<PAGE> 1
ANNUAL REPORT
KEMPER
ADVANTAGE III
Periodic and Flexible
Payment Variable Annuity
Contracts
KILICO Variable Annuity
Separate Account
Kemper Investors Fund
Period Ended December 31, 1995
[ZURICH KEMPER LIFE LOGO]
<PAGE> 2
DEAR KILICO POLICY OWNER:
- ---------------------------------------
GENERAL ECONOMIC OVERVIEW
Investors enjoyed very positive performance in both the fixed income and stock
markets in 1995. The returns of most leading securities markets worldwide were
significantly higher than they were in 1994.
After several quarters of robust growth, the United States economy seems to be
growing at a pace that investors find comfortable, creating an excellent
environment for financial assets. Contrary to isolated reports that caused some
observers to become concerned, we believe the economy is in no jeopardy of
recession. Its health was confirmed with the news that the economy grew (as
measured by real gross domestic product [GDP]) at an annual rate of 4.2 percent
in the third quarter. This follows much lower growth in the first two quarters,
as the economy was adjusting to the Federal Reserve Board's series of interest
rate increases. The slowdown, in fact, was acknowledged by the Fed when it eased
short-term rates by a small but symbolic 25 basis points in July. Now we know
that the economy was rebounding from July through September.
Growth without a corresponding increase in inflation is very encouraging.
Although we are well along in the economic cycle and at a point when prices
often start hiking up, inflationary pressures have actually been reduced
somewhat.
The Fed reduced rates again in December and January 1996, this time
acknowledging discussions underway to reduce the federal budget deficit. Even
with such reduction's by the Fed, our forecast calls for lower growth ranging
between 2 percent to 3 percent for the next few quarters, with the momentum
likely to come from exports and nonresidential construction.
MARKET OUTLOOK
Slow growth and low inflation is the optimal combination for investors in the
fixed income markets, and we expect them to continue to perform well.
We believe that the opportunities for common stock investors will be
increasingly concentrated in higher quality investments. After hitting new highs
and showing considerable strength for most of the year, the stock market has
shown some vulnerability and then gone on to set records. However, it's
inevitable the current bull market will come to an end some day. In fact, some
sectors may be overextended today.
As we view the new year, companies cannot necessarily count on the economy to
provide above-average earnings support. Rather, stocks that have proven
themselves with a pattern of consistent earnings are likely to attract investor
support. Specifically, sectors that produce more consistent earnings, such as
health care, consumer nondurables, selected technology and selected capital
goods can be expected to do well. Picking the right sectors to invest in will be
the key challenge for equity investors during the next few quarters.
International investing continues to be quite complex. After sinking to its
post-World War II low last year, the value of the U.S. dollar has gained
strength against most foreign currencies. While a stronger dollar favors the
U.S. economy because it reduces the cost of American imports and attracts
foreign capital, a strong dollar in relation to a local currency has the effect
of devaluing a foreign investment. The value of the dollar and the
attractiveness of U.S. investments to foreign investors will be key factors in
the next few months.
We are in the midst of a global recovery, and the same fundamentals that have
driven markets higher in the U.S. can be found in many foreign countries
currently. However, leading international economies continue to lag the U.S. For
example, Japan and Germany, whose economies typically follow U.S. growth, are
not as robust as in past cycles. Moreover, conditions in emerging market
countries underline the importance of careful research and experience in
understanding how these markets work.
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<PAGE> 3
ECONOMIC GUIDEPOSTS
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on the portfolio
performance.
The following are some significant economic guideposts and their investment
rationale that may help your investment decision-making. The 10-year Treasury
rate and the prime rate are prevailing interest rates. The other data report
year-to-year percentage changes.
LOGO
1 Falling interest rates in recent years have been a big plus for financial
assets.
2 The interest rate that commercial lenders charge their best borrowers.
3 Inflation reduces an investor's real return. In the last five years, inflation
has been as high as 6%. The low, moderate inflation of the last few years has
meant high real returns.
Source: Economics Department, Kemper Financial Services, Inc.
4 Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
5 These influence corporate profits and equity performance.
6 An influence on corporate profits and equity performance.
7 An influence on family income and retail sales.
* Data as of November 30, 1995
** Data as of October 31, 1995
Political leadership also has some bearing on the progress of the economy and
the state of the financial markets. In the months preceding a presidential
election year, it has been common for incumbents to attempt to stimulate growth.
Given our Republican Congress and Democratic President, however, we do not
consider this as likely this time.
With the rest of the country, we are closely following political initiatives to
produce a balanced federal budget. This is a political wild card, but we would
expect both the stock and fixed-income markets to react with enthusiasm if
progress can be made.
We would like now to direct your attention to the performance of the
subaccounts, which are investment options available through your annuity
contract. Please take a moment to review the market and performance summaries
prepared by the Kemper Investors Fund portfolio managers.
<TABLE>
<CAPTION>
MONEY MARKET PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -------------------------------------------------------------
PERIODIC FLEXIBLE
-------- --------
<S> <C> <C>
Year Ended 12/31/95 4.31% 4.62%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------
CURRENT NET YIELDS++
For Week Ended 12/31/95
CURRENT COMPOUNDED
ANNUALIZED YIELD EFFECTIVE YIELD
---------------- ----------------
<S> <C> <C>
ADVANTAGE III 3.93% 4.00%
--------------------------------------------------------
</TABLE>
The current annualized yield was 3.80% for the week ended January 31, 1996; the
compounded effective yield was 3.87%.
2
<PAGE> 4
1995 started with the Federal Reserve increasing interest rates a half
percentage point in February and ending with rates decreasing a quarter
percentage in December.
The market generally viewed this second move as a step in the process of
gradually moving away from restrictive monetary conditions toward a more neutral
monetary policy stance, given the economy's moderate growth pace. However, an
extended trend toward lower interest rate levels is not expected at this time.
We believe that there is continuing potential for long-term growth. With
long-term rates at current levels, housing and auto sales should continue to be
stimulated. These and other factors cause us to believe that the economy should
exhibit improved growth as the year progresses.
In the meantime, the Money Market Portfolio currently has a longer than usual
average maturity because of our outlook for stable to slightly lower rates for
the next several months.
Frank Rachwalski
Portfolio Manager February 1, 1996
<TABLE>
<CAPTION>
TOTAL RETURN PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -------------------------------------------------------------
PERIODIC FLEXIBLE
-------- --------
<S> <C> <C>
Year Ended 12/31/95 24.36% 24.72%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------
AVERAGE ANNUAL TOTAL RETURN
PERFORMANCE++
For Period Ended 12/31/95
- ---------------------------------------
<S> <C>
1 Year 14.36%
5 Year 8.41%
10 Year 9.01%
Inception (4-14-82) to Date 10.92%
- ---------------------------------------
</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.
U.S. stock and bond market strength in the third and fourth quarter of 1995
enabled the Total Return Portfolio to produce its second best year in 10 years.
The fixed-income portion of the Portfolio served as a "risk limiter"--investing
in bonds reduces the overall risk of the Portfolio and enables us to
aggressively manage the Portfolio's stock holdings for capital appreciation. The
Portfolio's income comes from both the stocks and bonds within the Portfolio.
Our confidence about the economy throughout the year prompted us to maintain
relatively longer maturities in the government bond portion of the Portfolio,
which provided superior returns. In addition, our larger commitments to favored
stocks in preferred industry sectors were instrumental in boosting the
Portfolio's participation in the 1995 technology rally.
As 1995 drew to a close, we reduced the Portfolio's technology exposure while
increasing its investment in interest rate-sensitive stocks. We look for modest
growth in the economy throughout 1996. For the near term, at least, we expect
U.S. markets to offer more attractive opportunities than international markets.
Gary A. Langbaum
Portfolio Manager February 1, 1996
<TABLE>
<CAPTION>
HIGH YIELD PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -------------------------------------------------------------
PERIODIC FLEXIBLE
-------- --------
<S> <C> <C>
Year Ended 12/31/95 15.89% 16.24%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------
AVERAGE ANNUAL TOTAL RETURN
PERFORMANCE++
For Period Ended 12/31/95
- ---------------------------------------
<S> <C>
1 Year 7.22%
5 Year 16.51%
10 Year 9.28%
Inception (4-14-82) to Date 11.88%
- ---------------------------------------
</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.
Corporate high yield bonds posted solid gains in 1995. Healthy corporate
earnings, slow economic growth and declining interest rates created a positive
environment for lower-rated and non-rated securities.
1995 was a good year. The High Yield Portfolio generated a strong total return,
which outweighed its few credit concerns. The corporate sector benefited from
favorable levels of supply and demand. Demand for the higher income offered by
high yield corporate bonds was stimulated by a decline in yields in the U.S.
Treasury and investment grade sectors.
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<PAGE> 5
At the same time, there was a decrease in new issues, which also helped high
yield prices. The Portfolio's exposure to BB- rated bonds, in particular,
contributed to performance. BB- rated bonds are the highest quality tier of high
yield bonds, and their price movement tends to be more closely correlated to
U.S. Treasuries than lower quality bonds. This was positive for the Portfolio as
the U.S. Treasury market rallied throughout most of the year.
Looking ahead, we anticipate continued slow economic growth, a benign rate of
inflation and the possibility of further interest rate cuts. We also anticipate
a favorable supply and demand balance. Together, these factors should be
positive for the Portfolio and the high yield market overall.
Michael A. McNamara
Harry E. Resis, Jr.
Co-Portfolio Managers February 1, 1996
<TABLE>
<CAPTION>
EQUITY PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -------------------------------------------------------------
PERIODIC FLEXIBLE
-------- --------
<S> <C> <C>
Year Ended 12/31/95 31.27% 31.66%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------
AVERAGE ANNUAL TOTAL RETURN
PERFORMANCE++
For Period Ended 12/31/95
- ----------------------------------------
<S> <C>
1 Year 21.57%
5 Year 16.04%
10 Year 11.22%
Inception (12-13-83) to Date 12.37%
- ----------------------------------------
</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.
NOTE: C. Beth Cotner, portfolio manager of the Equity Portfolio, resigned in
early September to pursue other opportunities. Until a successor is named, the
Portfolio is being managed by Steven H. Reynolds, chief investment officer for
equities. In addition, the Equity Portfolio will be renamed the Growth Portfolio
as of May 1, 1996. All objectives of the Portfolio will remain unchanged.
The Equity Portfolio posted solid gains for the year ended December 31, 1995,
despite increasing market volatility. Concerns about the longevity of the
technology sector's bull run and the outlook for corporate earnings growth
prompted some profit taking during the fourth quarter, resulting in a series of
modest market corrections. Technology stocks were particularly hard hit at
year-end, following some disappointing earnings announcements and reports of
rising inventories in the telecommunications and semiconductor arenas.
Through the fourth quarter, we focused on reducing the Portfolio's exposure to
technology, health care and consumer non-durable stocks, which had enjoyed
strong gains earlier in the year. In addition, we've eliminated several
positions that proved too small to make a meaningful contribution to
performance. With expectations for the economy to strengthen modestly during the
first half of 1996, we deployed some of those assets into energy (Enron,
Schlumberger, Union Texas Petroleum) and communications/media (Viacom, Cox
Communications, AirTouch) sectors. Selected housing-related stocks (Armstrong,
Shaw Industries, Home Depot) were also added to the Portfolio. Following a
strong increase in mortgage loan applications in recent months, we believe these
stocks may benefit from increased activity during the coming months.
Going forward, our outlook remains positive. While relatively low interest rates
and low inflation should favor growth stocks, we think it's going to be a stock
picker's market in 1996. In this environment, we believe our strong research and
analytical capabilities can help to give us an edge.
Steven H. Reynolds
Portfolio Manager February 1, 1996
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -------------------------------------------------------------
PERIODIC FLEXIBLE
-------- --------
<S> <C> <C>
Year Ended 12/31/95 17.46% 17.81%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 12/31/95
------------------------------------------------------
<S> <C>
1 Year 8.84%
5 Year 5.22%
Inception (11-3-89) to Date 6.00%
------------------------------------------------------
</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.
4
<PAGE> 6
The government market posted impressive gains in 1995 as slower economic growth
quelled investors' concerns about inflation. The government market experienced
bouts of market volatility during the year as investors questioned the depth of
the inventory correction, the underlying strength of the economy and the
possibility of a federal budget deficit accord. By the end of the year, the
yield on the two year Treasury note fell below 5.25 percent and the yield on the
30 year long bond pierced 6.0 percent for the first time in two years.
The excellent total return performance of the Portfolio was due to our decision
to maintain a long duration and to favor U.S. Treasuries over mortgages for much
of the year. Early in the second quarter, the Portfolio's U.S. Treasury holdings
were increased and U.S. Treasuries outperformed mortgages for most of the period
as volatility and prepayment fears caused mortgages to underperform their U.S.
Treasury counterparts.
We anticipate continued economic growth at a non-inflationary pace, and a steady
to somewhat lower interest rate environment. If a meaningful balanced federal
budget agreement is ironed out, the potential for further interest rate declines
would be enhanced. The environment for fixed-income investments should remain
positive.
