<PAGE> 1
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED SEPTEMBER 30, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
KEMPER
CASH RESERVES FUND
"... We saw a little bit of everything from the markets
in the 12-month period ... However, our money market
investments did what they are supposed to do:
They provided stability and liquidity. ..."
[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
Report of Independent Auditors
AT A GLANCE
- --------------------------------------------------------------------------------
YIELDS
- --------------------------------------------------------------------------------
SEVEN-DAY ANNUALIZED YIELD FOR THE PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
KEMPER CASH RESERVES FUND CLASS A 4.64%
- --------------------------------------------------------------------------------
KEMPER CASH RESERVES FUND CLASS B 3.62%
- --------------------------------------------------------------------------------
KEMPER CASH RESERVES FUND CLASS C 3.99%
- --------------------------------------------------------------------------------
</TABLE>
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE COMPANY (FDIC) 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.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
FOR PERIODS ENDED SEPTEMBER 30, 1999 (ADJUSTED FOR THE APPLICABLE SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR CLASS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEMPER CASH RESERVES CLASS A 4.12% 4.62% N/A 3.95% (since 1/10/92)
- ---------------------------------------------------------------------------------------------------------------
KEMPER CASH RESERVES CLASS B 0.08% 3.45% 3.54% 4.45% (since 2/6/84)
- ---------------------------------------------------------------------------------------------------------------
KEMPER CASH RESERVES CLASS C 3.44% 3.88% N/A 3.81% (since 5/31/94)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND YIELDS
WILL FLUCTUATE. PERFORMANCE OF SHARE CLASSES WILL DIFFER. CONSULT THE
PROSPECTUS FOR DETAILS.
*AVERAGE ANNUAL TOTAL RETURN MEASURES NET INVESTMENT INCOME AND CAPITAL GAIN OR
LOSS FROM THE FUND'S INVESTMENTS OVER THE PERIODS SPECIFIED, ASSUMING
REINVESTMENT OF DIVIDENDS AND, WHERE INDICATED, ADJUSTMENT FOR THE MAXIMUM
SALES CHARGE. THERE IS NO INITIAL SALES CHARGE FOR CLASS A SHARES. HOWEVER,
APPLICABLE SALES CHARGES APPLY ON EXCHANGES. FOR CLASS B SHARES, THE MAXIMUM
CONTINGENT DEFERRED SALES CHARGE (CDSC) IS 4%. CLASS C SHARES HAVE NO SALES
ADJUSTMENT, BUT REDEMPTIONS WITHIN ONE YEAR OF PURCHASE MAY BE SUBJECT TO A
CDSC OF 1%. SHARE CLASSES INVEST IN THE SAME UNDERLYING PORTFOLIO. AVERAGE
ANNUAL RETURN REFLECTS ANNUALIZED CHANGE. FOR ADDITIONAL INFORMATION, SEE THE
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION AND THE FINANCIAL
HIGHLIGHTS AT THE END OF THE REPORT.
TERMS TO KNOW
FEDERAL FUNDS (fed funds) Commercial banks are required to keep 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, 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 The time remaining before an issuer is scheduled to repay the principal
amount on a debt security. Money market instruments are debt securities.
SEVEN-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 seven-day period. This average helps
to minimize the effect of daily fluctuation in fund income and, therefore,
yield.
U.S. TREASURIES Debt securities issued by the U.S. Treasury, including 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 LEAD PORTFOLIO MANAGER OF KEMPER CASH RESERVES FUND. HE HAS MANAGED MONEY
MARKET FUNDS SINCE JOINING SCUDDER KEMPER INVESTMENTS IN 1973.
[COHEN PHOTO]
JERRI I. COHEN IS A PORTFOLIO MANAGER FOR THE FUND. SHE JOINED THE ADVISOR IN
1981, AND BEGAN HER INVESTMENT CAREER IN 1992 AS A MONEY MARKET TRADER.
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.
