<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED SEPTEMBER 30, 2000
KEMPER
CASH RESERVES FUND
"... Regardless of how the market behaves, this portfolio is managed to offer
attractive income and a consistent return with only a nominal level of
risk...."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
7
PERFORMANCE UPDATE
9
PORTFOLIO STATISTICS
10
PORTFOLIO OF
INVESTMENTS
12
FINANCIAL STATEMENTS
15
FINANCIAL HIGHLIGHTS
17
NOTES TO FINANCIAL
STATEMENTS
20
REPORT OF
INDEPENDENT AUDITORS
AT A GLANCE
YIELDS
SEVEN-DAY ANNUALIZED EFFECTIVE YIELD FOR THE PERIOD ENDED SEPTEMBER 30, 2000
<TABLE>
<S> <C> <C> <C>
---------------------------------------------------------------------------
KEMPER CASH RESERVES FUND CLASS A 6.11%
...........................................................................
KEMPER CASH RESERVES FUND CLASS B 5.12%
...........................................................................
KEMPER CASH RESERVES FUND CLASS C 5.48%
...........................................................................
</TABLE>
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (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, 2000 (ADJUSTED FOR THE APPLICABLE SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR CLASS
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KEMPER CASH RESERVES FUND CLASS A 5.43% 4.67% n/a 4.12% (since 1/10/92)
.........................................................................................................
KEMPER CASH RESERVES FUND CLASS B 1.49% 3.48% 3.33% 4.45% (since 2/6/84)
.........................................................................................................
KEMPER CASH RESERVES FUND CLASS C 4.81% 3.98% n/a 3.97% (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.
*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. FOR ADDITIONAL INFORMATION, SEE
THE PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION AND FINANCIAL HIGHLIGHTS AT
THE END OF THE REPORT.
TERMS TO KNOW
BASIS POINT The movement of interest rates or yields expressed in hundredths of
a percent. For example, an increase in yield from 5 percent to 5.50 percent is
50 basis points.
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.
INVERTED YIELD CURVE A market phenomenon in which bonds with shorter maturities
have higher current yields than long-term bonds (securities with 10- to 30-year
maturities). Historically it has occurred during a period of rising short-term
interest rates and been viewed as an indicator of a future economic slowdown.
MATURITY The time remaining before an issuer is scheduled to repay the principal
amount on a debt security. Money market instruments are debt securities.
U.S. TREASURIES Debt securities issued by the U.S. government, including
Treasury bills, bonds and notes. They are considered the safest of all
securities. Their safety rests in the power of the U.S. government to obtain tax
revenue to repay its obligations and in its historical record of always having
done so.
<PAGE> 3
ECONOMIC OVERVIEW
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $290 BILLION IN ASSETS FOR INSTITUTIONAL AND CORPORATE
CLIENTS, RETIREMENT AND PENSION PLANS, INSURANCE COMPANIES, MUTUAL FUND
INVESTORS AND INDIVIDUALS. SCUDDER KEMPER INVESTMENTS OFFERS A FULL RANGE OF
INVESTMENT COUNSEL AND ASSET MANAGEMENT CAPABILITIES BASED ON A COMBINATION OF
PROPRIETARY RESEARCH AND DISCIPLINED, LONG-TERM INVESTMENT STRATEGIES.
DEAR KEMPER FUNDS SHAREHOLDER:
Times have been good. During the first half of 2000, the global economy grew
faster than it has in over a decade. All regions participated. The United
States, of course, was still powering ahead. The growth rate in Europe was
nearly 4 percent. Asia fed off an electronics boom and a revitalized China.
South America got a boost from an improved credit rating. New money pumped up
energy producers from Mexico to the Middle East.
Now for the bad news, which is that the best news is probably behind us.
Global growth peaked in the spring, and in the United States, at least, the
slowdown was abrupt. After 6 percent growth in the year ending June 30, the
economy grew at a rate of just 2.7 percent during the summer. It seems that
expensive energy, currency volatility and more widespread profit problems, are
bringing the exuberant global economy, including the United States, to heel.
