... 9,000 9,464
6.25%, 2003..................... 8,500 8,359
7.25%, 2004..................... 33,000 34,218
6.50%, 2005..................... 4,200 4,146
U.S. Treasury Bonds
12.00%, 2013.................... 1,800 2,541
12.50%, 2014.................... 13,000 19,153
Government of Canada,
8.625%, 2005.................... 2,000 2,157
--------
TOTAL GOVERNMENT OBLIGATIONS--14.4%
(Cost: $97,886)................... 97,884
COMMON STOCKS
BASIC INDUSTRIES--2.6%
Air Products & Chemicals.......... 92,500 shs. 5,342
Crown Cork & Seal Co.............. 33,700 1,517
Monsanto Co....................... 175,000 5,688
Praxair, Inc...................... 106,100 4,483
Sumitomo Metal Industries......... 50,000 153
Toray Industries.................. 23,000 159
--------
17,342
CAPITAL GOODS--7.2%
Boeing Co......................... 86,000 7,493
Emerson Electric Co............... 70,900 6,408
Fluor Corp........................ 89,000 5,818
General Electric Co............... 161,600 13,978
B.F. Goodrich Co.................. 165,000 6,167
Honda Motor Co., Ltd. ............ 6,000 155
Illinois Tool Works............... 36,500 2,468
Mitsubishi Heavy Industries....... 18,000 156
Technip S.A. ..................... 1,734 159
York International Corp........... 120,900 6,256
--------
49,058
CONSUMER CYCLICALS--8.2%
Burton Group PLC.................. 70,330 170
Carnival Corp..................... 200,000 5,775
(b)Circus Circus Enterprises...... 94,900 3,891
(b)Consolidated Stores
Corporation....................... 85,000 3,124
Walt Disney Company............... 100,000 6,288
(b)Federated Department Stores.... 119,000 4,061
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
Harcourt General.................. 31,600 $ 1,580
Hilton Hotels..................... 35,000 3,938
Liberty Media Group, "A".......... 145,000 3,842
Lowes Companies................... 80,000 2,890
Manpower, Inc. ................... 75,000 2,944
Marriott International............ 98,500 5,294
Merrill Lynch & Co.
(convertible preferred)........... 96,000 2,124
(b)Mirage Resorts, Inc............ 73,000 3,942
Moet Hennessy Louis Vuitton....... 642 152
(b)OfficeMax Inc.................. 116,400 2,779
Pep Boys-Manny Moe & Jack......... 64,400 2,190
(b)Thrifty Payless Holdings....... 47,500 208
--------
55,192
CONSUMER DURABLES--1.6%
Leggett & Platt Incorporated...... 149,000 4,135
Magna International Inc........... 140,500 6,463
--------
10,598
CONSUMER STAPLES--8.1%
Avon Products..................... 50,000 2,256
Duracell International............ 100,000 4,313
Gillette Co....................... 75,000 4,678
Heineken N.V...................... 734 164
Melville Corp..................... 52,700 2,134
PepsiCo........................... 145,400 5,144
Philip Morris Companies........... 172,800 17,971
Procter & Gamble Co............... 101,700 9,216
Reed International PLC............ 8,968 150
Sysco Corp........................ 50,000 1,712
Warnaco Group..................... 190,000 4,892
Wendy's International............. 115,000 2,142
--------
54,772
ENERGY--1.4%
Enron Corp........................ 142,200 5,812
Mobil Corp........................ 31,000 3,476
--------
9,288
FINANCE--9.3%
Allstate Corp. ................... 120,000 5,475
American International Group,
Inc. ........................... 45,000 4,438
Bank of Boston.................... 85,800 4,247
Bank of Ireland................... 24,057 164
CITIC Pacific Ltd. ............... 42,000 170
Cheung Kong Holdings Ltd. ........ 22,000 158
Dean Witter Discover.............. 80,000 4,580
</TABLE>
31
<PAGE> 33
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
Development Bank of Singapore..... 13,000 $ 162
Federal National Mortgage
Association..................... 262,000 8,777
First USA......................... 73,900 4,065
ITT Hartford Group................ 90,000 4,793
Internationale Nederlanden
Groep........................... 5,750 171
KeyCorp........................... 102,500 3,972
Krung Thai Bank Public Co.
Ltd. ........................... 31,800 149
MBIA Inc. ........................ 68,800 5,358
MGIC Investment Corp. ............ 72,200 4,052
Marsh & McLennan Companies,
Inc. ........................... 30,000 2,895
NationsBank....................... 45,000 3,718
Swire Pacific Ltd., "A"........... 19,500 167
Travelers Group................... 123,750 5,646
--------
63,157
HEALTH CARE--8.4%
Abbott Laboratories............... 120,000 5,220
American Home Products............ 100,000 6,013
Astra AB.......................... 3,691 163
C. R. Bard........................ 60,000 2,040
Baxter International.............. 120,000 5,670
(b)Biogen......................... 25,000 1,372
Johnson & Johnson................. 240,000 11,880
Eli Lilly & Co. .................. 100,000 6,500
Medtronic, Inc. .................. 77,000 4,312
Merck & Co., Inc. ................ 91,200 5,894
Omnicare.......................... 41,000 1,087
Perkin-Elmer Corp. ............... 70,000 3,378
Roche Holding AG.................. 40 153
Sandoz, Ltd. ..................... 61,200 3,481
(b)U.S. Bioscience................ 2,326 31
--------
57,194
TECHNOLOGY--14.4%
Alco Standard Corporation......... 62,000 2,806
(b)Atmel Corporation.............. 110,800 3,338
(b)Cisco Systems.................. 190,000 10,759
Computer Associates
International................... 72,600 5,173
(b)Computer Sciences Corp. ....... 56,000 4,186
(b)Electronic Arts................ 70,000 1,873
Electronic Data Systems........... 115,100 6,187
L.M. Ericsson Telephone Co.,
"B"............................. 8,045 173
First Data Corporation............ 49,174 3,915
Harris Corp. ..................... 60,000 3,660
Hewlett-Packard, Co. ............. 57,000 5,679
Intel Corp. ...................... 94,000 6,903
Linear Technology Corp. .......... 107,400 3,222
<CAPTION>
Number of
Shares or
Principal
Amount Value
---------- --------
<S> <C> <C>
Matsushita Electric Industrial
Co., Ltd. ...................... 10,000 $ 186
(b)Microsoft Corp. ............... 36,000 4,325
Murata Manufacturing.............. 5,000 189
(b)Parametric Technology Corp. ... 56,500 2,451
(b)Seagate Technology............. 86,000 3,870
(b)Solectron Corp. ............... 77,000 2,916
(b)Sun Microsystems............... 85,000 5,004
Texas Instruments................. 52,000 2,593
(b)3Com Corporation............... 185,000 8,464
United Technologies............... 20,000 2,300
Xerox Corporation................. 141,000 7,543
--------
97,715
TRANSPORTATION--.7%
Canadian National Railway
Company......................... 8,767 161
Conrail........................... 35,000 2,323
Nippon Express.................... 17,000 166
Union Pacific Corp. .............. 30,000 2,096
--------
4,746
UTILITIES--2.9%
AT&T.............................. 142,900 8,860
(b)AirTouch Communications........ 130,000 3,673
Iberdrola, S.A. .................. 17,400 178
SBC Communications Inc. .......... 80,000 3,940
(b)WorldCom....................... 58,600 3,245
--------
19,896
--------
TOTAL COMMON STOCKS--64.8%
(Cost: $363,671).................. 438,958
CORPORATE OBLIGATIONS
BASIC INDUSTRIES--1.4%
Boise Cascade Corp.
9.85%, 2002..................... $ 1,000 1,118
9.45%, 2009..................... 1,000 1,112
Crown Paper, 11.00%, 2005......... 1,200 1,143
Owens-Illinois, Inc., 11.00%,
2003............................ 3,990 4,289
Smurfit Capital Funding, 6.75%,
2005............................ 2,000 1,904
--------
9,566
CAPITAL GOODS--.5%
G-I Holdings, zero coupon, 1998... 360 291
Lockheed Corp., 7.45%, 2004....... 2,000 2,029
Nortek, Inc., 9.875%, 2004........ 90 85
Northrop Grumman, 7.00%, 2006..... 750 722
--------
3,127
</TABLE>
32
<PAGE> 34
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
CONSUMER CYCLICALS--7.0%
American Radio System Corporation,
9.00%, 2006..................... $ 1,260 $ 1,178
Bally's Park Place Funding,
9.25%, 2004..................... 1,800 1,915
CF Cable TV, Inc., 11.625%,
2005............................ 510 561
Cablevision Systems Corporation,
9.25%, 2005..................... 1,800 1,674
Century Communications
Corporation, 9.50%, 2005........ 1,500 1,451
Cinemark USA, Inc., 12.00%,
2002............................ 570 618
Comcast Corporation, 10.625%,
2012............................ 1,500 1,567
(a)Comcast UK Cable Partners
Limited, 11.20%, 2007........... 2,880 1,670
Continental Cablevision, Inc.,
9.50%, 2013..................... 2,000 2,162
Empress River Casino, 10.75%,
2002............................ 2,000 2,100
Federated Department Stores,
10.00%, 2001.................... 2,000 2,148
Granite Broadcasting Corp.,
9.375%, 2005.................... 1,240 1,139
ITT Corporation, 6.75%, 2005...... 2,000 1,892
K-III Communication Corporation,
8.50%, 2006..................... 750 697
Mobilemedia Communications,
9.375%, 2007.................... 2,000 1,780
News American Holdings,
9.25%, 2013..................... 2,000 2,177
P&C Food Markets, Inc.,
11.50%, 2001.................... 120 113
Pathmark Stores, Inc., 11.625%,
2002............................ 1,390 1,387
Penn Traffic Company
10.25%, 2002.................... 30 27
10.65%, 2004.................... 400 361
10.375%, 2004................... 930 830
Rogers Cablesystems Limited,
10.00%, 2005.................... 1,050 1,047
Rogers Cantel, 11.125%, 2002...... 1,790 1,902
Sears Roebuck Acceptance Corp.,
6.75%, 2005..................... 2,000 1,929
Sinclair Broadcast Group, Inc.