THROUGH THE COURSE OF THE FUND'S FISCAL YEAR, THE FEDERAL RESERVE DID AN
ABOUT-FACE, CUTTING THE FEDERAL FUNDS RATE THREE TIMES IN THE FALL OF 1998, BUT
RAISING IT TWICE IN THE THIRD QUARTER OF 1999. IN THIS SECTION, LEAD PORTFOLIO
MANAGER FRANK RACHWALSKI DISCUSSES THE EFFECTS OF THE FED'S ACTIONS ON THE
FINANCIAL MARKETS AND THE FUNDS.
Q FRANK, COULD YOU PROVIDE A BROAD OVERVIEW OF THE MONEY MARKETS FOR THE
LAST YEAR AND THE FORCES THAT SHAPED THEM?
A We saw a little bit of everything from the markets in the 12-month period
ended September 30, 1999. In the fourth quarter last year, economic growth in
the U.S. was increasing at a moderately strong pace. However, economic problems
in Russia and Latin America emerged, following on the heels of similar distress
in Asian countries. Eventually, the financial turmoil overseas prompted
investors to pour money into U.S. Treasury securities (see Terms to Know on page
2). In fact, 30-year Treasury bonds were trading below the federal funds (see
Terms to Know on page 2) rate for the first time since 1989. The Fed needed to
take action to both stabilize financial markets and provide some protection from
slower economic growth. It responded with the three rate cuts.
Q DID THIS MOVE WORK?
A Yes, it did. In fact, it may have worked too well. Stock markets here and
abroad bounced back, but long-bond yields rose as investors exited these
securities in favor of higher potential returns elsewhere. This created a tough
environment for bond investors as yields rose and prices fell on most types of
fixed-income securities. Adding to the difficulty was a slight uptick in
inflation measures. This, coupled with tight labor markets, prompted the Federal
Reserve to raise the federal funds rate by 0.25 percent on June 30 and again on
August 24, partially rescinding the cuts it made earlier.
Q HOW DID THESE EVENTS AFFECT SHORT-MATURITY INVESTMENTS SUCH AS MONEY
MARKET FUNDS AND T-BILLS?
A Short-term investments reflected these developments as yields increased
toward the end of the 12-month period. More aggressive money market funds with
long maturities did well in the fourth quarter of 1998 but lagged as the market
started reflecting upward rate pressures in 1999.
It's been a difficult year for most areas of the fixed income market. However,
our money market investments did what they are supposed to do: They provided
stability and liquidity.
Q HOW WAS THE KEMPER CASH RESERVES FUND POSITIONED?
A We remained defensive through most of the year, so we kept the average
maturity (see Terms to Know on page 2) of the fund relatively short. In our
experience, you don't want to be aggressive when conditions are unpredictable,
as they've been the last 12 months. This conservative positioning caused us to
underperform some peers slightly in the last quarter of 1998. However, we were
positioned to take advantage of the subsequent rate hikes that occurred.
3
<PAGE> 4
PERFORMANCE UPDATE
Q WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
A We believe the Federal Reserve's rate increase of August 24 was the last
of the year. The Fed needs to maintain orderly financial markets in the face of
any potential irrational behavior sparked by Y2K fears. In fact, Y2K behavior
should make the last quarter of the year quite interesting. As the end of the
year draws to a close, we could see more people transfer assets to money market
funds for safety and liquidity reasons. That could prompt T-bill prices to
increase and yields to fall. Or we could see a number of investors transfer out
of investments altogether, and the resulting lack of demand could spark a rise
in yields and price declines.
Into next year, however, with Y2K concerns out of the way, we could see a
resurgence in inflation as spending picks up and assets are redistributed. The
Fed might then again be forced to boost the fed funds rate. Regardless, we'll
likely remain in our slightly defensive positioning, with shorter-than-typical
maturities to guard against an uptick in rates, and greater-than-normal cash
supplies that can accommodate investor needs as the millennium draws to a close.
As for the economy, there are no credit concerns right now. T-bills are at
normal spreads relative to longer maturity instruments. Our outlook is for a
good pace of economic growth coupled with modest inflationary pressures. If
that's the case, we would expect rates to move modestly upward.