Let's explore these factors in more detail.
OIL, OIL, TOIL AND TROUBLE
Although oil prices have receded somewhat, everyone's still jittery, and with
good reason: Of the seven recessions since World War II, six were preceded by a
spike in crude oil prices.
Oil prices have already been strong enough for long enough to crimp growth,
and they're biting the rest of the world even harder than the United States. But
there are two factors working to our advantage. First, oil prices are still
historically low. Oil is slightly more than $30 per barrel today, but it peaked
at over $75 per barrel back in 1980 (stated in today's dollars). Second, our
dependence on oil has decreased: The United States uses only roughly half as
much oil to produce a unit of GDP as it did thirty years ago. This gives us hope
that the economy can escape recession this time around.
What would make us worry more? Outright energy shortages or a political
crisis. If either happens, the odds of a recession occurring would rise steeply.
People panic or become excessively cautious when they have to fret. Can I fill
up my oil tank? Will there be a war? Their loss of confidence can be much more
devastating than price increases alone.
CURRENCY CONCERNS
Currency turmoil is a second danger to the economy. Central bankers have
intervened to halt the euro's decline, and they're right that the euro is
fundamentally undervalued. But intervention is a hazardous game. Let's hope they
don't convince the markets that the euro should rise a lot very quickly. A
suddenly weak dollar might make Europeans think about selling all those American
stocks and bonds they've been buying, and would greatly complicate the Fed's
inflation fight.
BUSINESS: BIG PLANS BUT PROFIT DISAPPOINTMENTS
Profit warnings escalated late this summer, and we believe there's fire amid
that smoke.
Sure, businesses have had a voracious appetite for money -- and until very
recently, corporate treasurers were finding it easily: Banks increased business
lending by 10.8 percent in the past year. Bond markets have suddenly become a
lot more picky, especially for low-quality credits, but money is still available
for investment grade borrowers. Capital goods orders reflect executives'
enthusiasm -- they've been accelerating since early in the year, and in
September were up more than 20 percent compared to a year ago.
Still, we expect total capital spending to slow, from this year's estimated 14
percent to 12.5 percent in 2001. The reason? A profit squeeze is about to take
some of the edge off executives' animal spirits.
We've always been more cautious than Wall Street about 2001 profits, and our
forecast hasn't changed. Profits are likely to be flat to down next year for
several reasons. First, the growth slowdown will make it harder to keep up the
productivity gains that have kept labor costs under control. Second, interest
expense will surge thanks to higher rates and all that new debt. Third,
depreciation costs are escalating. And finally, the excessively weak euro and
higher oil costs will sap earnings.
3
<PAGE> 4
ECONOMIC OVERVIEW
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.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (10/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
-------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 5.70 6.00 6.10 4.50
Prime rate (2) 9.50 9.00 8.25 8.25
Inflation rate (3)* 3.50 3.80 2.60 1.40
The U.S. dollar (4) 11.30 1.10 -0.90 1.10
Capital goods orders (5)* 22.70 13.30 4.70 8.60
Industrial production (5)* 5.70 5.40 3.50 3.70
Employment growth (6) 1.80 2.50 2.30 2.50
</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 PERCENT. 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 FAMILY INCOME AND RETAIL SALES.
*DATA AS OF 9/30/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
SAVING GRACES: FISCAL POLICY AND CONSUMER SPENDING
While growth has peaked and is now slowing, we can be thankful that growth
probably won't slow too much, thanks in part to a more stimulative fiscal policy
and consumer spending.
Fiscal policy is likely to be more stimulative. Of course, most economists
agree that the last thing this pumped-up economy needs is another shot of
stimulants -- too much stimulus, after all, is widely believed to cause
inflation. But economists weren't running for office; politicians were. And
inflation risk was about the last thing on the mind of either candidate in the
heat of election campaigning. They wanted to win votes, and the time-tested way
to do so was to make promises. Although we didn't have the name of the winner as
of press time, neither candidate seems to be planning a lot of fiscal
restraint -- but the good news is that neither candidate's plan is likely to be
enacted until 2002 at the earliest.
