<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MARCH 31, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
KEMPER
CASH RESERVES FUND
"... The fund performed as it should in a period of
volatility and lowered interest rates. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
PERFORMANCE
UPDATE
4
PORTFOLIO
STATISTICS
5
PORTFOLIO OF
INVESTMENTS
7
FINANCIAL
STATEMENTS
9
NOTES TO
FINANCIAL
STATEMENTS
12
FINANCIAL
HIGHLIGHTS
14
SHAREHOLDERS'
MEETING
AT A GLANCE
YIELDS
7-DAY ANNUALIZED YIELD FOR THE PERIOD ENDED MARCH 31, 1999
<TABLE>
- ---------------------------------------------------------------------------
<S> <C>
KEMPER CASH RESERVES FUND CLASS A 3.61%
- ---------------------------------------------------------------------------
KEMPER CASH RESERVES FUND CLASS B 2.58%
- ---------------------------------------------------------------------------
KEMPER CASH RESERVES FUND CLASS C 2.93%
- ---------------------------------------------------------------------------
</TABLE>
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND. YIELDS ARE HISTORICAL AND WILL FLUCTUATE.
TERMS TO KNOW
FEDERAL FUNDS (Fed Funds) Commercial banks are required to keep these funds on
deposit at the Federal Reserve Bank in their district. In order to meet these
reserve requirements, occasionally commercial banks need to borrow funds. These
funds are borrowed from banks that have an excess of the required amount on hand
in what is called the "Fed Funds Market." The interest rate on these loans is
called the "Fed Funds rate" and is the key money market rate that influences all
other short-term rates.
MATURITY Maturity is the time remaining before an issuer is scheduled to repay
the principal amount on a debt security. Money market instruments are debt
securities.
7-DAY AVERAGE YIELD Every money market fund calculates its yield according to a
standardized method prescribed by the Securities and Exchange Commission. Each
day's yield is an average taken over a 7-day period. This average helps to
minimize the effect of daily fluctuation in fund income, and therefore, yield.
U.S. TREASURIES These debt securities are issued by the U.S. Treasury and
include Treasury bills, Treasury bonds and Treasury notes. They are considered
the safest of all securities. Their safety rests in the power of the U.S.
government to obtain tax revenues to repay its obligations, and in its
historical record of always having done so.
<PAGE> 3
PERFORMANCE UPDATE
[RACHWALSKI PHOTO]
FRANK RACHWALSKI IS A SENIOR VICE PRESIDENT OF SCUDDER KEMPER INVESTMENTS, INC.
AND A LEAD PORTFOLIO MANAGER OF KEMPER CASH RESERVES FUND.
[COHEN PHOTO]
JERRI COHEN JOINED SCUDDER KEMPER INVESTMENTS IN 1981 AND IS A PORTFOLIO MANAGER
OF KEMPER CASH RESERVES FUND. SHE IS A CHARTERED FINANCIAL ANALYST AND A
CERTIFIED PUBLIC ACCOUNTANT.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
WITH THREE CONSECUTIVE CUTS IN INTEREST RATES IN THE FALL OF 1998, THE FEDERAL
RESERVE BOARD (THE FED) HAD A BIG IMPACT ON MONEY MARKET FUNDS. BECAUSE YIELDS
WILL ALWAYS MOVE, WITH SOME LAG-TIME, IN THE SAME DIRECTION AS THE FEDERAL FUNDS
RATE, THE SIX MONTHS COVERED PROVED TO BE CHALLENGING FOR MONEY MARKET FUND
MANAGERS. PORTFOLIO MANAGER FRANK RACHWALSKI DISCUSSES MARKET EVENTS AND KEMPER
CASH RESERVE FUND'S PERFORMANCE DURING THIS PERIOD.
Q FRANK, PRIOR TO THE INTEREST RATE CUTS THAT STARTED IN SEPTEMBER 1998, THE
FED HAD LEFT INTEREST RATES UNCHANGED FOR MORE THAN A YEAR. WITH A STABLE U.S.
ECONOMY AND LOW EXPECTATION OF INFLATION, WHAT PROMPTED THE FED TO CHANGE COURSE
IN THEIR POLICY?