Q FRANK, YOU'VE BEEN MANAGING MONEY FUNDS FOR MORE THAN TWENTY YEARS. DO YOU
HAVE ANY CONCERNS ABOUT Y2K?
A Actually, I think it might present our team with some opportunities. Our
money market funds aren't a training ground for other areas of the firm, which
can be the case in some other companies. We have a staff dedicated to money
market funds who've seen enough to recognize potential trouble spots. A seasoned
staff counts in volatile times, and gives you the potential to spot
opportunities and avoid potential pitfalls. We'll apply these talents through
Y2K and whatever lies beyond.
PORTFOLIO STATISTICS
KEMPER CASH RESERVES FUND
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ON 9/30/99
- -------------------------------------------------------------------------------
<S> <C>
COMMERCIAL PAPER, FIRST TIER 82%
- -------------------------------------------------------------------------------
CDs 18
- -------------------------------------------------------------------------------
TOTAL 100%
</TABLE>
[PIE CHART]
*PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE. ON 9/30/99
4
<PAGE> 5
PORTFOLIO OF INVESTMENTS
KEMPER CASH RESERVES FUND
Portfolio of Investments at September 30, 1999
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
VALUE
<S> <C>
- ---------------------------------------------------------
COMMERCIAL PAPER
- ---------------------------------------------------------
Abbey National N.A.
5.38%, 11/12/99 $ 4,969
AES Hawaii, Inc.
5.33%, 10/22/99 9,969
AES Shady Point, Inc.
5.39%, 10/21/99 9,970
Allstate Corp.
5.32%, 10/06/99 13,989
Alpine Securitization Corp.
5.37%, 10/14/99 4,990
Amsterdam Funding Corp.
5.44%, 10/12/99 4,991
(a) Anheuser-Busch Cos., Inc.
5.28%, 10/16/99 6,996
Asset Securitization Cooperative Corp.
5.36%, 10/14/99 9,980
Associates First Capital Corp.
5.35%, 10/27/99 9,961
Atlantis One Funding Corp.
5.75%, 1/25/00 4,909
Banque National de Paris
5.29%-5.46%, 11/15/99-12/20/99 19,828
Baxter International, Inc.
6.01%, 2/08/00 4,892
Beta Finance, Inc.
6.00%, 2/08/00 4,893
Brazos River Authority, TX
5.36%, 10/15/99 5,000
California, Oakland-Alameda County
Coliseum
5.42%, 11/15/99 5,000
(a) Caterpillar Financial Services Corp.
5.45%, 11/16/99 6,998
Centric Capital Corp.
5.42%, 10/29/99 6,970
China Merchants, Inc.
5.27%, 10/07/99 4,995
Citigroup
5.36%, 10/13/99 4,991
Clipper Receivables Corp.
5.32%, 10/06/99 4,996
Coca-Cola Enterprises, Inc.
5.41%, 11/18/99 9,928
CSW Credit, Inc.
5.62%, 10/01/99 8,800
Delaware Funding Corp.
6.00%, 1/24/00 4,906
Duke Capital Corp.
5.91%, 1/25/00 4,907
Eksportfinans A/S
5.37%, 10/29/99 9,958
Eureka Securitization, Inc.
5.31%, 10/08/99 4,995
(a) FINOVA Capital Corp.
5.51%, 12/13/99 7,000
<CAPTION>
VALUE
<S> <C>
- ---------------------------------------------------------
COMMERCIAL PAPER--CONTINUED
- ---------------------------------------------------------
(a) Ford Motor Credit Co.
5.50%, 12/30/99 $ 4,995
Forrestal Funding Corp.
5.95%, 1/21/00 4,909
Fortis Bank Nederland N.V.
5.47%, 11/22/99 4,961
Fountain Square Commercial Funding
Corp.
5.37%, 10/18/99 4,987
Goldman Sachs Group, L.P.
5.42%, 11/02/99 5,000
GTE Corp.
5.32%, 10/04/99 18,092
(a) Heller Financial, Inc.
5.53%, 10/07/99 7,006
International Securitization Corp.
