<PAGE> 1
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED JULY 31, 1995
OFFERING INVESTORS THE OPPORTUNITY FOR HIGH CURRENT INCOME AND PRESERVATION OF
CAPITAL
"...The last 12 months highlighted
the importance of staying fully invested
in the market -- an approach that enabled
us to weather rough market conditions
and enhance performance..."
[KEMPER MUTUAL FUNDS LOGO]
<PAGE> 2
=============================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Economic Overview 3
Performance Update 5
Terms to Know 8
Portfolio Statistics 9
Portfolio of Investments 10
Report from Independent Auditors 11
Financial Statements 12
Notes to Financial Statements 14
Financial Highlights 18
</TABLE>
=============================================================================
AT A GLANCE
Kemper Short-Intermediate Government Fund Total Returns for the year ended July
31, 1995 (unadjusted for any sales charge):
<TABLE>
<S> <C>
CLASS A 9.48%
CLASS B 8.44%
CLASS C 8.85%
LIPPER U.S. MORTGAGE FUND AVERAGE** 8.48%
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AS OF AS OF
7/31/95 7/31/94
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS A $8.09 $8.11
- --------------------------------------------------------------------------------
KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS B $8.06 $8.08
- --------------------------------------------------------------------------------
KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS C $8.06 $8.08
- --------------------------------------------------------------------------------
</TABLE>
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND RANKINGS
Compared to all other funds in the Lipper Short Government Funds category**
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #69 OF #105 OF #103 OF
128 FUNDS 128 FUNDS 128 FUNDS
- -------------------------------------------------------------------------------
5-YEAR N/A #30 OF 35 FUNDS N/A
- -------------------------------------------------------------------------------
</TABLE>
**Lipper Analytical Services, Inc. rankings are based upon changes in net asset
value with all dividends reinvested and do not include the effect of sales
charges and, if they had, results may have been less favorable. Rankings are
historical and do not reflect future performance.
DIVIDEND REVIEW
The following table shows per share dividend and yield information for the fund
as of July 31, 1995
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1 YEAR INCOME: $0.5299 $0.4602 $0.4647
- --------------------------------------------------------------------------------
JULY DIVIDEND: $0.0450 $0.0395 $0.0398
- --------------------------------------------------------------------------------
ANNUALIZED DISTRIBUTION RATE+: 6.67% 5.88% 5.93%
- --------------------------------------------------------------------------------
SEC YIELD+: 4.69% 3.86% 3.91%
- --------------------------------------------------------------------------------
</TABLE>
+Current annualized distribution rate is the latest monthly dividend shown as an
annualized percentage of net asset value on July 31, 1995. Distribution rate
simply measures the level of dividends and is not a complete measure of
performance. The SEC yield is net investment income per share earned over the
month ended July 31, 1995 shown as an annualized percentage of the maximum
offering price on that date. The SEC yield is computed in accordance with a
standardized method prescribed by the Securities and Exchange Commission.
================================================================================
ABOUT YOUR REPORT
SHAREHOLDER REPORTS REVISED
Your fund's annual report is one of your best sources for tracking the progress
of your investment. This report includes several changes that have been made in
effort to provide additional information to you as well as explain significant
changes to the fund over the last fiscal year. In addition, the performance
update includes commentary from your fund's portfolio manager or management team
on what might be expected in the coming months. Specifically, your report now
includes:
- - Terms you'd need to know related to your fund
- - A look at your fund's portfolio composition and how it has changed
- - The years to maturity and the duration of the fund's underlying investments.
If you have any comments about the revised format or if you have suggestions
for additional changes, please write to:
Kemper Mutual Funds
Shareholder Communications
120 South LaSalle Street
Chicago, IL 60603
<PAGE> 3
===============================================================================
GENERAL ECONOMIC REVIEW
[PHOTO OF STEPHEN B. TIMBERS IN UPPER RIGHT-HAND CORNER]
Stephen B. Timbers is both Chief Executive and Chief Investment Officer of
Kemper Financial Services, Inc. (KFS). KFS and its affiliates manage
approximately $60 billion in assets, including $42 billion in retail mutual
funds. Timbers is a graduate of Yale University and holds an M.B.A. from
Harvard University.
DEAR SHAREHOLDER,
Investors enjoyed generally positive performance in both the fixed income and
stock markets in the first several months of 1995. At this point in the year,
the returns of most leading securities markets are significantly higher than
they were at the same time in 1994.
This is an excellent environment for financial assets. After several
quarters of robust growth, the United States economy seems to be slowing down at
a comfortable pace.
Through a series of interest rate adjustments, the Federal Reserve Board has
played a critical role in controlling the pace of economic growth. Its most
recent adjustment was in July when the Fed acknowledged that economic growth had
slowed so much that a recession was a threat. In response, the Federal Reserve
eased short-term interest rates by a small but symbolic 25 basis points. This
action was significant because, since February 1994, the Fed had been raising
interest rates to slow down what was considered high enough growth to rekindle
troublesome inflation.