10.00%, 2003.................... 810 786
10.00%, 2005.................... 900 867
TCI Communications, 8.65%, 2004... 1,000 1,020
(a)TeleWest Communications PLC,
11.00%, 2007.................... 4,020 2,382
360 Communications, 7.125%,
2003............................ 2,000 1,917
<CAPTION>
Principal
Amount Value
---------- --------
Time Warner Entertainment Company,
L.P., 8.875%, 2012.............. $ 1,000 $ 1,064
Time Warner Inc., 9.125%, 2013.... 1,000 1,043
Trump Atlantic City, 11.25%,
2006............................ 1,800 1,805
Univision TV, 11.75%, 2001........ 1,500 1,575
Viacom International, Inc.,
8.00%, 2006..................... 2,400 2,217
(a)Videotron Holdings, 11.125%,
2004.............................. 625 456
--------
47,457
CONSUMER DURABLES--.3%
WestPoint Stevens, 9.375%, 2005... 1,900 1,843
CONSUMER STAPLES--.5%
Philip Morris Companies
8.25%, 2003..................... 1,000 1,057
7.25%, 2003..................... 1,000 999
RJR Nabisco Inc., 8.00%, 2000..... 1,000 1,031
--------
3,087
ENERGY--1.6%
BHP Finance USA, 7.875%, 2002..... 2,000 2,087
Gulf Canada Resources Limited,
9.25%, 2004..................... 1,500 1,464
Parker & Parsley Petroleum,
8.25%, 2007..................... 2,000 2,080
Petronas Dagangan Bhd
7.125%, 2005.................... 1,000 990
7.750%, 2015.................... 1,000 1,003
Repsol International Finance,
7.00%, 2005..................... 1,000 986
USX Corporation, 9.375%, 2012..... 2,000 2,210
--------
10,820
FINANCE--4.1%
ABN AMRO Bank, 8.25%, 2009........ 2,000 2,064
Abbey National First Capital,
8.20%, 2004..................... 2,000 2,116
Associates Corp, N.A., 8.25%,
1999............................ 2,000 2,090
Banco Central Hispano Americano,
7.50%, 2005..................... 1,000 994
Bangkok Bank Ltd., 7.25%, 2005.... 2,000 1,927
Capital One Bank, 8.125%, 2000.... 2,000 2,057
Citicorp, 7.625%, 2005............ 1,000 1,015
Commercial Credit, 7.375%, 2005... 1,250 1,253
ERAC USA Finance, 6.95%, 2006..... 2,000 1,885
Equitable Life, 6.95%, 2005....... 2,000 1,917
First USA Bank, 8.10%, 1997....... 2,000 2,022
</TABLE>
33
<PAGE> 35
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
GMAC Medium Term Note,
8.50%, 2000..................... $ 2,000 $ 2,119
Lehman Brothers Holdings,
7.250%, 2003.................... 2,000 1,976
Malayan Banking Berhad,
7.125%, 2005.................... 1,000 977
Merita Bank Ltd., 6.50%, 2006..... 1,000 928
Merrill Lynch & Co., 7.375%,
2006.............................. 750 750
Societe Generale, 7.40%, 2006..... 2,000 1,999
--------
28,089
HEALTH CARE--.8%
Columbia/HCA Healthcare Corp.,
6.91%, 2005..................... 2,000 1,951
Ornda HealthCorp.
12.25%, 2002.................... 1,440 1,555
11.375%, 2004................... 410 452
Tenet Healthcare Corporation
9.625%, 2002.................... 130 138
10.125%, 2005................... 1,370 1,449
--------
5,545
TRANSPORTATION--.8%
Delta Airlines
9.875%, 2008.................... 749 835
9.75%, 2021..................... 2,250 2,577
United Airlines, 9.56%, 2018...... 2,000 2,199
--------
5,611
UTILITIES--1.7%
Ameritech Capital Funding,
7.50%, 2005..................... 2,000 2,047
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
(a)International CableTel Inc.,
11.50%, 2006.................... $ 2,600 $ 1,462
(a)MFS Communications Company,
Inc., 8.875%, 2006.............. 3,525 2,141
(a)PanAmSat, L.P., 11.375%,
2003.............................. 1,800 1,557
Southwestern Bell Telephone,
6.625%, 2005.................... 1,000 969
Tenaga Nasional Berhad,
7.875%, 2004.................... 1,750 1,810
USA Mobile Communication, Inc. II,
9.50%, 2004..................... 1,750 1,612
--------
11,598
--------
TOTAL CORPORATE
OBLIGATIONS--18.7%
(Cost: $128,340).................. 126,743
MONEY MARKET INSTRUMENTS--1.2%
Yield--5.45% to 5.50%
Due--July 1996
(Cost: $7,992).................... 8,000 7,992
--------
TOTAL INVESTMENTS--99.1%
(Cost: $597,889).................. 671,577
CASH AND OTHER ASSETS, LESS
LIABILITIES--.9%.................... 6,065
--------
NET ASSETS--100%.................... $677,642
========
</TABLE>
NOTES TO TOTAL RETURN PORTFOLIO OF INVESTMENTS
(a) Deferred interest obligation; currently zero coupon under the terms of the
initial offering.
(b) Non-income producing security.
Based on the cost of investments of $597,889,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $84,161,000, the gross
unrealized depreciation was $10,473,000 and the net unrealized appreciation on
investments was $73,688,000.
See accompanying notes to financial statements.
34
<PAGE> 36
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
U.S. TREASURY NOTES--.4%
8.875%, 1997
(Cost: $1,043)..................... $ 1,000 $ 1,038
CORPORATE OBLIGATIONS
AEROSPACE--1.5%
Fairchild Corporation, 12.00%,
2001............................... 2,390 2,384
Howmet Inc., 10.00%, 2003............ 270 285
K & F Industries, Inc., 11.875%,
2003............................... 470 503
Sequa Corporation, 8.75%, 2001....... 730 708
--------
3,880
BROADCASTING, CABLESYSTEMS AND
PUBLISHING--20.7%
Adelphia Communication Corporation,
12.50%, 2002....................... 1,380 1,401
Affinity Group, Inc., 11.50%, 2003... 1,460 1,480
American Radio Systems, 9.00%,
2006............................... 1,520 1,421
(b)American Telecasting
14.50%, 2004....................... 970 667
14.50%, 2005....................... 590 348
(b)Bell Cablemedia PLC, 11.95%,
2004............................... 3,370 2,376
Big Flower Press, Inc., 10.75%,
2003............................... 1,147 1,118
CAI Wireless Systems, 12.25%, 2002... 1,000 1,050
CF Cable TV, Inc., 11.625%, 2005..... 1,180 1,295
(b)CS Wireless, 11.375%, 2006........ 2,520 1,307
Cablevision Industries Corporation,
9.25%, 2008........................ 1,000 1,015
Cablevision Systems Corporation
9.25%, 2005........................ 420 391
9.875%, 2013....................... 965 895
10.50%, 2016....................... 1,250 1,212
9.875%, 2023....................... 550 498
Century Communications Corporation
11.875%, 2003...................... 960 1,020
9.50%, 2005........................ 2,200 2,128
(b)Charter Communications, 14.00%,
2007............................... 1,870 1,038
Comcast Corporation
9.125%, 2006....................... 1,740 1,657
9.50%, 2008........................ 630 608
10.625%, 2012...................... 570 596
(b)Comcast UK Cable Partners Limited,
11.20%, 2007....................... 4,630 2,685
Continental Cablevision, Inc., 9.50%,
2013............................... 2,200 2,379
EZ Communications, 9.75%, 2005....... 1,420 1,349
(b)Echostar Communications, 12.875%,
2004............................... 2,645 1,937
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Granite Broadcasting Corp.
10.375%, 2005...................... $ 1,220 $ 1,188
9.375%, 2005....................... 640 588
(b)International Cabletel
Incorporated
12.75%, 2005....................... 3,750 2,414
11.50%, 2006....................... 450 253
Katz Corporation, 12.75%, 2002....... 960 1,069
Multicanal Port, 12.625%, 2004....... 820 845
Neodata Services, 12.00%, 2003....... 1,610 1,606
Newsquest Capital PLC, 11.00%,
2006............................... 1,020 1,020
(b)People's Choice TV Unit, 13.125%,
2004............................... 2,050 1,187
Rogers Cablesystems Limited
9.625%, 2002....................... 720 715
10.00%, 2005....................... 620 618
10.00%, 2007....................... 290 284
Sinclair Broadcasting Group, Inc.,
10.00%, 2003....................... 1,620 1,569
Sullivan Broadcasting
10.25%, 2005....................... 410 395
13.25%, 2006....................... 810 798
Telewest Communications PLC
9.625%, 2006....................... 1,080 1,053
(b) 11.00%, 2007.................... 1,465 868
(b)UIH Australia Pacific, Inc.,
14.00%, 2006....................... 2,590 1,366
Univision TV, 11.75%, 2001........... 370 389
(b)Videotron Holdings PLC
11.125%, 2004...................... 745 544
11.00%, 2005....................... 1,020 650
Young Broadcasting Inc.
11.75%, 2004....................... 440 464
9.00%, 2006........................ 990 881
--------
52,635
BUSINESS SERVICES--1.8%
Allied Waste Industry, 12.00%,
2004............................... 550 599
Corporate Express, Inc., 9.125%,
2004............................... 1,300 1,287
Monarch Marking Systems, 12.50%,
2003............................... 1,270 1,343
Outdoor Systems, Inc., 10.75%,
2003............................... 1,250 1,300
--------
4,529
CHEMICALS AND AGRICULTURE--5.1%
Agriculture, Mining and Chemicals,
Inc., 10.75%, 2003................. 940 996
Arcadian Partners, L.P., 10.75%,
2005............................... 1,370 1,480
Atlantis Group, Inc., 11.00%, 2003... 1,735 1,640
G-I Holdings Inc., zero coupon,
1998............................... 3,240 2,616
Hines Horticulture, 11.75%, 2005..... 350 364
</TABLE>
35
<PAGE> 37
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Pioneer Americas Acquisition
Corporation, 13.375%, 2005......... $ 840 $ 882
Polymer Group Inc., 12.25%, 2002..... 827 889
Rexene Corporation, 11.75%, 2004..... 1,910 1,986
Terra Industries, 10.50%, 2005....... 840 874
UCC Investors Holdings, Inc.
10.50%, 2002....................... 840 886
11.00%, 2003....................... 300 316
--------
12,929
COMMUNICATIONS--8.6%
(b)Call-Net Enterprises Inc., 13.25%,
2004............................... 1,000 742
(b)Cellular, Inc., 11.75%, 2003...... 625 500
(b)Commcell, 13.125%, with warrants,
2003............................... 2,200 1,419
CommNet Cellular, 11.25%, 2005....... 500 533
(b)Intelcom Group, Inc., 13.50%, with
warrants, 2005..................... 1,470 933
Intermedia Communications of Florida,
Inc., 13.50%, with warrants,
2005............................... 1,140 1,328
(b)Millicom International Cellular
S.A., 13.50%, 2006................. 2,050 1,084
Mobilemedia Communications, 9.375%,
2007............................... 1,170 1,041
Nextlink Communications, 12.50%,
2006............................... 1,260 1,260
Paging Network, Inc.
11.75%, 2002....................... 2,070 2,225
10.125%, 2007...................... 1,140 1,129
(b)PanAmSat, L.P., 11.375%, 2003..... 2,815 2,435
Rogers Cantel
11.125%, 2002...................... 1,820 1,934
9.375%, 2008....................... 780 757
9.75%, 2016........................ 520 504
(b)Shared Technologies, 12.25%,
2006............................... 810 608
(b)Teleport Communications, 11.125%,
2007............................... 880 513
USA Mobile Communicatons, Inc. II
14.00%, 2004....................... 1,190 1,342
9.50%, 2004........................ 600 553
Vanguard Cellular Systems, 9.375%,
2006............................... 580 567
Western Wireless, 10.50%, 2006....... 540 543
--------
21,950
CONSTRUCTION MATERIALS--4.0%
American Standard Inc.