5.48%, 11/01/99 4,976
Intrepid Funding
6.00%, 2/29/00 4,877
(a) John Deere Capital Corp.
5.40%, 10/01/99 4,999
Kitty Hawk Funding Corp.
5.44%, 11/18/99 4,964
Knight-Ridder, Inc.
6.02%, 1/26/00 9,122
(a) Merrill Lynch & Co., Inc.
5.36%, 10/21/99 7,000
Moat Funding LLC
5.43%, 10/22/99 4,984
Moriarty LLC
5.36%, 10/13/99 9,982
New Center Asset Trust
5.37%, 10/20/99 4,986
New Hampshire, Industrial Development
Authority
5.44%, 11/15/99 9,500
Northern Rock PLC
5.39%, 11/18/99 9,929
(a) Norwest Financial, Inc.
5.40%, 10/07/99 6,996
PACCAR Financial Corp.
5.32%, 10/22/99 7,975
Park Avenue Receivables Corp.
5.62%, 10/01/99 30,000
Preferred Receivables Funding Corp.
5.36%, 10/19/99 4,986
Prudential Funding Corp.
5.34%, 10/12/99 9,983
Quincy Capital Corp.
5.33%, 10/12/99 4,992
Receivables Capital Corp.
6.03%, 2/15/00 4,888
Salomon Smith Barney Holdings, Inc.
5.35%, 10/19/99 9,973
Sears Roebuck Acceptance Corp.
5.41%, 10/26/99 6,974
</TABLE>
5
<PAGE> 6
PORTFOLIO OF INVESTMENTS
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
VALUE
<S> <C>
COMMERCIAL PAPER--CONTINUED
Spintab, AB
4.97%, 11/04/99 $ 4,997
Sweetwater Capital Corp.
5.38%-5.39%, 10/01/99-10/12/99 14,663
TECO Finance, Inc.
5.31%, 10/05/99 24,985
Thunder Bay Funding, Inc.
5.31%, 10/13/99 4,991
(a) Transamerica Finance Corp.
5.56%, 10/22/99 5,000
US WEST Communications, Inc.
5.60%, 10/01/99 29,000
UBS Finance (Delaware), Inc.
5.04%-5.60%, 10/01/99-12/22/99 34,944
Variable Funding Capital Corp.
5.42%, 11/17/99 4,965
Wal-Mart Stores, Inc.
5.30%, 10/05/99 14,991
WCP Funding, Inc.
5.39%, 10/20/99 4,986
Windmill Funding Corp.
5.77%, 01/21/00 4,912
Wood Street Funding Corp.
5.64%, 10/01/99 20,000
-----------------------------------------------------
TOTAL COMMERCIAL PAPER--81.6%
(AVERAGE MATURITY: 29 DAYS) 580,251
-----------------------------------------------------
CERTIFICATES OF DEPOSIT
(a) Allfirst Bank, Inc.
5.59%, 12/07/99 6,997
(a) AMEX Centurian Bank
5.37%, 10/18/99 5,000
(a) Bank of Montreal
5.39%, 10/01/99 4,999
(a) Barclays Bank, PLC
5.39%, 10/01/99 4,998
(a) Bayerische Landesbank
5.27%, 10/12/99 4,998
(a) Comerica Bank
5.40%, 10/01/99 4,999
</TABLE>
<TABLE>
<CAPTION>
CERTIFICATES OF DEPOSIT--CONTINUED
VALUE
<S> <C>
(a) Commerzbank AG
5.30%-5.41%, 10/01/99-10/08/99 $ 9,997
(a) CS First Boston
5.47%, 10/01/99 7,000
(a) Dresdner Bank AG
5.35%, 10/26/99 6,997
(a) First Boston Corp.
5.31%, 10/07/99 5,000
(a) First Union National Bank
5.50%, 11/16/99 5,000
(a) Harris Trust & Savings Bank
5.41%, 10/01/99 4,999
(a) Huntington National Bank
5.40%, 10/05/99 7,000
(a) J.P. Morgan & Co., Inc.
5.37%, 10/04/99 5,000
(a) Key Bank, N.A.