After the interest rate cut, the government announced that the real gross
domestic product (GDP) -- the value of goods and services produced in the United
States -- grew at a 1.1% annual rate in the second quarter. This was a revised
number, representing more than twice the growth that was originally reported,
and it virtually assured that the economy was not in jeopardy of recession. At
the same time, economic growth at that level did not require an immediate
response, in the form of additional rate cuts, from the Fed.
The absence of inflation is also very encouraging. Although we are well
along in the economic cycle and at a point when prices often start hiking up,
price increases are modest. In fact, plunging energy prices during the summer
offset slight increases in food prices. Consumer prices through July 1995 rose
at an annual rate of 3.1% -- higher than last year but still not a concern, and
the GDP deflator is running at only about 2%.
We anticipate 2% to 3% real GDP growth for the next few quarters, with the
momentum likely to come from housing and foreign trade. Will the Federal Reserve
Board adjust interest rates again? Additional action by the Fed at least once
more in 1995 would not surprise us.
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 showed
some vulnerability when it took a tumble in July. The market recovered after a
brief period and has started to move up again. But such a sudden, severe
mini-correction served to remind investors that the current bull market will
inevitably come to an end someday and that some sectors may even be overextended
today.
As we view the remainder of the 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 in April, the value of the U.S. dollar is gaining strength
against most foreign currencies. While a
3
<PAGE> 4
================================================================================
- --------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund performance.
The following are some significant economic guideposts and their investment
rationale that may help your investment decision-making. The 10-year Treasury
rate and the prime rate are prevailing interest rates. The other data report
year-to-year percentage changes.
<TABLE>
<CAPTION>
NOW (7/31/95) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE (1) 6.28% 7.47% 7.24% 5.68%
- --------------------------------------------------------------------------------
PRIME RATE (2) 8.80 9.00 7.51 6.00
- --------------------------------------------------------------------------------
INFLATION RATE (3) 2.90 2.86 2.90 2.84
- --------------------------------------------------------------------------------
THE U.S. DOLLAR (4) (7.04) (5.54) (2.61) 7.61
- --------------------------------------------------------------------------------
CAPITAL GOODS ORDERS (5) 7.08 15.06 21.72 16.98
- --------------------------------------------------------------------------------
INDUSTRIAL PRODUCTION (6) 2.60 5.60 6.18 3.87
- --------------------------------------------------------------------------------
EMPLOYMENT GROWTH (7) 2.09 3.15 3.17 2.09
- --------------------------------------------------------------------------------
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on corporate profits and equity performance.
(7) An influence on family income and retail sales.
Source: Economics Department, Kemper Financial Services, Inc.
- --------------------------------------------------------------------------------
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.
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.
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.
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including a question-and-answer interview with
your fund's portfolio managers. Thank you for your continued support. We
appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ STEPHEN B. TIMBERS
- --------------------------------------
STEPHEN B. TIMBERS
Chief Investment and Executive Officer
September 11, 1995
4
<PAGE> 5
================================================================================
PERFORMANCE UPDATE
[PHOTO OF PAUL SLOAN]
Paul Sloan joined Kemper Financial Services, Inc. (KFS) in April 1995 and is
Senior Vice President of KFS and Portfolio Co-Manager of Kemper
Short-Intermediate Fund. Mr. Sloan comes to Kemper from Woodbridge Capital
Management, the investment management subsidiary of Comerica, Inc., where he was
the director of institutional portfolio management. Mr. Sloan graduated from the
University of Detroit and earned his master's of business administration degree
from Wayne State University.
[PHOTO OF MICHELLE KEELEY]
Michelle Keeley joined KFS in 1990 and is First Vice President of KFS and
portfolio co-manager of Kemper Short-Intermediate Government Fund. Ms. Keeley
received her bachelor of arts degree from Michigan State University and went on
to receive her M.B.A. from Northwestern University.
THE LAST 12 MONTHS WERE CHARACTERIZED BY STARK SHIFTS IN THE GOVERNMENT BOND
MARKET. PAUL SLOAN AND MICHELLE KEELEY, PORTFOLIO CO-MANAGERS FOR KEMPER
SHORT-INTERMEDIATE GOVERNMENT FUND, EXPLAIN WHY THEY LENGTHENED DURATION TO
STRENGTHEN THE FUND'S PERFORMANCE DURING THE YEAR.
Q WE ARE REPORTING ON A FISCAL YEAR -- FROM AUGUST 1, 1994, TO
JULY 31, 1995 -- WHEN WE SAW BOTH RISING AND FALLING INTEREST RATES. WHAT KINDS
OF ADJUSTMENTS DID YOU MAKE TO THE PORTFOLIO AS RATES CONTINUED TO RISE AND THEN
REVERSED DIRECTION?
A During the year we adjusted the duration of the fund and the mix of short-
versus intermediate-maturity Treasuries as rates fluctuated and our economic
outlook changed. Let's look at some of the major adjustments we made over the
past 12 months.