10.875%, 1999...................... 2,315 2,448
(b) 10.50%, 2005.................... 1,110 968
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
(b)Building Materials Corporation of
America, 11.75%, 2004.............. $ 3,285 $ 2,464
Nortek, 9.875%, 2004................. 2,170 2,043
Triangle Pacific Corporation, 10.50%,
2003............................... 2,185 2,251
--------
10,174
CONSUMER PRODUCTS AND SERVICES--6.2%
AMF Group
(b) 12.25%, 2006.................... 1,000 554
10.875%, 2006...................... 1,520 1,510
Avondale Mills, 10.25%, 2006......... 1,070 1,053
(c)Beatrice Foods, Inc., 12.00%,
2001............................... 2,000 755
Cinemark USA, Inc., 12.00%, 2002..... 940 1,020
Coinmach Corporation, 11.75%, 2005... 2,340 2,451
(b)Dr. Pepper Bottling Holdings,
Inc., 11.625%, 2003................ 1,120 924
Foodbrands America, 10.75%, 2006..... 510 511
Herff Jones, Inc., 11.00%, 2005...... 200 206
Premier Parks Inc., 12.00%, 2003..... 1,220 1,305
(b)Six Flags Theme Park, 12.25%,
2005............................... 2,830 2,420
Van De Kamps, Inc., 12.00%, 2005..... 550 588
West Point Stevens, Inc., 9.375%,
2005............................... 2,550 2,474
--------
15,771
DRUGS AND HEALTH CARE--3.5%
Dade International Inc., 11.125%,
2006............................... 930 965
Magellan Health Services, 11.25%,
2004............................... 2,570 2,776
Ornda Healthcorporation
12.25%, 2002....................... 2,120 2,290
11.375%, 2004...................... 2,000 2,205
Tenet Healthcare, 9.625%, 2002....... 500 531
--------
8,767
ENERGY AND RELATED SERVICES--5.8%
Benton Oil & Gas Co., 11.625%,
2003............................... 695 719
Chesapeake Energy Corporation,
10.50%, 2002....................... 1,265 1,328
Clark USA Inc., 10.875%, 2005........ 490 503
Cliffs Drilling Co., 10.25%, 2003.... 850 841
Coda Energy, 10.50%, 2006............ 1,070 1,067
Empire Gas Corporation, 7.00%, with
warrants, 2004..................... 900 773
Ferrellgas Partners, L.P., 9.375%,
2006............................... 1,000 970
</TABLE>
36
<PAGE> 38
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Gulf Canada Resources Limited
9.25%, 2004........................ $ 1,690 $ 1,650
9.625%, 2005....................... 930 922
MESA Inc.
(b) 11.625%, 2006................... 830 490
10.625%, 2006...................... 860 877
Nuevo Energy Co., 9.50%, 2006........ 510 501
Plains Resources, 10.25%, 2006....... 950 950
Santa Fe Energy Resources, 11.00%,
2004............................... 1,040 1,113
United Meridian Corp., 10.375%,
2005............................... 730 756
Vintage Petroleum, 9.00%, 2005....... 1,360 1,289
--------
14,749
FINANCIAL SERVICES, HOME BUILDING AND
REAL ESTATE--2.4%
Continental Homes Holding, 10.00%,
2006............................... 1,556 1,490
Forecast Group L.P., 11.375%, 2000... 740 518
Fortress Group, 13.75%, 2003......... 660 682
Hovnanian Kent, 11.25%, 2002......... 1,188 1,102
J.M. Peters Company, 12.75%, 2002.... 740 688
Presley Companies, 12.50%, 2001...... 1,575 1,504
--------
5,984
HOTELS AND GAMING--4.8%
Bally's Park Place Funding, Inc.,
9.25%, 2004........................ 1,490 1,585
Empress River Casino, 10.75%, 2002... 1,670 1,754
Harvey's Casino Resorts, 10.625%,
2006............................... 460 467
MGM Grand Hotel Finance Corporation,
12.00%, 2002....................... 2,475 2,716
Majestic Star Casino, 12.75%, 2003... 200 216
Players International, 10.875%,
2005............................... 1,380 1,408
Station Casinos Inc., 10.125%,
2006............................... 1,440 1,411
Trump Atlantic City, 11.25%, 2006.... 2,550 2,556
--------
12,113
MANUFACTURING, METALS AND MINING--11.1%
Aftermarket Technology, 12.00%,
2004............................... 780 847
Alvey Systems, 11.375%, 2003......... 650 663
Bar Technologies, 13.50%, 2001....... 750 769
Bluebird Body Company, 11.75%,
2002............................... 1,540 1,586
Collins & Aikman Corporation, 11.50%,
2006............................... 660 672
Crain Industries, Inc., 13.50%,
2005............................... 750 799
Day International Group, 11.125%,
2005............................... 1,440 1,472
Essex Group, Incorporated, 10.00%,
2003............................... 1,290 1,258
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Fairfield Manufacturing Company,
11.375%, 2001...................... $ 580 $ 593
Foamex L.P.
11.25%, 2002....................... 1,470 1,518
11.875%, 2004...................... 500 513
(b)Foamex - JPS Automotive L.P.,
14.00%, 2004 with warrants, 1999... 940 663
Great Dane Holdings Inc., 12.75%,
2001............................... 835 810
GS Technologies
12.00%, 2004....................... 650 665
12.25%, 2005....................... 890 914
Gulf States Steel, 13.50%, with
warrants, 2003..................... 1,150 1,034
IMO Industries, 11.75%, 2006......... 630 645
JPS Automotive Products Corporation,
11.125%, 2001...................... 1,670 1,716
Jordan Industries, 10.375%, 2003..... 1,560 1,482
Knoll Inc., 10.875%, 2006............ 870 887
NS Group, Inc., 13.50%, 2003......... 1,055 1,029
Newflo Corporation, 13.25%, 2002..... 1,050 1,126
Penda Industries, Inc., 10.75%,
2004............................... 950 881
Renco Metals, 11.50%, 2003........... 620 629
Terex Corporation Unit, 13.75%,
2002............................... 1,000 1,045
Thermadyne Industries, Inc.
10.25%, 2002....................... 1,320 1,333
10.75%, 2003....................... 1,476 1,487
UNC, Inc., 11.00%, 2006.............. 500 505
Weirton Steel Corp., 11.375%, 2004... 520 513
--------
28,054
PAPER, FOREST PRODUCTS AND
CONTAINERS--7.6%
BPC Holding Corp., 12.50%, 2006...... 720 727
Berry Plastics Corporation, 12.25%,
with warrants, 2004................ 480 532
Container Corporation of America,
11.25%, 2004....................... 1,815 1,865
Crown Paper, 11.00%, 2005............ 1,630 1,553
Florida Coast Paper Company, 12.75%,
2003............................... 500 520
Four M Corporation, 12.00%, 2006..... 500 511
Gaylord Container Corporation,
12.75%, 2005....................... 2,390 2,518
Maxxam Group, Inc.
(b) 12.25%, 2003.................... 440 334
11.25%, 2003....................... 1,653 1,645
National Fiberstock, 11.625%, 2002... 520 524
</TABLE>
37
<PAGE> 39
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Owens-Illinois
11.00%, 2003....................... $ 670 $ 720
9.95%, 2004........................ 1,125 1,128
9.75%, 2004........................ 2,230 2,230
Repap New Brunswick, Inc., 10.625%,
2005............................... 1,430 1,351
Riverwood International Corp.
10.25%, 2006....................... 510 507
10.875%, 2008...................... 1,840 1,812
Sweetheart Cup Company, Inc., 10.50%,
2003............................... 900 891
--------
19,368
RETAILING--4.6%
Brunos, 10.50%, 2005................. 1,050 1,042
(c)Color Tile, Inc., 10.75%, 2001.... 1,470 73
Dominick's, 10.875%, 2005............ 1,000 1,058
Finlay Fine Jewelry Corporation,
10.625%, 2003...................... 1,520 1,512
Guitar Center, 11.00%, 2006.......... 420 426
Michaels Stores, 10.875%, 2006....... 520 530
Pamida Holdings, 11.75%, 2003........ 2,410 2,085
Pathmark Stores, Inc.
12.625%, 2002...................... 1,000 1,017
11.625%, 2002...................... 1,535 1,531
Penn Traffic Company
10.25%, 2002....................... 250 227
10.65%, 2004....................... 760 686
10.375%, 2004...................... 1,080 964
11.50%, 2006....................... 500 467
--------
11,618
TECHNOLOGY--.7%
Communication and Power Industry,
Inc., 12.00%, 2005................. 585 622
Computervision Corporation,
11.375%, 1999...................... 1,080 1,115
--------
1,737
TRANSPORTATION--.7%
(c)Burlington Motor Holdings, Inc.,
11.50%, 2003....................... 1,350 27
GPA Group PLC, 10.875%, 2019......... 1,190 1,241
(b)Transtar Holdings, L.P., 13.375%,
2003............................... 631 467
--------
1,735
--------
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
TOTAL CORPORATE
OBLIGATIONS--89.1%
(Cost: $226,668)..................... $225,993
COMMON AND PREFERRED STOCKS
BCP/Essex Holdings, PIK, preferred... 26,648shs. 698
(a)Benedek Unit, PIK, preferred...... 500 500
Computervision Corporation........... 130,160 1,304
(c)Echostar Communications........... 14,987 425
Gaylord Container Corporation,
warrants expiring 1996............. 122,950 961
(c)Grand Union Company............... 62,520 408
Great Bay Power...................... 2,662 20
(c)Sullivan Broadcasting............. 12,960 130
(c)Thrifty Payless Inc............... 31,540 138
(c)Walter Industries, Inc............ 7,468 104
(a)(c)Waxman Industries, Inc.,
warrants expiring 2004............. 52,274 157
--------
TOTAL COMMON AND PREFERRED STOCKS--1.9%
(Cost: $5,342)....................... 4,845
MONEY MARKET
INSTRUMENTS
Yield--5.45%-5.55%
Due--July 1996
Dynamic Funding Corporation.......... $ 5,000 4,991
Enserch Corporation.................. 6,000 5,991
Finova Capital Corporation........... 2,000 1,994
Union Pacific Corporation............ 7,000 6,998
--------
TOTAL MONEY MARKET INSTRUMENTS--7.9%
(Cost: $19,974)...................... 19,974
--------
TOTAL INVESTMENTS--99.3%
(Cost: $253,027)..................... 251,850
CASH AND OTHER ASSETS,
LESS LIABILITIES--.7%.................. 1,730
--------
NET ASSETS--100%....................... $253,580
========
</TABLE>
38
<PAGE> 40
NOTES TO HIGH YIELD PORTFOLIO OF INVESTMENTS
(a) The following securities may require registration under the Securities Act
of 1933 or an exemption therefrom in order to effect sale in the ordinary
course of business; they were valued at cost on the dates of acquisition.
These securities are valued at fair value as determined in good faith by the
Board of Trustees of the Fund. At June 30, 1996, the value of the
Portfolio's restricted securities was $657,000, which represented .26% of
net assets.
<TABLE>
<CAPTION>
Date of Number Unit
Security Description Acquisition of Shares Cost
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
Benedek Unit, PIK, preferred May 1996 500 $1,000
----------------------------------------------------------------------------------------------------------------------------
Waxman Industries, Inc., warrants expiring 2004 June 1994 52,274 2.00
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Deferred interest obligation; currently zero coupon under terms of the
initial offering.
(c) Non-income producing security. In the case of a bond, generally denotes that
issuer has defaulted on the payment of interest or has filed for bankruptcy.
"PIK" denotes that interest or dividends are paid in kind.
Based on the cost of investments of $253,027,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $8,198,000, the gross
unrealized depreciation was $9,375,000 and the net unrealized depreciation on
investments was $1,177,000.
See accompanying notes to financial statements.