5.33%, 10/01/99 5,000
(a) Mellon Bank N.A.
5.48%, 11/30/99 6,998
(a) National City Bank
5.39%, 10/07/99 7,006
(a) Old Kent Bank
5.44%, 10/01/99 8,498
(a) PNC Bank, N.A.
5.36%, 10/28/99 8,000
(a) Royal Bank of Canada
5.39%, 10/01/99 4,998
(a) Skandinaviska Enskilda Banken AB
5.30%, 10/22/99 6,998
-----------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT--18.4%
(AVERAGE MATURITY: 16 DAYS) 130,482
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(AVERAGE MATURITY: 26 DAYS) $710,733
-----------------------------------------------------
</TABLE>
NOTES TO PORTFOLIOS 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 September
30, 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 & LIABILITIES
September 30, 1999
(IN THOUSANDS)
<TABLE>
<S> <C>
- ------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------
Investment securities, at amortized cost $710,733
- ------------------------------------------------------------------------
Interest receivable 997
- ------------------------------------------------------------------------
Receivable for Fund shares sold 5,836
- ------------------------------------------------------------------------
TOTAL ASSETS 717,566
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------
Cash overdraft 1,561
- ------------------------------------------------------------------------
Dividends payable 558
- ------------------------------------------------------------------------
Payable for Fund shares redeemed 60,527
- ------------------------------------------------------------------------
Notes Payable 4,900
- ------------------------------------------------------------------------
Accrued management fee 133
- ------------------------------------------------------------------------
Other accrued expenses 1,882
- ------------------------------------------------------------------------
Total liabilities 69,561
- ------------------------------------------------------------------------
NET ASSETS, AT VALUE $648,005
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------
Net assets value and redemption price per share
- ------------------------------------------------------------------------
CLASS A SHARES
($264,609 / 264,609 shares outstanding) $1.00
- ------------------------------------------------------------------------
CLASS B SHARES
(subject to contingent deferred sales charge) ($286,625 /
286,625 shares outstanding) $1.00
- ------------------------------------------------------------------------
CLASS C SHARES
(subject to contingent deferred sales charge) ($96,771 /
96,771 shares outstanding) $1.00
- ------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE> 8
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended September 30, 1999
(IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------
NET INVESTMENT INCOME
- -----------------------------------------------------------------------
Interest income $25,358
- -----------------------------------------------------------------------
Expenses:
Management fee 1,917
- -----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 2,315
- -----------------------------------------------------------------------
Trustees' fees and expenses 21
- -----------------------------------------------------------------------
Reports to shareholders 192
- -----------------------------------------------------------------------
Administrative services fee 1,228
- -----------------------------------------------------------------------
Registration fees 113
- -----------------------------------------------------------------------
Auditing 30
- -----------------------------------------------------------------------
Legal 8
- -----------------------------------------------------------------------
Distribution services fees 2,248
- -----------------------------------------------------------------------
Other 116
- -----------------------------------------------------------------------
Total expenses 8,188
- -----------------------------------------------------------------------
NET INVESTMENT INCOME $17,170
- -----------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
------------------
1999 1998
- -----------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 17,170 11,073
- -----------------------------------------------------------------------------------
Dividends to shareholders from net investment income (17,170) (11,073)
- -----------------------------------------------------------------------------------
Net increase from capital share transactions and total
increase in net assets 98,616 209,734
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------
Net assets at beginning of year 549,389 339,655
- -----------------------------------------------------------------------------------
NET ASSETS AT END OF YEAR $648,005 549,389
- -----------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper Cash Reserves Fund (the "fund") is a series
of Kemper Portfolios which is registered under the
Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management investment
company organized as a Massachusetts business
trust.
The fund offers multiple 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 offered without an
initial sales charge but are subject to higher
ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically
convert to Class A shares six years after issuance.
Class C shares are offered without an initial sales
charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales
charge payable upon certain redemptions within one
year of purchase. Class C shares do not convert
into another class.