From August 1994 through January 1995, interest rates rose and the economy
continued its rapid expansion. Typically we try to keep the fund's duration
level between 1.5 years and 3.0 years. However, during that period, we invested
primarily in Treasuries with short durations of about 1.5 years. We adopted this
relatively short duration strategy to mitigate the decline in Treasury prices
that can be expected as interest rates rise. The shorter a fund's duration --
and remember that duration is a measurement of a portfolio's sensitivity to
interest rates -- the lower its sensitivity to interest rate changes.
By February, we saw signs that economic growth was starting to slow. We then
began to gradually move the fund into longer-duration investments such as
intermediate-term Treasuries with three- to five-year maturities. We made this
shift because we did not anticipate further interest rate increases. Our
strategy proved appropriate and we outperformed the average of our peers in May,
when our level of intermediate Treasuries reached 44 percent.
Q THE FUND'S FISCAL YEAR INCLUDES FIVE MONTHS OF 1994, ONE OF THE WORST YEARS
IN THE HISTORY OF THE BOND MARKET. YET, THE BOND MARKET MORE THAN RECOVERED IN
THE FIRST SEVERAL MONTHS OF 1995. WHAT, IF ANYTHING, DID YOU LEARN FROM THESE
TWO PERIODS?
A More than anything, perhaps, the last 12 months have demonstrated the
importance of being flexible. Our fund was designed for conservative investors
who prefer a more stable net asset value than a longer term income fund but want
to take on a bit more risk than a money market fund* for the potential of a
higher total return and capital gains. The last 12 months also highlighted the
importance of staying fully invested in the market -- an approach that enabled
us to
5
<PAGE> 6
================================================================================
weather rough market conditions and enhance our performance.
Q DID YOUR PREFERENCE FOR TREASURIES OVER MORTGAGES HAVE ANYTHING TO DO WITH
THE FUND'S TWO DIVIDEND INCREASES IN THE FISCAL YEAR?
A No, the dividend increases were factors of the rising interest rate
environment. Here's what happened.
In the last 12 months, interest rates on short-term investments increased
more than interest rates on long-term investments which caused a narrowing in
yield between the two. This narrowing allowed us to maintain a short-duration
stance yet still provide an attractive distribution rate.
So it was actually the increase in short-term yields that made it
possible for us to increase the fund's dividend two times during the fiscal
year.
Q What's your outlook for the next few months?
A We are undaunted in our belief that the economy is growing, but at a pace
slow enough to allow for further interest rate cuts. Given this outlook, we have
positioned the fund in short-term and intermediate-term Treasuries that should
perform well.
SEVERAL MARKET FORCES INFLUENCED INVESTORS IN U.S. GOVERNMENT SECURITIES FROM
AUGUST 1994 THROUGH JULY 1995
A ECONOMIC GROWTH HALTED...
Economic growth, as measured by quarterly changes in the U.S. economy's gross
domestic product (GDP), was robust throughout 1994 but fell dramatically by
mid-1995.
<TABLE>
<S> <C>
3Q94 4
4Q94 5.1
1Q95 2.7
2Q95 1.1
</TABLE>
Source: The Wall Street Journal and Barrons
B. IN RESPONSE TO RISING SHORT-TERM INTEREST RATES...
The Federal Reserve Board continued its series of interest rate hikes until
early July 1995, when it announced a modest interest rate cut. This bar graph
tracks the Fed's changes to the federal funds rate (the interest rate that banks
charge each other for overnight loans), which is a measure of short-term
interest rates.
<TABLE>
<S> <C>
(START OF FISCAL YEAR)
8/16 4.75
11/15 5.5
2/1 6
7/6/95 5.75
</TABLE>
Source: Investment Company Institute (ICI) Mutual Fund 1995 Fact Book and The
Wall Street Journal
C. BUT INFLATION POSED NO THREAT
Despite worries that the strong growth in 1994 would result in increased price
inflation, the Consumer Price Index (CPI) was never a concern during the period.
<TABLE>
<S> <C>
3Q94 8
4Q94 5
1Q95 8
2Q95 9
</TABLE>
Source: Towers Data Systems
6
<PAGE> 7
================================================================================
Q WHAT COULD THREATEN YOUR OUTLOOK -- AND RESULT IN AN ADJUSTMENT OF YOUR
PORTFOLIO MANAGEMENT STRATEGY?
A Our risks are fairly obvious. If the economy takes off like a rocket, for
example, our interest rate outlook will be wrong, and we'd have to readjust and
move into shorter duration investments. But we don't see that happening. We
expect a slow-growth, low-inflation environment, which is positive for
government securities and should be good for the fund.
* An investment in a money market fund is neither insured nor guaranteed by the
U.S. government, and there can be no guarantee that a money fund will maintain a
stable $1 share price. The fund's yield will vary.