Second, consumers continue to spend, spend, spend. The personal savings rate
keeps falling, from an already low 2.2 percent last year to a nearly invisible
0.1 percent this year. Critics of this admittedly squishy statistic claim it
doesn't adequately capture households' growing wealth. As it turns out, however,
the average American not only doesn't save much, but he's not getting wealthier
in leaps and bounds, either.
Net worth for the median family where the head of the household is over 45
(and where thoughts are presumably beginning to turn to retirement), rose less
than $13,000 between 1995 and 1998. That's less than a 12 percent gain during
the same three years the stock market nearly doubled and the market value of
owner-occupied homes jumped 21 percent. Why didn't the average family get richer
in that time? Because they were borrowing and spending like crazy. House values
were up 21 percent -- but mortgage debt rose even faster, by 25 percent!
Consumers' profligacy worries many financial professionals. Some people aren't
saving enough for retirement because they have inflated expectations of future
investment returns. Other people aren't saving enough for retirement because
they don't realize just how much money they'll need. Either way, people aren't
saving.
Still, no one wants consumers to change their profligate ways too fast. After
all, hearty consumer spending is a prime reason America's growth has stayed on a
fast track so far. Most economists would like to see shoppers be a bit more
moderate -- but only a bit. If Americans suddenly turned thrifty, the economy
would lurch into reverse.
4
<PAGE> 5
ECONOMIC OVERVIEW
Luckily, there's little chance of that happening, unless lenders get cold
feet. So far, they're hot to trot. In the past year, mortgage lending by banks
rocketed nearly 17 percent while loans to consumers jumped 10 percent. Brokers
are selling the loans banks don't want on their balance sheets to mortgage pools
and the asset-backed securities market, where eager non-bank lenders are
snapping them up. In the past year, these markets provided $625 billion of new
credit, a leap of more than 12 percent.
With so much money at their disposal, consumers didn't stay out of the
shopping centers and restaurants for long. Consumer spending growth jumped up to
4.5 percent in the summer, and we expect it to stay well above 3 percent through
2001.
OMINOUS SIGNS?
Decelerations are always tricky, to be sure. But barring some unexpected
shock, overall economic growth should to pop back into the 3.5 percent to 4
percent range in 2001. Why? Borrowing costs a little more than it did last year,
but money is still freely available for most borrowers. Capital goods orders are
strong, so there's a lot of life left in business spending. Shoppers are a
little pickier, but they're still more interested in visiting the mall than in
filling their piggy banks. And after the election, no matter who wins, fiscal
policy is likely to be more stimulative than it has been for years. The price to
pay will likely be a rise in core inflation (inflation excluding food and
energy). We expect it to hit 3 percent next year, up from its recent rate of 2.5
percent. We believe we'll make it safely through 2001, but investors should keep
their hands on the wheel and their eyes peeled.
Sincerely,
Kemper Distributors, Inc.
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF NOVEMBER 8, 2000, AND MAY NOT ACTUALLY COME TO PASS.
THIS INFORMATION IS SUBJECT TO CHANGE. NO PART OF THIS MATERIAL IS INTENDED AS
AN INVESTMENT RECOMMENDATION.
TO OBTAIN A KEMPER FUNDS PROSPECTUS, DOWNLOAD ONE FROM WWW.KEMPER.COM, TALK TO
YOUR FINANCIAL REPRESENTATIVE OR CALL SHAREHOLDER SERVICES AT (800) 621-1048.
THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING MANAGEMENT FEES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
5
<PAGE> 6
ECONOMIC OVERVIEW
[INTENTIONALLY LEFT BLANK]
6
<PAGE> 7
PERFORMANCE UPDATE
FOR THE ONE-YEAR PERIOD ENDING SEPTEMBER 30, 2000,
MONEY MARKET YIELDS ROSE IN TANDEM WITH THE FEDERAL
RESERVE BOARD'S SHORT-TERM INTEREST-RATE HIKES.