Investment income, realized and unrealized gains
and losses, and certain fund-level expenses and
expense reductions, if any, are borne pro rata on
the basis of relative net assets by the holders of
all classes of shares except that each class bears
certain expenses unique to that class such as
distribution services, shareholder services,
administrative services and certain other class
specific expenses. Differences in class expenses
may result in payment of different per share
dividends by class. All shares of the fund have
equal rights with respect to voting subject to
class specific arrangements.
The fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the fund in the
preparation of its financial statements.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES SECURITY VALUATION. The fund values all portfolio
securities utilizing the amortized cost method
permitted in accordance with Rule 2a-7 under the
1940 Act and pursuant to which the fund must adhere
to certain conditions. Under this method, which
does not take into account unrealized gains or
losses on securities, an instrument is initially
valued at its cost and thereafter assumes a
constant accretion/amortization to maturity of any
discount/premium.
REPURCHASE AGREEMENTS. The fund may enter into
repurchase agreements with certain banks and
broker/dealers whereby the fund, through its
custodian or sub-custodian bank, receives delivery
of the underlying securities, the amount of which
at the time of purchase and each subsequent
business day is required to be maintained at such a
level that the market value is equal to at least
the principal amount of the repurchase price plus
accrued interest.
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.
From November 1, 1998 through September 30, 1999,
the fund incurred approximately $14,000 of net
realized capital losses. As permitted by tax
9
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
regulations, the fund intends to elect to defer
these losses and treat them as arising in the
fiscal year ended September 30, 2000.
DISTRIBUTION OF INCOME AND GAINS. All of the net
investment income of the fund is declared as a
daily dividend and is distributed to shareholders
monthly. Net investment income includes all
realized gains (losses) on portfolio securities.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Realized gains and losses from
investment transactions are recorded on an
identified cost basis. All discounts and premiums
are accreted/amortized for both tax and financial
reporting purposes.
EXPENSES. Expenses arising in connection with a
specific fund are allocated to that fund. Other
Trust expenses are allocated between funds in
proportion to their relative net assets.
- --------------------------------------------------------------------------------
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 $1,917,000 for the
year ended September 30, 1999, of which $133,000 is
unpaid at September 30, 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 year ended September
30, 1999 are $3,777,000, of which $481,000 is
unpaid at September 30, 1999.
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 those firms based on assets of
fund accounts the firms service. Administrative
services fees (ASF) paid by the fund to KDI for the
year ended September 30, 1999 are $1,228,000, of
which $316,000 is unpaid at September 30, 1999.
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
$1,577,000 for the year ended September 30, 1999,
of which $732,000 is unpaid at September 30, 1999.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the fund are also officers or directors of
Scudder Kemper. For the year ended September 30,
1999, the fund
10
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
made no payments to its officers and incurred
trustees' fees of $21,000 to independent trustees,
of which $8,000 is unpaid at September 30, 1999.
- --------------------------------------------------------------------------------
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>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------
(IN THOUSANDS)
----------------------------------------------------------------------------
<S> <C> <C>
SHARES SOLD
Class A $ 5,843,269 $ 2,248,959
----------------------------------------------------------------------------
Class B 871,121 635,811
----------------------------------------------------------------------------
Class C 1,115,324 868,930
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 5,293 2,882
----------------------------------------------------------------------------
Class B 5,949 5,110
----------------------------------------------------------------------------
Class C 1,651 851
----------------------------------------------------------------------------
SHARES REDEEMED
Class A (5,812,296) (2,173,206)
----------------------------------------------------------------------------
Class B (843,608) (545,554)
----------------------------------------------------------------------------
Class C (1,088,087) (834,049)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 31,572 27,612
----------------------------------------------------------------------------
Class B (31,572) (27,612)
----------------------------------------------------------------------------
NET INCREASE (DECREASE)
FROM CAPITAL SHARE
TRANSACTIONS AND TOTAL
INCREASE (DECREASE)
IN NET ASSETS $ 98,616 $ 209,734
----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
5 LINE OF
CREDIT The fund and several Kemper Funds (the
"Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The fund may borrow up to a
maximum of 33 percent of its net assets under the
agreement.