AVERAGE ANNUAL TOTAL RETURNS**
For periods ended July 31, 1995 (adjusted for the maximum sales charge)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR CLASS
====================================================================================
<S> <C> <C> <C> <C>
KEMPER SHORT-INTERMEDIATE GOV'T FUND A 2.90% N/A 3.96% (Since 1/10/92)
- ------------------------------------------------------------------------------------
KEMPER SHORT-INTERMEDIATE GOV'T FUND B 2.68 5.55% 6.18 (Since 2/1/89)
- ------------------------------------------------------------------------------------
KEMPER SHORT-INTERMEDIATE GOV'T FUND C 5.73 N/A 5.57 (Since 5/31/94)
- ------------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and net asset
value fluctuate. Shares are redeemable at current net asset value, which may be
more or less than original cost.
** Average annual total return measures net investment income and capital gain
or loss from portfolio investments, assuming reinvestment of all dividends
and for A shares adjustment for the maximum sales charge of 3.5% and for B
shares adjustment for the applicable contingent deferred sales charge as
follows: 1-year, 3%; 5-year, 1%; since inception, 0%. During the periods
noted, securities prices fluctuated. For additional information, see the
Prospectus and Statement of Additional Information and the Financial
Highlights at the end of this report.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS A FROM 1/10/92 THROUGH 7/31/95
<TABLE>
<CAPTION>
1/10/92 12/31/92 12/31/93 12/31/94 7/31/95
==========================================================================================================
<S> <C> <C> <C> <C> <C>
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND CLASS A(1) 10,000 10,262 10,826 10,722 11,483
- ----------------------------------------------------------------------------------------------------------
MERRILL LYNCH 1-5 GOVERNMENT/GNMA INDEX+ 10,000 10,693 11,437 11,333 12,330
- ----------------------------------------------------------------------------------------------------------
CONSUMER PRICE INDEX ++ 10,000 10,290 10,573 10,856 11,059
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1)Performance includes reinvestment of dividends and adjustment for the
applicable sales charge in effect at the end of the period. In comparing the
Kemper Short-Intermediate Government Fund performance to the Merrill Lynch
1-5 Government/GNMA Index, you should also note that the fund's performance
reflects the maximum sales charge, while no such charges are reflected in the
performance of the index.
+ The Merrill Lynch 1-5 Government/GNMA Index, an unmanaged index, is
comprised of the universe of 1-5 year Treasuries plus the Merrill Lynch GNMA
Index. Source is Bloomberg.
++ The Consumer Price Index is a statistical measure of change, over time, in
the prices of goods and services in major expenditure groups for all urban
consumers. It is generally considered to be a measure of inflation. Source is
Towers Data Systems.
7
<PAGE> 8
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS B FROM 2/1/89 THROUGH 7/31/95
<TABLE>
<CAPTION>
2/1/89 12/31/91 12/31/93 7/31/95
======================================================================================================
<S> <C> <C> <C> <C>
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND CLASS B(1) 10,000 12,808 14,115 14,768
- ------------------------------------------------------------------------------------------------------
MERRILL LYNCH 1-5 GOVERNMENT/GNMA INDEX+ 10,000 13,975 15,690 16,497
- ------------------------------------------------------------------------------------------------------
CONSUMER PRICE INDEX++ 10,000 11,587 12,040 12,593
- ------------------------------------------------------------------------------------------------------
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS C FROM 5/31/94 THROUGH 7/31/95
<TABLE>
<CAPTION>
5/31/94 12/31/94 7/31/95
==================================================================================================
<S> <C> <C> <C>
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND CLASS C(1) 10,000 10,000 10,655
- --------------------------------------------------------------------------------------------------
MERRILL LYNCH 1-5 GOVERNMENT/GNMA INDEX+ 10,000 10,093 10,980
- --------------------------------------------------------------------------------------------------
CONSUMER PRICE INDEX++ 10,000 10,149 10,339
- --------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
TERMS TO KNOW
DURATION - Duration is a measure of the interest rate sensitivity of a
fixed-income portfolio incorporating time to maturity and coupon size. The
larger the duration number, the greater the interest rate risk.
TOTAL RETURN - A fund's total return figure measures both the net investment
income and any realized and unrealized appreciation or depreciation of the
underlying investments in its portfolio for the period, assuming the
reinvestment of all dividends. It represents the aggregate percentage or dollar
value change over the period.
YIELD - A fund's yield is a measure of the net investment income per share
earned over a specific one month or 30-day period expressed as a percentage of
the maximum offering price of the fund's shares at the end of the period.