J. Patrick Beimford
Portfolio Manager February 1, 1996
<TABLE>
<CAPTION>
INTERNATIONAL PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -------------------------------------------------------------
PERIODIC FLEXIBLE
-------- --------
<S> <C> <C>
Year Ended 12/31/95 11.39% 11.72%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 12/31/95
------------------------------------------------------
<S> <C>
1 Year 3.50%
Inception (1-6-92) to Date 5.98%
------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one-year (6%) lifetime (3%). 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 International Portfolio had a continued commitment to the mature European
markets, eschewing the troubled Japanese and Latin American markets, for most of
1995. Specifically, peripheral countries such as Sweden, the Netherlands and
Ireland presented growth opportunities, and participation in the smaller but
attractive Ireland market complemented the Portfolio's exposure to the United
Kingdom. Industries we favored included pharmaceuticals, financial services,
communications and retail companies.
We made several strategic shifts as the year ended. On the expectation that the
"long-sought" recovery was finally underway in Japan, the Portfolio boosted its
investment in Japanese holdings. Confirmation that Japan's economy is turning
around should result in heightened investment. Even with December's adjustment,
the Portfolio still had significantly less exposure to Japan than the Morgan
Stanley Capital International EAFE index*. As Japan's prospects improve, so do
the markets of Thailand and Singapore, and we also increased the Portfolio's
investment in those markets. Historically, these markets have performed well
when interest rates were stable or declining in the U.S.
At the same time, the Portfolio backed away from its favored telecommunications
sector. Looking forward, we expect accommodative monetary policies to help
enhance the prospects of financial stocks in Europe as well as elsewhere around
the world. We look for defensive growth companies, such as pharmaceuticals and
consumer-related stocks, to do well.
* The Morgan Stanley Capital International EAFE index is an unmanaged index that
is a generally accepted benchmark for major overseas market.
Dennis H. Ferro
Portfolio Manager February 1, 1996
5
<PAGE> 7
<TABLE>
<CAPTION>
SMALL CAPITALIZATION PERCENT CHANGE IN
EQUITY SUBACCOUNT ACCUMULATION UNIT VALUE+
- -------------------------------------------------------------
PERIODIC FLEXIBLE
-------- --------
<S> <C> <C>
Year Ended 12/31/95 28.41% 28.79%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 12/31/95
------------------------------------------------------
<S> <C>
1 Year 19.81%
Inception (5-1-94) to Date 13.78%
------------------------------------------------------
</TABLE>
Average annual total return performance reflects surrender charges as follows:
one-year (6%) and lifetime (5%). 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.
NOTE: As of May 1, 1996, the Small Capitalization Equity Portfolio will be
renamed the Small Cap Growth Portfolio. All objectives of the Portfolio will
remain unchanged.
After a year of relative underperformance, small company stocks came back to
life in the third quarter of 1995, as the market began to recognize their
improved fundamentals relative to larger companies. Some of those gains were
reversed in the fourth quarter, however, as investors became increasingly
concerned about high valuations in the technology sector and expectations of
slower corporate earnings growth.
Technology stocks were particularly hard hit at year-end, following some
disappointing earnings announcements and reports of rising inventories in the
telecommunications and semiconductor arenas. Despite these challenges, the Small
Capitalization Equity Portfolio ended the period--and the year--with solid
double-digit gains.
Through the second half of 1995, we trimmed the Portfolio's technology exposure,
along with stocks that had reached our price targets. New purchases for the
Portfolio included several health care stocks (ICU Medical, Physician Sales and
Service, Total Renal Care) and selected consumer goods companies (Pete's
Brewing, Manhattan Bagel Co.) that we believe are positioned for consistent
growth within their respective markets.
Looking to 1996, our outlook remains positive. Small cap stocks are still
generally in a secular growth trend, and earnings and valuations among the small
cap companies currently remain attractive relative to the large caps. Looking
ahead, it's apparent that earnings estimates are probably going to be hard to
meet, let alone beat, in the months ahead. With that in mind, we'll be focused
on classic growth companies--those that can help to maintain consistent earnings
despite a slower economy.
Gary A. Langbaum
Portfolio Manager February 1, 1996
We appreciate your support as a Kemper policy owner and look forward to
continuing to serve your insurance needs.
Sincerely,
John B. Scott Stephen B. Timbers
John B. Scott Stephen B. Timbers
President President
Chief Executive Officer Chief Executive Officer
Kemper Investors Life Chief Investment Officer
Insurance Company Kemper Financial Services,
Inc.
[SCOTT PHOTO] [TIMBERS PHOTO]
6
<PAGE> 8
+ 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
Total Return Portfolio, .60% for the High Yield Portfolio, .60% for the Equity
Portfolio, .55% for the Government Securities Portfolio, .65% for the Small
Capitalization Equity Portfolio and .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,
Equity, Government Securities and High Yield Subaccounts one year (6%) and
five year (2%); Kemper
ADVANTAGE III International Subaccount one year (6%) and lifetime (3%); Kemper
ADVANTAGE III Small Capitalization Equity Subaccount 1 year (6%) and lifetime
(5%).
The Money Market Subaccount's current annualized yield is the seven-day
annualized net investment income per share as of 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 Money Market
Portfolio 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 Portfolio, 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 Portfolio, 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 Capitalization Equity Portfolio, 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 that was in effect at
that time. Under current law, this no longer applies.
7
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8
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KEMPER INVESTORS FUND
FINANCIAL STATEMENTS
9
<PAGE> 11
[THIS PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE> 12
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER INVESTORS FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the Money Market, Total Return, High Yield,
Equity, Government Securities, International and Small Capitalization Equity
Portfolios, comprising the Kemper Investors Fund as of December 31, 1995, the
related statement of operations for the year then ended and the statement of
changes in net assets for each of the two years in the period then ended (except
for the Small Capitalization Equity Portfolio which is for the year ended
December 31, 1995 and the period May 2, 1994, commencement of operations,
through December 31, 1994), and the financial highlights for each of the fiscal
periods since 1991. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios of Kemper Investors Fund at December 31, 1995, the results of
their operations and the changes in their net assets for the fiscal periods
referred to above and the financial highlights for each of the fiscal periods
since 1991, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 16, 1996
11
<PAGE> 13
KEMPER INVESTORS FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small
Money Total High Government Capitalization
Market Return Yield Equity Securities International Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost:
$61,803, $566,602, $255,498,
$372,099, $91,855, $118,260 and
$30,571, respectively):......... $61,803 653,496 255,219 434,535 96,521 134,008 35,234
Repurchase agreements, at value
(Cost: $10,485)................. -- -- -- -- 10,485 -- --
Cash.............................. -- 843 516 689 1 441 1,153
Receivable for:
Investments sold................ -- 3,020 511 1,036 3,090 59 39
Portfolio shares sold........... 127 403 302 270 37 126 66
Interest and dividends.......... 313 4,985 5,006 355 880 185 5
--------- --------- --------- --------- ---------- ------------- ------
Total assets................ 62,243 662,747 261,554 436,885 111,014 134,819 36,497
LIABILITIES AND NET ASSETS
Cash overdraft.................... 523 -- -- -- -- -- --
Payable for:
Investments purchased........... -- 1,379 3,417 21,364 15,661 -- 1,038
Portfolio shares redeemed....... 435 1,126 602 753 91 231 53
Dividends....................... 159 -- -- -- -- -- --
Management fee.................. 29 302 128 201 43 83 18
Custodian and transfer agent
fees and related expenses..... 3 29 11 14 14 4 6
Other........................... 16 17 19 20 20 20 9
--------- --------- --------- --------- ---------- ------------- ------
Total liabilities........... 1,165 2,853 4,177 22,352 15,829 338 1,124
--------- --------- --------- --------- ---------- ------------- ------
Net assets........................ $61,078 659,894 257,377 414,533 95,185 134,481 35,373
======= ======= ======= ======= =========== =========== ============
ANALYSIS OF NET ASSETS
Paid-in capital................... $61,928 530,034 258,624 287,880 78,510 115,194 29,437
Undistributed net realized gain
(loss) on investments and
foreign currency transactions... -- 19,445 (22,162) 58,026 (4,477) 887 1,049
Net unrealized appreciation
(depreciation) on investments
and assets and liabilities in
foreign currencies.............. (850) 86,894 (279) 62,436 4,666 15,808 4,663
Undistributed net investment
income.......................... -- 23,521 21,194 6,191 16,486 2,592 224
--------- --------- --------- --------- ---------- ------------- ------
Net assets applicable to shares
outstanding..................... $61,078 659,894 257,377 414,533 95,185 134,481 35,373
======= ======= ======= ======= =========== =========== ============
THE PRICING OF SHARES
Shares outstanding, no par
value........................... 61,078 255,878 204,457 127,086 74,992 98,119 26,283
======= ======= ======= ======= =========== =========== ============
Net asset value and redemption
price per share (Net
assets / shares outstanding).... $ 1.00 2.579 1.259 3.262 1.269 1.371 1.346
======= ======= ======= ======= =========== =========== ============
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 14
KEMPER INVESTORS FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small
Money Total High Government Capitalization
Market Return Yield Equity Securities International Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------ -------- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest......................... $4,532 19,994 26,569 2,255 7,565 708 249
Dividends........................ -- 5,918 57 4,109 -- 2,435 50
------ -------- ------ ------ ------ ------ -----
4,532 25,912 26,626 6,364 7,565 3,143 299
Less foreign taxes withheld...... -- -- -- -- -- 227 --
------ -------- ------ ------ ------ ------ -----
Total investment income........ 4,532 25,912 26,626 6,364 7,565 2,916 299
Expenses:
Management fee................... 373 3,461 1,463 2,132 538 946 151
Custodian and transfer agent fees
and related expenses........... 17 140 47 45 58 157 28
Professional fees................ 8 53 21 28 8 10 8
Trustees' fees and other......... 11 130 58 72 38 45 15
------ -------- ------ ------ ------ ------ -----
Total expenses................. 409 3,784 1,589 2,277 642 1,158 202
------ -------- ------ ------ ------ ------ -----
Net investment income.............. 4,123 22,128 25,037 4,087 6,923 1,758 97
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on sales
of investments and foreign
currency transactions.......... -- 47,119 (2,027) 58,852 2,730 1,344 1,186
Net realized gain from futures
transactions................... -- -- -- -- 178 -- --
------ -------- ------ ------ ------ ------ -----
Net realized gain (loss)....... -- 47,119 (2,027) 58,852 2,908 1,344 1,186
Change in net unrealized
appreciation (depreciation) on
investments and assets and
liabilities in foreign
currencies..................... (355) 74,735 15,859 36,452 7,318 12,368 4,361
------ -------- ------ ------ ------ ------ -----
Net gain (loss) on investments..... (355) 121,854 13,832 95,304 10,226 13,712 5,547
------ -------- ------ ------ ------ ------ -----
Net increase in net assets
resulting from operations........ $3,768 143,982 38,869 99,391 17,149 15,470 5,644
====== ======= ====== ====== ====== ====== =====
</TABLE>
13
<PAGE> 15
KEMPER INVESTORS FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
Money Market Total Return
Portfolio Portfolio
--------------------- ---------------------
1995 1994 1995 1994
-------- ------ ------- -------
<S> <C> <C> <C> <C>
Operations:
Net investment income...................................................... $ 4,123 4,049 22,128 19,352
Net realized gain (loss)................................................... -- -- 47,119 (26,384)
Change in unrealized appreciation (depreciation)........................... (355) (495) 74,735 (55,621)
Capital contribution from investment manager............................... 355 495 -- --
-------- ------ ------- -------
Net increase (decrease) in net assets resulting from operations.......... 4,123 4,049 143,982 (62,653)
Equalization credits (charges)............................................... -- -- (1,827) 721
Dividends to shareholders:
Distribution from net investment income.................................... (4,123) (4,049) (18,740) (15,302)
Distribution from net realized gain on investments......................... -- -- -- (43,357)
-------- ------ ------- -------
Total dividends to shareholders.............................................. (4,123) (4,049) (18,740) (58,659)
Net increase (decrease) from capital share transactions...................... (22,743) 15,644 (50,115) 63,355
-------- ------ ------- -------
Total increase (decrease) in net assets...................................... (22,743) 15,644 73,300 (57,236)
Net assets:
Beginning of year.......................................................... 83,821 68,177 586,594 643,830
-------- ------ ------- -------
End of year................................................................ $ 61,078 83,821 659,894 586,594
======== ====== ======= =======
Undistributed net investment income at end of year........................... $ -- -- 23,521 21,265
======== ====== ======= =======
</TABLE>
(a) For the period from May 2, 1994 (commencement of operations) to December 31,
1994.
See accompanying notes to financial statements.
