<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MARCH 31, 2000
KEMPER
CASH RESERVES FUND
"... Yields for Treasury bills increased to a
greater degree than yields for long-term bonds,
so that by March 31, 2000, one-year Treasury
bills yielded 6.24 percent, 40 basis points
more than 30-year Treasury bonds. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
PERFORMANCE UPDATE
5
PORTFOLIO STATISTICS
6
PORTFOLIO OF INVESTMENTS
8
FINANCIAL STATEMENTS
10
FINANCIAL HIGHLIGHTS
12
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
YIELDS
SEVEN-DAY ANNUALIZED YIELD FOR THE PERIOD ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
...........................................................................
<S> <C> <C> <C>
KEMPER CASH RESERVES FUND CLASS A 4.77%
...........................................................................
KEMPER CASH RESERVES FUND CLASS B 3.91%
...........................................................................
KEMPER CASH RESERVES FUND CLASS C 4.14%
...........................................................................
</TABLE>
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND. YIELDS ARE HISTORICAL AND WILL FLUCTUATE.
TERMS TO KNOW
AVERAGE DAYS-TO-MATURITY The average amount of time remaining before issuers of
securities within a money market fund's portfolio are scheduled to repay
principal. This period can be up to 90 days. A short average maturity generally
allows a portfolio manager to capitalize on a rising-interest-rate environment,
while a longer maturity can help maximize income when interest rates fall.
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 RATE The interest rate that banks charge each other on overnight
loans. The Federal Reserve Board's Open Market Committee sets a target rate to
either make credit more easily available or tighten monetary policy in an
attempt to avoid economic imbalances such as high inflation.
INVERTED YIELD CURVE A market phenomenon in which 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.
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.
<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 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.
YIELDS HAVE RISEN SHARPLY SINCE LAST SEPTEMBER AS
THE FEDERAL RESERVE INCREASED SHORT-TERM INTEREST
RATES 75 BASIS POINTS. IN THIS REPORT, FRANK
RACHWALSKI DISCUSSES HOW THE FED'S ACTIONS AND
MARKET CONDITIONS ENHANCED THE FUND'S INCOME
POTENTIAL AND HOW THE PORTFOLIO IS CURRENTLY
POSITIONED.
Q HOW DID THE MONEY AND BOND MARKETS PERFORM DURING THE FIRST SIX MONTHS OF
FISCAL YEAR 2000?
A It was the most volatile period since 1994. Strong economic growth
prompted the Federal Reserve to raise its short-term interest-rate target three
times by a total of 75 basis points (0.75 percent) to 6.00 percent. Between
September 30, 1999, and March 31, 2000, U.S. Treasury bill yields rose sharply.
Yields for Treasury bills increased to a greater degree than yields for
long-term bonds, so that by March 31, 2000, one-year Treasury bills yielded 6.24
percent, 40 basis points more than 30-year Treasury bonds. Mortgage interest
rates for consumers reached their highest levels since March 1997, but housing
and related consumer spending activity remained brisk. Oil prices soared past
$30 a barrel. Most economists and many bond market professionals anticipate
further Fed interest-rate hikes before the November 2000 national elections.
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 in the autumn of 1999 and winter of 2000. However,
the Treasury yield curve inverted as the new millennium began because of several
factors, the most significant of which were the Fed's interest-rate hikes and a
decision by the Treasury to reduce the amount of long-term debt outstanding. In
February, the Treasury announced plans to buy back some 30-year bonds from
investors. This may benefit the
U.S. TREASURY YIELDS
YIELDS ON ONE-YEAR TREASURIES INCREASED MORE THAN 100 BASIS POINTS BETWEEN THE
END OF SEPTEMBER 1999 AND MARCH 31, 2000.
[LINE GRAPH]
<TABLE>
<CAPTION>
9/30/99 3/31/00
------- -------
<S> <C> <C>
3-month 4.85 5.89
6-month 4.96 6.14
1-year 5.18 6.24
2-year 5.60 6.48
5-year 5.76 6.32
10-year 5.88 6.02
30-year 6.05 5.84
</TABLE>
SOURCE IS BLOOMBERG BUSINESS NEWS.