BELOW, FRANK RACHWALSKI DISCUSSES HOW MARKET
CONDITIONS AND THE FED'S ACTIONS BENEFITED THE
FUND'S PERFORMANCE, AND COMMENTS ON HOW THE
PORTFOLIO HAS BEEN POSITIONED AGAINST THIS ECONOMIC
BACKDROP.
Q WILL YOU PROVIDE AN OVERVIEW OF THE FORCES THAT SHAPED THE MARKET DURING
THE LAST YEAR AND HOW THESE EVENTS AFFECTED SHORT-MATURITY INVESTMENTS SUCH AS
MONEY MARKET FUNDS AND TREASURY BILLS?
A The past 12 months have been interesting and volatile. Strong economic
growth, upticks in inflation measures and tight labor markets all prompted the
Federal Reserve to raise interest rates four times by a total of 125 basis
points to prevent the economy from overheating. T-bill yields rose so sharply
that one-year T-bills yielded more than 30-year Treasury bonds during this
period. Stock markets here and abroad corrected and broadened. Oil prices soared
past $35 a barrel, and although many investors had planned for the worst-case
scenario, January 1 came and went without incident. Short-term investments
reflected these developments as yields increased toward the end of the 12-month
period.
While the Fed might have succeeded in engineering a slowdown for the economy,
the bond market remains unpredictable. For example, earlier this year mortgage
rates -- a good indicator of how the economy is doing -- reached their highest
levels since March 1997. Nevertheless, they remain historically low. In fact,
since the last Fed rate increase which was in May (50 basis points), mortgage
rates have actually dropped by 73 basis points. Applications for mortgages
increased throughout the fiscal year, which means housing and related consumer
spending activity remained brisk in spite of the uncertain economic climate.
It's been a challenging 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 WHY DID SHORT-TERM BOND YIELDS RISE MORE THAN LONG-TERM YIELDS?
A Usually, long-term government bonds provide more income potential than
securities maturing in a year or less, since they involve more interest-rate
risk. This pattern held true as 1999 came to a close and the new millennium
began. However, the Treasury yield curve inverted at the beginning of 2000,
because of several factors, the most significant being the Fed's interest-rate
hikes and the ability of the Treasury to reduce the amount of long-term debt
outstanding, due to the federal surplus. To elaborate, in February of this year,
the Treasury announced plans to buy back some 30-year bonds from investors. This
decision was designed to benefit the U.S. economy in the long run by freeing
more capital for private investment.
[RACHWALSKI PHOTO]
FRANK RACHWALSKI, CFA, IS A MANAGING DIRECTOR 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 JOINED SCUDDER KEMPER INVESTMENTS IN 1981. 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, AND SHOULD NOT BE CONSIDERED A RECOMMENDATION OF ANY SPECIFIC
SECURITY.
7
<PAGE> 8
PERFORMANCE UPDATE
Q HOW WAS KEMPER CASH RESERVES FUND POSITIONED IN THIS UNIQUE ENVIRONMENT?
A Overall, money market securities were an excellent place for
risk-sensitive, fixed-income investors. By positioning the portfolio's average
maturity between 20 and 25 days, which we believe was shorter than many of our
peers, we maximized the fund's flexibility to respond to dynamic market
conditions. We navigated Fed rate increases while maintaining liquidity for the
one-year period ending September 30, 2000. We kept this defensive stance through
most of this period, since, in our experience, we did not want to be aggressive
when conditions are unpredictable. Thus, the portfolio was well positioned to
take advantage of the subsequent rate hikes that occurred. This strategy began
to pay off as the market shifted to favor more conservative, short-maturity
issues. So far in 2000, we have focused on high-quality commercial paper and
bank obligations.
Q IS THERE ANY WAY TO ESTIMATE HOW MUCH A GIVEN CHANGE IN INTEREST RATES CAN
AFFECT THE RETURN FROM MONEY MARKET INVESTMENTS?