8
<PAGE> 9
================================================================================
PORTFOLIO STATISTICS
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
ON 7/31/95 ON 7/31/94
================================================================================
<S> <C> <C>
GOVERNMENT SHORT-TERM SECURITIES 49% 84%
- --------------------------------------------------------------------------------
GOVERNMENT INTERMEDIATE-TERM SECURITIES 46% 12
- --------------------------------------------------------------------------------
MORTGAGE-BACKED GNMAs -- 1
- --------------------------------------------------------------------------------
GOVERNMENT AGENCY SECURITIES -- 1
- --------------------------------------------------------------------------------
CASH AND EQUIVALENTS 5 2
================================================================================
100% 100%
</TABLE>
[FIGURE 1] [FIGURE 2]
<TABLE>
<CAPTION>
ON 7/31/95 ON 7/31/94
================================================================================
<S> <C>
- - Government short-term securities - Government short-term securities
- - Government intermediate-term securities - Government intermediate-term securities
- - Cash and equivalents - Mortgage-backed GNMAs
- Government agency securities
- Cash and equivalents
</TABLE>
YEARS TO MATURITY
As a percentage of the portfolio
<TABLE>
<CAPTION>
ON 7/31/95 ON 7/31/94
================================================================================
<S> <C> <C>
LESS THAN 3 YEARS 51% 87%
- --------------------------------------------------------------------------------
4-10 YEARS 49 12
- --------------------------------------------------------------------------------
10-20 YEARS -- 1
- --------------------------------------------------------------------------------
100% 100%
================================================================================
</TABLE>
[FIGURE 3] [FIGURE 4]
<TABLE>
<CAPTION>
ON 7/31/95 ON 7/31/94
- --------------------------------------------------------------------------------
<S> <C>
- Less than 3 years - Less than 3 years
- 4-10 years - 4-10 years
- 10-20 years
</TABLE>
DURATION
<TABLE>
<CAPTION>
ON 7/31/95 ON 7/31/94
================================================================================
<S> <C> <C>
DURATION 2.44 years 1.70 years
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
===============================================================================
PORTFOLIO OF INVESTMENTS
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND
Portfolio of Investments at July 31, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
COUPON PRINCIPAL
U.S. GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
================================================================================================================
<S> <C> <C> <C> <C> <C>
U.S. TREASURY 9.375% 1996 $ 12,000 $ 12,298
NOTES -- 97.0% 7.25 1996 10,000 10,183
(Cost: $236,942) 8.75 1997 15,000 15,863
8.625 1997 30,000 31,556
8.50 1997 20,000 20,919
7.50 1997 10,000 10,244
9.25 1998 10,000 10,881
8.875 1998 20,000 21,650
8.25 1998 10,000 10,594
7.25 1998 10,000 10,294
8.875 1999 20,000 21,753
7.75 1999 10,000 10,589
7.125 1999 10,000 10,350
6.75 1999 10,000 10,209
7.125 2000 10,000 10,367
6.875 2000 10,000 10,273
7.50 2005 10,000 10,728
=========================================================================
238,751
- ----------------------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION -- .2% Pass-through 11.25 2010 501 548
(Cost: $564) Certificates
- ----------------------------------------------------------------------------------------------------------------
GOVERNMENT Pass-through 9.00 - 9.50 2016-2020 192 203
NATIONAL MORTGAGE Certificates
ASSOCIATION -- .1%
(Cost: $204) =========================================================================
TOTAL U.S. GOVERNMENT OBLIGATIONS -- 97.3%
(Cost: $237,710) 239,502
=========================================================================
- ----------------------------------------------------------------------------------------------------------------
MONEY MARKET Yield -- 5.71%, Due August 1995
INSTRUMENTS -- .7% Federal National Mortgage Association 1,700 1,698
(Cost: $1,698) =========================================================================
TOTAL INVESTMENTS -- 98.0%
(Cost: $239,408) 241,200
=========================================================================
OTHER ASSETS, LESS LIABILITIES -- 2.0% 5,048
=========================================================================
NET ASSETS -- 100% $246,248
=========================================================================
</TABLE>
See accompanying Notes to Financial Statements.
NOTE TO PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $239,408,000 for federal income tax purposes
at July 31, 1995, the aggregate gross unrealized appreciation was $2,436,000,
the aggregate gross unrealized depreciation was $644,000 and the net unrealized
appreciation of investments was $1,792,000.