3
<PAGE> 4
PERFORMANCE UPDATE
U.S. economy in the long run by freeing more capital for private investment, but
the Treasury's news created confusion that increased short-term bond market
volatility. Prior to the announcement, some institutional investors made large
bets that long-term Treasury prices would fall sharply in 2000, and in January
they were right. However, when these investors realized that the government's
action would reduce the supply of 30-year bonds, these securities suddenly
became a much more prized commodity, and long-term bond prices rebounded.
Overall, money market securities were an excellent spot in the yield curve
(see chart - U.S. Treasury Yields/ September 30, 1999, vs. March 31, 2000, on
page 3) for risk-sensitive, fixed-income investors. Income potential rose
sharply. By positioning the fund's portfolio average maturity between 20- and
25-days, we quickly captured Fed rate increases as they occurred and maintained
liquidity for the six months ended March 31, 2000.
Q HOW DID YOU POSITION THE FUND BETWEEN SEPTEMBER 1999 AND MARCH 2000?
A The fund's average days-to-maturity (see Portfolio Statistics on page 5)
was shorter than that of most of its peers. This helped the fund respond to a
climate of rapidly rising interest rates. We were mindful of the fact that the
Fed was on the move, and we sought to maximize the fund's flexibility to respond
to dynamic market conditions. We focused on high-quality commercial paper during
the first half of fiscal year 2000 because of these securities' added income
potential.
Q IS THERE ANY WAY TO ESTIMATE HOW MUCH A GIVEN CHANGE IN INTEREST RATES CAN
AFFECT THE RETURN FROM MONEY MARKET INVESTMENTS?
A Generally, a 100-basis-point increase in interest rates translates into a
price decline of slightly more than 1 percent for a bond or fixed-income mutual
fund that has an average maturity of one year. Bond prices and fixed-income
mutual fund net asset values are also affected by market factors such as credit
risk. The fund's results since last summer were fully in line with market
conditions. Yields on 90-day Treasury bills rose by 104 basis points between
September 1999 and March 2000 while the fund's net asset value remained stable
at $1.00 a share (all classes of shares). 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 a fund's
portfolio. A money market fund's average portfolio maturity can range up to 90
days.
Q WHAT'S YOUR OUTLOOK FOR THE FUND FOR THE MONTHS AHEAD?
A A dual dynamic of the Fed attempting to keep inflation in check and an
overall reduction in bond supply may dictate what happens this year. We could
easily see another 50 basis points in rate hikes, especially given that the
government's March consumer price data showed that inflation was running at its
worst pace in five years. We intend to remain somewhat defensive, with an
average maturity within the 20- to 25-day range. We are comfortable that this
positioning can allow us to take advantage of any increase in income potential
consistent with our efforts to preserve principal. For investors seeking to
reduce the volatility of an overall bond or equity portfolio or simply capture
added income potential, we think the fund could be an attractive alternative.
Over the past several years, even small whiffs of inflation from one or two
government statistics that deviate from analysts' expectations have caused
equity and bond prices to rise or fall substantially in a single day. We believe
these overreactions should eventually subside. For that to happen, however, we
believe that the bond market will need to be convinced that the Fed has
succeeded in keeping consumer inflation from accelerating. In such an
environment, we believe it is prudent for investors to utilize money market
securities for the inevitable rainy day.
4
<PAGE> 5
PORTFOLIO STATISTICS
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
ON 3/31/00
<S> <C> <C> <C>
COMMERCIAL PAPER, FIRST TIER 47%
...............................................................................
REPURCHASE AGREEMENTS 30
...............................................................................
CERTIFICATES OF DEPOSITS AND OTHER 23
- -------------------------------------------------------------------------------
100%
</TABLE>
[PIE CHART]
*PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
5
<PAGE> 6
PORTFOLIO OF INVESTMENTS
KEMPER CASH RESERVES FUND
Portfolio of investments at March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--29.6%
Chase Securities,
Inc.