A Several factors entered into the decision. The economic problems in Asia
that surfaced toward the end of 1997 continued, as political leaders in these
countries were unable to correct the situation. In addition, economic problems
in Russia and Latin America appeared. Eventually, the financial turmoil overseas
started to take its toll on the U.S. economy with the stock market plunge in
late August as investors fled to safer investments. In fact, with foreign and
domestic investors pouring money into U.S. Treasury securities, the 30-year
Treasury bond was trading below the Fed Funds rate (see Terms to Know) for the
first time since 1989. What this means for investors is very low yields on their
longer-term bonds.
The Fed needed to take action at this point to both stabilize financial
markets and provide some protection from slower economic growth by lowering
interest rates.
Q DID THIS MOVE WORK?
A Yes, it did. We saw a quick recovery in the stock market and investor
concerns dissipated. This, in turn, brought the spread between long-term rates
for U.S. Treasuries and the Fed Funds rate more in line.
Q HOW DID ALL THIS TURMOIL, INCLUDING THE THREE CONSECUTIVE CUTS IN INTEREST
RATES, AFFECT KEMPER CASH RESERVES FUND?
A Invariably, the rate cuts caught up with the fund. Because money market
funds invest in shorter maturities, there is no way to avoid this. When the
rates on short-term securities drop, money market yields follow.
Q WHAT WAS YOUR INVESTMENT STRATEGY FOR THE FUND DURING THIS TIME, AND HOW
DO YOU FEEL IT PERFORMED GIVEN THIS MARKET CLIMATE?
A At the beginning of this period, we wanted to extend maturities because we
felt the Fed was going to lower interest rates, but with long-term issues
unattractively priced, there wasn't any reward in extending.
However, when rates started getting more in balance toward the end of the
year, we selectively looked to extend and when the market offered value for long
maturities, we took advantage of the opportunity. In all, I feel the fund
performed as it should in a period of volatility and lowered interest rates.
3
<PAGE> 4
PERFORMANCE UPDATE
Q WHAT DO YOU SEE HAPPENING IN THE MARKETPLACE DURING THE NEXT SIX MONTHS,
AND WHAT IS YOUR STRATEGY FOR THE REMAINDER OF THE FUND'S FISCAL YEAR?
A As we expected, inflation pressures did not emerge in the first quarter of
1999. Consumer spending is still strong, the labor market is tight and the
Federal Reserve Board has been patient, taking a wait-and-see attitude.
We plan to keep the maturities of our investments in the neutral
range -- between 20-30 days. This decision is based on our expectations that the
Fed won't tighten any time soon, coupled with the yield curve remaining
relatively flat and the market's anticipated seasonal softening as the tax
season comes to a close in the second quarter.
Our main goal is to search for value to ensure the consistent performance
we feel we have always provided our shareholders.
- -------------------------------------------------------------------------------
PORTFOLIO STATISTICS
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
ON 3/31/99
<S> <C>
COMMERCIAL PAPER, FIRST TIER 65%
- -------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT 23
- -------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY NOTES 12
- -------------------------------------------------------------------------------
TOTAL 100%
</TABLE>
[PIE CHART]
- -------------------------------------------------------------------------------
* PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
4
<PAGE> 5
PORTFOLIO OF INVESTMENTS
KEMPER CASH RESERVES FUND
PORTFOLIO OF INVESTMENTS AT MARCH 31, 1999 (UNAUDITED)
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
CORPORATE OBLIGATIONS VALUE
- -----------------------------------------------------------
<S> <C>
BANKING--5.3%
Abbey National N.A.
4.92%, 4/6/99 $ 9,993
Banque National de Paris
4.91%, 6/22/99 4,945
Lloyds Bank, Plc.
4.89%, 4/1/99 5,000
- -----------------------------------------------------------
19,938
- -----------------------------------------------------------
BUSINESS LOANS--14.5%
Corporate Asset Funding Co.
4.88%, 4/16/99 4,990
Delaware Funding Corp.
4.89%, 4/16/99 4,990
Fairway Finance Corp.
4.94%, 4/5/99 9,994
Mont Blanc Capital Corp.
4.90%, 4/15/99 4,990
Quincy Capital Corp.
4.88%, 4/9/99 4,995
Receivables Capital Corp.
4.88%, 4/12/99 14,978
Sheffield Receivables Corp.
4.90%, 4/13/99 4,992
Special Purpose Accounts
Receivables Cooperative
4.91%, 5/13/99 4,972
- -----------------------------------------------------------
54,901
- -----------------------------------------------------------
CAPITAL AND EQUIPMENT LENDING--1.3%
(a) John Deere Capital Corp.
4.90%, 4/1/99 4,998
- -----------------------------------------------------------
CAPTIVE BUSINESS LENDING--8.2%
CSW Credit, Inc.