10
<PAGE> 11
================================================================================
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Short-Intermediate Government
Fund, a series of Kemper Portfolios, as of July 31, 1995, and the related
statements of operations for the year then ended and changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the fiscal periods since 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 investments owned as of July
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
Kemper Short-Intermediate Government Fund at July 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the fiscal periods since 1991, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 15, 1995
11
<PAGE> 12
================================================================================
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
Investments, at value
(Cost: $239,408) $241,200
- --------------------------------------------------------------------------
Receivable for:
Fund shares sold 288
- --------------------------------------------------------------------------
Interest 6,014
- --------------------------------------------------------------------------
TOTAL ASSETS 247,502
==========================================================================
LIABILITIES AND NET ASSETS
- --------------------------------------------------------------------------
Cash overdraft 310
- --------------------------------------------------------------------------
Payable for:
Fund shares redeemed 545
- --------------------------------------------------------------------------
Investments purchased 11
- --------------------------------------------------------------------------
Management fee 114
- --------------------------------------------------------------------------
Distribution services fee 136
- --------------------------------------------------------------------------
Administrative services fee 49
- --------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 79
- --------------------------------------------------------------------------
Other 10
- --------------------------------------------------------------------------
Total liabilities 1,254
- --------------------------------------------------------------------------
NET ASSETS $246,248
==========================================================================
ANALYSIS OF NET ASSETS
Paid in capital $259,819
Accumulated undistributed net realized loss on investments (18,014)
- --------------------------------------------------------------------------
Net unrealized appreciation on investments 1,792
- --------------------------------------------------------------------------
Undistributed net investment income 2,651
- --------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $246,248
==========================================================================
THE PRICING OF SHARES
CLASS A SHARES
Net asset value and redemption price per share
($29,570 / 3,655 shares outstanding) $ 8.09
- --------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 3.63% of
net asset value or 3.50% of offering price) $ 8.38
==========================================================================
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($214,260 / 26,594 shares outstanding) $ 8.06
==========================================================================
CLASS C SHARES
Net asset value and redemption price per share
($2,418 / 300 shares outstanding) $ 8.06
==========================================================================
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 13
FINANCIAL STATEMENTS
================================================================================
STATEMENT OF OPERATIONS
Year ended July 31, 1995
(in thousands)
<TABLE>
<S> <C>
NET INVESTMENT INCOME
Investment income $ 19,669
- --------------------------------------------------------------------------
Expenses
Management fee 1,402
- --------------------------------------------------------------------------
Distribution services fee 1,731
- --------------------------------------------------------------------------
Administrative services fee 616
- --------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 707
- --------------------------------------------------------------------------
Professional fees 41
- --------------------------------------------------------------------------
Reports to shareholders 60
- --------------------------------------------------------------------------
Trustees' fees and other 26
- --------------------------------------------------------------------------
Total expenses 4,583
- --------------------------------------------------------------------------
NET INVESTMENT INCOME 15,086
- --------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------
Net realized loss on sale of investments (4,486)
- --------------------------------------------------------------------------
Net realized loss from futures transactions (696)
- --------------------------------------------------------------------------
Net realized loss (5,182)
- --------------------------------------------------------------------------
Change in net unrealized depreciation on investments 3,921
- --------------------------------------------------------------------------
Net loss on investments (1,261)
- --------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 13,825
- --------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL ACTIVITY
- --------------------------------------------------------------------------
Net investment income $ 15,086 14,144
- --------------------------------------------------------------------------
Net realized loss (5,182) (12,024)
- --------------------------------------------------------------------------
Change in net unrealized depreciation 3,921 (3,439)
- --------------------------------------------------------------------------
Net one increase (decrease) in net assets
resulting from operations 13,825 (1,319)
- --------------------------------------------------------------------------
Net equalization charges (249) (68)
- --------------------------------------------------------------------------
Distribution from net investment income (14,897) (12,992)
- --------------------------------------------------------------------------
Distribution from realized gain -- (3,792)
- --------------------------------------------------------------------------
Total dividends to shareholders (14,897) (16,784)
- --------------------------------------------------------------------------
Net increase (decrease) from capital share
transactions (19,071) 1,562
- --------------------------------------------------------------------------
TOTAL DECREASE IN NET ASSETS (20,392) (16,609)
- --------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------
Beginning of year 266,640 283,249
END OF YEAR (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $2,651 FOR 1995 AND
$2,706 FOR 1994) $ 246,248 266,640
- --------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
================================================================================
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE FUND Kemper Short-Intermediate Government Fund is a
separate series of Kemper Portfolios, an open-end
management investment company organized as a
business trust under the laws of Massachusetts. The
Fund currently offers three classes of shares.
Class A shares are sold to investors subject to an
initial sales charge, Class B shares are sold
without an initial sales charge but are subject to
higher ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically
convert to Class A shares six years after issuance.
Class C shares are sold without an initial or a
contingent deferred sales charge but are subject to
higher ongoing expenses than Class A shares and do
not convert into another class. The Fund may offer,
to a limited group of investors, Class I shares
(none sold through July 31, 1995) which are not
subject to initial or contingent deferred sales
charges and have lower ongoing expenses than other
classes. Each share represents an identical
interest in the investments of the Fund and has the
same rights.
- --------------------------------------------------------------------------------
2 SIGNIFICANT INVESTMENT VALUATION. Investments are stated at
ACCOUNTING POLICIES value. 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. 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. Other securities and assets are valued at
fair value as determined in good faith by the Board
of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). 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. Realized and
unrealized gains and losses on financial futures
and options are included in net realized and
unrealized gain (loss) on investments, as
appropriate.
The Fund may purchase securities with delivery
or payments to occur at a later date. At the time
the Fund 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
Fund until payment takes place. At the time the
Fund enters into this type of transaction it is
required to designate cash or other liquid assets
equal to the value of the securities purchased. At
July 31, 1995 the Fund had no purchase commitments
outstanding.
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
================================================================================
FUND SHARE VALUATION. Fund shares are sold and
redeemed on a continuous basis at net asset value
(plus an initial sales charge on most sales of
Class A shares). Proceeds payable on redemption
of Class B shares will be reduced by the amount of
any applicable contingent deferred sales charge.