6.25% to be
repurchased on
4/3/2000 at
$102,053,125 $102,000,000 $102,000,000
Goldman Sachs Cos.,
Inc.
6.25% to be
repurchased on
4/3/2000 at
$102,053,125 102,000,000 102,000,000
State Street Bank
and Trust Company,
6.05% to be
repurchased on
4/3/2000 at
$1,129,569 1,129,000 1,129,000
-----------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--29.6%
(Cost $205,129,000)(b) 205,129,000
-----------------------------------------------------
COMMERCIAL PAPER--46.8%
Allfirst Bank BN
5.99%*, 4/16/2000 5,000,000 4,998,832
Amsterdam Funding
Corp.
5.91%, 4/6/2000 18,000,000 17,985,300
Anheuser-Busch Cos.,
Inc.
5.92%*, 4/16/2000 7,000,000 6,998,703
Brazos River
Authority
6.04%, 4/19/2000 5,000,000 5,000,000
Caterpillar
Financial Services
Corp.
6.10%*, 5/16/2000 7,000,000 6,999,467
Falcon Asset
Security Corp.
6.30%, 4/3/2000 21,843,000 21,835,355
FINOVA Capital Corp.
5.15%, 6/12/2000 7,000,000 7,000,000
Ford Motor Credit
Co.
6.27%*, 6/30/2000 5,000,000 4,997,545
Forrestal Funding
Master TR
6.22%, 6/12/2000 22,682,000 22,403,919
Four Winds Funding
Corp.
5.92%, 4/6/2000 25,000,000 24,979,548
Galaxy Funding
6.23%, 6/12/2000 20,000,000 19,754,000
Goldman Sachs Group,
L.P.
5.93%*, 4/3/2000 10,000,000 10,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C> <C> <C>
COMMERCIAL PAPER--CONTINUED
Louis Dreyfus
6.05%, 4/17/2000 $ 15,000,000 $ 14,959,867
Norwest Financial,
Inc.
5.96%*, 4/7/2000 7,000,000 6,998,205
Sheffield
Receivables Corp.
6.08%, 4/19/2000 20,000,000 19,939,500
Stellar Funding
Group
5.93%, 4/5/2000 16,596,000 16,585,120
Superior Funding
Capital
5.93%, 4/6/2000 10,000,000 9,991,805
Sweetwater Capital
Corp.
6.06%, 4/14/2000 20,000,000 19,956,450
UBS Finance, Inc.
6.28%, 4/3/2000 33,000,000 32,988,487
WCP Funding, Inc.
5.93%, 4/3/2000 25,000,000 24,934,667
Wood Street Funding
Corp.
6.28%, 4/3/2000 25,014,000 25,005,273
-----------------------------------------------------
TOTAL COMMERCIAL PAPER--46.8%
(Cost 324,312,043) 324,312,043
-----------------------------------------------------
CERTIFICATES OF DEPOSIT--20.4%
Allfirst Bank
6.18%*, 4/7/2000 7,000,000 6,998,810
Amsouth Bank
6.22%*, 4/1/2000 10,000,000 9,996,910
Barclays Bank, PLC
6.14%*, 4/1/2000 5,000,000 4,999,662
Bayerische
Landesbank, NY
5.86%*, 4/10/2000 5,000,000 4,999,914
Comerica Bank
5.94%*, 4/14/2000 5,000,000 4,998,461
Commerzbank AG
6.16%*, 4/1/2000 5,000,000 4,999,979
Commerzbank AG
Monthly Floater
4.87%, 4/10/2000 5,000,000 4,999,909
Credit Suisse
6.22%*, 4/1/2000 7,000,000 7,000,000
Dresdner Bank AG
6.09%*, 4/23/2000 7,000,000 6,999,150
First Union National
Bank
6.18%*, 4/18/2000 7,500,000 7,500,000
Harris Trust &
Savings Bank
6.16%*, 4/1/2000 5,000,000 4,999,973
</TABLE>
6
<PAGE> 7
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT--CONTINUED
Heller Financial,
Inc.