39
<PAGE> 41
KEMPER INVESTORS FUND
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES--3.0%
(a)FMC Corp. ....................... 100,000 $ 6,525
Monsanto Co. ....................... 100,000 3,250
Praxair, Inc. ...................... 61,000 2,577
Sumitomo Metal Industries........... 161,000 493
Toray Industries.................... 76,000 524
--------
13,369
CAPITAL GOODS--5.2%
Boeing Co. ......................... 65,200 5,681
Fluor Corp. ........................ 76,900 5,027
B.F. Goodrich Co. .................. 125,000 4,672
Honda Motor Co., Ltd. .............. 19,000 492
Kyocera Corp. ...................... 4,500 318
Mitsubishi Heavy Industries......... 61,000 530
Technip S.A. ....................... 2,317 213
York International Corp. ........... 128,400 6,645
--------
23,578
CONSUMER CYCLICALS--18.0%
Burton Group PLC.................... 249,970 604
Carnival Corp. ..................... 204,000 5,890
(a)Cox Communications Inc. ......... 470,000 10,164
Walt Disney Company................. 64,100 4,030
(a)Federated Department Stores...... 268,900 9,176
Home Depot.......................... 91,500 4,941
(a)Liberty Media Group, "A"......... 206,100 5,462
Lowes Companies Inc. ............... 125,000 4,516
Manpower, Inc. ..................... 80,000 3,140
Marriott International.............. 150,000 8,063
(a)Mirage Resorts, Inc. ............ 20,000 1,080
Moet Hennessy Louis Vuitton......... 2,317 550
(a)Office Depot..................... 118,950 2,424
Paging Network, Inc. ............... 260,000 6,240
Tele-Communications, Inc. .......... 463,000 8,392
(a)Viking Office Products........... 30,800 966
Wal-Mart Stores..................... 219,100 5,560
--------
81,198
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
CONSUMER DURABLES--1.9%
Armstrong World Industries.......... 92,800 $ 5,348
Shaw Industries..................... 255,000 3,347
--------
8,695
CONSUMER STAPLES--6.6%
Duracell International.............. 80,000 3,450
Heineken N.V. ...................... 2,692 601
Kimberly-Clark Corp. ............... 56,400 4,357
Philip Morris Companies............. 77,900 8,102
Procter & Gamble Co. ............... 44,200 4,006
Reed International PLC.............. 31,114 521
Warnaco Group....................... 151,200 3,893
Wendy's International............... 250,000 4,656
--------
29,586
FINANCE--14.3%
Allstate Corp. ..................... 100,000 4,562
American International Group,
Inc. ............................. 45,000 4,438
Bank of Ireland..................... 72,091 492
CITIC Pacific Ltd. ................. 90,000 364
Cheung Kong Holdings Ltd............ 51,000 367
Dean Witter Discover................ 73,300 4,196
Development Bank of Singapore....... 35,000 436
Federal Home Loan Mortgage Corp. ... 60,000 5,130
Federal National Mortgage
Association....................... 220,000 7,370
General Re Corp. ................... 28,000 4,263
ITT Hartford Group.................. 45,000 2,396
Internationale Nederlanden Groep.... 19,202 572
Krung Thai Bank Public Co. Ltd. .... 95,000 445
MBIA Inc. .......................... 133,700 10,412
MGIC Investment Corp. .............. 136,000 7,633
NationsBank......................... 45,800 3,784
Swire Pacific Ltd. "A".............. 44,000 377
Travelers Group..................... 162,500 7,414
--------
64,651
</TABLE>
40
<PAGE> 42
KEMPER INVESTORS FUND
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996 -- (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
HEALTH CARE--23.6%
Astra AB............................ 11,731 $ 518
Baxter International................ 90,000 4,252
(a)Biogen........................... 100,000 5,488
(a)Boston Scientific Corp........... 100,000 4,500
Columbia/HCA Healthcare Corp........ 97,000 5,177
Glaxo Wellcome, ADR................. 195,000 5,216
Guidant Corporation................. 120,745 5,947
(a)IDEXX Laboratories............... 72,300 2,838
Johnson & Johnson................... 191,000 9,455
Eli Lilly & Co...................... 95,000 6,175
Medtronic, Inc...................... 169,000 9,464
Omnicare............................ 148,600 3,938
Pall Corp........................... 250,000 6,031
Perkin-Elmer Corp................... 120,000 5,790
Pfizer Inc.......................... 30,000 2,141
Roche Holding AG.................... 134 513
Sandoz, Ltd......................... 165,000 9,384
(a)R.P. Scherer Corp................ 80,100 3,635
SmithKline Beecham PLC.............. 135,000 7,341
United Healthcare Corp.............. 175,000 8,836
--------
106,639
TECHNOLOGY--16.2%
Alco Standard Corporation........... 140,000 6,335
(a)BMC Software..................... 28,000 1,673
(a)Cisco Systems.................... 122,200 6,920
(a)Compaq Computer Corp............. 95,000 4,679
(a)Computer Sciences Corp........... 120,000 8,970
DSC Communications Corp............. 59,300 1,786
Electronic Data Systems............. 40,000 2,150
LM Ericsson Telephone Co., "B"...... 16,329 352
First Data Corporation.............. 20,572 1,638
Hewlett-Packard, Co................. 69,500 6,924
Intel Corp.......................... 52,800 3,877
Linear Technology Corp.............. 92,500 2,775
Matsushita Electric Industrial Co.,
Ltd............................... 30,000 558
(a)Microchip Technology............. 40,000 990
(a)Microsoft Corp................... 38,500 4,625
Murata Manufacturing................ 15,000 567
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
(a)Parametric Technology Corp....... 21,600 $ 937
(a)Solectron Corp................... 75,000 2,841
(a)Sun Microsystems................. 45,000 2,649
(a)3Com Corporation................. 123,000 5,627
Xerox Corporation................... 117,000 6,260
--------
73,133
TRANSPORTATION--.2%
Canadian National Railway Company... 28,372 521
Nippon Express...................... 52,000 507
--------
1,028
UTILITIES--2.1%
(a)AirTouch Communications.......... 224,000 6,328
Iberdrola, S.A...................... 45,000 462
(a)WorldCom, Inc.................... 45,000 2,492
--------
9,282
--------
TOTAL COMMON STOCKS--91.1%
(Cost: $352,666).................... 411,159
MONEY MARKET INSTRUMENTS
Yield--5.49% to 5.57%
Due--July 1996
ConAgra, Inc.......................... $14,000 13,963
Houston Industries, Inc............... 10,000 9,986
Other................................. 14,000 13,983
--------
TOTAL MONEY MARKET INSTRUMENTS--8.4%
(Cost: $37,932)....................... 37,932
--------
TOTAL INVESTMENTS--99.5%
(Cost: $390,598)...................... 449,091
CASH AND OTHER ASSETS, LESS
LIABILITIES--.5%........................ 2,416
--------
NET ASSETS--100%........................ $451,507
========
</TABLE>
NOTES TO GROWTH PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $390,598,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $63,729,000, the gross
unrealized depreciation was $5,236,000 and the net unrealized appreciation on
investments was $58,493,000.
See accompanying notes to financial statements.
41
<PAGE> 43
KEMPER INVESTORS FUND
GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Coupon Rate Maturity Amount Value
----------- --------- --------- -------
<S> <C> <C> <C> <C>
GOVERNMENT OBLIGATIONS
FEDERAL HOME LOAN MORTGAGE CORPORATION--11.2%
(Cost: $9,476)
Pass-through Certificates.............................................. 7.00% 2023-2024 $10,129 $ 9,756
FEDERAL NATIONAL MORTGAGE ASSOCIATION--16.3%
(Cost: $14,556)
Pass-through Certificates.............................................. 6.50 2025-2026 2,547 2,382
7.50 2025-2026 4,792 4,729
8.00 2024-2025 932 939
8.50 2026 6,000 6,158
-------
14,208
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--52.1%
(Cost: $44,996)
Pass-through Certificates.............................................. 7.00 2022-2024 15,394 14,773
7.50 2022-2026 12,512 12,336
8.00 2016-2026 11,603 11,712
8.50 2016-2024 1,455 1,497
9.00 2016-2026 3,273 3,417
9.50 2013-2022 692 739
10.00 2016 921 1,003
-------
45,477
U.S. TREASURY SECURITIES--25.9%
(Cost: $23,443)
Notes.................................................................. 8.875 1998 5,000 5,288
8.00 1999 7,000 7,324
8.75 2000 5,000 5,418
7.875 2004 2,000 2,152
Bonds.................................................................. 9.125 2009 484 551
12.75 2010 1,382 1,941
-------
22,674
CANADIAN PROVINCIAL OBLIGATIONS--1.2%
(Cost: $1,094)
Province of Ontario.................................................... 7.625 2004 500 516
Province of Quebec..................................................... 8.625 2005 500 539
-------
1,055
-------
TOTAL GOVERNMENT OBLIGATIONS--106.7%
(Cost: $93,565)........................................................ 93,170
CORPORATE OBLIGATIONS
BHP Finance USA........................................................ 7.875 2002 500 522
Banco Central Hispano.................................................. 7.50 2005 500 497
Equitable Life......................................................... 6.95 2005 500 479
Nabisco Inc............................................................ 6.70 2002 500 487
NationsBank Corporation................................................ 9.50 2004 500 564
Sears Roebuck Acceptance Corp.......................................... 6.75 2005 500 482
Southwestern Bell Telephone............................................ 6.625 2005 500 484
-------
TOTAL CORPORATE OBLIGATIONS--4.0%
(Cost: $3,695)........................................................... 3,515
-------
</TABLE>
42
<PAGE> 44
KEMPER INVESTORS FUND
GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Value
-------
<S> <C>
TOTAL INVESTMENTS--110.7%
(Cost $97,260).................................................................................................. $96,685
LIABILITIES, LESS CASH AND OTHER ASSETS--(10.7)%.................................................................. (9,341)
-------
NET ASSETS--100%.................................................................................................. $87,344
=======
</TABLE>
NOTE TO GOVERNMENT SECURITIES PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $97,260,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $1,264,000, the gross
unrealized depreciation was $1,839,000 and the net unrealized depreciation on
investments was $575,000.
See accompanying notes to financial statements.