On each day the New York Stock Exchange is open
for trading, the net asset value per share is
determined as of the earlier of 3:00 p.m. Chicago
time or the close of the Exchange. The net asset
value per share is determined separately for each
class by dividing the Fund's net assets
attributable to that class by the number of shares
of the class outstanding.
FEDERAL INCOME TAXES AND DIVIDENDS TO
SHAREHOLDERS. The Fund has complied with the
special provisions of the Internal Revenue Code
available to investment companies and therefore no
federal income tax provision is required. The
accumulated net realized loss on sales of
investments for federal income tax purposes at
July 31, 1995, amounting to approximately
$17,688,000, is available to offset future taxable
gains. If not applied, the loss carryover expires
during the period 2002 through 2003.
Differences in dividends per share are due to
different class expenses. Dividends payable to
its shareholders are recorded by the Fund on the
ex-dividend date.
Distributions are determined in accordance with
income tax principles which may treat certain
transactions differently than generally accepted
accounting principles.
EQUALIZATION ACCOUNTING. A portion of proceeds
from sales and cost of redemptions of Fund
shares is credited or charged to undistributed net
investment income so that income per share
available for distribution is not affected by
sales or redemptions of shares.
- --------------------------------------------------------------------------------
3 TRANSACTIONS MANAGEMENT AGREEMENT. The Fund has a management
WITH AFFILIATES agreement with Kemper Financial Services, Inc.
(KFS) and pays a management fee at an annual rate
of .55% of the first $250 million of average daily
net assets declining gradually to .40% of average
daily net assets in excess of $12.5 billion. The
Fund incurred a management fee of $1,402,000 for
the year ended July 31, 1995.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI). As principal underwriter for the Fund, KDI
retained commissions of $21,000 for the year
ended July 31, 1995, for sales of Class A shares,
after allowing $194,000 as commissions to
retail firms, of which $60,000 was paid to firms
affiliated with KDI. For services under the
distribution services agreement, the Fund pays KDI
a fee of .75% of average daily net assets of the
Class B and Class C shares. Pursuant to the
agreement, KDI enters into related selling group
agreements with various firms that provide
distribution services to investors. KDI
compensates these firms at various rates for sales
of Class B and Class C shares. During the
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
================================================================================
year ended July 31, 1995, the Fund incurred a
distribution services fee for Class B and Class C
shares of $1,731,000, and KDI paid $668,000 for
commissions and distribution fees to firms,
including $58,000 to firms affiliated with KDI. In
addition, KDI received $910,000 of contingent
deferred sales charges.
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to shareholders, the Fund pays KDI a fee at an
annual rate of up to .25% of average daily
net assets. KDI in turn has various arrangements
with financial services firms that provide these
services and pays these firms based on assets of
Fund accounts the firms service. For the year
ended July 31, 1995, the Fund incurred an
administrative services fee of $616,000 and KDI
paid $601,000 to firms, including $52,000 that was
paid to firms affiliated with KDI.
CUSTODIAN AND TRANSFER AGENT AGREEMENTS. The Fund
has a custodian agreement and a transfer agent
agreement with Investors Fiduciary Trust Company
(IFTC), which was 50% owned by KFS until January
31, 1995, when KFS completed the sale of IFTC to a
third party. For the year ended July 31, 1995, the
Fund incurred custodian and transfer agent fees
of $575,000 (excluding related expenses). Pursuant
to a services agreement with IFTC, Kemper Service
Company (KSvC), an affiliate of KFS, is the
shareholder service agent of the Fund. For the
year ended July 31, 1995, IFTC remitted
shareholder service fees of $715,000 to KSvC.
OFFICERS AND TRUSTEES. Certain officers or
trustees of the Fund are also officers or
directors of KFS. For the year ended July 31,
1995, the Fund made no payments to its
officers and incurred trustees' fees of $15,000 to
independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT For the year ended July 31, 1995, investment
TRANSACTIONS transactions (excluding short-term instruments)
are as follows (in thousands):
Purchases $1,427,567
Proceeds from sales 1,447,991
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
================================================================================
- --------------------------------------------------------------------------------
5 CAPITAL SHARE The following table summarizes the activity in
TRANSACTIONS capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
--------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------
SHARES SOLD
Class A 2,581 $ 20,257 553 $ 4,703
- -------------------------------------------------------------------------
Class B 4,895 37,726 10,856 90,855
- -------------------------------------------------------------------------
Class C 460 3,661 76 611
- -------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 161 1,392 64 534
- -------------------------------------------------------------------------
Class B 1,224 10,537 1,457 11,729
- -------------------------------------------------------------------------
Class C 14 117 -- --
- -------------------------------------------------------------------------
SHARES REDEEMED
Class A (1,561) (12,311) (522) (4,281)
- -------------------------------------------------------------------------
Class B (9,966) (78,456) (12,389) (102,589)
- -------------------------------------------------------------------------
Class C (250) (1,994) -- --
- -------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 571 4,585 999 8,133
- -------------------------------------------------------------------------
Class B (574) (4,585) (1,001) (8,133)
- -------------------------------------------------------------------------
NET INCREASE
(DECREASE) FROM
CAPITAL SHARE
TRANSACTIONS $(19,071) $ 1,562
- -------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6 FINANCIAL FUTURES In order to help protect itself against future
CONTRACTS changes in market conditions which otherwise might
affect adversely the value of securities the Fund
holds, the Fund has entered into exchange
traded financial futures contracts as described
below. The Fund bears the market risk that arises
from changes in the value of these financial
instruments.