6.22%*, 6/7/2000 $ 15,000,000 $ 14,999,983
J.P. Morgan & Co.,
Inc.
5.92%*, 4/3/2000 5,000,000 5,000,000
Mellon Bank
6.09%*, 5/31/2000 7,000,000 6,999,134
National City Bank
6.11%*, 4/7/2000 7,000,000 7,001,953
Old Kent Bank Note
6.19%*, 4/1/2000 8,500,000 8,499,304
PNC Bank
6.10%*, 4/28/2000 8,000,000 8,000,116
Royal Bank of Canada
6.14%*, 4/1/2000 5,000,000 4,999,984
Skandinaviska
Enskilda Banken AB
6.23%*, 4/24/2000 7,000,000 6,999,354
US Bank NA,
Minnesota
6.08%*, 4/19/2000 10,000,000 10,009,371
-----------------------------------------------------
TOTAL CERTIFICATES OF
DEPOSIT--20.4%
(Cost 141,001,967) 141,001,967
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C> <C> <C>
SHORT-TERM AND MEDIUM TERM NOTES--3.2%
Finova Capital
Corp., 6.17%,
6/12/2000 $ 5,000,000 $ 5,000,000
Heller Financial,
Inc., 6.25%,
4/7/2000 7,000,000 7,002,113
SMM Trust 1999,
6.15%, 4/3/2000 10,000,000 10,000,000
-----------------------------------------------------
SHORT-TERM AND MEDIUM TERM
NOTES--3.2%
(Cost 22,002,113) 22,002,113
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $692,445,123)(a) $692,445,123
-----------------------------------------------------
</TABLE>
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 $692,445,123.
(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 March 31, 2000.
The dates shown represent the demand are or next interest rate change date.
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
FINANCIAL STATEMENTS
STATEMENT OF ASSETS & LIABILITIES
March 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, amortized cost $692,445,123