4.90%-4.93%, 4/29/99-5/20/99 9,948
Duke Capital Corp.
5.08%, 4/1/99 10,000
(a) FINOVA Capital Corp.
5.05%, 6/11/99 5,000
Pemex Capital, Inc.
4.91%, 6/21/99 5,934
- -----------------------------------------------------------
30,882
- -----------------------------------------------------------
CONSUMER LENDING--3.9%
J.C. Penney Funding Corp.
5.01%, 6/14/99 4,949
Sears Roebuck Acceptance Corp.
4.89%, 4/28/99 4,982
(a) Transamerica Finance Corp.
5.22%, 4/22/99 5,000
- -----------------------------------------------------------
14,931
<CAPTION>
- -----------------------------------------------------------
VALUE
- -----------------------------------------------------------
<S> <C>
DIVERSIFIED FINANCE--9.2%
Allstate Financial Corp.
4.86%, 4/19/99 $ 14,964
CXC, Inc.
4.88%, 4/26/99 9,966
Heller Financial, Inc.
5.01%, 6/17/99 4,947
Twin Towers, Inc.
4.92%, 5/25/99 4,964
- -----------------------------------------------------------
34,841
- -----------------------------------------------------------
FINANCIAL SERVICES--7.1%
(a) Bear Stearns Cos., Inc.
4.91%, 4/19/99 5,000
(a) Goldman Sachs Group, L.P.
4.95%, 4/12/99 5,000
Lehman Brothers Holdings, Inc.
5.06%, 6/21/99 4,944
(a) Merrill Lynch & Co., Inc.
4.91%, 4/21/99 7,000
Morgan Stanley, Dean Witter & Co.
4.89%, 4/27/99 4,982
- -----------------------------------------------------------
26,926
- -----------------------------------------------------------
MANUFACTURING/INDUSTRIAL--6.6%
Cooper Industries, Inc.
5.05%, 4/1/99 10,000
Pitney Bowes, Inc.
4.83%, 4/5/99 14,992
- -----------------------------------------------------------
24,992
- -----------------------------------------------------------
UTILITIES--9.2%
AES Hawaii, Inc.
4.85%, 4/23/99 14,956
California
Oakland-Alameda County Coliseum
4.91%, 5/7/99 5,000
Pollution Control Revenue
4.91%, 6/1/99 5,000
GTE Corp.
4.90%, 4/6/99 9,993
- -----------------------------------------------------------
34,949
- -----------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--65.3%
(AVERAGE MATURITY: 25 DAYS) 247,358
- -----------------------------------------------------------
</TABLE>
5
<PAGE> 6
PORTFOLIO OF INVESTMENTS
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
BANK OBLIGATIONS VALUE
- -----------------------------------------------------------
<S> <C>
CERTIFICATES OF DEPOSIT--U.S. BANKS--16.4%
(a) Amex Centurian Bank
4.93%, 4/19/99 $ 5,000
(a) Comerica Bank
4.90%, 4/1/99 4,998
(a) FCC National Bank
4.80%, 4/1/99 4,999
(a) BANKBOSTON Corp.
5.06%, 4/7/99 5,000
(a) First Union National Bank
5.02%, 5/17/99 5,000
Fleet National Bank, N.A.
4.92%, 4/15/99 10,000
(a) Huntington National Bank
4.99%, 4/5/99 6,999
(a) Key Bank, N.A.
4.89%, 4/29/99 4,999
(a) J.P. Morgan & Co., Inc.
4.86%, 4/7/99 4,999
Nationsbank, N.A.
4.88%, 6/4/99 5,000
(a) Northern Trust Corp.
4.86%, 4/8/99 4,999
------------------------------------------------
61,993
- -----------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------
VALUE
- -----------------------------------------------------------
<S> <C>
CERTIFICATES OF DEPOSIT--FOREIGN BANKS--6.6%
(a) Abbey National, N.A.
4.82%, 4/20/99 $ 4,999
(a) Bank of Montreal
4.90%, 4/1/99 4,997
Royal Bank of Canada
4.90%, 4/29/99 10,005
(a) Svenska Handelsbanken
4.84%, 4/2/99 4,999
------------------------------------------------
25,000
- -----------------------------------------------------------
TOTAL BANK OBLIGATIONS--23.0%
(AVERAGE MATURITY: 17 DAYS) 86,993
- -----------------------------------------------------------
U.S. GOVERNMENT AGENCY NOTES
- -----------------------------------------------------------
Federal Home Loan Mortgage Corp.