43
<PAGE> 45
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS
EUROPE
DENMARK--.5%
Copenhagen Airports................. 7,800 $ 771
AIRPORT OPERATOR
FRANCE--5.5%
Carrefour S.A....................... 6,000 2,510
FOOD RETAILER
Christian Dior S.A.................. 2,500 325
LUXURY GOODS MANUFACTURER
Elf Aquitaine....................... 22,000 1,618
OIL AND GAS PRODUCER
Grand Optical Photoservice.......... 5,000 644
PHOTODEVELOPING AND PRESCRIPTION
OPTICAL MANUFACTURING
Moet Hennessy Louis Vuitton......... 9,000 2,134
LUXURY GOODS MANUFACTURER
Technip S.A......................... 16,400 1,510
ENGINEERING COMPANY
--------
8,741
GERMANY--3.5%
Bayer A.G........................... 46,000 1,624
CHEMICAL COMPANY
Mannesmann A.G...................... 4,100 1,417
CAPITAL GOODS PRODUCER
SGL CARBON A.G...................... 7,000 819
CHEMICAL COMPANY
Veba, A.G........................... 32,000 1,700
ELECTRIC UTILITY
--------
5,560
HUNGARY--.3%
(a)Cofinec GDR....................... 10,220 488
LABELS AND PACKAGING MATERIAL
MANUFACTURER
IRELAND--3.5%
Bank of Ireland..................... 272,176 1,857
BANKING
Greencore Group PLC................. 256,990 1,345
FOOD PRODUCER
Independent Newspapers PLC.......... 366,666 1,672
PUBLISHER
Kerry Group PLC..................... 70,280 724
FOOD PROCESSING
--------
5,598
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
ITALY--1.5%
Bulgari SpA......................... 55,000 $ 879
LUXURY GOODS MANUFACTURER
Telecom Italia Mobile............... 700,000 1,564
MOBILE TELECOMMUNICATIONS PROVIDER
--------
2,443
NETHERLANDS--11.2%
Aalberts Industries N.V............. 12,289 1,204
CAPITAL GOODS AND COMPONENTS
Aegon N.V........................... 33,646 1,549
INSURANCE COMPANY
GTI Holding......................... 8,840 849
ENGINEERING SERVICES
Getronics N.V....................... 57,700 1,278
INFORMATION TECHNOLOGY SERVICES
(a)Gucci Group N.V................... 10,300 667
LUXURY GOODS MANUFACTURER
Heineken N.V........................ 7,000 1,564
BREWERY
IHC Caland N.V...................... 23,800 1,170
MARINE TECHNOLOGY HOLDING COMPANY
Internationale Nederlanden Groep.... 66,695 1,989
BANKING AND INSURANCE
Koninklijke Ahold N.V............... 31,915 1,729
FOOD RETAILER
Randstad Holding N.V................ 18,750 1,384
BUSINESS SERVICES
Royal Dutch Petroleum............... 9,065 1,400
PETROLEUM PRODUCER
Schuttersveld Holding N.V........... 32,735 1,266
HOLDING COMPANY
Wolters Kluwer...................... 15,000 1,704
PUBLISHER
--------
17,753
NORWAY--.3%
Schibsted A/S....................... 35,550 460
PUBLISHER
SPAIN--3.0%
Banco Bilbao Vizcaya................ 34,600 1,401
BANKING
Empresa Nacional de Electricidad
S.A............................... 20,000 1,246
ELECTRIC UTILITY
Iberdrola, S.A...................... 125,000 1,282
ELECTRIC UTILITY
</TABLE>
44
<PAGE> 46
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
PRYCA Centros....................... 35,000 $ 874
FOOD RETAILER
--------
4,803
SWEDEN--4.7%
Astra AB............................ 90,000 3,974
PHARMACEUTICAL COMPANY
Dahl International.................. 13,540 195
TECHNICAL WHOLESALER
LM Ericsson Telephone Co. "B"....... 60,000 1,293
TELECOMMUNICATIONS EQUIPMENT
MANUFACTURER
Getinge Industrier AB............... 24,750 466
MEDICAL SUPPLY COMPANY
Hoganas AB.......................... 24,200 846
ENGINEERING COMPANY
WM-data AB.......................... 11,320 716
INFORMATION TECHNOLOGY SERVICES
--------
7,490
SWITZERLAND--5.6%
Ciba-Geigy Limited.................. 3,900 4,752
PHARMACEUTICAL COMPANY
Rhone-Poulenc Rorer................. 200 13
CHEMICAL AND PHARMACEUTICAL
COMPANY
Roche Holding AG.................... 1,050 4,019
PHARMACEUTICAL COMPANY
--------
8,784
UNITED KINGDOM--9.1%
BBA Group PLC....................... 275,551 1,319
AUTOMOTIVE PRODUCTS MANUFACTURER
British Airways PLC................. 180,000 1,549
AIRLINE
(a)British Bio-Technology Group..... 40,000 1,548
PHARMACEUTICAL COMPANY
Burton Group PLC.................... 1,000,000 2,416
RETAILER
Dixons Group PLC.................... 213,393 1,754
ELECTRONICS RETAILER
Glaxo Wellcome...................... 20,000 269
PHARMACEUTICAL COMPANY
(a)Millenium & Copthorne............ 175,500 900
HOTEL OPERATOR
Next PLC............................ 110,000 962
RETAILER
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
Reed International PLC.............. 136,000 2,276
PUBLISHER
(a)Sun Life & Provincial Holdings... 398,700 $ 1,369
LIFE INSURANCE COMPANY
--------
14,362
--------
TOTAL EUROPEAN COUNTRIES--48.7%....... 77,253
PACIFIC REGION
HONG KONG--4.1%
CITIC Pacific Ltd................... 210,000 849
CONGLOMERATE
Cheung Kong Holding Ltd............. 140,000 1,008
REAL ESTATE
Dao Heng Bank Ltd................... 190,000 734
BANKING
Guangdong Investment Ltd............ 1,650,000 1,044
CONGLOMERATE
HSBC Holdings PLC................... 65,935 997
BANKING
Henderson Land Development Co.,
Ltd............................... 100,000 749
PROPERTY DEVELOPER
Swire Pacific Ltd................... 128,000 1,095
CONGLOMERATE
--------
6,476
JAPAN--28.9%
Bridgestone Corp.................... 100,000 1,905
RUBBER RELATED PRODUCTS
MANUFACTURER
Canon Inc........................... 88,000 1,829
PRECISION INSTRUMENTS MANUFACTURER
Circle K Japan...................... 18,000 932
CONVENIENCE RETAILER
(a)Daicel Chemical Industries,
Ltd............................... 130,000 800
CHEMICAL COMPANY
Daifuku Co., Ltd.................... 66,000 1,011
DIVERSIFIED MACHINERY MANUFACTURER
Honda Motor Co., Ltd................ 40,000 1,036
AUTOMOBILE MANUFACTURER
Ishikawajima-Harima Heavy
Industries........................ 325,000 1,585
HEAVY MACHINERY MANUFACTURER
Kyocera Corp........................ 31,000 2,190
ELECTRONICS MANUFACTURER
Mabuchi Motor Co., Ltd.............. 36,000 2,291
ENGINE MANUFACTURER
</TABLE>
45
<PAGE> 47
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
Matsushita Electric Industrial Co.,
Ltd............................... 145,000 $ 2,697
ELECTRONICS MANUFACTURER
Mitsubishi Heavy Industries......... 165,000 1,434
INDUSTRIAL EQUIPMENT MANUFACTURER
Miura Co., Ltd...................... 43,000 729
BOILER MAKER
Murata Manufacturing................ 42,000 1,589
ELECTRONICS COMPONENTS
MANUFACTURER
NEC Corporation..................... 95,000 1,031
ELECTRONICS MANUFACTURER
NKK Corp............................ 350,000 1,059
STEEL MANUFACTURER
New Japan Securities Co., Ltd....... 190,000 1,155
SECURITIES BROKER
Nippon Express...................... 195,000 1,902
TRANSPORTATION COMPANY
Olympus Optical Co., Ltd............ 150,000 1,504
CAMERA AND OPTICAL EQUIPMENT
MANUFACTURER
Seven Eleven Japan Co., Ltd......... 16,000 1,020
CONVENIENCE RETAILER
Shimizu Corp........................ 140,000 1,544
CONSTRUCTION COMPANY
Sony Music Entertainment............ 29,100 1,353
ENTERTAINMENT SOFTWARE COMPANY
Sumitomo Bank Ltd................... 75,000 1,450
BANKING
Sumitomo Metal Industries........... 610,000 1,869
STEEL MANUFACTURER
Sumitomo Trust & Banking............ 168,000 2,297
BANKING
Taisei Corp......................... 253,000 1,795
CONSTRUCTION COMPANY
Teijin Ltd.......................... 275,000 1,492
TEXTILE MANUFACTURER
Tokyo Style......................... 77,000 1,341
WOMEN'S APPAREL MANUFACTURER
Tokyu Department Store.............. 166,000 1,132
RETAILER
Toray Industries.................... 385,000 2,654
TEXTILE MANUFACTURER
Tsubakimoto Chain Co................ 175,000 1,192
CHAIN AND CONVEYOR MANUFACTURER
--------
45,818
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
MALAYSIA--3.0%
DCB Holdings Bhd.................... 375,000 $ 1,285
BANKING
Edaran Otomobil Nasional Berhad..... 30,000 287
AUTOMOBILE DISTRIBUTOR
Hong Leong Industries Berhad........ 160,000 776
CONGLOMERATE
Hume Industries Bhd................. 155,000 758
CONSTRUCTION MATERIAL MANUFACTURER
KFC Holdings Bhd.................... 63,000 341
RESTAURANT
Kedah Cement Berhad................. 150,000 278
CEMENT MANUFACTURER
Renong Berhad....................... 520,000 829
CONGLOMERATE
Sungei Way Holdings Berhad.......... 35,000 164
BUILDING MATERIALS COMPANY
--------
4,718
SINGAPORE--1.2%
Development Bank of Singapore....... 90,000 1,122
BANKING
Fraser & Neave Ltd.................. 70,000 724
BEER AND SOFT DRINK MANUFACTURER
--------
1,846
THAILAND--1.3%
Advanced Info Service Ltd........... 42,000 658
TELECOMMUNICATION SERVICES
Shinawatra Computer Co.............. 45,000 967
COMPUTER EQUIPMENT DISTRIBUTOR
Siam Cement Co. Ltd................. 6,000 294
BUILDING MATERIALS PRODUCER
Siam City Bank...................... 200,000 217
BANKING
--------
2,136
--------
TOTAL PACIFIC REGION--38.5%........... 60,994
COMMONWEALTH COUNTRIES
AUSTRALIA--1.4%
Aristocrat.......................... 72,000 164
ENTERTAINMENT
Tabcorp Holdings Ltd................ 436,400 1,975
ENTERTAINMENT AND GAMING
--------
2,139
</TABLE>
46
<PAGE> 48
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
---------- --------
<S> <C> <C>
CANADA--4.6%
CAE Inc............................. 181,000 $ 1,506
FLIGHT SIMULATOR MANUFACTURER
Canadian National Railway Company... 84,000 1,544
RAILWAY COMPANY
Petro-Canada........................ 232,700 1,425
OIL AND GAS COMPANY
(a)Philip Environmental.............. 166,500 1,311
WASTE COLLECTION AND RECYCLING
COMPANY
Shaw Communications................. 209,100 1,479
CABLE TELEVISION COMPANY
--------
7,265
NEW ZEALAND--1.6%
Lion Nathan Ltd..................... 657,800 1,717
BEER AND SOFT DRINK MANUFACTURER
Tranz Rail Holdings Ltd............. 63,100 876
TRANSPORTATION
--------
2,593
--------
TOTAL COMMONWEALTH COUNTRIES--7.6%.... 11,997
LATIN AMERICA
ARGENTINA--.5%
(a)Ciadea S.A.......................... 107,000 760
AUTOMOBILE MANUFACTURER AND DEALER
<CAPTION>
Number of
Shares or
Principal
Amount Value
---------- --------
<S> <C> <C>
BRAZIL--.5%
(a)Iochpe-Maxion....................... 6,100,000 $ 762
AUTO PARTS AND MACHINERY --------
MANUFACTURER
TOTAL LATIN AMERICAN
COUNTRIES--1.0%....................... 1,522
TOTAL COMMON STOCKS--95.8%
(Cost: $130,451).................... 151,766
MONEY MARKET INSTRUMENTS--4.3%
Yield--5.50% to 5.54%
Due-July 1996
(Cost: $6,874)...................... $ 6,900 6,874
--------
TOTAL INVESTMENTS--100.1%
(Cost: $137,325).................... 158,640
LIABILITIES, LESS OTHER
ASSETS--(.1)%......................... (187)
--------
NET ASSETS--100%...................... $158,453
========
</TABLE>
47
<PAGE> 49
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
At June 30, 1996, the International Portfolio of Investments had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
-------- -----
<S> <C> <C>
Finance................................................................................. $ 26,422 16.7
Consumer Cyclicals...................................................................... 20,852 13.1
Basic Industries........................................................................ 17,307 10.9
Technology.............................................................................. 17,271 10.9
Capital Goods........................................................................... 17,011 10.7
Consumer Staples........................................................................ 16,261 10.3
Health Care............................................................................. 15,685 9.9
Transportation.......................................................................... 6,642 4.2
Utilities............................................................................... 5,792 3.7
Energy.................................................................................. 4,443 2.8
Consumer Durables....................................................................... 4,080 2.6
-------- -----
Total Common Stocks..................................................................... 151,766 95.8
Other Net Assets........................................................................ 6,687 4.2
-------- -----
Net Assets.............................................................................. $158,453 100.0
======== =====
</TABLE>
NOTES TO INTERNATIONAL PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $137,325,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $22,847,000, the gross
unrealized depreciation was $1,532,000 and the net unrealized appreciation on
investments was $21,315,000.
See accompanying notes to financial statements.