- ----------------------------------------------------------------------------
Cash 318
- ----------------------------------------------------------------------------
Interest receivable 1,318,714
- ----------------------------------------------------------------------------
Receivable for Fund shares sold 7,316,345
- ----------------------------------------------------------------------------
TOTAL ASSETS 701,080,500
- ----------------------------------------------------------------------------
LIABILITIES
Dividends payable 485,391
- ----------------------------------------------------------------------------
Payable for Fund shares redeemed 163,018,392
- ----------------------------------------------------------------------------
Accrued management fee 138,246
- ----------------------------------------------------------------------------
Other accrued expenses 1,674,921
- ----------------------------------------------------------------------------
Total liabilities 165,316,950
- ----------------------------------------------------------------------------
NET ASSETS, AT VALUE $535,763,550
- ----------------------------------------------------------------------------
NET ASSETS
NET ASSETS, AT VALUE $535,763,550
- ----------------------------------------------------------------------------
NET ASSETS VALUE
CLASS A SHARES
Net asset value offering and redemption price per share
($227,952,408 / 227,952,408 shares outstanding) $1.00
- ----------------------------------------------------------------------------
CLASS B SHARES
Net asset value offering and redemption price per share
($239,025,220 / 239,025,220 shares outstanding) $1.00
- ----------------------------------------------------------------------------
CLASS C SHARES
Net asset value offering and redemption price per share
($68,785,922 / 68,785,922 shares outstanding) $1.00
- ----------------------------------------------------------------------------
</TABLE>
8 The accompanying notes are an integral part of the financial statements.
<PAGE> 9
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Period ended March 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $16,994,690
- ---------------------------------------------------------------------------
Expenses:
Management fee 1,131,839
- ---------------------------------------------------------------------------
Services to shareholders 820,523
- ---------------------------------------------------------------------------
Custodian fees 10,970
- ---------------------------------------------------------------------------
Distribution services fees 1,201,140
- ---------------------------------------------------------------------------
Administrative service fees 734,896
- ---------------------------------------------------------------------------
Auditing 17,584
- ---------------------------------------------------------------------------
Legal 3,481
- ---------------------------------------------------------------------------
Trustees' fees 5,309
- ---------------------------------------------------------------------------
Reports to shareholders 70,001
- ---------------------------------------------------------------------------
Registration fees 76,618
- ---------------------------------------------------------------------------
Other 4,709
- ---------------------------------------------------------------------------
Total expenses before expense reductions 4,077,070
- ---------------------------------------------------------------------------
Expense reductions (3,253)
- ---------------------------------------------------------------------------
Total expenses, after expense reductions 4,073,817
- ---------------------------------------------------------------------------
NET INVESTMENT INCOME $12,920,873
- ---------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
2000 SEPTEMBER 30,
(UNAUDITED) 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ 12,920,873 $ 17,170,466
- -------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (12,920,873) (17,170,466)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions (112,241,417) 98,615,967
- -------------------------------------------------------------------------------------------------------
Net assets at beginning of period 648,004,967 549,389,000
- -------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD $ 535,763,550 $648,004,967
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 9
<PAGE> 10
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
CLASS A
SIX MONTHS
ENDED TWO MONTHS
MARCH 31, YEAR ENDED SEPTEMBER 30, ENDED YEAR ENDED
2000 ------------------------- SEPTEMBER 30, JULY 31,
(UNAUDITED) 1999 1998 1997 1996 1995 1995
<S> <C> <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 1.00
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02 .04 .04 .04 .05 .01 .05
- -----------------------------------------------------------------------------------------------------------------
Distributions from net investment income (.02) (.04) (.04) (.04) (.05) (.01) (.05)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN % 2.50** 4.12 4.58 4.57 4.67 .85** 4.99(A)
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in millions) 228 265 197 91 36 34 35
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions
(%) .90* 1.09 1.21 1.16 1.08 .92* .89
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions
(%) .90* 1.09 1.21 1.16 1.08 .92* .89
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) 4.79* 4.07 4.49 4.45 4.53 5.11* 4.75
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
SIX MONTHS
ENDED TWO MONTHS
MARCH 31, YEAR ENDED SEPTEMBER 30, ENDED YEAR ENDED
2000 ------------------------- SEPTEMBER 30, JULY 31,
(UNAUDITED) 1999 1998 1997 1996 1995 1995
<S> <C> <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 1.00
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02 .03 .03 .03 .04 .01 .04
- -----------------------------------------------------------------------------------------------------------------
Distributions from net investment income (.02) (.03) (.03) (.03) (.04) (.01) (.04)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN % 2.02** 3.08 3.53 3.49 3.73 .71** 4.08(A)
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in millions) 239 287 285 217 162 141 172
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions
(%) 1.85* 2.11 2.22 2.19 1.99 1.79* 1.78
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions
(%) 1.85* 2.11 2.22 2.19 1.99 1.79* 1.78
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) 3.96* 3.05 3.48 3.42 3.62 4.24* 3.86
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
SIX MONTHS
ENDED TWO MONTHS
MARCH 31, YEAR ENDED SEPTEMBER 30, ENDED YEAR ENDED
2000 ------------------------- SEPTEMBER 30, JULY 31,
(UNAUDITED) 1999 1998 1997 1996 1995 1995
<S> <C> <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 1.00
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02 .03 .04 .04 .04 .01 .04
- ---------------------------------------------------------------------------------------------------------------
Distributions from net investment income (.02) (.03) (.04) (.04) (.04) (.01) (.04)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------
Total return % 2.06** 3.44 3.90 3.85 3.93 .71** 4.08(a)
- ---------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in millions) 69 97 68 32 10 2 5
- ---------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions(%) 1.53* 1.75 1.88 1.84 1.79 1.78* 1.76
- ---------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions(%) 1.53* 1.75 1.88 1.84 1.79 1.78* 1.76
- ---------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)(%) 4.23* 3.41 3.82 3.77 3.82 4.25* 3.88
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not annualized
(a) 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.