A With respect to yield, all things being equal, a money market fund's yield
will lag changes in Federal Reserve monetary policy by a period of time
generally equal to the average maturity of securities in that fund's portfolio.
The yield of Kemper Cash Reserve Fund tracked market conditions. This is the
reason we stayed defensive. Yields on 90-day Treasury bills rose by 136 basis
points between September 1999 and September 2000 while the fund's net asset
value remained stable at $1.00 a share (all share classes).
Q WHAT'S YOUR OUTLOOK FOR THIS MARKET FOR THE NEXT FEW MONTHS?
A Mortgage rates remain historically low, consumer confidence is still high,
and spending is up -- all signs that point to a continuing strong economy.
However, we remain cautious about the underlying strength of the economy, the
effects of this year's sharp rise in oil and natural gas prices, and the
potential inflationary promises of U.S. presidential candidates. We believe the
United States is likely to see more stimulating fiscal policy coming out of
Washington in the form of tax cuts and higher spending. Thus, inflation is still
a concern. The impact on short-term rates is very uncertain at this time. Our
feeling is that rates are currently in a holding pattern for an extended period.
With that in mind, we are seeking opportunities to modestly extend the fund's
average maturity by purchasing slightly longer-term investments, given a modest
income reward for extensions. Our focus for the portfolio will continue to be on
commercial paper and bank liabilities. Regardless of how the market behaves,
this portfolio is managed to offer attractive income and a consistent return
with only a nominal level of risk.
8
<PAGE> 9
PORTFOLIO STATISTICS
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
ON 9/30/00
<S> <C> <C> <C>
COMMERCIAL PAPER, FIRST TIER 69.4%
................................................................................
DOMESTIC BANK CDS 23.9
................................................................................
REPURCHASE AGREEMENT 6.7
--------------------------------------------------------------------------------
100%
</TABLE>
[PIE CHART]
*PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER CASH RESERVES FUND
Portfolio of Investments at September 30, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--6.7%
Bear Stearns
6.68% to be repurchased
on 10/2/2000 at
$30,011,133 $30,000,000 $ 30,000,000
State Street Bank and Trust
Company,
6.48% to be repurchased
on 10/2/2000 at
$3,024,088 3,023,000 3,023,000
-----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $33,023,000)(b) 33,023,000
-----------------------------------------------------------
COMMERCIAL PAPER--69.4%
Amsterdam Funding Corp.
6.52%, 10/6/2000 10,000,000 9,990,944
Associates Corp. N.A.
6.66%*, 12/15/2000 10,000,000 10,000,000
Atlantis One Funding Corp.
6.50%, 11/1/2000 10,000,000 9,944,028
Bank of America Corp.
6.59%, 1/11/2001 10,000,000 9,813,283
Baxter International, Inc.
6.52%-6.60%, 10/4/2000-
10/20/2000 22,455,000 22,392,292
British Telecommunications
PLC
6.54%, 2/21/2001 10,000,000 9,740,217
COFCO Capital Corp.
6.51%, 11/16/2000 8,000,000 7,933,453
Cooper Industries, Inc.
6.55%-6.60%, 10/20/2000-
12/4/2000 20,000,000 19,848,723
Corporate Receivables Corp.
6.54%, 11/9/2000 10,000,000 9,929,150
Countrywide Home Loan
6.75%-6.76%*, 10/1/2000-
12/5/2000 18,000,000 17,999,368
CXC Inc.
6.51%, 11/2/2000 10,000,000 9,942,133
Eureka Securitization Inc.
6.52%, 10/17/2000 10,000,000 9,971,022
Firstar Corp.
6.97%*, 11/3/2000 8,000,000 8,015,979
Ford Motor Credit Co.
6.77%*, 10/2/2000 5,000,000 4,999,987
Forrestal Funding Master
Trust
6.55%, 1/25/2001 5,000,000 4,894,472
Galaxy Funding
6.59%, 1/25/2001 10,000,000 9,787,656
Greenwich Funding Corp.
6.52%, 11/1/2000 10,000,000 9,943,856
Heller Financial, Inc.