4.85%, 5/18/99 24,843
Federal National Mortgage
Association
4.72%, 4/8/99 19,982
------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
NOTES--11.8%
(AVERAGE MATURITY: 30 DAYS) 44,825
------------------------------------------------
TOTAL INVESTMENTS--100.1%
(AVERAGE MATURITY: 24 DAYS) 379,176
------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS--(.1)% (309)
------------------------------------------------
NET ASSETS--100% $378,867
------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at March 31,
1999. The dates shown represent the demand date or next interest rate change
date.
See accompanying Notes to Financial Statements.
6
<PAGE> 7
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------
<S> <C>
Investments, at amortized cost $379,176
- ------------------------------------------------------------------------
Cash 752
- ------------------------------------------------------------------------
Receivable for:
Fund shares sold 29
- ------------------------------------------------------------------------
Interest 1,116
- ------------------------------------------------------------------------
TOTAL ASSETS 381,073
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------
Payable for:
Dividends 205
- ------------------------------------------------------------------------
Fund shares redeemed 560
- ------------------------------------------------------------------------
Management fee 171
- ------------------------------------------------------------------------
Distribution services fee 173
- ------------------------------------------------------------------------
Administrative services fee 91
- ------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 706
- ------------------------------------------------------------------------
Trustees' fees and other 300
- ------------------------------------------------------------------------
Total liabilities 2,206
- ------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $378,867
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------
Net asset value and redemption price per share
- ------------------------------------------------------------------------
CLASS A SHARES
($154,094 / 154,094 shares outstanding) $1.00
- ------------------------------------------------------------------------
CLASS B SHARES
(subject to contingent deferred sales charge)
($187,932 / 187,932 shares outstanding) $1.00
- ------------------------------------------------------------------------
CLASS C SHARES
(subject to contingent deferred sales charge)
($36,841 / 36,841 shares outstanding) $1.00
- ------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE> 8
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------
NET INVESTMENT INCOME
- -----------------------------------------------------------------------
Interest income $11,211
- -----------------------------------------------------------------------
Expenses:
Management fee 884
- -----------------------------------------------------------------------
Distribution services fee 1,034
- -----------------------------------------------------------------------
Administrative services fee 550
- -----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1,198
- -----------------------------------------------------------------------
Professional fees 21
- -----------------------------------------------------------------------
Reports to shareholders 60
- -----------------------------------------------------------------------
Trustees' fees and other 143
- -----------------------------------------------------------------------
Total expenses 3,890
- -----------------------------------------------------------------------
NET INVESTMENT INCOME $ 7,321
- -----------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 1999 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
Net investment income $ 7,321 11,073
- ----------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (7,321) (11,073)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share transactions
and total increase (decrease) in net assets (170,522) 209,734
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Beginning of period 549,389 339,655
- ----------------------------------------------------------------------------------------------------------
END OF PERIOD $378,867 549,389
- ----------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Kemper Cash Reserves Fund (the 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 offers
four classes of shares. Class A shares are sold
without an initial sales charge but are subject to
the applicable sales charge if exchanged into Class
A shares of another Kemper Mutual Fund. Class B
shares are sold without an initial sales charge but
are subject to higher ongoing expenses than Class A
shares and a contingent deferred sales charge
payable upon certain redemptions. Class B shares
automatically convert to Class A shares six years
after issuance. Class C shares are sold without an
initial sales charge but are subject to higher
ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions within one year of purchase.
Class C shares do not convert into another class.
Class I shares (none sold through March 31, 1999)
are offered to a limited group of investors, are
not subject to initial or contingent deferred sales
charges and have lower ongoing expenses than other
classes. Differences in class expenses will result
in the payment of different per share income
dividends by class. All shares of the fund have
equal rights with respect to voting, dividends and
assets, subject to class specific preferences.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES INVESTMENT VALUATION. Investments 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 fund's $1.00 per share net asset
value, calculated at amortized cost, and the net
asset value calculated by reference to market-based
values, 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 should be initiated.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis and includes amortization of
premium and discount on investments.
FUND SHARE VALUATION AND DIVIDENDS TO
SHAREHOLDERS. Fund shares are sold and redeemed on
a continuous basis at net asset value. Proceeds
payable on redemption of Class B and Class C shares
will be reduced by the amount of any applicable
contingent deferred sales charge. On each day the
New York Stock Exchange is open for trading, the
net asset value per share is determined as of the
close of the Exchange. The net asset value per
share is determined separately for each class by
dividing the fund's net assets attributable to that
class by the number of shares of the class
outstanding. The fund declares a daily dividend,
equal to its net investment income for that day,
payable monthly.