48
<PAGE> 50
KEMPER INVESTORS FUND
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES--6.6%
Greenfield Industries............... 13,000 $ 429
Hollinger International............. 30,100 342
(a)Jacobs Engineering Group......... 27,000 712
Outdoor Systems, Inc................ 30,000 1,057
Philip Environmental................ 35,000 276
Trico Marine Services, Inc.......... 30,000 667
------
3,483
CAPITAL GOODS--5.2%
(a)Cascade Communications........... 6,000 408
(a)Elsag Bailey Process
Automation.......................... 25,500 682
Federal Signal Corp................. 13,000 306
(a)Lamson & Sessions................ 15,000 178
Nordson Corp........................ 6,000 339
Pioneer-Standard Electronics........ 8,500 113
(a)Renters Choice................... 11,200 286
TriMas Corp......................... 19,200 449
------
2,761
CONSUMER CYCLICALS--12.5%
(a)APAC TeleServices................ 16,000 576
Allen Group......................... 17,000 370
Gaylord Entertainment Co............ 41,000 1,158
(a)Global DirectMail................ 15,000 593
(a)MGM Grand........................ 10,000 399
(a)OfficeMax, Inc................... 31,500 752
(a)Primadonna Resorts............... 25,000 575
SPX Corp............................ 35,000 857
(a)Safety 1st....................... 9,500 80
(a)Tellabs Operations............... 9,500 635
(a)Viking Office Products........... 6,800 213
Vincam Group, Inc................... 2,000 52
(a)Williams-Sonoma.................. 15,000 354
------
6,614
CONSUMER DURABLES--3.4%
(a)Ethan Allen Interiors............ 20,300 502
Diamond Home Services, Inc.......... 25,000 419
(a)Mohawk Industries................ 17,000 302
(a)Triangle Pacific Corp............ 30,000 592
------
1,815
<CAPTION>
Number of
Shares Value
------
<S> <C> <C>
CONSUMER STAPLES--8.2%
(a)Kenneth Cole Productions......... 20,000 $ 395
(a)Gymboree......................... 8,000 244
Intimate Brands..................... 12,500 286
(a)Donna Karan International Inc.... 4,000 112
(a)Opta Food Ingredients............ 2,800 28
(a)Patterson Dental Co.............. 22,300 808
(a)Revlon, Inc...................... 29,000 845
Richfood Holdings................... 10,500 341
(a)Starbucks Corp................... 28,000 791
Talbots............................. 15,000 486
------
4,336
ENERGY--.4%
(a)Input/Output, Inc................ 6,600 214
FINANCE--11.2%
(a)Cityscape Financial.............. 16,400 841
Executive Risk...................... 11,500 440
(a)Financial Federal Corporation.... 55,000 859
(a)Meadowbrook Insurance Group...... 5,500 169
PMI Group........................... 20,800 884
(a)Riscorp, Inc..................... 21,800 398
(a)Risk Capital Holdings, Inc....... 40,000 785
Roosevelt Financial Group........... 37,500 722
Texas Regional Bancshares........... 10,800 270
(a)United Insurance Companies....... 11,200 255
Western National Corporation........ 18,000 331
------
5,954
HEALTH CARE--20.8%
(a)ABR Information Services......... 11,500 578
(a)Access Health, Inc............... 14,950 706
(a)CRA Managed Care, Inc............ 22,500 1,007
Caremark International, Inc......... 13,800 348
(a)Dura Pharmaceuticals............. 11,000 616
(a)EndoSonics Corp.................. 25,000 447
(a)IDEXX Laboratories............... 14,000 549
(a)IMNET Systems.................... 5,100 156
(a)Interim Services................. 18,600 800
Millenmum Pharmaceutical............ 10,000 155
(a)Occusystems, Inc................. 12,300 460
Omnicare, Inc....................... 33,000 875
Physician Computer Network.......... 20,000 231
Physician Sales & Service........... 35,200 854
(a)Quest Medical.................... 15,000 105
RTW, Inc............................ 11,100 350
(a)Renal Treatment Centers.......... 13,200 379
(a)Research Industries.............. 12,000 265
</TABLE>
49
<PAGE> 51
KEMPER INVESTORS FUND
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
(a)Serologicals Corporation............ 10,700 $ 284
(a)Steris Corp......................... 8,000 256
Stewart Enterprises................. 24,250 758
(a)Total Renal Care Holdings........... 19,800 837
-------
11,016
TECHNOLOGY--17.3%
(a)Alternative Resources
Corporation......................... 27,000 992
(a)Ascend Communications............... 4,500 253
Atmel Corporation................... 17,500 527
(a)Auspex Systems, Inc................. 18,000 270
(a)Boca Research....................... 17,500 319
(a)Ciber, Inc.......................... 11,400 251
(a)Dendrite International, Inc......... 17,000 587
(a)Electronic Arts..................... 20,000 535
(a)Gartner Group....................... 10,000 366
(a)Integrated Systems.................. 6,400 256
(a)InterVoice, Inc..................... 18,000 358
(a)Keane, Inc.......................... 19,200 708
(a)McAfee Associates, Inc.............. 7,200 353
(a)Parametric Technology Corp.......... 19,000 824
(a)SPSS, Inc........................... 10,000 250
(a)Softkey International............... 25,000 473
(a)Solectron Corp...................... 21,500 814
(a)Tech Data Corporation............... 21,700 472
U.S. Robotics....................... 4,000 342
(a)Wang Laboratories................... 10,000 189
-------
9,139
TRANSPORTATION--3.9%
(a)Copart, Inc......................... 28,500 470
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -------
<S> <C> <C>
(a)Genesee & Wyoming Inc............ 37,000 $ 759
Tranz Rail Holdings, Ltd............ 25,000 347
(a)Wisconsin Central
Transportation...................... 15,400 500
-------
2,076
UTILITIES--2.2%
(a)LCI International, Inc........... 36,400 1,142
-------
TOTAL COMMON STOCKS--91.7%
(Cost: $39,021)..................... 48,550
MONEY MARKET INSTRUMENTS
Yield--5.48% to 5.65%
Due--July 1996
ConAgra............................. $ 1,000 996
Enserch Corporation................. 1,000 999
Houston Industries.................. 1,000 999
Union Pacific Corp.................. 1,000 1,000
-------
TOTAL MONEY MARKET INSTRUMENTS--7.5%
(Cost: $3,994)...................... 3,994
-------
TOTAL INVESTMENTS--99.2%
(Cost: $43,015)..................... 52,544
CASH AND OTHER ASSETS, LESS
LIABILITIES--.8%...................... 419
-------
NET ASSETS--100%...................... $52,963
=======
</TABLE>
NOTES TO SMALL CAP GROWTH PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $43,015,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $10,500,000, the gross
unrealized depreciation was $971,000 and the net unrealized appreciation on
investments was $9,529,000.
50
<PAGE> 52
KEMPER INVESTORS FUND
INVESTMENT GRADE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- -----
<S> <C> <C>
U.S. TREASURY BILLS--22.5%
(Cost: $100)............................ $ 100 $ 99
CORPORATE OBLIGATIONS
AEROSPACE--2.3%
Lockheed Martin, 7.70%, 2008............ 10 10
BANKING--2.3%
Societe Generale, 7.40%, 2006........... 10 10
OIL, GAS AND PETROLEUM SERVICES--2.2%
Parker & Parsley Petroleum,
8.25%, 2007........................... 10 10
----
TOTAL CORPORATE OBLIGATIONS--6.8%
(Cost: $30)............................. 30
<CAPTION>
Principal
Amount Value
--------- -----
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield -- 5.08% to 5.31%
Due--July and September 1996
Federal Farm Credit Banks............... $ 50 $ 50
Federal Home Loan Mortgage
Corporation........................... 150 150
Federal National Mortgage Association... 50 50
----
TOTAL MONEY MARKET INSTRUMENTS--56.8%
(Cost: $249)............................ 250
----
TOTAL INVESTMENTS--86.1%
(Cost: $379)............................ 379
CASH AND OTHER ASSETS, LESS
LIABILITIES--13.9%........................ 61
----
NET ASSETS--100%.......................... $440
====
</TABLE>
NOTE TO INVESTMENT GRADE BOND PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $379,000 for federal income tax purposes at
June 30, 1996, there was no appreciation or depreciation on investments.
See accompanying notes to financial statements.
51
<PAGE> 53
KEMPER INVESTORS FUND
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
COMMON STOCKS
BANKS--19.2%
Banc One Corporation............... 2,300 $ 78
Bank of New York Co................ 300 15
BankAmerica Corp................... 1,000 76
Bankers Trust New York Corp........ 500 38
Barnett Banks...................... 1,200 73
First Chicago NBD Corp............. 1,900 74
First Union Corp................... 1,400 85
NationsBank........................ 1,200 99
PNC Bank, N.A...................... 2,600 77
--------
615
BASIC INDUSTRIES--.1%
Crane Company...................... 100 4
CAPITAL GOODS--3.0%
General Electric Co................ 1,100 95
CONSUMER CYCLICALS--9.4%
(a)Burlington Coat Factory............ 900 9
Liz Claiborne...................... 700 24
Dayton Hudson Corp................. 300 32
Dillard Department Stores.......... 600 22
(a)Fruit of The Loom.................. 1,200 31
Philips N.V., ADR.................. 1,800 59
TJX Companies, Inc................. 1,200 41
(a)Toys R Us.......................... 800 23
V.F. Corp.......................... 500 30
Wal-Mart Stores.................... 1,200 30
--------
301
CONSUMER DURABLES--.4%
Ford Motor Co...................... 400 13
CONSUMER STAPLES--9.2%
Hanson PLC, ADR.................... 400 6
Philip Morris Companies............ 1,600 166
UST, Inc........................... 3,600 123
--------
295
ENERGY--9.5%
AMOCO Corp......................... 700 51
Atlantic Richfield Co.............. 600 71
Columbia Gas System................ 2,800 147
Louisiana-Pacific Corp............. 1,600 35
--------
304
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
FINANCIAL SERVICES--21.8%
H.F. Ahmanson & Co................. 400 $ 11
American General Corp.............. 600 22
American International Group,
Inc.............................. 400 39
Capital One Financial Corp......... 100 3
Crestar Financial Corp............. 200 11
Federal Home Loan Mortgage Corp.... 2,000 171
Federal National Mortgage
Association...................... 6,600 221
Fleet Financial Group, Inc......... 600 26
Great Western Financial Corp....... 600 14
KeyCorp............................ 1,600 62
J.P. Morgan & Company.............. 500 42
Norwest Corp....................... 500 17
Signet Banking Corp................ 2,400 56
--------
695
HEALTH CARE--6.7%
Baxter International............... 200 9
Becton Dickinson & Co.............. 100 8
Columbia/HCA Healthcare Corp....... 100 5
Glaxo Wellcome, ADR................ 200 5
(a)Humana, Inc........................ 2,400 43
Eli Lilly & Co..................... 500 33
Merck & Co., Inc................... 300 19
Pharmacia-Upjohn Inc............... 500 22
(a)Tenet Healthcare Corporation....... 1,400 30
U.S. Healthcare.................... 700 39
--------
213
TECHNOLOGY--8.1%
(a)Compaq Computer Corp............... 1,800 89
Intel Corp......................... 1,500 110
Texas Instruments.................. 1,200 60
--------
259
--------
TOTAL COMMON STOCKS--87.4%
(Cost: $2,780)..................... 2,794
</TABLE>
52
<PAGE> 54
KEMPER INVESTORS FUND
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996 -- (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
MONEY MARKET INSTRUMENTS--20.5%
Yield--5.25% to 5.30%
Due--July and August 1996
(Cost: $657)
Federal Home Loan Mortgage Corp.... $ 660 $ 657
--------
</TABLE>
<TABLE>
<CAPTION>
Value
--------
<S> <C> <C>
TOTAL INVESTMENTS--107.9%
(Cost: $3,437)..................... $ 3,451
LIABILITIES, LESS CASH AND OTHER
ASSETS--(7.9)%..................... (252)
--------
NET ASSETS--100%..................... $ 3,199
========
</TABLE>
NOTES TO VALUE PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $3,437,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $63,000, the gross
unrealized depreciation was $49,000 and the net unrealized appreciation on
investments was $14,000.
See accompanying notes to financial statements.