6.85%-6.93%*, 10/2/2000-
10/17/2000 20,000,000 19,988,382
Monte Rosa Capital Corp.
6.52%, 10/11/2000 10,000,000 9,981,889
Northern States Power Co.
6.75%, 10/2/2000 12,000,000 11,997,750
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER--CONTINUED
Receivables Capital Corp.
6.50%-6.52%, 10/10/2000-
10/24/2000 $19,173,000 $ 19,118,539
Scaldis Capital LLC
6.52%, 11/13/2000 10,000,000 9,922,122
Sheffield Receivables Corp.
6.52%, 10/6/2000 10,000,000 9,990,944
Sigma Finance Inc.
6.55%, 10/23/2000 5,000,000 4,979,986
SMM Trust 2000
6.64*, 10/13/2000 10,000,000 10,000,000
Stellar Funding Group
6.52%, 10/30/2000 10,000,000 9,947,478
Superior Funding Capital
6.53%, 10/5/2000 10,000,000 9,992,744
Sweetwater Capital Corp.
6.50%, 12/27/2000 9,533,000 9,383,252
Thunder Bay Funding, Inc.
6.52%, 10/20/2000 10,000,000 9,965,589
Variable Funding Corp.
6.51%, 10/3/2000 10,000,000 9,996,383
Windmill Funding Corp.
6.51%, 10/3/2000 10,000,000 9,996,383
-----------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $340,408,004) 340,408,004
-----------------------------------------------------------
CERTIFICATES OF DEPOSIT--23.9%
Allfirst Bank
6.59%-6.62%*,
10/10/2000-10/16/2000 10,000,000 9,999,574
American Express Centurion
Bank
6.59%*, 10/19/2000 7,500,000 7,499,476
Amsouth Bank
6.72%*, 10/1/2000 10,000,000 9,998,840
Canadian Imperial Bank
6.58%*, 10/4/2000 10,000,000 9,994,796
Comerica Bank
6.54%-6.57%*,
10/12/2000-10/14/2000 12,500,000 12,497,661
Fleet National Bank
6.57%*, 10/20/2000 10,000,000 9,996,444
First Union National Bank
6.67%-6.68%*, 10/1/2000 17,500,000 17,500,000
Harris Trust & Savings Bank
6.56%*, 10/12/2000 10,000,000 9,997,216
Key Bank
6.63%*, 11/25/2000 10,000,000 9,997,670
Old Kent Bank
6.67%*, 10/1/2000 10,000,000 10,000,000
US Bank NA, Minnesota
6.70%*, 10/19/2000 10,000,000 10,002,851
-----------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $117,484,528) 117,484,528
-----------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $490,915,532)(a) $490,915,532
-----------------------------------------------------------
</TABLE>
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
PORTFOLIO OF INVESTMENTS
NOTES TO PORTFOLIOS OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
floating rate securities described below.
(a) Cost for federal income tax purposes was $490,915,532.
(b) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
* Floating rate notes are securities whose rates vary with a designated market
index or market rate, such as the coupon-equivalent of the Treasury bill
rate. These securities are shown at their current rate as of September 30,
2000. The dates shown represent the demand or next interest rate change
date.