14
<PAGE> 16
<TABLE>
<CAPTION>
Government Small
High Yield Equity Securities International Capitalization
Portfolio Portfolio Portfolio Portfolio Equity Portfolio
- ------------------- ------------------- ------------------ ------------------- -------------------
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994(a)
- ------- ------- ------- ------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25,037 21,022 4,087 2,041 6,923 6,026 1,758 828 97 37
(2,027) (6,998) 58,852 23,805 2,908 (6,812) 1,344 1,853 1,186 (128)
15,859 (19,015) 36,452 (37,642) 7,318 (2,415) 12,368 (7,631) 4,361 302
-- -- -- -- -- -- -- -- -- --
- ------- ------- ------- ------- ------ ------- ------- ------- ------- ------
38,869 (4,991) 99,391 (11,796) 17,149 (3,201) 15,470 (4,950) 5,644 211
36 (1,390) 249 432 (2,310) (2,672) (37) 422 97 60
(22,165) (19,251) (1,120) -- (6,202) (5,312) (970) -- (76) --
-- -- (24,649) (14,929) -- (2,656) (1,941) (1,170) -- --
- ------- ------- ------- ------- ------ ------- ------- ------- ------- ------
(22,165) (19,251) (25,769) (14,929) (6,202) (7,968) (2,911) (1,170) (76) --
21,222 11,083 18,954 63,540 (9,234) (12,289) (751) 39,528 16,799 12,538
- ------- ------- ------- ------- ------ ------- ------- ------- ------- ------
37,962 (14,549) 92,825 37,247 (597) (26,130) 11,771 33,830 22,464 12,809
219,415 233,964 321,708 284,461 95,782 121,912 122,710 88,880 12,909 100
- ------- ------- ------- ------- ------ ------- ------- ------- ------- ------
257,377 219,415 414,533 321,708 95,185 95,782 134,481 122,710 35,373 12,909
======= ======= ======= ======= ====== ======= ======= ======= ======= ======
21,194 18,280 6,191 3,001 16,486 18,069 2,592 1,716 224 97
======= ======= ======= ======= ====== ======= ======= ======= ======= ======
</TABLE>
15
<PAGE> 17
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, Equity, Government Securities,
International and Small Capitalization Equity Portfolios. The Fund has an
unlimited number of authorized shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION.
Investments are stated at value.
The securities of the Total Return, High Yield, Equity, Government Securities,
International and Small Capitalization Equity Portfolios 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.
16
<PAGE> 18
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 premium and discount amortization on money market
instruments and mortgage-backed securities; it also includes original issue and
market discount amortization on long-term fixed income 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 December 31, 1995, the Government Securities Portfolio
had $15,661,000 of purchase commitments outstanding (16% 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 the Total Return, High Yield,
Equity, Government Securities, International and Small Capitalization Equity
Portfolios 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 with the special provisions of the Internal Revenue
Code available to investment companies and therefore no federal income tax
provision is required. The accumulated net realized loss on sales of investments
for federal income tax purposes at December 31, 1995 amounted to approximately
$22,141,000 in the High Yield Portfolio and $3,904,000 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 2003.
DIVIDENDS TO SHAREHOLDERS.
Dividends payable to shareholders are recorded by all Portfolios except the
Money Market Portfolio on the ex-dividend date. Net realized capital gains, if
any, reduced by capital loss carryovers, will be distributed at least annually.
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.
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Distributions to shareholders 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 Kemper Financial Services, Inc. (KFS),
the Fund's investment manager. 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 and Equity Portfolios, .65% for
the Small Capitalization Equity Portfolio and .75% for the International
Portfolio. For the year ended December 31, 1995, the Fund incurred management
fees of $9,064,000. Kemper Distributors, Inc., an affiliate of KFS, is the
distributor and principal underwriter for shares of the Fund.
Kemper Asset Holdings, Inc. (KAHI), a subsidiary of Kemper Corporation, the
parent company of KFS, arranged for the issuance of a $3,201,000 irrevocable
letter of credit from The Bank of New York for the benefit of the Fund. The
letter of credit supports the payment of principal and interest on the Orange
County, California obligation held in the Money Market Portfolio. The Fund and
KAHI are parties to an agreement related to the letter of credit which provides,
among other things, that, in connection with a payment of principal or interest
under the letter of credit, the Fund will transfer to KAHI any proceeds received
under the Orange County obligation.
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the year ended December 31, 1995, the Fund made no direct payments to its
officers and incurred trustees' fees of $124,000 to independent trustees.
(4) INVESTMENT TRANSACTIONS
For the year ended December 31, 1995, investment transactions (excluding
temporary short-term investments) are as follows (in thousands):
<TABLE>
<CAPTION>
Small
Total High Government Capitalization
Return Yield Equity Securities International Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Purchases............................. $ 724,808 265,763 292,542 286,819 145,372 32,114
--------- --------- --------- ---------- ------------- ------
Proceeds from sales................... 746,193 252,152 342,982 287,532 142,314 16,272
--------- --------- --------- ---------- ------------- ------
</TABLE>
18
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund (in
thousands):
<TABLE>
<CAPTION>
Year ended December 31, 1995
---------------------------------------------------------------------
Money
Market Total Return High Yield Equity
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
Less 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 Small
Securities International Capitalization
Portfolio Portfolio Equity 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
Less 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>
<TABLE>
<CAPTION>
Year ended December 31, 1994
---------------------------------------------------------------------
Money
Market Total Return High Yield Equity
Portfolio Portfolio Portfolio Portfolio
--------- ------------------ ---------------- -----------------
(a) Shares Amount Shares Amount Shares Amount
--------- ------- -------- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold ............ $ 218,865 55,759 $127,333 105,586 $122,106 63,325 $173,691
Shares issued in
reinvestment
of dividends ......... 3,923 27,538 58,659 16,697 19,251 5,689 14,929
--------- ------ -------- ------- -------- ------ --------
222,788 83,297 185,992 122,283 141,357 69,014 188,620
Less shares redeemed ... 207,144 54,564 122,637 111,925 130,274 45,216 125,080
--------- ------ -------- ------- -------- ------ --------
Net increase (decrease)
from capital share
transactions .......... $ 15,644 28,733 $ 63,355 10,358 $ 11,083 23,798 $ 63,540
========= ====== ======== ======= ======== ====== ========
<CAPTION>
Year ended December 31, 1994
--------------------------------------------------------
Government Small
Securities International Capitalization
Portfolio Portfolio Equity Portfolio(b)
---------------- ---------------- -------------------
Shares Amount Shares Amount Shares Amount
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ............ 18,859 $ 17,396 78,847 $ 99,933 16,090 $16,218
Shares issued in
reinvestment
of dividends ......... 7,004 7,968 952 1,170 -- --
------- -------- ------ -------- ------ -------
25,863 25,364 79,799 101,103 16,090 16,218
Less shares redeemed ... 38,208 37,653 49,218 61,575 3,671 3,680
------- -------- ------ -------- ------ -------
Net increase (decrease)
from capital share
transactions .......... (12,345) $(12,289) 30,581 $ 39,528 12,419 $12,538
======= ======== ====== ======== ====== =======
</TABLE>
(a) For the Money Market Portfolio, dollar amounts and number of shares are the
same.
(b) For the period from May 2, 1994 (commencement of operations) to December 31,
1994.
19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(6) FORWARD FOREIGN CURRENCY CONTRACTS
In order to protect itself against a decline in the value of particular foreign
currencies against the U.S. Dollar, the International Portfolio has entered into
forward contracts to deliver foreign currency in exchange for U.S. Dollars as
described below. The Portfolio bears the market risk that arises from changes in
foreign exchange rates, and accordingly, the net unrealized gain on these
contracts is reflected in the accompanying financial statements. The Portfolio
also bears the credit risk if the counterparty fails to perform under the
contract. At December 31, 1995, the Portfolio had the following forward foreign
currency contracts outstanding with settlement dates in March, 1996.
<TABLE>
<CAPTION>
Unrealized
Foreign Currency Contract Gain (Loss)
to be delivered amount at 12/31/95
(in thousands) (in thousands) (in thousands)
<S> <C> <C>
- ------------------------------------------------------------------
3,868 British Pounds $ 5,900 $(96)
- ------------------------------------------------------------------
22,898 French Francs 4,595 (92)
- ------------------------------------------------------------------
2,628 German Marks 1,820 (22)
- ------------------------------------------------------------------
1,554,990 Japanese Yen 15,529 325
- ------------------------------------------------------------------
2,854 Swiss Francs 2,440 (56)
- ------------------------------------------------------------------
Net unrealized gain $ 59
- ------------------------------------------------------------------
</TABLE>
20
<PAGE> 22
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................ $ 1.00 1.00 1.00 1.00 1.00
Net investment income and dividends declared...................... .06 .04 .03 .03 .06
-------- ------- ------- ------- -------
Net asset value, end of year...................................... $ 1.00 1.00 1.00 1.00 1.00
======== ======= ======= ======= =======
TOTAL RETURN (%).................................................. 5.66 3.96 2.83 3.43 5.89
RATIOS TO AVERAGE NET ASSETS (%):
Expenses.......................................................... .55 .53 .56 .57 .56
Net investment income............................................. 5.52 3.95 2.79 3.38 5.80
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands).......................... $ 61,078 83,821 68,177 75,270 76,479
</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>
Year ended December 31,
--------------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................ $ 2.112 2.586 2.473 2.658 2.071
Income from investment operations:
Net investment income........................................... .084 .069 .069 .061 .080
Net realized and unrealized gain (loss)......................... .453 (.313) .214 (.026) .677
-------- ------- ------- ------- -------
Total from investment operations.................................. .537 (.244) .283 .035 .757
Less dividends:
Distribution from net investment income......................... .070 .060 .050 .080 .110
Distribution from net realized gain............................. -- .170 .120 .140 .060
-------- ------- ------- ------- -------
Total dividends................................................... .070 .230 .170 .220 .170
-------- ------- ------- ------- -------
Net asset value, end of year...................................... $ 2.579 2.112 2.586 2.473 2.658
======== ======= ======= ======= =======
TOTAL RETURN (%).................................................. 25.97 (9.50) 12.13 1.69 37.90
RATIOS TO AVERAGE NET ASSETS (%):
Expenses.......................................................... .60 .61 .59 .60 .61
Net investment income............................................. 3.52 3.13 3.19 3.41 3.46
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands).......................... $659,894 586,594 643,830 528,007 412,772
Portfolio turnover rate (%)....................................... 118 128 191 160 187
</TABLE>
21
<PAGE> 23
FINANCIAL HIGHLIGHTS--(CONTINUED)
HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................... $ 1.185 1.338 1.209 1.144 .914
Income from investment operations:
Net investment income.............................................. .125 .116 .120 .125 .140
Net realized and unrealized gain (loss)............................ .069 (.149) .109 .070 .300
-------- ------- ------- ------- -------
Total from investment operations..................................... .194 (.033) .229 .195 .440
Less distribution from net investment income......................... .120 .120 .100 .130 .210
-------- ------- ------- ------- -------
Net asset value, end of year......................................... $ 1.259 1.185 1.338 1.209 1.144
======== ======= ======= ======= =======
TOTAL RETURN (%)..................................................... 17.40 (2.25) 20.00 17.76 51.83
RATIOS TO AVERAGE NET ASSETS (%):
Expenses............................................................. .65 .65 .63 .64 .67
Net investment income................................................ 10.27 9.49 9.54 10.44 12.95
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands)............................. $257,377 219,415 233,964 162,158 121,608
Portfolio turnover rate (%).......................................... 90 98 84 57 31
</TABLE>
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................... $ 2.665 2.935 2.631 2.642 1.681
Income from investment operations:
Net investment income.............................................. .034 .018 .004 .007 .017
Net realized and unrealized gain (loss)............................ .793 (.138) .370 .082 .974
-------- ------- ------- ------- -------
Total from investment operations..................................... .827 (.120) .374 .089 .991
Less dividends:
Distribution from net investment income............................ .010 -- .010 .005 .030
Distribution from net realized gain................................ .220 .150 .060 .095 --
-------- ------- ------- ------- -------
Total dividends...................................................... .230 .150 .070 .100 .030
-------- ------- ------- ------- -------
Net asset value, end of year......................................... $ 3.262 2.665 2.935 2.631 2.642
======== ======= ======= ======= =======
TOTAL RETURN (%)..................................................... 32.97 (4.02) 14.63 3.57 59.47
RATIOS TO AVERAGE NET ASSETS (%):
Expenses............................................................. .64 .66 .64 .64 .67
Net investment income................................................ 1.15 .69 .30 .65 .83
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands)............................. $414,533 321,708 284,461 203,624 118,983
Portfolio turnover rate (%).......................................... 88 106 78 78 106
</TABLE>
22
<PAGE> 24
FINANCIAL HIGHLIGHTS--(CONTINUED)
GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- ------- ------------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................ $ 1.142 1.267 1.277 1.287 1.175
Income from investment operations:
Net investment income........................................... .084 .067 .060 .064 .090
Net realized and unrealized gain (loss)......................... .123 (.102) .020 .006 .082
-------- ------- ------- ------ ------
Total from investment operations.................................. .207 (.035) .080 .070 .172
Less dividends:
Distribution from net investment income......................... .080 .060 .060 .050 .060
Distribution from net realized gain............................. -- .030 .030 .030 --
-------- ------- ------- ------ ------
Total dividends................................................... .080 .090 .090 .080 .060
-------- ------- ------- ------ ------
Net asset value, end of year...................................... $ 1.269 1.142 1.267 1.277 1.287
======== ======= ======= ====== ======
TOTAL RETURN (%).................................................. 18.98 (2.74) 6.48 5.90 15.22
RATIOS TO AVERAGE NET ASSETS (%):
Expenses.......................................................... .65 .63 .60 .61 .63
Net investment income............................................. 7.08 5.69 5.05 6.08 7.42
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands).......................... $ 95,185 95,782 121,912 98,814 59,064
Portfolio turnover rate (%)....................................... 275 606 534 492 141
</TABLE>
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
January 6,
Year ended December 31, 1992 to
-------------------------------- December 31,
1995 1994 1993 1992
-------- ------- ------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............................. $ 1.244 1.306 .993 1.000
Income from investment operations:
Net investment income........................................... .018 .009 .010 .010
Net realized and unrealized gain (loss)......................... .139 (.056) .313 (.017)
-------- ------- ------- ------
Total from investment operations.................................. .157 (.047) .323 (.007)
Less dividends:
Distribution from net investment income......................... .010 -- .009 --
Distribution from net realized gain............................. .020 .015 .001 --
-------- ------- ------- ------
Total dividends................................................... .030 .015 .010 --
-------- ------- ------- ------
Net asset value, end of period.................................... $ 1.371 1.244 1.306 .993
======== ======= ======= ======
TOTAL RETURN (NOT ANNUALIZED) (%)................................. 12.83 (3.59) 32.83 (.72)
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED) (%):
Expenses.......................................................... .92 .93 .92 1.11
Net investment income............................................. 1.39 .74 .86 1.01
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)........................ $134,481 122,710 88,880 19,447
Portfolio turnover rate (annualized) (%).......................... 126 107 116 129
</TABLE>
23
<PAGE> 25
FINANCIAL HIGHLIGHTS--(CONTINUED)
SMALL CAPITALIZATION EQUITY PORTFOLIO
<TABLE>
<CAPTION>
May 2, 1994
Year ended to
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................... $ 1.039 1.000
Income from investment operations:
Net investment income.................................. .005 .008
Net realized and unrealized gain....................... .307 .031
-------- ------
Total from investment operations......................... .312 .039
Less distribution from net investment income............. .005 --
-------- ------
Net asset value, end of period........................... $ 1.346 1.039
======== ======
TOTAL RETURN (NOT ANNUALIZED) (%)........................ 30.07 3.95
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED) (%):
Expenses................................................. .87 1.25
Net investment income.................................... .42 .91
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)............... $35,373 12,909
Portfolio turnover rate (annualized) (%)................. 81 58
</TABLE>
NOTE FOR ALL PORTFOLIOS:
Financial Highlights reflect data at the Portfolio level and exclude contract
specific charges which would reduce Total Return.