53
<PAGE> 55
KEMPER INVESTORS FUND
SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
---------- ------
<S> <C> <C>
COMMON STOCKS
AUTOS AND TRANSPORTATION--5.0%
Airborne Freight Corporation........ 2,700 $ 70
Fleetwood Enterprises............... 2,900 90
Simpson Industries.................. 3,700 34
------
194
BANKS AND THRIFTS--12.9%
Compass Bancshares.................. 2,100 69
Cullen Frost Bankers................ 1,400 39
First Commerce Corp................. 1,800 64
First Financial Corp................ 1,600 36
Liberty Bancorp..................... 1,500 53
Long Island Bancorp................. 2,300 70
North Side Savings Bank............. 1,300 45
Roosevelt Financial Group........... 3,600 69
T.R. Financial Corp................. 2,000 55
------
500
CONSUMER DISCRETIONARY--12.8%
J. Baker, Inc....................... 6,400 48
Bally Entertainment Corp............ 4,500 124
Cato Corp........................... 9,700 58
Fedders Corporation................. 5,300 38
Haggar Apparel Co................... 3,100 42
Heilig-Meyers....................... 2,000 48
(a)Insurance Auto Auctions............. 6,300 63
(a)Sports & Recreation................. 8,500 77
------
498
ENERGY--5.1%
Giant Industries.................... 4,800 70
KCS Energy.......................... 4,500 129
------
199
FINANCE--10.9%
First Financial Caribbean Corp...... 3,300 68
Guaranty National Insurance......... 2,200 40
Imperial Credit Industries.......... 3,400 103
Integon Corp........................ 3,000 60
Lawyers Title Insurance Corp........ 1,900 34
PHH Corporation..................... 2,100 120
------
425
INTEGRATED OILS--1.9%
(a)Tesoro Petroleum Corp................. 6,500 75
MATERIALS AND PROCESSING--10.4%
AK Steel Holding Corp............... 1,600 63
<CAPTION>
Number of
Shares or
Principal
Amount Value
---------- ------
<S> <C> <C>
AMCOL International................. 2,600 $ 39
Del Webb Corp....................... 4,500 90
(a)Mueller Industries, Inc............. 2,600 108
Quanex Corp......................... 1,500 35
Rexene Corp......................... 7,300 72
------
407
PRODUCER DURABLES--8.0%
(a)Asyst Technologies.................. 2,000 38
Blount, Inc......................... 4,400 139
(a)Electroglas......................... 4,600 65
Stewart & Stevenson Services........ 3,000 68
------
310
TECHNOLOGY--7.7%
(a)Burr Brown Corp..................... 1,800 32
(a)Cyrix............................... 900 15
(a)Diamond Multimedia Systems,
Inc. ............................. 2,700 26
(a)EXAR Corporation.................... 5,100 66
(a)Proxima Corp........................ 2,700 33
(a)Read-Rite Corp...................... 5,100 72
(a)Western Digital Corp................ 2,100 55
------
299
UTILITIES--3.4%
(a)Atlantic Tele-Network............... 5,500 132
OTHER--2.9%
Arbatax International, Inc.......... 3,250 15
(a)Mercer International Inc............ 7,100 96
------
111
------
TOTAL COMMON STOCKS--81.0%
(Cost: $3,291)...................... 3,150
MONEY MARKET INSTRUMENTS--17.4%
Yield--5.25% to 5.29%
Due--July and August 1996
(Cost: $678)
Federal Home Loan Mortgage Corp..... $ 680 678
------
TOTAL INVESTMENTS--98.4%
(Cost: $3,969)...................... 3,828
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.6%..................... 62
------
NET ASSETS--100%...................... $3,890
======
</TABLE>
54
<PAGE> 56
NOTES TO SMALL CAP VALUE PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $3,969,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $107,000, the gross
unrealized depreciation was $248,000 and the net unrealized depreciation on
investments was $141,000.
See accompanying notes to financial statements.
55
<PAGE> 57
KEMPER INVESTORS FUND
VALUE + GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES--1.6%
(a)FMC Corp.............................. 400 $ 26
CAPITAL GOODS--4.9%
Emerson Electric Co................. 200 18
General Electric Co................. 400 35
Xerox Corporation................... 500 27
-------
80
CONSUMER CYCLICALS--10.8%
Circuit City Stores................. 500 18
Dayton Hudson Corp.................. 200 21
Dillard Department Stores........... 300 11
(a)Fruit of The Loom................... 400 10
Mattel, Inc......................... 800 23
Newell Co........................... 1,000 31
Philips N.V., ADR................... 300 10
TJX Companies, Inc.................. 300 10
(a)Toys R Us........................... 600 17
V.F. Corp........................... 200 12
Wal-Mart Stores..................... 600 15
-------
178
CONSUMER DURABLES--1.7%
Ford Motor Co....................... 400 13
Leggett & Platt Incorporated........ 300 8
Singer Company N.V.................. 400 8
-------
29
CONSUMER STAPLES--14.0%
American Greetings Corp............. 400 11
Carnival Corp....................... 700 20
(a)Cox Communications Inc.............. 1,000 22
Walt Disney Company................. 400 25
(a)Franklin Quest Co................... 600 12
Philip Morris Companies............. 400 42
Procter & Gamble Co................. 300 27
Tele-Communications, Inc............ 1,000 18
UST, Inc............................ 1,000 34
Wendy's International............... 1,000 19
-------
230
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
ENERGY--6.9%
AMOCO Corp.......................... 400 $ 29
Atlantic Richfield Co............... 200 24
Columbia Gas System................. 600 31
Enron Corp.......................... 400 16
Louisiana-Pacific Corp.............. 600 13
-------
113
FINANCE--21.6%
American General Corp............... 300 11
American International Group,
Inc............................... 200 20
Banc One Corporation................ 300 10
BankAmerica Corp.................... 200 15
Bankers Trust New York Corp......... 200 15
Barnett Banks....................... 300 18
Federal Home Loan Mortgage Corp..... 500 43
Federal National Mortgage
Association....................... 1,500 50
First Chicago NBD Corp.............. 400 16
First Union Corp.................... 400 24
First USA........................... 300 16
Fleet Financial Group, Inc.......... 200 9
KeyCorp............................. 200 8
MGIC Investment Corp................ 200 11
J.P. Morgan & Company............... 200 17
NationsBank......................... 300 25
PNC Bank, N.A....................... 500 15
Signet Banking Corp................. 600 14
Travelers Group..................... 400 18
-------
355
HEALTH CARE--12.7%
Abbott Laboratories................. 600 26
(a)Foundation Health Corp.............. 400 14
Glaxo Wellcome, ADR................. 400 11
(a)Humana, Inc......................... 800 14
Johnson & Johnson................... 500 25
Eli Lilly & Co...................... 300 19
Mallinckrodt Group.................. 300 12
Merck & Co., Inc.................... 400 26
(a)Mid Atlantic Medical Services,
Inc............................... 1,000 14
Sandoz, Ltd......................... 300 17
United Healthcare Corp................. 600 30
-------
208
</TABLE>
56
<PAGE> 58
KEMPER INVESTORS FUND
VALUE + GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
TECHNOLOGY--21.3%
(a)Applied Materials, Inc.............. 600 $ 18
(a)Atmel Corporation................... 500 15
(a)Bay Networks........................ 700 18
(a)Cisco Systems....................... 400 23
(a)Compaq Computer Corp................ 800 39
(a)EMC Corp............................ 1,000 19
Intel Corp.......................... 300 22
International Business Machines
Corp.............................. 200 20
(a)LSI Logic Corp...................... 600 16
(a)Lam Research Corp................... 900 23
Linear Technology Corp.............. 400 12
(a)Maxim Integrated Products........... 500 14
(a)Novellus Systems.................... 500 18
(a)Seagate Technology.................. 400 18
(a)Silicon Graphics Inc................ 700 17
(a)Softkey International............... 800 15
Texas Instruments................... 400 20
(a)3Com Corporation.................... 500 23
-------
350
UTILITIES--3.5%
AT & T.............................. 400 25
(a)Paging Network, Inc................. 700 17
SBC Communications Inc.............. 300 15
-------
57
-------
<CAPTION>
Principal
Amount Value
--------- -------
<S> <C> <C>
TOTAL COMMON STOCK--99.0%
(Cost: $1,651)...................... $ 1,626
MONEY MARKET INSTRUMENTS--6.1%
Yield--5.26%
Due--July 1996
(Cost: $100)
Federal Home Loan Mortgage Corp..... $ 100 100
-------
TOTAL INVESTMENTS--105.1%
(Cost: $1,751)...................... 1,726
LIABILITIES, LESS CASH AND OTHER
ASSETS--(5.1)%........................ (83)
-------
NET ASSETS--100%...................... $ 1,643
=======
</TABLE>
NOTES TO VALUE + GROWTH PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $1,751,000 for federal income tax
purposes at June 30, 1996, the gross unrealized appreciation was
$36,000, the gross unrealized depreciation was $61,000 and the net
unrealized depreciation on investments was $25,000.
See accompanying notes to financial statements.
57
<PAGE> 59
KEMPER INVESTORS FUND
HORIZON 20+ PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES--1.2%
(a)FMC Corp........................... 100 $ 7
CAPITAL GOODS--2.4%
General Electric Co................... 100 9
Xerox Corporation..................... 100 5
-----
14
CONSUMER CYCLICALS--8.7%
Circuit City Stores................... 200 7
Dillard Department Stores............. 100 4
(a)Fruit of The Loom.................. 200 5
Mattel, Inc........................... 200 6
Newell Co............................. 200 6
Philips N.V., ADR..................... 100 3
TJX Companies, Inc.................... 100 3
(a)Toys R Us.......................... 200 6
V.F. Corp............................. 100 6
Wal-Mart Stores....................... 200 5
-----
51
CONSUMER DURABLES--2.2%
Ford Motor Co......................... 100 3
Leggett & Platt Incorporated.......... 200 6
Singer Company N.V.................... 200 4
-----
13
CONSUMER STAPLES--9.8%
American Greetings Corp............... 200 5
Carnival Corp......................... 200 6
(a)Cox Communications Inc............. 200 4
Walt Disney Company................... 100 6
Philip Morris Companies............... 100 10
Procter & Gamble Co................... 100 9
Tele-Communications, Inc.............. 300 5
UST, Inc.............................. 200 7
Wendy's International................. 300 5
-----
57
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
ENERGY--5.5%
AMOCO Corp............................ 100 $ 7
Atlantic Richfield Co................. 100 12
Columbia Gas System................... 100 5
Enron Corp............................ 100 4
Louisiana-Pacific Corp................ 200 4
-----
32
FINANCE--18.5%
American International Group, Inc..... 100 10
Banc One Corporation.................. 100 3
BankAmerica Corp...................... 100 8
Bankers Trust New York Corp........... 100 7
Barnett Banks......................... 100 6
Federal Home Loan Mortgage Corp....... 100 9
Federal National Mortgage
Association......................... 400 13
First Chicago NBD Corp................ 100 4
First Union Corp...................... 100 6
First USA............................. 100 6
MGIC Investment Corp.................. 100 6
NationsBank........................... 100 8
PNC Bank, N.A......................... 200 6
Signet Banking Corp................... 400 9
Travelers Group....................... 150 7
-----
108
HEALTH CARE--9.9%
Abbott Laboratories................... 200 9
(a)Foundation Health Corp............. 100 4
Glaxo Wellcome, ADR................... 200 5
(a)Humana, Inc........................ 200 4
Johnson & Johnson..................... 100 5
Eli Lilly & Co........................ 100 7
Mallinckrodt Group.................... 100 4
Merck & Co., Inc...................... 100 6
(a)Mid Atlantic Medical Services,
Inc................................... 200 3
Sandoz, Ltd........................... 100 6
United Healthcare Corp................ 100 5
-----
58
</TABLE>
58
<PAGE> 60
KEMPER INVESTORS FUND
HORIZON 20+ PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
TECHNOLOGY--20.2%
(a)Applied Materials, Inc............. 100 $ 3
(a)Atmel Corporation.................. 200 6
(a)Bay Networks....................... 200 5
(a)Cisco Systems...................... 100 6
(a)Compaq Computer Corp............... 100 5
(a)EMC Corp........................... 300 6
Intel Corp............................ 100 7
(a)LSI Logic Corp..................... 300 8
(a)Lam Research Corp.................. 300 8
Linear Technology Corp................ 200 6
(a)Maxim Integrated Products.......... 200 5
(a)Novellus Systems................... 300 11
(a)Seagate Technology................. 300 14
(a)Silicon Graphics Inc............... 400 10
(a)Softkey International.............. 200 4
Texas Instruments..................... 100 5
(a)3Com Corporation................... 200 9
-----
118
UTILITIES--3.1%
AT&T.................................. 100 6
(a)Paging Network, Inc................ 300 7
SBC Communications Inc................ 100 5
-----
18
-----
TOTAL COMMON STOCKS--81.5%
(Cost: $483).......................... 476
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
--------- -----
<S> <C> <C>
MONEY MARKET INSTRUMENTS--17.1%
Yield--5.52%
Due--July 1996
(Cost: $100)
Federal Farm Credit Banks............. $ 100 $100
-----
TOTAL INVESTMENTS--98.6%
(Cost: $583).......................... 576
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.4%....................... 8
-----
NET ASSETS--100%........................ $584
=====
</TABLE>
NOTES TO HORIZON 20+ PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $583,000 for federal income tax purposes at
June 30, 1996, the gross unrealized appreciation was $11,000, the gross
unrealized depreciation was $18,000 and the net unrealized depreciation on
investments was $7,000.