At the time the Fund enters into a futures
contract, it is required to make a margin deposit
with its custodian of a specified amount of cash
or eligible securities. Subsequently, gain or loss
is recognized and payments are made on a daily
basis between the Fund and the broker as the
market price of the futures contract fluctuates.
At July 31, 1995, the market value of investments
pledged by the Fund to cover margin requirements
for open futures positions was $124,000. At July
31, 1995, the Fund had outstanding financial
futures contracts as follows (in thousands):
<TABLE>
<CAPTION>
Face Expiration Gain at
Type amount Position month 7/31/95
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
Securities $5,000 Short September $42
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
CLASS A SHARES
JANUARY 10,
YEAR ENDED JULY 31, 1992 TO
-------------------------------------- JULY 31,
1995 1994 1993 1992
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $8.11 8.63 8.65 8.59
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .54 .48 .53 .29
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (.03) (.44) (.03) .11
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations .51 .04 .50 .40
- -----------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .53 .45 .52 .34
- -----------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- .11 -- --
- -----------------------------------------------------------------------------------------------------------------
Total dividends .53 .56 .52 .34
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.09 8.11 8.63 8.65
- -----------------------------------------------------------------------------------------------------------------
Total return 6.58% .41 6.01 4.87
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
Expenses 1.06% 1.06 1.04 .95
- -----------------------------------------------------------------------------------------------------------------
Net investment income 6.65 5.85 6.06 7.48
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES
YEAR ENDED JULY 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $8.08 8.61 8.64 8.27 8.42
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .47 .40 .45 .58 .69
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (.03) (.44) (.02) .36 (.14)
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations .44 (.04) .43 .94 .55
- -----------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .46 .38 .46 .57 .70
- -----------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- .11 -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total dividends .46 .49 .46 .57 .70
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of year $8.06 8.08 8.61 8.64 8.27
- -----------------------------------------------------------------------------------------------------------------
Total return 5.68% (.48) 5.13 11.76 6.85
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
Expenses 1.87% 1.93 1.87 1.89 2.07
- -----------------------------------------------------------------------------------------------------------------
Net investment income 5.84 4.95 5.23 6.84 8.19
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
CLASS C SHARES
YEAR ENDED MAY 31, TO
JULY 31, 1995 JULY 31, 1994
- -----------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $8.08 8.09
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment income .47 .07
- -----------------------------------------------------------------------------------
Net realized and unrealized loss (.03) (.01)
- -----------------------------------------------------------------------------------
Total from investment operations .44 .06
- -----------------------------------------------------------------------------------
Less distribution from net investment income .46 .07
- -----------------------------------------------------------------------------------
Net asset value, end of period $8.06 8.08
- -----------------------------------------------------------------------------------
Total return 5.73% .77
- -----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.78% 1.83
- -----------------------------------------------------------------------------------
Net investment income 5.93 5.54
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL FUND DATA
Net assets at end of year (in thousands) $246,248 266,640 283,249 191,716 104,279
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 597% 916 339 120 180
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE FOR ALL CLASSES: Ratios have been determined on an annualized basis. Total
return is not annualized and does not reflect the effect of any sales charges.
19
<PAGE> 20
TRUSTEES AND OFFICERS
================================================================================
TRUSTEES
STEPHEN B. TIMBERS
President and Trustee
DAVID W. BELIN
Trustee
LEWIS A. BURNHAM
Trustee
DONALD L. DUNAWAY
Trustee
ROBERT B. HOFFMAN
Trustee
DONALD R. JONES
Trustee
DAVID B. MATHIS
Trustee
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
OFFICERS
J. PATRICK BEIMFORD, JR.
Vice President
JOHN E. PETERS
Vice President
MICHELLE M. KEELEY
Vice President
FRANK J. RACHWALSKI, JR.
Vice President
PAUL F. SLOAN
Vice President
PHILIP J. COLLORA
Vice President
and Secretary
CHARLES F. CUSTER
Vice President and
Assistant Secretary
JEROME L. DUFFY
Treasurer
ELIZABETH C. WERTH
Assistant Secretary
================================================================================
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
1-800-621-1048
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER KEMPER FINANCIAL SERVICES, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street
Chicago, IL 60603
- --------------------------------------------------------------------------------
[RECYCLED LOGO]
Printed on recycled paper.
This report is not to be distributed
unless proceeded or accompanied by a
Kemper Fixed Income Funds prospectus.
KSIGF - 2 (9/95) [KEMPER MUTUAL FUNDS LOGO]
20