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
As of September 30, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $490,915,532) $490,915,532
----------------------------------------------------------------------------
Cash 870
----------------------------------------------------------------------------
Interest receivable 1,230,908
----------------------------------------------------------------------------
Receivable for Fund shares sold 46,026,769
----------------------------------------------------------------------------
TOTAL ASSETS 538,174,079
----------------------------------------------------------------------------
LIABILITIES
Dividends payable 574,059
----------------------------------------------------------------------------
Payable for Fund shares redeemed 3,663,028
----------------------------------------------------------------------------
Accrued management fee 153,505
----------------------------------------------------------------------------
Other accrued expenses and payables 1,137,598
----------------------------------------------------------------------------
Total liabilities 5,528,190
----------------------------------------------------------------------------
NET ASSETS, AT VALUE $532,645,889
----------------------------------------------------------------------------
NET ASSETS VALUE
CLASS A SHARES
Net asset value, offering and redemption price per share
($251,618,728 / 251,618,728 shares outstanding) $1.00
----------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($202,180,191
/ 202,180,191 shares outstanding) $1.00
----------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($78,846,970 /
78,846,970 shares outstanding) $1.00
----------------------------------------------------------------------------
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended September 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $32,594,859
---------------------------------------------------------------------------
Expenses:
Management fee 2,051,259
---------------------------------------------------------------------------
Services to shareholders 1,472,699
---------------------------------------------------------------------------
Custodian fees 46,933
---------------------------------------------------------------------------
Distribution services fees 2,162,137
---------------------------------------------------------------------------
Administrative service fees 1,316,592
---------------------------------------------------------------------------
Auditing 62,930
---------------------------------------------------------------------------
Legal 19,905
---------------------------------------------------------------------------
Trustees' fees and expenses 4,630
---------------------------------------------------------------------------
Reports to shareholders 152,771
---------------------------------------------------------------------------
Registration fees 80,880
---------------------------------------------------------------------------
Total expenses, before expense reductions 7,370,736
---------------------------------------------------------------------------
Expense reductions (37,744)
---------------------------------------------------------------------------
Total expenses, after expense reductions 7,332,992
---------------------------------------------------------------------------
NET INVESTMENT INCOME $25,261,867
---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 25,261,867 17,170,466
-------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (25,261,867) (17,170,466)
-------------------------------------------------------------------------------------------------
Fund share transactions, at net asset value of $1.00 per
share:
Shares sold
Class A 6,315,703,189 5,874,842,261
-------------------------------------------------------------------------------------------------
Class B 677,392,767 871,120,274
-------------------------------------------------------------------------------------------------
Class C 586,784,915 1,115,322,982
-------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends
Class A 8,378,489 5,292,395
-------------------------------------------------------------------------------------------------
Class B 7,898,877 5,949,415
-------------------------------------------------------------------------------------------------
Class C 2,697,278 1,650,846
-------------------------------------------------------------------------------------------------
Shares redeemed
Class A (6,337,071,917) (5,812,296,009)
-------------------------------------------------------------------------------------------------
Class B (769,736,453) (875,179,547)
-------------------------------------------------------------------------------------------------
Class C (607,406,223) (1,088,086,650)
-------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions (115,359,078) 98,615,967
-------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (115,359,078) 98,615,967
-------------------------------------------------------------------------------------------------
Net assets at beginning of period 648,004,967 549,389,000
-------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 532,645,889 648,004,967
-------------------------------------------------------------------------------------------------
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL HIGHLIGHTS
The following tables include selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
CLASS A
YEAR ENDED SEPTEMBER 30,
---------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------
Net investment income .05 .04 .04 .04 .05
------------------------------------------------------------------------------------
Distributions from net investment income (.05) (.04) (.04) (.04) (.05)
------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
------------------------------------------------------------------------------------
TOTAL RETURN % 5.43 4.12 4.58 4.57 4.67
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in millions) 252 265 197 91 36
------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) .93 1.09 1.21 1.16 1.08
------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) .92 1.09 1.21 1.16 1.08
------------------------------------------------------------------------------------
Ratio of net investment income (%) 5.27 4.07 4.49 4.45 4.53
------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
YEAR ENDED SEPTEMBER 30,
----------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
-------------------------------------------------------------------------------------
Net investment income .04 .03 .03 .03 .04
-------------------------------------------------------------------------------------
Distributions from net investment income (.04) (.03) (.03) (.03) (.04)
-------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
-------------------------------------------------------------------------------------
TOTAL RETURN % 4.49 3.08 3.53 3.49 3.73
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in millions) 202 287 285 217 162
-------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 1.87 2.11 2.22 2.19 1.99
-------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.86 2.11 2.22 2.19 1.99
-------------------------------------------------------------------------------------
Ratio of net investment income (%) 4.33 3.05 3.48 3.42 3.62
-------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
YEAR ENDED SEPTEMBER 30,
---------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------------
Net investment income .05 .03 .04 .04 .04
----------------------------------------------------------------------------------
Distributions from net investment income (.05) (.03) (.04) (.04) (.04)
----------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------------
TOTAL RETURN % 4.81 3.44 3.90 3.85 3.93
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in millions) 79 97 68 32 10
----------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 1.57 1.75 1.88 1.84 1.79
----------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.56 1.75 1.88 1.84 1.79
----------------------------------------------------------------------------------
Ratio of net investment income (%) 4.63 3.41 3.82 3.77 3.82
----------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES 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, diversified 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 accounting principles generally
accepted in the United States which require the use
of management estimates. The policies described
below are followed consistently by the Fund in the
preparation of its financial statements.