The weighted average outstanding daily balance of
all loans (based on the number of days the loans
were outstanding) was approximately $4,665,000,
with a weighted average interest rate of 5.38%
interest for the year ended September 30, 1999 was
$4,884 (less than $0.01 per share). The maximum
borrowings outstanding at any time during the
period were $4,900,000.
11
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
--------------------------------------------------------
CLASS A SHARES
--------------------------------------------------------
TWO MONTHS YEAR ENDED
YEAR ENDED SEPTEMBER 30, ENDED JULY 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 .04 .04 .04 .05 .01 .05
- ---------------------------------------------------------------------------------------------------
Less dividends declared .04 .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) 4.12% 4.58 4.57 4.67 .85 4.99
- ---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------
Expenses 1.09% 1.21 1.16 1.08 .92 .89
- ---------------------------------------------------------------------------------------------------
Net investment income 4.07% 4.49 4.45 4.53 5.11 4.75
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------
CLASS B SHARES
--------------------------------------------------------
TWO MONTHS YEAR ENDED
YEAR ENDED SEPTEMBER 30, ENDED JULY 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 .03 .03 .03 .04 .01 .04
- ---------------------------------------------------------------------------------------------------
Less dividends declared .03 .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) 3.08% 3.53 3.49 3.73 .71 4.08
- ---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------
Expenses 2.11% 2.22 2.19 1.99 1.79 1.78
- ---------------------------------------------------------------------------------------------------
Net investment income 3.05% 3.48 3.42 3.62 4.24 3.86
- ---------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
CLASS C SHARES
--------------------------------------------------------------------------
TWO MONTHS YEAR ENDED
YEAR ENDED SEPTEMBER 30, ENDED JULY 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 .03 .04 .04 .04 .01 .04
- ---------------------------------------------------------------------------------------------------------------------------
Less dividends declared .03 .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) 3.44% 3.90 3.85 3.93 .71 4.08
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------------
Expenses 1.75% 1.88 1.84 1.79 1.78 1.76
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 3.41% 3.82 3.77 3.82 4.25 3.88
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TWO MONTHS
YEAR ENDED SEPTEMBER 30, ENDED YEAR ENDED
-------------------------------------------- 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) $648,005 549,389 339,655 207,616 176,557 213,031
- ----------------------------------------------------------------------------------------------------------------------
</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.
13
<PAGE> 14
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER CASH RESERVES FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Cash Reserves Fund, a series
of Kemper Portfolios, as of September 30, 1999, 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 1995. 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
September 30, 1999 by correspondence with the custodian. 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
Cash Reserves Fund at September 30, 1999, 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 1995 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 19, 1999
14
<PAGE> 15
NOTES
15
<PAGE> 16
TRUSTEES&OFFICERS
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
JOHN W. BALLANTINE MARK S. CASADY RICHARD L. VANDENBERG
Trustee President Vice President
LEWIS A. BURNHAM
Trustee PHILIP J. COLLORA LINDA J. WONDRACK
Vice President Vice President
DONALD L. DUNAWAY and Secretary
Trustee MAUREEN E. KANE
JOHN R. HEBBLE Assistant Secretary
ROBERT B. HOFFMAN Treasurer
Trustee CAROLINE PEARSON
ANN M. MCCREARY Assistant Secretary
DONALD R. JONES Vice President
Trustee BRENDA LYONS
ROBERT C. PECK, JR. Assistant Treasurer
THOMAS W. LITTAUER Vice President
Trustee & Vice President
KATHRYN L. QUIRK
SHIRLEY D. PETERSON Vice President
Trustee
FRANK J. RACHWALSKI, JR.
CORNELIA SMALL Vice President
Trustee
WILLIAM P. SOMMERS
Trustee
</TABLE>
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- ----------------------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
- ----------------------------------------------------------------------------------------------
CUSTODIAN STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02109
- ----------------------------------------------------------------------------------------------
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
- ----------------------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- ----------------------------------------------------------------------------------------------
PRINCIPAL KEMPER DISTRIBUTORS, INC.
UNDERWRITER 222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
</TABLE>
[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 - 2 (11/23/99) 1094260