24
<PAGE> 26
KEMPER INVESTORS FUND
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Value
-------
<S> <C>
CORPORATE OBLIGATIONS
BANKING AND CONSUMER FINANCING--19.6%
Associates Corporation of North America
5.78%, 2/7/96............................... $ 1,988
Barton Capital Corporation
5.83%, 1/24/96.............................. 1,993
Countrywide Funding Corporation
5.51%, 7/31/96.............................. 2,005
Mitsubishi Motors Credit of America, Inc.
6.01%, 1/19/96.............................. 1,994
Sierra Funding Corporation
6.09%, 1/25/96.............................. 1,992
Svenska Handelsbanken, Inc.
5.77%, 2/23/96.............................. 1,983
-------
11,955
CAPTIVE BUSINESS FINANCE--19.6%
(a)AT&T Capital Corporation
5.78%, 1/29/96.............................. 2,000
Caterpillar Financial Services Corporation
5.79%, 1/29/96.............................. 1,991
CSW Credit, Inc.
5.76%, 2/6/96............................... 1,989
(a)Finova Capital Corporation
5.91%, 3/15/96.............................. 2,000
Hanson Finance (UK) PLC
5.77%, 2/16/96.............................. 1,985
(a)USL Capital Corporation
6.00%, 2/29/96.............................. 2,002
-------
11,967
COMMUNICATIONS--3.3%
NYNEX Corporation
5.78%, 2/9/96............................... 1,988
CONSUMER PRODUCTS AND SERVICES--2.4%
American Home Products Corporation
5.78%, 2/12/96.............................. 1,490
CORPORATE FINANCING--9.8%
Astro Capital Corp.
5.86%, 3/8/96............................... 1,979
(a)Beta Finance Corporation
5.25%, 1/3/96............................... 2,000
Ranger Funding Corporation
5.80%, 2/1/96............................... 1,990
-------
5,969
FINANCIAL SERVICES--13.1%
(a)Bear Stearns Companies Inc.
5.98%, 1/19/96.............................. 2,000
(a)CS First Boston, Inc.
5.99%, 1/10/96.............................. 2,000
(a)Goldman, Sachs & Co.
5.90%, 1/25/96.............................. 2,000
<CAPTION>
Value
-------
<S> <C>
Nomura Holding America Inc.
5.86%, 2/16/96.............................. $ 1,985
-------
7,985
MANUFACTURING AND INDUSTRIAL PRODUCTS--6.5%
Bridgestone/Firestone, Inc.
6.20%, 1/22/96.............................. 1,993
Kobe Steel International (USA) Inc.
6.01%, 1/22/96.............................. 1,993
-------
3,986
MUNICIPAL OBLIGATIONS--8.2%
(a)(b)Orange County, California
6.78%, 6/30/96, $3,000,000 (cost and par)... 2,865
(b)Letter of credit from The Bank of New
York........................................ 135
-------
3,000
Gulf Coast Waste Disposal Authority
5.78%, 2/21/96.............................. 2,000
-------
5,000
RECEIVABLES FINANCING--3.2%
Heller International Corporation
6.12%, 3/4/96............................... 1,979
-------
TOTAL CORPORATE OBLIGATIONS--85.7%
(average maturity: 41 days)..................... 52,319
BANK OBLIGATIONS
CERTIFICATES OF DEPOSIT
U.S. BANKS--5.7%
MBNA America Bank N.A.
5.90%, 2/5/96............................... 1,500
Mellon Bank Corporation
5.75%, 2/6/96............................... 2,000
-------
3,500
FOREIGN BANKS--9.8%
ABN AMRO Bank Canada
5.75%, 2/20/96.............................. 1,984
Banque Nationale De Paris
5.76%, 1/31/96.............................. 2,000
National Westminster Bank, PLC
5.75%, 1/31/96.............................. 2,000
-------
5,984
-------
TOTAL BANK OBLIGATIONS--15.5%
(average maturity: 36 days)..................... 9,484
-------
TOTAL INVESTMENTS--101.2%
(average maturity: 40 days)..................... 61,803
LIABILITIES, LESS OTHER ASSETS--(1.2)%.......... (725)
-------
NET ASSETS--100%................................ $61,078
=======
</TABLE>
See accompanying notes to Money Market Portfolio of Investments.
25
<PAGE> 27
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, except as
described in Note (b), 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 December
31, 1995. The dates shown represent the demand date or next interest rate
change date.
(b) Illiquid securities. At December 31, 1995 the value of the Portfolio's
illiquid securities was $3,000,000, which represented 4.9% of net assets.
See Note (3) of the Notes to Financial Statements.
See accompanying notes to financial statements.
26
<PAGE> 28
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(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 $ 10,863
7.875%, 2001.................... 7,000 7,818
7.75%, 2001..................... 9,000 9,951
6.25%, 2003..................... 8,500 8,868
7.25%, 2004..................... 33,000 36,704
6.50%, 2005..................... 4,200 4,468
U.S. Treasury Bonds
7.25%, 2016..................... 19,000 21,722
8.75%, 2017..................... 32,000 42,355
Republic of Italy,
6.875%, 2023.................... 2,000 1,951
--------
TOTAL GOVERNMENT OBLIGATIONS--21.9%
(Cost: $133,149).................. 144,700
COMMON STOCKS
BASIC INDUSTRY--3.5%
Air Products & Chemicals.......... 92,500shs. 4,879
(b)FMC Corp. ........................ 51,300 3,469
Georgia-Pacific Corp. ............ 40,000 2,745
Monsanto Co. ..................... 76,500 9,371
Nucor Corp. ...................... 50,000 2,856
--------
23,320
COMMUNICATIONS AND MEDIA--3.0%
(b)AirTouch Communications........... 130,000 3,672
Gillett Holdings, Inc. ........... 33,652 698
(b)Liberty Media Group, "A".......... 70,000 1,881
Tele-Communications, Inc. ........ 210,000 4,174
(b)Viacom International
"A" Shares...................... 57,456 2,636
"B" Shares...................... 50,377 2,387
(b)WorldCom, Inc. ................... 129,100 4,551
--------
19,999
COMPUTER HARDWARE, COMPONENTS AND
SEMICONDUCTORS--8.7%
(b)Applied Materials, Inc. .......... 96,300 3,792
(b)Atmel Corporation................. 142,800 3,195
(b)Bay Networks...................... 60,750 2,498
(b)Cisco Systems..................... 65,000 4,851
(b)Compaq Computer Corp. ............ 138,300 6,638
Hewlett-Packard, Co. ............. 90,000 7,538
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
Intel Corp. ...................... 125,600 $ 7,128
International Business Machines
Corp. ............................ 50,000 4,588
(b)LSI Logic Corp. .................. 120,000 3,930
(b)Silicon Graphics, Inc. ........... 100,300 2,758
(b)Sun Microsystems.................. 100,000 4,563
Texas Instruments................. 45,000 2,329
(b)3Com Corporation.................. 80,000 3,730
--------
57,538
COMPUTER SOFTWARE AND
ELECTRONICS--4.3%
(b)BMC Software...................... 75,000 3,206
Computer Associates
International..................... 75,000 4,266
First Data Corporation............ 49,174 3,289
General Motors-Electronic Data
Systems......................... 95,100 4,945
(b)Microsoft Corp. .................. 105,000 9,214
(b)Parametric Technology Corp. ...... 50,000 3,325
--------
28,245
CONSUMER DURABLES--1.4%
Armstrong World Industries........ 100,000 6,200
Magna International, "A".......... 75,000 3,244
--------
9,444
CONSUMER PRODUCTS AND SERVICES--8.3%
Alco Standard Corporation......... 60,000 2,737
CPC International................. 60,000 4,117
Coca-Cola Co. .................... 50,000 3,712
(b)CUC International ................ 70,450 2,404
Gillette Co. ..................... 75,000 3,909
PepsiCo........................... 149,200 8,337
Philip Morris Companies........... 140,800 12,742
Procter & Gamble Co. ............. 109,200 9,064
Sara Lee Corp. ................... 130,000 4,144
Warnaco Group..................... 150,000 3,750
--------
54,916
DRUGS AND HEALTHCARE--7.4%
Abbott Laboratories............... 86,600 3,616
Baxter International.............. 100,000 4,187
Columbia/HCA Healthcare Corp. .... 100,400 5,095
Johnson & Johnson................. 100,000 8,563
Eli Lilly & Co. .................. 66,000 3,713
Medtronic, Inc. .................. 70,000 3,911
Merck & Co., Inc. ................ 96,200 6,325
Pfizer Inc. ...................... 105,000 6,615
</TABLE>
27
<PAGE> 29
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
SmithKline Beecham PLC............ 110,000 $ 6,105
United Healthcare Corp. .......... 5,000 328
--------
48,458
ENERGY AND RELATED SERVICES--1.6%
Enron Corp. ...................... 107,200 4,087
Mobil Corp. ...................... 45,000 5,040
Schlumberger Ltd. ................ 20,000 1,385
--------
10,512
ENTERTAINMENT--2.3%
Carnival Corp. ................... 182,800 4,456
(b)Circus Circus Enterprises......... 172,000 4,794
Walt Disney Company............... 100,000 5,900
--------
15,150
FINANCIAL SERVICES--5.1%
American International Group,
Inc. ........................... 90,000 8,325
Banc One Corporation.............. 90,000 3,397
Dean Witter Discover.............. 70,000 3,290
Federal National Mortgage
Association..................... 48,000 5,958
First USA......................... 45,100 2,001
General Re Corp. ................. 30,000 4,650
MGIC Investment Corp. ............ 52,000 2,821
NationsBank....................... 50,000 3,481
--------
33,923
MANUFACTURING--9.1%
Allied-Signal..................... 160,000 7,600
B.F. Goodrich Co. ................ 55,000 3,747
Boeing Co. ....................... 90,000 7,054
Emerson Electric Co. ............. 88,900 7,268
Fluor Corp. ...................... 120,000 7,920
General Electric Co. ............. 178,600 12,859
Xerox Corporation................. 55,000 7,535
York International Corp. ......... 120,900 5,682
--------
59,665
RETAILING AND DISTRIBUTION--2.3%
(b)Federated Department Stores....... 200,000 5,500
May Department Stores Co. ........ 95,000 4,014
(b)OfficeMax......................... 166,400 3,723
Pep Boys-Manny Moe & Jack......... 59,200 1,517
Thrifty Payless Holdings.......... 47,500 202
--------
14,956
<CAPTION>
Number of
Shares or
Principal
Amount Value
---------- --------
<S> <C> <C>
TRANSPORTATION--.7%
Union Pacific Corp. .............. 60,000 $ 3,960
(b)Wisconsin Central
Transportation Corporation...... 10,900 717
--------
4,677
--------
TOTAL COMMON STOCKS--57.7%
(Cost: $311,443).................. 380,803
CORPORATE OBLIGATIONS
BROADCASTING, CABLESYSTEMS AND
PUBLISHING--1.9%
CF Cable TV Inc., 11.625%, 2005... $ 510 561
Century Communications
Corporation, 9.50%, 2005........ 1,500 1,549
Comcast Corporation, 10.625%,
2012............................ 1,500 1,680
Continental Cablevision, Inc.,
9.50%, 2013..................... 2,000 2,150
(a)Diamond Cable Communications
PLC, 11.75%, 2005............... 320 189
Rogers Cablesystems Limited,
10.00%, 2005.................... 1,050 1,129
Time Warner Entertainment Company,
L.P., 8.375%, 2033.............. 2,000 2,134
Univision TV, 11.75%, 2001........ 1,500 1,605
Viacom International Inc.,
8.00%, 2006..................... 1,500 1,545
--------
12,542
COMMUNICATIONS AND MEDIA--1.9%
Cinemark USA, Inc., 12.00%,
2002............................ 570 621