FEDERAL INCOME TAXES. The fund's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated investment companies, and to distribute
all of its taxable income to its shareholders.
Accordingly, the fund paid no federal income taxes
and no federal income tax provision was required.
9
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment
management fee of 1/12 of the annual rate of .40%
of the first $250 million of average daily net
assets declining to .25% of average daily net
assets in excess of $12.5 billion. The fund
incurred a management fee of $884,000 for the six
months ended March 31, 1999.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (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 separate
Rule 12b-1 plans for the Class B and Class C
shares. Pursuant to the agreement, KDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares. In addition, KDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B and Class C shares. Distribution fees and
CDSC received by KDI for the six months ended March
31, 1999 are $1,758,000.
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. Administrative
services fees (ASF) paid by the fund to KDI for the
six months ended March 31, 1999 are $550,000.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the fund. Under the agreement,
KSvC received shareholder services fees of $774,000
for the six months ended March 31, 1999.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the fund are also officers or directors of
Scudder Kemper. For the six months ended March 31,
1999, the fund made no payments to its officers and
incurred trustees' fees of $6,000 to independent
trustees.
10
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the fund (dollar amounts and
number of shares are the same).
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998
---------------- ------------------
(IN THOUSANDS)
<S> <C> <C>
SHARES SOLD
Class A $ 2,420,116 2,248,959
-----------------------------------------------------------------------------
Class B 450,093 635,811
-----------------------------------------------------------------------------
Class C 536,255 868,930
-----------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 2,223 2,882
-----------------------------------------------------------------------------
Class B 2,593 5,110
-----------------------------------------------------------------------------
Class C 680 851
-----------------------------------------------------------------------------
SHARES REDEEMED
Class A (2,478,697) (2,173,206)
-----------------------------------------------------------------------------
Class B (535,808) (545,554)
-----------------------------------------------------------------------------
Class C (567,977) (834,049)
-----------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 13,681 27,612
-----------------------------------------------------------------------------
Class B (13,681) (27,612)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE)
FROM CAPITAL SHARE
TRANSACTIONS AND TOTAL
INCREASE (DECREASE) IN NET
ASSETS $ (170,522) 209,734
-----------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------------------------------
CLASS A SHARES
----------------------------------------------------------------------
SIX MONTHS TWO MONTHS YEAR ENDED
ENDED YEAR ENDED SEPTEMBER 30, ENDED JULY 31,
MARCH 31, ------------------------ SEPTEMBER 30, ----------
1999 1998 1997 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------
Net investment income .02 .04 .04 .05 .01 .05
- ---------------------------------------------------------------------------------------------------------------------
Less dividends declared .02 .04 .04 .05 .01 .05
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 1.99% 4.58 4.57 4.67 .85 4.99
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------
Expenses 1.19% 1.21 1.16 1.08 .92 .89
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 3.94% 4.49 4.45 4.53 5.11 4.75
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------
CLASS B SHARES
----------------------------------------------------------------------
SIX MONTHS TWO MONTHS YEAR ENDED
ENDED YEAR ENDED SEPTEMBER 30, ENDED JULY 31,
MARCH 31, ------------------------- SEPTEMBER 30, ----------
1999 1998 1997 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------
Net investment income .01 .03 .03 .04 .01 .04
- ---------------------------------------------------------------------------------------------------------------------
Less dividends declared .01 .03 .03 .04 .01 .04
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 1.48% 3.53 3.49 3.73 .71 4.08
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------
Expenses 2.20% 2.22 2.19 1.99 1.79 1.78
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 2.92% 3.48 3.42 3.62 4.24 3.86
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
CLASS C SHARES
-------------------------------------------------------------------------------
SIX MONTHS TWO MONTHS YEAR ENDED
ENDED YEAR ENDED SEPTEMBER 30, ENDED JULY 31,
MARCH 31, ------------------------------ SEPTEMBER 30, ----------
1999 1998 1997 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income .02 .04 .04 .04 .01 .04
- ---------------------------------------------------------------------------------------------------------------------------
Less dividends declared .02 .04 .04 .04 .01 .04
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 1.65% 3.90 3.85 3.93 .71 4.08
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
Expenses 1.87% 1.88 1.84 1.79 1.78 1.76
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 3.26% 3.82 3.77 3.82 4.25 3.88
- ---------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS TWO MONTHS
ENDED YEAR ENDED SEPTEMBER 30, ENDED YEAR ENDED
MARCH 31, --------------------------------- SEPTEMBER 30, JULY 31,
1999 1998 1997 1996 1995 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $378,867 549,389 339,655 207,616 176,557 213,031
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES: The total returns for the year ended July 31, 1995 include the effect of
a capital contribution from Scudder Kemper. Without the capital contribution,
the total returns would have been 4.07% in Class A, 3.16% in Class B and 3.16%
in Class C. Data for the period ended March 31, 1999 is unaudited.