See accompanying notes to financial statements.
59
<PAGE> 61
KEMPER INVESTORS FUND
HORIZON 10+ PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES--.6%
(a)FMC Corp........................ 100 $ 7
CAPITAL GOODS--2.7%
Emerson Electric Co................ 100 9
General Electric Co................ 200 17
Xerox Corporation.................. 200 10
--------
36
CONSUMER CYCLICALS--6.1%
Circuit City Stores................ 300 11
Dayton Hudson Corp................. 50 5
Dillard Department Stores.......... 200 7
Mattel, Inc........................ 300 9
Newell Co.......................... 400 12
Philips N.V., ADR.................. 100 3
TJX Companies, Inc................. 200 7
(a)Toys R Us....................... 200 6
V.F. Corp.......................... 100 5
Wal-Mart Stores.................... 600 15
--------
80
CONSUMER DURABLES--1.7%
Ford Motor Co...................... 300 10
Leggett & Platt Incorporated....... 300 8
Singer Company N.V................. 200 4
--------
22
CONSUMER STAPLES--7.8%
American Greetings Corp............ 200 5
Carnival Corp...................... 400 12
(a)Cox Communications Inc.......... 400 9
Walt Disney Company................ 200 13
Philip Morris Companies............ 200 21
Procter & Gamble Co................ 100 9
Tele-Communications, Inc........... 300 5
UST, Inc........................... 500 17
Wendy's International.............. 600 11
--------
102
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
ENERGY--3.8%
AMOCO Corp......................... 100 $ 7
Atlantic Richfield Co.............. 100 12
Columbia Gas System................ 300 16
Enron Corp......................... 200 8
Louisiana-Pacific Corp............. 300 7
--------
50
FINANCE--14.8%
American General Corp.............. 300 11
American International Group,
Inc.............................. 100 10
Banc One Corporation............... 400 14
BankAmerica Corp................... 100 8
Bankers Trust New York Corp........ 100 7
Barnett Banks...................... 200 12
Federal Home Loan Mortgage Corp.... 200 17
Federal National Mortgage
Association...................... 500 17
First Chicago NBD Corp............. 200 8
First Union Corp................... 200 12
First USA.......................... 200 11
Fleet Financial Group, Inc......... 100 4
KeyCorp............................ 100 4
MGIC Investment Corp............... 200 11
J.P. Morgan & Company.............. 100 8
NationsBank........................ 100 8
PNC Bank, N.A...................... 300 9
Signet Banking Corp................ 400 9
Travelers Group.................... 300 14
--------
194
HEALTH CARE--7.4%
Abbott Laboratories................ 300 13
(a)Foundation Health Corp.......... 200 7
Glaxo Wellcome, ADR................ 200 5
(a)Humana, Inc..................... 300 5
Johnson & Johnson.................. 200 10
Eli Lilly & Co..................... 100 6
Mallinckrodt Group................. 200 8
Merck & Co., Inc................... 200 13
(a)Mid Atlantic Medical Services,
Inc.............................. 600 9
Sandoz, Ltd........................ 100 6
United Healthcare Corp............. 300 15
--------
97
</TABLE>
60
<PAGE> 62
KEMPER INVESTORS FUND
HORIZON 10+ PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996 -- (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
TECHNOLOGY--12.2%
(a)Applied Materials, Inc.......... 100 $ 3
(a)Atmel Corporation............... 100 3
(a)Bay Networks.................... 300 8
(a)Cisco Systems................... 100 6
(a)Compaq Computer Corp............ 300 15
(a)EMC Corp........................ 300 6
Intel Corp......................... 200 15
International Business Machines
Corp............................. 100 10
(a)Lam Research Corp. 400 10
(a)LSI Logic Corp.................. 400 10
Linear Technology Corp............. 200 6
(a)Maxim Integrated Products....... 300 8
(a)Novellus Systems 300 11
(a)Seagate Technology.............. 300 14
(a)Silicon Graphics Inc............ 200 5
(a)Softkey International........... 300 6
Texas Instruments.................. 200 10
(a)3Com Corporation................ 300 14
--------
160
UTILITIES--2.7%
AT&T............................... 200 12
(a)Paging Network, Inc............. 600 14
SBC Communications Inc............. 200 10
--------
36
--------
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
TOTAL COMMON STOCKS--59.8%
(Cost: $796)....................... $ 784
MONEY MARKET INSTRUMENTS
Yield--5.28% to 5.31%
Due--July 1996
Federal Farm Credit Banks.......... $ 100 100
Federal Home Loan Mortgage
Corporation...................... 300 299
Federal National Mortgage
Association...................... 100 100
--------
TOTAL MONEY MARKET INSTRUMENTS--38.1%
(Cost: $499)....................... 499
--------
TOTAL INVESTMENTS--97.9%
(Cost: $1,295)..................... 1,283
CASH AND OTHER ASSETS, LESS
LIABILITIES--2.1%.................... 28
--------
NET ASSETS--100%..................... $ 1,311
========
</TABLE>
NOTES TO HORIZON 10+ PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $1,295,000 for federal income tax purposes
at June 30, 1996, the gross unrealized appreciation was $15,000, the gross
unrealized depreciation was $27,000 and the net unrealized depreciation on
investments was $12,000.
See accompanying notes to financial statements.
61
<PAGE> 63
KEMPER INVESTORS FUND - HORIZON 5 PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -----
<S> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES--.9%
(a)FMC Corp........................... 100 $ 7
CAPITAL GOODS--1.9%
General Electric Co................... 100 9
Xerox Corporation..................... 100 5
----
14
CONSUMER CYCLICALS--3.0%
Circuit City Stores................... 200 7
Dillard Department Stores............. 100 4
Mattel, Inc........................... 100 3
Newell Co............................. 200 6
Wal-Mart Stores....................... 100 3
----
23
CONSUMER DURABLES--1.1%
Ford Motor Co......................... 100 3
Leggett & Platt Incorporated.......... 100 3
Singer Company N.V.................... 100 2
----
8
CONSUMER STAPLES--6.6%
American Greetings Corp............... 100 3
Carnival Corp......................... 100 3
(a)Cox Communications Inc............. 200 4
Walt Disney Company................... 100 6
Philip Morris Companies............... 100 10
Procter & Gamble Co................... 100 9
Tele-Communications, Inc.............. 200 4
UST, Inc.............................. 200 7
Wendy's International................. 200 4
----
50
ENERGY--1.5%
Columbia Gas System................... 100 5
Enron Corp............................ 100 4
Louisiana-Pacific Corp................ 100 2
----
11
FINANCE--8.9%
Banc One Corporation.................. 100 3
Barnett Banks......................... 100 6
Federal Home Loan Mortgage Corp....... 100 9
Federal National Mortgage
Association......................... 300 10
First Union Corp...................... 100 6
First USA............................. 100 5
<CAPTION>
Number of
Shares Value
----
<S> <C> <C>
KeyCorp............................... 100 $ 4
NationsBank........................... 100 8
PNC Bank, N.A......................... 200 6
Signet Banking Corp................... 200 5
Travelers Group....................... 100 5
----
67
HEALTH CARE--6.0%
Abbott Laboratories................... 100 4
(a)Foundation Health Corp............. 100 4
Glaxo Wellcome, ADR................... 100 3
(a)Humana, Inc........................ 200 4
Johnson & Johnson..................... 100 5
Eli Lilly & Co........................ 100 7
Merck & Co., Inc...................... 100 6
(a)Mid Atlantic Medical Services,
Inc................................. 100 1
Sandoz, Ltd........................... 100 6
United Healthcare Corp................ 100 5
----
45
TECHNOLOGY--8.4%
(a)Applied Materials, Inc............. 100 3
(a)Bay Networks....................... 200 5
(a)Cisco Systems...................... 100 5
(a)Compaq Computer Corp............... 100 5
(a)EMC Corp........................... 200 4
Intel Corp............................ 100 7
(a)Lam Research Corp.................. 200 5
(a)Maxim Integrated Products.......... 100 3
(a)Novellus Systems................... 100 4
(a)Seagate Technology................. 200 9
(a)Silicon Graphics Inc............... 100 2
(a)Softkey International.............. 100 2
Texas Instruments..................... 100 5
(a)3Com Corporation................... 100 4
----
63
UTILITIES--1.7%
AT&T.................................. 100 6
(a)Paging Network, Inc................ 100 2
SBC Communications Inc................ 100 5
----
13
----
TOTAL COMMON STOCKS--40.0%
(Cost: $305).......................... 301
----
</TABLE>
62
<PAGE> 64
KEMPER INVESTORS FUND - HORIZON 5 PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
----
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.27% - 5.31%
Due--July and August 1996
Federal Farm Credit Banks............. $ 200 $198
Federal Home Loan Mortgage Corp....... 200 200
----
TOTAL MONEY MARKET
INSTRUMENTS--52.9%
(Cost: $398).......................... 398
----
TOTAL INVESTMENTS--92.9%
(Cost: $703).......................... $699
CASH AND OTHER ASSETS, LESS
LIABILITIES--7.1%....................... 53
----
NET ASSETS--100%........................ $752
====
</TABLE>
NOTES TO HORIZON 5 PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $703,000 for federal income tax purposes at
June 30, 1996, the gross unrealized appreciation was $8,000, the gross
unrealized depreciation was $12,000 and the net unrealized depreciation on
investments was $4,000.
See accompanying notes to financial statements.
63
<PAGE> 65
This publication may be distributed to the public only
if preceded or accompanied by a prospectus.
<TABLE>
<S><C>
Distributed by
Investors Brokerage Services, Inc.
[ZURICH Kemper Investors Life Insurance Company
L-1021 (2/96) Kemper ADVANTAGE III Individual Policy form series L-1000 KEMPER 1 Kemper Drive
1052 LIFE LOGO] Long Grove, IL 60049
[RECYCLE LOGO] PRINTED ON RECYCLED PAPER
</TABLE>