Cox Communications, 6.875%,
2005............................ 2,000 2,072
GTE Corporation, Florida,
6.25%, 2005..................... 1,000 1,014
MCI Communications, 7.50%, 2004... 1,000 1,086
News American Holdings,
9.25%, 2013..................... 2,000 2,357
Rogers Cantel, 11.125%, 2002...... 1,790 1,920
TCI Communications, 8.65%, 2004... 2,000 2,220
(a)Telewest Communications PLC,
11.00%, 2007.................... 1,900 1,140
--------
12,430
CONSUMER PRODUCTS AND SERVICES--1.0%
Nabisco, 8.00%, 2000.............. 1,000 1,062
P&C Food Markets, Inc.,
11.50%, 2001.................... 120 118
</TABLE>
28
<PAGE> 30
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
Philip Morris Companies
8.25%, 2003..................... $ 1,000 $ 1,113
7.25%, 2003..................... 1,000 1,052
Philips Electronics N.V.,
8.375%, 2006.................... 1,000 1,155
RJR Nabisco Inc., 8.75%, 2005..... 2,000 2,043
--------
6,543
DRUGS AND HEALTHCARE--.9%
American Home Products,
7.90%, 2005..................... 2,000 2,250
Columbia/HCA Healthcare Corp.,
6.91%, 2005..................... 2,000 2,081
Tenet Healthcare
9.625%, 2002.................... 130 142
10.125%, 2005................... 1,370 1,516
--------
5,989
ENERGY AND RELATED SERVICES--1.5%
Gulf Canada Resources Limited,
9.25%, 2004..................... 1,500 1,537
Parker & Parsley Petroleum,
8.25%, 2007..................... 1,500 1,622
Petronas, 7.125%, 2005............ 1,000 1,055
Texas Utilities Company, 6.75%,
2003............................ 2,000 2,060
TransTexas Gas Corporation,
11.50%, 2002.................... 1,385 1,427
USX Corporation, 9.375%, 2012..... 2,000 2,328
--------
10,029
FINANCIAL SERVICES--4.0%
ABN AMRO Bank, 8.25%, 2009........ 2,000 2,237
Abbey National First Capital,
8.20%, 2004..................... 2,000 2,267
Associates Corp, N.A., 8.25%,
1999............................ 2,000 2,167
Capital One Bank, 8.125%, 2000.... 2,000 2,138
Citicorp, 7.625%, 2005............ 1,000 1,095
Commercial Credit, 7.375%, 2005... 2,000 2,156
Equitable Life, 6.95%, 2005....... 2,000 2,028
First USA Bank, Medium Term Note,
8.10%, 1997..................... 2,000 2,049
GMAC, Medium Term Note,
8.50%, 2000..................... 2,000 2,204
Lehman Brothers Holdings,
7.125%, 2003.................... 2,000 2,061
Malayan Banking Berhad,
7.125%, 2005.................... 1,000 1,049
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
Repsol International Finance,
7.00%, 2005..................... $ 1,000 $ 1,059
Sears Roebuck Acceptance Corp.,
6.75%, 2005..................... 2,000 2,065
Smurfit Capital Funding,
6.75%, 2005..................... 2,000 2,049
--------
26,624
MANUFACTURING--2.3%
Boise Cascade Corp.
9.85%, 2002..................... 1,000 1,183
9.45%, 2009..................... 1,000 1,238
CSR America, 6.875%, 2005......... 2,000 2,089
Case Corp., 7.25%, 2005........... 1,000 1,059
Crown Paper, 11.00%, 2005......... 1,000 875
Lockheed Corp., 6.75%, 2003....... 2,000 2,079
Magna International, 5.00%,
2002............................ 917 931
Nortek, Inc., 9.875%, 2004........ 90 84
Owens-Illinois, Inc., 11.00%,
2003............................ 3,990 4,509
Raytheon Co., 6.50%, 2005......... 1,000 1,031
--------
15,078
RETAILING AND DISTRIBUTION-- .9%
Federated Department Stores,
10.00%, 2001.................... 2,000 2,185
May Department Stores Co.
7.15%, 2004..................... 250 265
7.50%, 2015..................... 750 802
Pathmark Stores, Inc.,
11.625%, 2002................... 1,390 1,400
Penn Traffic Company
10.25%, 2002.................... 30 29
10.65%, 2004.................... 400 386
10.375%, 2004................... 930 884
--------
5,951
TRANSPORTATION-- .8%
Delta Airlines, 9.75%, 2021....... 3,000 3,688
United Airlines, 9.56%, 2018...... 1,000 1,160
--------
4,848
--------
TOTAL CORPORATE OBLIGATIONS--15.2%
(Cost: $94,042)................... 100,034
</TABLE>
29
<PAGE> 31
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
MONEY MARKET INSTRUMENTS--4.2%
Yield--5.82% to 6.20%
Due--January 1996
(Cost: $27,968)................... $ 28,000 $ 27,959
--------
TOTAL INVESTMENTS--99.0%
(Cost: $566,602).................. 653,496
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.0%................... 6,398
--------
NET ASSETS--100%.................... $659,894
========
</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 $566,602,000 for federal income tax purposes
at December 31, 1995, the aggregate gross unrealized appreciation was
$94,364,000, the aggregate gross unrealized depreciation was $7,470,000 and the
net unrealized appreciation on investments was $86,894,000.
See accompanying notes to financial statements.
30
<PAGE> 32
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
CORPORATE OBLIGATIONS
AEROSPACE--4.5%
BE Aerospace, 9.75%, 2003............ $ 880 $ 884
Fairchild Corporation, 12.00%,
2001............................... 2,390 2,342
Fairchild Industries, 12.25%, 1999... 1,490 1,588
Howmet Inc., 10.00%, 2003............ 270 283
K & F Industries, Inc.
13.75%, 2001....................... 4,226 4,395
11.875%, 2003...................... 420 455
RHI Holdings, 11.875%, 1999.......... 1,070 1,059
Sequa Corporation, 8.75%, 2001....... 730 690
--------
11,696
BROADCASTING, CABLESYSTEMS AND
PUBLISHING--21.4%
(b)A3 Holdings, Unit, 13.25%, 2006...... 810 830
Act III Broadcasting, Inc.
9.625%, 2003....................... 330 343
10.250%, 2005...................... 360 369
Adelphia Communications Corporation,
12.50%, 2002....................... 1,940 1,901
Affinity Group, Inc., 11.50%, 2003... 1,460 1,482
(b)Australis Media Corporation,
14.00%, 2003....................... 2,220 1,610
(b)Bell Cablemedia PLC
11.95%, 2004....................... 2,810 1,981
11.875%, 2005...................... 340 213
Big Flower Press, Inc., 10.75%,
2003............................... 1,267 1,362
CAI Wireless Systems, 12.25%, 2002... 1,000 1,073
CF Cable TV Inc., 11.625%, 2005...... 1,100 1,210
Cablevision Systems Company
9.250%, 2005....................... 570 596
9.875%, 2013....................... 965 1,025
9.875%, 2023....................... 550 572
Century Communications Corporation
9.50%, 2000........................ 300 311
11.875%, 2003...................... 960 1,034
9.50%, 2005........................ 2,200 2,272
Comcast Corporation
9.125%, 2006....................... 1,030 1,076
9.50%, 2008........................ 690 731
10.625%, 2012...................... 1,950 2,184
(b)Comcast UK Cable Partners Limited,
11.20%, 2007....................... 3,120 1,817
Continental Cablevision, Inc.,
9.50%, 2013........................ 4,270 4,590
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
(b)Diamond Cable Communications PLC,
11.75%, 2005....................... $ 2,560 $ 1,510
(b)Echostar Communications,
12.875%, 2004...................... 4,745 3,179
EZ Communications, 9.75%, 2005....... 930 931
Fundy Cable Limited., 11.00%, 2005... 320 335
Granite Broadcasting Corp.,
10.375%, 2005...................... 1,420 1,461
(b)International Cabletel
Incorporated, 12.75%, 2005......... 3,960 2,534
Katz Corporation, 12.75%, 2002....... 960 1,073
(b)Neodata Services, 12.00%, 2003....... 1,610 1,457
(b)People's Choice TV, Unit,
13.125%, 2004...................... 1,550 903
Rogers Cablesystems Limited
9.625%, 2002....................... 720 754
10.00%, 2005....................... 800 860
Sinclair Broadcasting Group, Inc.,
10.00%, 2003....................... 1,620 1,660
(b)Telewest PLC, 11.00%, 2007........... 4,490 2,694
Univision TV, 11.75%, 2001........... 370 396
Viacom International Inc., 8.00%,
2006............................... 3,350 3,450
Videotron Groupe, 10.625%, 2005...... 500 536
(b)Videotron Holdings PLC
11.125%, 2004...................... 1,500 1,046
11.00%, 2005....................... 1,090 676
Webcraft Technologies, Inc.,
9.375%, 2002....................... 640 621
Young Broadcasting Inc., 11.75%,
2004............................... 440 493
--------
55,151
BUSINESS SERVICES--1.7%
Corporate Express Inc., 9.125%,
2004............................... 1,300 1,310
Host Marriott Travel Plazas, Inc.,
9.50%, 2005........................ 600 595
Monarch Marking Systems,
12.50%, 2003....................... 1,270 1,340
Outdoor Systems, 10.75%, 2003........ 1,250 1,206
--------
4,451
CHEMICALS--5.8%
Agriculture, Mining and Chemicals,
Inc., 10.75%, 2003................. 640 698
Allied Waste Industries, 12.00%,
2004............................... 550 589
Arcadian Partners, L.P., 10.75%,
2005............................... 1,370 1,517
Atlantis Group, Inc., 11.00%, 2003... 1,135 985
G-I Holdings Inc., zero coupon,
1998............................... 3,240 2,487
Hines Horticulture, 11.75%, 2005..... 350 366
</TABLE>
31
<PAGE> 33
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Huntsman Corporation, 10.625%,
2001............................... $ 700 $ 782
Pioneer Americas Acquisition Corp.,
13.375%, 2005...................... 840 884
Polymer Group, Inc., 12.25%, 2002.... 1,240 1,277
Rexene Corporation, 11.75%, 2004..... 1,650 1,749
Terra Industries, 10.50%, 2005....... 840 926
UCC Investors Holdings, Inc.
10.50%, 2002....................... 2,280 2,360
11.00%, 2003....................... 300 308
--------
14,928
COMMUNICATIONS--7.5%
(b)Call-Net Enterprises Inc., 13.25%,
2004............................... 1,000 720
(a)(b)Celcaribe, S.A., 13.50%,
2004............................... 1,000 915
(b)Cellular, Inc., 11.75%, 2003......... 625 494
(b)Comcel, 13.125%, 2003................ 2,200 1,243
Commnet Cellular, 11.25%, 2005....... 500 528
(b)Intelcom Group, Inc., 13.50%,
2005............................... 1,470 853
Intermedia Communications of Florida,
Inc., 13.50%, with warrants,
2005............................... 1,140 1,277
IXC Communication Services,
12.50%, 2005....................... 1,610 1,719
Mobilemedia Communications,
9.375%, 2007....................... 400 413
Paging Network, Inc.
11.75%, 2002....................... 2,070 2,298
10.125%, 2007...................... 580 632
(b)PanAmSat, L.P., 11.375%, 2003........ 2,815 2,294
Rogers Cantel, 11.125%, 2002......... 3,570 3,829
USA Mobile Communications, Inc. II
14.00%, 2004....................... 1,190 1,380
9.50%, 2004........................ 600 591
--------
19,186
CONSTRUCTION MATERIALS--5.6%
American Standard Inc.
10.875%, 1999...................... 2,315 2,564
11.375%, 2004...................... 1,090 1,207
(b)10.50%, 2005....................... 1,110 952
9.25%, 2016........................ 840 874
(b)Building Materials Corporation of
America, 11.75%, 2004.............. 3,285 2,234
Nortek, Inc., 9.875%, 2004........... 2,170 2,034
Triangle Pacific Corp., 10.50%,
2003............................... 2,185 2,316
Waxman Industries, Inc.