13
<PAGE> 14
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 17, 1998, a special shareholders' meeting was held. Kemper Cash
Reserves Fund shareholders were asked to vote on two separate issues: approval
of the new Investment Management Agreement between the fund and Scudder Kemper
Investments, Inc., and to modify or eliminate certain policies and to eliminate
the shareholder approval requirement as to certain other matters. The following
are the results.
1) Approval of the new Investment Management Agreement between the fund and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
263,478,737 6,577,176 15,086,323
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,164,722 11,467,666 25,810,353 56,699,496
</TABLE>
Investment policies
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,199,914 11,416,023 25,826,804 56,699,496
</TABLE>
Diversification
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
192,302,826 11,313,112 25,826,804 56,699,496
</TABLE>
Borrowing
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,162,670 11,453,267 25,826,804 56,699,496
</TABLE>
Senior securities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,371,448 11,244,489 25,826,804 56,699,496
</TABLE>
Concentration
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,308,132 11,307,805 25,826,804 56,699,496
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,392,183 11,223,755 25,826,804 56,699,496
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,071,341 11,544,597 25,826,804 56,699,496
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,390,195 11,225,742 25,826,804 56,699,496
</TABLE>
Lending
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,229,780 11,386,158 25,826,804 56,699,496
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
190,827,796 11,788,141 25,826,804 56,699,496
</TABLE>
Purchases of securities of related issuers
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
190,942,570 11,673,368 25,826,804 56,699,496
</TABLE>
Restricted and illiquid securities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,059,854 11,556,084 25,826,804 56,699,496
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,301,623 11,314,314 25,826,804 56,699,496
</TABLE>
Purchases of options and warrants
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,214,257 11,401,681 25,826,804 56,699,496
</TABLE>
Investment for the purpose of exercising control or management
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
191,238,025 11,377,913 25,826,804 56,699,496
</TABLE>
Investment in mineral exploration
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
190,960,317 11,655,621 25,826,804 56,699,496
</TABLE>
Investment in issuers with short histories
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
190,779,028 11,836,909 25,826,804 56,699,496
</TABLE>
Investment in other investment companies
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
190,860,204 11,755,734 25,826,804 56,699,496
</TABLE>
Investment other than in accordance with objectives and policies
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
190,315,085 12,300,853 25,826,804 56,699,496
</TABLE>
14
<PAGE> 15
NOTES
15
<PAGE> 16
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY RICHARD L. VANDENBERG
Chairman and Trustee President Vice President
LEWIS A. BURNHAM PHILIP J. COLLORA LINDA J. WONDRACK
Trustee Vice President Vice President
and Secretary
DONALD L. DUNAWAY MAUREEN E. KANE
Trustee JOHN R. HEBBLE Assistant Secretary
Treasurer
ROBERT B. HOFFMAN CAROLINE PEARSON
Trustee ANN M. MCCREARY Assistant Secretary
Vice President
DONALD R. JONES ELIZABETH C. WERTH
Trustee ROBERT C. PECK, JR. Assistant Secretary
Vice President
THOMAS W. LITTAUER BRENDA LYONS
Trustee & Vice President KATHRYN L. QUIRK Assistant Treasurer
Vice President
SHIRLEY D. PETERSON
Trustee FRANK J. RACHWALSKI, JR.
Vice President
WILLIAM P. SOMMERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT 225 Franklin Street
Boston, MA 02109
INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
- --------------------------------------------------------------------------------
PRINCIPAL KEMPER DISTRIBUTORS, INC.
UNDERWRITER 222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
[KEMPER FUNDS LOGO]
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
Printed in the U.S.A. on recycled paper.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Cash Reserves Fund prospectus.
KCRF - 3 (5/21/99) 1074050