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.
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.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
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 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 the Funds in
proportion to their relative net assets.
--------------------------------------------------------------------------------
2 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
("Scudder Kemper"). The Fund 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. For the year
ended September 30, 2000, the Fund incurred a
management fee of $2,051,259 which is equivalent to
an annualized effective rate of 0.39% of the Fund's
average daily net assets.
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 for the year
ended September 30, 2000 are $3,871,037, of which
$394,447 is unpaid as of September 30, 2000.
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 agreements with
financial services firms that provided 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 year ended September 30, 2000 are $1,316,592,
of which $181,599 is unpaid at September 30, 2000.
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
$1,441,055 for the year ended September 30, 2000,
of which $395,281 is unpaid at September 30, 2000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. For the year ended September 30,
2000, the Fund made no payments to its officers and
incurred trustees' fees of $4,630 to independent
trustees, of which $937 is unpaid at September 30,
2000.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
3 CONVERSION
OF SHARES The following table summarizes the conversion of
Class B shares into Class A shares (dollar amounts
and number of shares are the same):
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
<S> <C> <C>
CONVERSION OF SHARES
Class A 21,579,371 31,572,316
----------------------------------------------------------------------------
Class B (21,579,371) (31,572,316)
----------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
4 LINE OF CREDIT The Fund and several Kemper Funds (the
"Participants") share in a $750 million revolving
credit facility with Chase Manhattan 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 amount 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.
--------------------------------------------------------------------------------
5 EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian and transfer agent whereby credits
realized as a result of uninvested cash balances
were used to reduce a portion of the Fund's
expenses. During the period, the Fund's custodian
and transfer agent fees were reduced by $6,301 and
$31,443, respectively, under these arrangements.
19
<PAGE> 20
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, 2000, and the related statements of
operations for the year then ended, 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 1996. 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 accounting principles generally
accepted in the United States. 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, 2000 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, 2000, 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 1996, in conformity with accounting principles generally accepted in the
United States.
ERNST & YOUNG LLP
Chicago, Illinois
November 16, 2000
20
<PAGE> 21
NOTES
21
<PAGE> 22
NOTES
22
<PAGE> 23
NOTES
23
<PAGE> 24
TRUSTEES&OFFICERS
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
JOHN W. BALLANTINE MARK S. CASADY MAUREEN E. KANE
Trustee President Assistant Secretary
LEWIS A. BURNHAM PHILIP J. COLLORA CAROLINE PEARSON
Trustee Vice President Assistant Secretary
and Secretary
LINDA C. COUGHLIN BRENDA LYONS
Trustee JOHN R. HEBBLE Assistant Treasurer
Treasurer
DONALD L. DUNAWAY
Trustee ANN M. MCCREARY
Vice President
ROBERT B. HOFFMAN
Trustee KATHRYN L. QUIRK
Vice President
DONALD R. JONES
Trustee FRANK J. RACHWALSKI, JR.
Vice President
THOMAS W. LITTAUER
Chairman, Trustee & RICHARD L. VANDENBERG
Vice President Vice President
SHIRLEY D. PETERSON LINDA J. WONDRACK
Trustee Vice President
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 AND STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT 225 Franklin Street
Boston, MA 02109
.............................................................................................
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 (11/25/00) 1124170
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