12.25%, 1998....................... 850 824
13.75%, 1999....................... 884 575
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
(b)12.75%, 2004....................... $ 1,749 $ 700
(a)52,274 warrants expiring 2004...... 6
--------
14,286
CONSUMER PRODUCTS AND SERVICES--3.7%
(c)Beatrice Foods, Inc., 12.00%,
2001............................... 2,000 560
Cinemark USA, Inc., 12.00%, 2002..... 940 1,025
Coinmach Corporation, 11.75%, 2005... 1,500 1,530
(b)Dr. Pepper Bottling Holdings,
Inc., 11.625%, 2003................ 1,120 913
Premier Parks Inc., 12.00%, 2003..... 600 624
(b)Six Flags Theme Park, 12.25%,
2005............................... 2,550 2,005
Van De Kamps, Inc., 12.00%, 2005..... 550 572
West Point Stevens Inc., 9.375%,
2005............................... 2,280 2,251
--------
9,480
DRUGS AND HEALTHCARE--2.9%
Amerisource Distribution Corp.,
11.25%, 2005....................... 753 828
Charter Medical Corporation,
11.25%, 2004....................... 2,570 2,840
Dade International Inc., 13.00%,
2005............................... 720 806
Graphic Controls, 12.00%, 2005....... 320 333
Merit Behavioral, 11.50%, 2005....... 380 394
Ornda Healthcorporation,
11.375%, 2004...................... 1,560 1,755
Tenet Healthcare, 9.625%, 2002....... 500 547
--------
7,503
ENERGY AND RELATED SERVICES--3.8%
Chesapeake Energy Corporation,
10.50%, 2002....................... 1,175 1,234
Empire Gas Corporation, 7.00%, with
warrants, 2004..................... 900 758
Gerrity Oil & Gas, 11.75%, 2004...... 910 851
Gulf Canada Resources Limited, 9.25%,
2004............................... 1,800 1,845
Santa Fe Energy Resources, Inc.,
11.00%, 2004....................... 1,030 1,137
TransTexas Gas Corporation,
11.50%, 2002....................... 2,065 2,127
United Meridian Corp., 10.375%,
2005............................... 500 529
Vintage Petroleum, 9.00%, 2005....... 1,160 1,173
--------
9,654
</TABLE>
32
<PAGE> 34
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
FINANCIAL SERVICES, HOME BUILDING AND
REAL ESTATE--1.7%
Continental Homes Holding,
12.00%, 1999....................... $ 680 $ 735
Forecast Group L.P.,
11.375%, 2000...................... 440 255
Hovnanian Kent
11.25%, 2002....................... 1,368 1,303
9.75%, 2005........................ 550 484
J.M. Peters, 12.75%, with
warrants, 2002..................... 460 422
Presley Companies, 12.50%, 2001...... 1,575 1,260
--------
4,459
LODGING AND GAMING--4.8%
Bally's Park Place Funding, Inc.,
9.25%, 2004........................ 2,490 2,534
Empress River Casino, 10.75%, 2002... 1,090 1,125
Grand Casinos, Inc., 10.125%, 2003... 530 553
Players International, Inc.,
10.875%, 2005...................... 990 928
Santa Fe Hotel, Inc., 11.00%, 2000... 757 477
Trump Plaza Funding, 10.875%, 2001... 1,280 1,328
Trump Taj Mahal, PIK, 11.35%, 1999... 5,553 5,358
--------
12,303
MANUFACTURING, METALS AND MINING--8.9%
Aftermarket Technology, 12.00%,
2004............................... 780 827
Bluebird Body Company, 11.75%,
2002............................... 1,430 1,502
Crain Industries, Inc., 13.50%,
2005............................... 750 761
Day International Group, Inc.,
11.125%, 2005...................... 970 989
Essex Group Incorporated,
10.00%, 2003....................... 1,270 1,251
Fairfield Manufacturing Company,
11.375%, 2001...................... 530 517
Foamex L.P.
11.25%, 2002....................... 930 893
11.875%, 2004...................... 1,370 1,315
(b)Foamex-JPS Automotive L.P.,
14.00%, 2004, with warrants
expiring 1999.................... 940 531
Great Dane Holding Company,
12.75%, 2001....................... 1,495 1,360
GS Technologies
12.00%, 2004....................... 1,930 1,916
12.25%, 2005....................... 670 669
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Gulf States Steel, 13.50%, with
warrants, 2003..................... $ 1,310 $ 1,146
Jordan Industries, 10.375%, 2003..... 1,560 1,326
JPS Automotive Products Corporation,
11.125%, 2001...................... 1,160 1,160
Newflo Corporation, 13.25%, 2002..... 1,050 1,087
NS Group, Inc., 13.50%, 2003......... 1,535 1,374
Pace Industries, Inc., 10.625%,
2002............................... 1,020 903
Penda Industries, Inc., 10.75%,
2004............................... 650 530
RBX Corporation, 11.250%, 2005....... 60 59
Thermadyne Industries, Inc.
10.25%, 2002....................... 1,290 1,290
10.75%, 2003....................... 1,476 1,476
--------
22,882
PAPER, FOREST PRODUCTS AND
CONTAINERS--6.6%
Berry Plastics Corporation, 12.25%,
with warrants, 2004................ 480 520
Container Corporation of America,
11.25%, 2004....................... 1,815 1,879
Crown Paper, 11.00%, 2005............ 1,500 1,313
Gaylord Container Corporation
(b) 12.75%, 2005.................... 3,060 3,014
122,950 warrants expiring 1996..... 922
Maxxam Group, Inc.
(b) 12.25%, 2003.................... 740 503
11.25%, 2003....................... 1,220 1,171
Owens-Illinois, Inc.
11.00%, 2003....................... 1,030 1,164
9.75%, 2004........................ 2,780 2,926
Repap New Brunswick Inc.,
10.625%, 2005...................... 1,250 1,216
SD Warren Company, 12.00%, 2004...... 475 522
Stone Container Corporation,
10.75%, 2002....................... 280 290
Sweetheart Cup Company Inc., 10.50%,
2003............................... 900 918
Williamhouse-Regency, 13.00%, 2005... 600 630
--------
16,988
RETAILING--5.2%
(c)Color Tile, Inc., 10.75%, 2001.... 1,470 162
Finlay Fine Jewelry Corporation,
10.625%, 2003...................... 740 703
P&C Food Markets, Inc., 11.50%,
2001............................... 1,380 1,358
Pamida Holdings, 11.75%, 2003........ 1,950 1,462
</TABLE>
33
<PAGE> 35
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Pathmark Stores, Inc.
12.625%, 2002...................... $ 1,000 $ 1,029
11.625%, 2002...................... 1,535 1,546
Penn Traffic Company
10.25%, 2002....................... 370 356
10.375%, 2004...................... 1,290 1,226
Ralph's Grocery Company,
10.45%, 2004....................... 1,040 1,056
Southland Corporation, 5.00%, 2003... 1,139 948
Specialty Retailers, Inc., 11.00%,
2003............................... 610 543
Thrifty Payless Inc., 11.75%, 2003... 2,830 3,056
--------
13,445
TECHNOLOGY--1.5%
Communication and Power Industry,
Inc.,
12.00%, 2005....................... 585 603
Computervision Corporation, 11.375%,
1999............................... 1,080 1,139
Merisel, Inc., 12.50%, 2004.......... 1,370 1,028
Unisys Corporation
13.50%, 1997....................... 1,160 1,102
9.50%, 1998........................ 20 17
10.625%, 1999...................... 100 88
--------
3,977
TRANSPORTATION--.6%
(c)Burlington Motor Holdings Inc.,
11.50%, 2003....................... 1,350 243
OMI Corp., 10.25%, 2003.............. 995 894
(b)Transtar Holdings, L.P., 13.375%,
2003............................... 631 429
--------
1,566
--------
TOTAL CORPORATE
OBLIGATIONS--86.2%
(Cost: $220,025)..................... 221,955
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
COMMON AND PREFERRED STOCKS
BCP/Essex Holdings, PIK, preferred... 24,756 $ 625
(c)Computervision Corporation........ 130,160 2,001
(c)Echostar Communications........... 27,450 499
(c)Gaylord Container Corporation..... 68,728 555
(c)Gillett Holdings, Inc............. 42,066 873
(c)Grand Union Company............... 70,520 529
(c)IntelCom Group, Inc............... 4,851 24
(c)Thrifty Payless Inc............... 31,540 134
(c)UGI Inc........................... 4,250 5
(c)Walter Industries, Inc............ 7,468 98
--------
TOTAL COMMON AND PREFERRED STOCKS--2.1%
(Cost: $7,544)....................... 5,343
MONEY MARKET
INSTRUMENTS
Yield--5.82%-6.03%
Due--January 1996
ConAgra, Inc......................... $ 8,000 7,992
Countrywide Funding Corporation...... 6,000 5,981
ITT Destinations..................... 8,000 7,974
SRD Finance Inc...................... 6,000 5,974
--------
TOTAL MONEY MARKET INSTRUMENTS--10.9%
(Cost: $27,929)...................... 27,921
--------
TOTAL INVESTMENTS--99.2%
(Cost: $255,498)..................... 255,219
CASH AND OTHER ASSETS,
LESS LIABILITIES--.8%.................. 2,158
--------
NET ASSETS--100%....................... $257,377
========
</TABLE>
See accompanying notes to High Yield Portfolio of Investments.
34
<PAGE> 36
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 were valued at fair value as determined in good faith by
the Board of Trustees of the Fund. At December 31, 1995, the value of the
Portfolio's restricted securities was $921,000, which represented .36% of
net assets.
<TABLE>
<CAPTION>
Principal
Amount
Date of or Number Unit
Security Description Acquisition of Shares Cost
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------
Celcaribe, S.A., 13.50%, 2004 May 1994 $1,000,000 $0.80
--------------------------------------------------------------------------------------------------------------------------
Waxman Industries, Inc., warrants expiring 2004 June 1994 52,274shs. 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 $255,498,000 for federal income tax purposes
at December 31, 1995, the aggregate gross unrealized appreciation was
$12,351,000, the aggregate gross unrealized depreciation was $12,630,000 and the
net unrealized depreciation on investments was $279,000.
See accompanying notes to financial statements.