11
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Kemper Cash Reserves Fund (the "Fund") 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 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.
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
regulations, the Fund intends to elect to defer
these losses and treat them as arising in the
fiscal year ended September 30, 2000.
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
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. Dividend income is recorded on
the ex-dividend date. 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. The Fund
incurred a management fee of $1,131,839 for the six
months ended March 31, 2000.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The Fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (KDI).
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of the Class B and Class C
shares pursuant to separate Rule 12b-1 plans for
the Class B and Class C shares. Pursuant to the
agreement, KDI enters into related selling group
agreements with various firms at various rates for
sales of Class B and Class C shares. In addition,
KDI receives any contingent deferred sales charges
("CDSC") from redemptions of Class B and Class C
shares. Distribution fees and CDSC received by KDI
for the six months ended March 31, 2000 are
$2,185,501, of which $661,240 is unpaid as of March
31, 2000.
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with Kemper
Distributors, Inc. ("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 six months
ended March 31, 2000 are $734,896, of which
$226,336 is unpaid at March 31, 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 $763,760
for the six months ended March 31, 2000, of which
$127,293 is unpaid at March 31, 2000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. For the six months ended March 31,
2000, the Fund made no payments to its officers and
incurred trustees' fees of $5,309 to independent
trustees, of which $2,231 is unpaid at March 31,
2000.
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund (dollar amounts and
number of shares are the same):
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
<S> <C> <C>
SHARES SOLD
Class A 4,365,500,494 5,874,842,261
----------------------------------------------------------------------------
Class B 375,440,208 871,120,274
----------------------------------------------------------------------------
Class C 393,425,812 1,115,322,982
----------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 4,203,096 5,292,395
----------------------------------------------------------------------------
Class B 4,128,721 5,949,415
----------------------------------------------------------------------------
Class C 1,345,569 1,650,846
----------------------------------------------------------------------------
SHARES REDEEMED
Class A (4,419,356,830) (5,812,296,009)
----------------------------------------------------------------------------
Class B (414,162,842) (875,179,547)
----------------------------------------------------------------------------
Class C (422,765,645) (1,088,086,650)
----------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 13,004,773 31,572,316
----------------------------------------------------------------------------
Class B (13,004,773) (31,572,316)
----------------------------------------------------------------------------
NET INCREASE (DECREASE)
FROM CAPITAL SHARE
TRANSACTIONS $ (112,241,417) $ 98,615,967
----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
4 LINE OF CREDIT The Fund and several Kemper Funds (the
"Participants") share in a $1 billion 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 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 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 $47 and $3,206, respectively, under
these arrangements.
14
<PAGE> 15
NOTES
15
<PAGE> 16
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
JOHN W. BALLANTINE MARK S. CASADY RICHARD L. VANDENBERG
Trustee President Vice President
LEWIS A. BURNHAM PHILIP J. COLLORA LINDA J. WONDRACK
Trustee Vice President Vice President
and Secretary
LINDA C. COUGHLIN MAUREEN E. KANE
Trustee JOHN R. HEBBLE Assistant Secretary
Treasurer
DONALD L. DUNAWAY CAROLINE PEARSON
Trustee ANN M. MCCREARY Assistant Secretary
Vice President
ROBERT B. HOFFMAN BRENDA LYONS
Trustee KATHRYN L. QUIRK Assistant Treasurer
Vice President
DONALD R. JONES
Trustee FRANK J. RACHWALSKI, JR.
Vice President
THOMAS W. LITTAUER
Trustee & Vice President
SHIRLEY D. PETERSON
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>
TRUSTEES&OFFICERS
[KEMPER FUNDS LOGO] Long-term investing in a short-term world(SM)
Printed in the U.S.A. on recycled paper.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Cash Reserves Fund prospectus.
KCRF - 3 (05/25/00) 1111840
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