35
<PAGE> 37
KEMPER INVESTORS FUND
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
COMMON STOCKS
CHEMICALS--7.8%
Air Products & Chemicals........... 86,000 $ 4,537
B.F. Goodrich Co................... 70,000 4,769
E.I. DuPont de Nemours & Co........ 90,000 6,289
(a)FMC Corp........................... 100,000 6,762
Monsanto Co........................ 61,000 7,473
Praxair, Inc....................... 77,000 2,589
--------
32,419
COMMUNICATIONS AND MEDIA--12.5%
(a)AirTouch Communications............ 224,000 6,328
Cox Communications Inc............. 430,000 8,385
(a)DSC Communications Corp............ 51,300 1,892
(a)Liberty Media Group, "A"........... 210,000 5,644
SBC Communications, Inc............ 47,900 2,754
Tele-Communications, Inc........... 373,000 7,413
(a)Tellabs, Inc....................... 30,800 1,140
(a)3Com Corporation................... 58,000 2,704
(a)Viacom International "B"........... 150,093 7,111
(a)WorldCom, Inc...................... 246,200 8,679
--------
52,050
COMPUTER SOFTWARE,
ELECTRONIC DATA
PROCESSING AND
SEMICONDUCTORS--9.3%
Atmel Corporation.................. 60,600 1,356
(a)BMC Software....................... 28,000 1,197
(a)Cisco Systems...................... 56,600 4,224
(a)Compaq Computer Corp............... 36,600 1,757
First Data Corporation............. 114,572 7,662
General Motors-Electronic Data
Systems.......................... 64,700 3,364
Hewlett-Packard, Co................ 34,500 2,889
Intel Corp......................... 104,100 5,908
Linear Technology Corp............. 72,500 2,846
(a)LSI Logic Corp..................... 27,000 884
(a)Microsoft Corp..................... 40,500 3,554
(a)Parametric Technology.............. 6,000 399
(a)Silicon Graphics Inc............... 89,000 2,448
--------
38,488
CONSUMER PRODUCTS AND
SERVICES--9.0%
Alco Standard Corporation.......... 100,000 4,562
Gillette Co........................ 62,300 3,247
Kimberly-Clark Corp................ 56,400 4,667
Manpower Inc....................... 210,000 5,906
Philip Morris Companies............ 77,900 7,050
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
Procter & Gamble Co................ 44,200 $ 3,669
Sara Lee Corp...................... 108,000 3,442
Warnaco Group...................... 186,200 4,655
--------
37,198
DRUGS AND HEALTHCARE--9.5%
Boston Scientific Corp............. 37,000 1,813
Columbia/HCA Healthcare Corp....... 97,000 4,923
Guidant Corp....................... 70,745 2,989
(a)IDEXX Laboratories................. 72,200 3,393
(a)Integrated Health Services......... 38,000 950
Johnson & Johnson.................. 50,500 4,324
(a)Medaphis Corp...................... 95,214 3,523
Medtronic, Inc..................... 150,000 8,381
Pfizer Inc......................... 65,700 4,139
SmithKline Beecham PLC............. 45,000 2,498
United Healthcare Corp............. 38,500 2,522
--------
39,455
ENERGY AND TRANSPORTATION--6.9%
Enron Corp......................... 161,100 6,142
Enron Oil & Gas.................... 146,600 3,518
Mobil Corp......................... 48,000 5,376
Schlumberger Ltd................... 47,800 3,310
Union Texas Petroleum Holdings..... 360,000 6,975
(a)Wisconsin Central Transportation
Corporation...................... 48,200 3,169
--------
28,490
ENTERTAINMENT AND RESTAURANTS--2.9%
Carnival Corp...................... 195,000 4,753
Walt Disney Co..................... 94,100 5,552
McDonald's Corp.................... 37,400 1,688
--------
11,993
FINANCIAL SERVICES--7.0%
American International Group,
Inc.............................. 12,700 1,175
Bank of Boston..................... 60,000 2,775
Boatmen's Bancshares............... 104,400 4,267
Dean Witter Discover............... 75,800 3,563
First USA.......................... 51,600 2,290
General Re Corp.................... 18,200 2,821
Mercantile Bancorp................. 97,500 4,485
MGIC Investment Corp............... 61,000 3,309
NationsBank........................ 60,800 4,233
--------
28,918
</TABLE>
36
<PAGE> 38
KEMPER INVESTORS FUND
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
MANUFACTURING--12.8%
Allied-Signal...................... 68,400 $ 3,249
(a)Applied Materials, Inc............. 76,600 3,016
Armstrong World Industries......... 22,800 1,414
Boeing Co.......................... 77,200 6,051
(a)Crown Cork & Seal Co............... 42,000 1,753
Emerson Electric Co................ 55,000 4,496
Fluor Corp......................... 76,900 5,075
General Electric Co................ 19,400 1,397
Georgia-Pacific Corp............... 91,500 6,279
Magna International, "A"........... 50,000 2,163
Nucor Corp......................... 50,000 2,856
PPG Industries..................... 50,000 2,287
Shaw Industries.................... 225,000 3,319
Xerox Corporation.................. 27,000 3,699
York International Corp............ 128,400 6,035
--------
53,089
RETAILING--4.3%
Federated Department Stores........ 213,500 5,871
Home Depot......................... 103,500 4,955
(a)Office Depot....................... 118,950 2,349
(a)Viking Office Products............. 38,400 1,786
Wal-Mart Stores.................... 134,100 3,000
--------
17,961
--------
TOTAL COMMON STOCKS--82.0%
(Cost: $277,592)................... 340,061
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.82% to 6.20%
Due--January 1996
ConAgra, Inc......................... $10,000 $ 9,985
Countrywide Funding Corp............. 10,000 9,968
CSX Corp............................. 10,000 9,990
Dayton-Hudson Corp................... 10,000 9,972
Enterprise Funding Corp.............. 2,700 2,695
ITT Corporation...................... 12,000 11,961
Potomac Capital Investment
Corporation........................ 10,000 9,992
SRD Finance Inc...................... 10,000 9,956
Windmill Funding Corp................ 10,000 9,990
Working Capital Management Co.,
L.P................................ 10,000 9,965
--------
TOTAL MONEY MARKET INSTRUMENTS--22.8%
(Cost: $94,507)...................... 94,474
--------
TOTAL INVESTMENTS--104.8%
(Cost: $372,099)..................... 434,535
LIABILITIES, LESS CASH AND OTHER
ASSETS--(4.8)%......................... (20,002)
--------
NET ASSETS--100%....................... $414,533
========
</TABLE>
NOTES TO EQUITY PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $372,099,000 for federal income tax purposes
at December 31, 1995, the aggregate gross unrealized appreciation was
$66,687,000, the aggregate gross unrealized depreciation was $4,251,000 and the
net unrealized appreciation on investments was $62,436,000.
See accompanying notes to financial statements.
37
<PAGE> 39
KEMPER INVESTORS FUND
GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Coupon Principal
Rate Maturity Amount Value
---------- --------- --------- -------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
FEDERAL HOME LOAN MORTGAGE CORPORATION--11.1%
(Cost: $9,810)
Pass-through Certificates............................................... 7.00% 2023-2024 $10,490 $10,589
FEDERAL NATIONAL MORTGAGE ASSOCIATION--11.1%
(Cost: $10,279)
Pass-through Certificates............................................... 6.50 2025-2026 7,469 7,382
7.50 2025 1,924 1,972
8.00 2024-2025 1,208 1,251
-------
10,605
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--55.3%
(Cost: $50,056)
Pass-through Certificates............................................... 6.00 2026 3,000 2,911
6.50 2023-2026 6,891 6,838
7.00 2023-2026 17,785 18,002
7.50 2022-2024 12,111 12,460
8.00 2016-2024 8,011 8,346
8.50 2016-2024 1,655 1,739
9.00 2016 275 291
9.50 2013-2022 771 828
10.00 2016 1,063 1,168
-------
52,583
U.S. TREASURY BONDS--17.2%
(Cost: $15,617)......................................................... 11.875 2003 945 1,320
7.25 2016 700 800
7.875 2021 1,090 1,343
7.25 2022 5,000 5,787
6.25-7.125 2023 6,800 7,118
-------
16,368
-------
TOTAL U.S. GOVERNMENT OBLIGATIONS--94.7%
(Cost: $85,762)......................................................... 90,145
CORPORATE OBLIGATIONS
American Home Products.................................................. 7.90 2005 500 562
Barnett Banks........................................................... 6.90 2005 500 521
CSR America, Inc. ...................................................... 6.875 2005 500 522
Case, Corp. ............................................................ 7.25 2005 500 530
Columbia/HCA Healthcare Corp. .......................................... 6.91 2005 500 520
Commercial Credit Company............................................... 7.375 2005 500 539
Cox Communications...................................................... 6.875 2005 500 518
GTE Florida, Inc. ...................................................... 6.25 2005 500 507
Nabisco Holdings Corp. ................................................. 6.70 2002 500 509
NationsBank Corporation................................................. 9.50 2004 500 606
Philip Morris Companies................................................. 7.25 2003 500 526
Sears Roebuck Acceptance Corp. ......................................... 6.75 2005 500 516
-------
TOTAL CORPORATE OBLIGATIONS--6.7%
(Cost: $6,093).......................................................... 6,376
</TABLE>
38
<PAGE> 40
KEMPER INVESTORS FUND
GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
(a) REPURCHASE AGREEMENTS--11.0%
State Street Bank and Trust Company,
dated 12/29/95, 4.75%, due 1/2/96............................................................... $10,485 $ 10,485
TOTAL INVESTMENTS--112.4%
(Cost: $102,340)................................................................................. $107,006
-------
LIABILITIES, LESS CASH AND OTHER ASSETS--(12.4)%................................................... (11,821)
-------
NET ASSETS--100%................................................................................... $ 95,185
=======
</TABLE>
NOTES TO GOVERNMENT SECURITIES PORTFOLIO OF INVESTMENTS
(a) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. The collateral is monitored daily by the
Portfolio so that its market value exceeds the carrying value of the
repurchase agreement.
Based on the cost of investments of $102,340,000 for federal income tax purposes
at December 31, 1995, the aggregate gross unrealized appreciation was
$4,793,000, the aggregate gross unrealized depreciation was $127,000, and the
net unrealized appreciation of investments was $4,666,000.
See accompanying notes to financial statements.
39
<PAGE> 41
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
COMMON STOCKS
EUROPE
FINLAND--.9%
Nokia Oy AB......................... 32,258 $ 1,248
TELECOMMUNICATIONS EQUIPMENT
MANUFACTURER
FRANCE--4.2%
Axa Group........................... 30,000 2,024
INSURANCE COMPANY
Carrefour S.A....................... 4,000 2,430
FOOD RETAILER
Technip S.A......................... 16,400 1,130
OIL SERVICES COMPANY
--------
5,584
GERMANY--4.9%
Allianz AG Holding.................. 1,000 1,953
INSURANCE COMPANY
Mannesmann A.G...................... 4,100 1,308
CONSTRUCTION AND ENGINEERING
COMPANY
(a)SGL CARBON.......................... 7,000 543
CHEMICALS
Veba A.G............................ 64,000 2,723
ELECTRIC UTILITY COMPANY
--------
6,527
HUNGARY--.2%
(a)MOL Magyar Olajes Gazipari.......... 42,500 349
OIL AND GAS COMPANY
IRELAND--3.8%
Bank of Ireland..................... 200,000 1,449
BANKING
Greencore Group PLC................. 126,686 1,093
FOOD PROCESSING
Independent Newspapers PLC ......... 333,007 2,082
PUBLISHER
Kerry Group PLC..................... 70,280 536
FOOD PROCESSING
--------
5,160
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
ITALY--1.3%
Stet................................ 205,000 $ 580
TELECOMMUNICATIONS COMPANY
(a)Telecom Italia Mobile............. 700,000 1,233
MOBILE TELECOMMUNICATIONS PROVIDER
--------
1,813
NETHERLANDS--4.2%
Aalberts Industries N.V............. 23,603 1,377
HARDWARE COMPANY
Getronics N.V. ..................... 29,500 1,380
INFORMATION SYSTEMS
(a)Internationale Nederlanden
Groep............................. 30,500 2,040
BANKING
PolyGram N.V. ...................... 15,430 820
MUSIC RECORDING COMPANY
--------
5,617
SPAIN--4.2%
Banco Bilbao Vizcaya................ 34,600 1,246
BANKING
Empresa Nacional de Electricidad,
S.A............................... 40,000 2,265
ELECTRIC UTILITY COMPANY
Iberdrola, S.A...................... 235,000 2,150
ELECTRIC UTILITY COMPANY
--------
5,661
SWEDEN--4.1%
Astra AB............................ 60,000 2,399
PHARMACEUTICAL COMPANY
H & M Hennes & Mauritz AB........... 21,560 1,204
RETAILING
LM Ericsson Telephone Co., "B"...... 98,645 1,935
TELECOMMUNICATIONS EQUIPMENT
MANUFACTURER
--------
5,538
</TABLE>
40
<PAGE> 42
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
SWITZERLAND--5.6%
Ciba-Geigy Limited.................. 2,300 $ 2,029
PHARMACEUTICAL COMPANY
Rhone-Poulenc....................... 200 11
CHEMICAL AND PHARMACEUTICAL
COMPANY
Roche Holding AG.................... 525 4,163
PHARMACEUTICAL COMPANY
Union Bank of Switzerland........... 1,200 1,304
BANKING
--------
7,507
UNITED KINGDOM--17.6%
Abbey National PLC.................. 290,000 2,864
FINANCIAL SERVICES
British Bio-Technology Group........ 40,000 1,121
PHARMACEUTICAL COMPANY
Burton Group PLC.................... 1,000,000 2,088
RETAILER
Cable & Wireless PLC................ 240,000 1,714
TELECOMMUNICATIONS COMPANY
Dixons Group PLC.................... 333,393 2,306
ELECTRONICS RETAILER
Forte PLC........................... 150,000 770
HOTEL AND RESTAURANT OPERATOR
Glaxo Wellcome PLC.................. 260,000 3,694
PHARMACEUTICAL COMPANY
Grand Metropolitan PLC.............. 300,000 2,159
FOOD AND DRINK MARKETING
Medeva PLC.......................... 220,000 915
PHARMACEUTICAL COMPANY
National Westminster Bank PLC....... 171,800 1,730
BANKING
Reed International PLC.............. 136,000 2,072
PUBLISHER
SmithKline Beecham PLC.............. 200,000 2,205
PHARMACEUTICAL COMPANY
--------
23,638
--------
TOTAL EUROPEAN COUNTRIES--51.0%....... 68,642
PACIFIC REGION
HONG KONG--6.7%
Cheung Kong Holdings Ltd............ 310,000 1,888
Real Estate Company
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
CITIC Pacific Ltd................... 550,000 $ 1,881
CONGLOMERATE HOLDING COMPANY
Henderson Land Development Co.,
Ltd............................... 150,000 904
PROPERTY DEVELOPER
Hong Kong Telecommunications Ltd.... 734,400 1,311
TELECOMMUNICATIONS COMPANY
HSBC Holdings PLC................... 109,193 1,652
BANKING
New World Development Co., Ltd...... 250,000 479
INVESTMENT HOLDING AND PROPERTY
INVESTMENT COMPANY
Peregrine Investment Holdings....... 705,000 912
INVESTMENT BANKING
--------
9,027
JAPAN--23.5%
Bridgestone Corp.................... 90,000 1,431
RUBBER RELATED PRODUCTS
MANUFACTURER
Daifuku Co., Ltd.................... 45,000 637
DIVERSIFIED MACHINERY MANUFACTURER
Daiwa Securities Co., Ltd........... 90,000 1,378
STOCK BROKER
Fujisawa Pharmaceutical............. 70,000 672
PHARMACEUTICAL COMPANY
Kurita Water Industries Ltd......... 30,000 800
WATER TREATMENT EQUIPMENT AND
CHEMICAL MANUFACTURER
Mabuchi Motor Co., Ltd.............. 16,000 996
ENGINE MANUFACTURER
Matsushita Electric Industrial Co.,
Ltd............................... 84,000 1,368
ELECTRONICS MANUFACTURER
Mitsubishi Heavy Industries......... 165,000 1,316
INDUSTRIAL MACHINERY MANUFACTURER
Mitsubishi Paper Mills Ltd.......... 110,000 662
PAPER MANUFACTURER
Mitsui & Co. Ltd.................... 120,000 1,054
STEEL PRODUCTS WHOLESALER
Miura Printing...................... 43,000 659
MANUFACTURING AND PRINTING
Murata Manufacturing................ 26,000 958
CERAMIC CAPACITORS AND FILTERS
MANUFACTURER
New Japan Securities Co., Ltd....... 190,000 1,227
FINANCIAL SERVICES
</TABLE>
41
<PAGE> 43
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
Nippon Express...................... 160,000 $ 1,542
Transportation company
(a)NKK Corp............................ 446,000 1,202
Steel manufacturer
Omron Corporation................... 50,000 1,154
Electronics manufacturer
Sanwa Bank Ltd...................... 65,000 1,323
Financial services
Seven Eleven Japan Co., Ltd......... 8,000 564
Convenience retailer
Sumitomo Bank Ltd................... 35,000 743
Banking
Sumitomo Corp....................... 130,000 1,323
Holding company
Sumitomo Metal Industries........... 500,000 1,517
Steel manufacturer
Sumitomo Trust & Banking............ 120,000 1,698
Banking
Taisei Corp......................... 210,000 1,403
Construction company
Teijin Ltd.......................... 275,000 1,407
Synthetic fiber manufacturer
Tokyo Style......................... 43,000 738
Women's apparel manufacturer
Tokyu Department Store.............. 225,000 1,490
Retailer
Toray Industries.................... 240,000 1,582
Synthetic fiber manufacturer
Ube Industries, Ltd................. 200,000 756
Diversified company
--------
31,600
SINGAPORE--3.8%
DBS Bank............................ 90,000 1,120
Banking
Fraser & Neave Ltd.................. 100,000 1,272
Beer and soft drink manufacturer
Jurong Shipyard Ltd................. 135,000 1,040
Shipyard company
Keppel Corp. Ltd.................... 80,000 713
Conglomerate holding company
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
Singapore Press Holdings Ltd........ 53,000 $ 937
Publisher
--------
5,082
THAILAND--.6%
Advanced Info Service Ltd........... 25,000 443
Telecommunications company
Siam Cement Co., Ltd................ 6,000 332
Cement company
--------
775
--------
TOTAL PACIFIC REGION--34.6%............ 46,484
COMMONWEALTH COUNTRIES
AUSTRALIA--3.1%
Australia and New Zealand Banking
Group Limited..................... 508,700 2,388
Financial services
Qantas Airways Limited.............. 39,200 652
Air transportation company
TABcorp Holdings Ltd................ 380,300 1,075
Entertainment and gaming
--------
4,115
CANADA--1.2%
(a)Canadian National Railway
Company........................... 36,000 540
Railway company
Petro-Canada........................ 195,700 1,125
Oil and gas company
--------
1,665
NEW ZEALAND--1.0%
Lion Nathan Ltd..................... 591,700 1,412
Beer and soft drink manufacturer
--------
TOTAL COMMONWEALTH
COUNTRIES--5.3%..................... 7,192
--------
TOTAL COMMON STOCKS--90.9%
(Cost: $106,570)....................... 122,318
--------
</TABLE>
42
<PAGE> 44
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.90% to 6.15%
Due--January 1996
ConAgra, Inc........................ $5,300 $ 5,295
Cooper Industries, Inc.............. 3,600 3,597
Potomac Capital Investment
Corporation....................... 2,800 2,798
--------
TOTAL MONEY MARKET INSTRUMENTS--8.7%
(Cost: $11,690)..................... 11,690
--------
<CAPTION>
Value
--------
<S> <C>
TOTAL INVESTMENTS--99.6%
(Cost: $118,260).................... $134,008
CASH AND OTHER ASSETS,
LESS LIABILITIES--.4%................. 473
--------
NET ASSETS--100%...................... $134,481
========
</TABLE>
At December 31, 1995, the International Portfolio of Investments had the
following industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
Value %
-------- -----
<S> <C> <C>
Financial Services...................................................................... $ 27,322 20.3
Chemicals, Medical Equipment and Pharmaceuticals........................................ 18,552 13.8
Industrial Products and Services........................................................ 13,393 9.9
Consumer Products and Services.......................................................... 10,830 8.1
Food and Beverages...................................................................... 8,902 6.6
Retailing............................................................................... 8,390 6.2
Utilities............................................................................... 8,371 6.2
Communications.......................................................................... 7,231 5.4
Publishing.............................................................................. 5,091 3.8
Transportation.......................................................................... 3,774 2.8
Diversified............................................................................. 2,792 2.1
Energy Sources.......................................................................... 2,604 1.9
Construction and Building Materials..................................................... 2,544 1.9
Electrical and Electronics.............................................................. 2,522 1.9
-------- -----
Total Common Stocks..................................................................... 122,318 90.9
Cash and Other Net Assets............................................................... 12,163 9.1
-------- -----
Net Assets.............................................................................. $134,481 100.0
======== =====
</TABLE>
NOTES TO INTERNATIONAL PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $118,260,000 for federal income tax purposes
at December 31, 1995, the aggregate gross unrealized appreciation was
$16,964,000, the aggregate gross unrealized depreciation was $1,216,000 and the
net unrealized appreciation on investments was $15,748,000.
See accompanying notes to financial statements.
43
<PAGE> 45
KEMPER INVESTORS FUND
SMALL CAPITALIZATION EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
COMMON STOCKS
COMMUNICATIONS, ENTERTAINMENT AND
MEDIA--3.7%
(a)CKS Group........................... 1,000 $ 39
Gaylord Entertainment Co. .......... 20,000 555
Hollinger International............. 15,400 162
(a)Infinity Broadcasting Corp.......... 10,000 372
Mecklermedia Corporation............ 7,000 112
(a)MGM Grand........................... 3,000 69
-------
1,309
CHEMICALS--2.8%
(a)FMC Corp............................ 12,000 811
Lawter International................ 8,000 93
OM Group............................ 3,000 99
-------
1,003
COMPUTER SOFTWARE AND
TECHNOLOGY--16.1%
(a)Alpha Industries.................... 10,800 153
(a)Alternative Resources
Corporation........................ 20,000 605
(a)Artisoft, Inc....................... 12,400 78
(a)Atmel Corporation................... 9,000 201
(a)Auspex Systems, Inc. ............... 12,000 219
(a)Cooper & Chyan Technology........... 2,000 31
(a)C P Clare Corporation............... 11,000 225
(a)Gartner Group....................... 2,500 120
(a)HCIA Inc............................ 3,000 140
(a)IDX Systems......................... 2,500 87
(a)IMNET Systems, Inc.................. 2,800 67
(a)Intergraph Corp..................... 12,000 189
(a)Keane, Inc.......................... 19,200 425
(a)McAfee Associates Inc............... 4,800 211
(a)Medaphis Corp....................... 3,000 111
(a)Meta Group.......................... 500 15
(a)Metatools........................... 1,000 26
(a)Microchip Technology................ 11,000 401
(a)Novadigm, Inc....................... 8,000 227
(a)Parametric Technology Corp.......... 4,000 266
(a)PLATINUM Technology................. 27,000 496
(a)7th Level, Inc...................... 28,000 392
(a)Softkey International............... 8,000 185
(a)Solectron Corp...................... 6,000 265
(a)SPSS, Inc. ......................... 10,000 195
(a)Symantec Corp....................... 8,000 186
(a)Wang Laboratories................... 10,000 166
-------
5,682
CONSUMER PRODUCTS AND SERVICES--7.1%
(a)Estee Lauder Companies.............. 4,300 150
(a)Franklin Quest Co................... 7,900 154
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
Hudson Foods......................... 30,000 $ 517
(a)Kenneth Cole Productions............ 10,000 187
(a)Manhattan Bagel Company............. 9,000 162
(a)Opta Food Ingredients............... 5,000 64
(a)Pete's Brewing Company.............. 8,000 112
(a)Play-By-Play Toys & Novelties,
Inc................................ 10,000 146
(a)Redhook Ale Brewing,
Incorporated....................... 3,000 78
(a)Safety 1st.......................... 20,000 295
Stewart Enterprises, Inc............ 10,000 370
(a)Williams-Sonoma..................... 15,000 277
-------
2,512
ENERGY AND TRANSPORTATION--3.2%
(a)Copart, Inc. ....................... 11,000 289
(a)Input/Output, Inc................... 3,300 191
(a)Smith International................. 2,000 47
(a)Wisconsin Central Transportation
Corporation........................ 9,300 611
-------
1,138
ENGINEERING--1.4%
(a)Jacobs Engineering Group............ 20,000 500
FINANCIAL SERVICES--5.3%
(a)Cityscape Financial................. 21,400 444
(a)Meadowbrook Insurance Group......... 4,100 137
(a)Risk Capital Holdings, Inc.......... 27,000 631
(a)SPS Transaction Services............ 13,000 385
Western National Corporation........ 18,000 290
-------
1,887
MANUFACTURING AND DISTRIBUTION--11.6%
(a)Applied Extrusion Technologies...... 13,700 171
Dekalb Genetics Corp................ 1,500 68
(a)Elsag Bailey Process
Automation......................... 19,000 511
Federal Signal Corp................. 21,700 561
(a)Fort Howard Corporation............. 40,000 900
Greenfield Industries............... 13,000 406
IMCO Recycling...................... 9,000 220
(a)Mohawk Industries................... 17,000 266
Nordson Corp........................ 6,000 338
Superior Industries International... 6,000 158
(a)Thompson PBE, Inc................... 10,000 140
TriMas Corp......................... 19,200 362
-------
4,101
MEDICAL PRODUCTS AND EQUIPMENT--9.1%
Arrow International................. 2,000 80
(a)Dendrite International, Inc......... 16,100 290
(a)Dura Pharmaceuticals................ 11,000 382
(a)Genzyme Corporation................. 3,000 48
</TABLE>
44
<PAGE> 46
KEMPER INVESTORS FUND
SMALL CAPITALIZATION EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
(a)Healthdyne Technologies............. 15,000 $ 173
(a)ICU Medical......................... 12,000 204
(a)IDEXX Laboratories.................. 14,000 658
(a)i-STAT Corp......................... 13,800 448
Physician Sales & Service........... 15,600 445
(a)Quest Medical....................... 16,900 175
(a)Research Industries................. 12,000 324
-------
3,227
MEDICAL SERVICES--8.8%
(a)ABR Information Services............ 6,000 264
(a)Access Health, Inc.................. 5,300 235
Caremark International, Inc......... 34,000 616
(a)CRA Managed Care, Inc............... 12,000 263
(a)Emeritus Corporation................ 4,500 52
(a)Occusystems, Inc.................... 8,800 176
Omnicare, Inc....................... 12,000 537
(a)Owen Healthcare, Inc................ 4,000 111
(a)Renal Treatment Centers............. 6,600 290
(a)RTW, Inc............................ 7,400 194
(a)Total Renal Care Holdings........... 12,800 378
-------
3,116
OFFICE EQUIPMENT AND SUPPLIES--3.8%
Danka Business Systems PLC.......... 13,000 481
(a)OfficeMax, Inc...................... 15,000 336
(a)Viking Office Products.............. 11,000 512
-------
1,329
RETAILING AND RESTAURANTS--5.1%
(a)Department 56, Inc.................. 8,900 342
(a)General Nutrition................... 13,200 304
(a)Gymboree............................ 14,000 289
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -------
<S> <C> <C>
(a)Renters Choice, Inc................. 38,800 534
(a)Starbucks Corp...................... 16,000 336
-------
1,805
TELECOMMUNICATIONS AND EQUIPMENT--7.5%
Allen Group......................... 17,000 $ 380
(a)APAC TeleServices................... 5,500 184
(a)InterVoice, Inc..................... 18,000 342
(a)LCI International, Inc.............. 41,400 849
(a)MIDCOM Communications, Inc.......... 9,400 172
(a)Tellabs Operations.................. 12,000 444
(a)Teltrend Inc........................ 1,900 89
U.S. Robotics....................... 2,000 176
-------
2,636
-------
TOTAL COMMON STOCKS--85.5%
(Cost: $25,580)..................... 30,245
MONEY MARKET INSTRUMENTS
Yield--6.02% to 6.07%
Due--January 1996
CSX Corporation..................... $ 1,000 999
ConAgra, Inc........................ 1,000 998
Countrywide Funding Corporation..... 1,000 997
Potomac Capital Investment
Corporation........................ 1,000 999
SRD Finance Inc..................... 1,000 996
-------
TOTAL MONEY MARKET INSTRUMENTS--14.1%
(Cost: $4,991)...................... 4,989
-------
TOTAL INVESTMENTS--99.6%
(Cost: $30,571)..................... 35,234
CASH AND OTHER ASSETS, LESS
LIABILITIES--.4%....................... 139
-------
NET ASSETS--100%....................... $35,373
=======
</TABLE>
NOTES TO SMALL CAPITALIZATION EQUITY PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $30,571,000 for federal income tax purposes
at December 31, 1995, the aggregate gross unrealized appreciation was
$5,732,000, the aggregate gross unrealized depreciation was $1,069,000 and the
net unrealized appreciation on investments was $4,663,000.
45
<PAGE> 47
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Distributed by
Investors Brokerage Services, Inc.
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[RECYCLED LOGO] PRINTED ON RECYCLED PAPER
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1012120
