<PAGE> 1
DEAR KILICO POLICY OWNER:
- ---------------------------------------
GENERAL ECONOMIC OVERVIEW
Investors enjoyed generally positive performance in both the fixed-income and
stock markets in the first six months of 1995. At this midpoint in the year, the
returns of most leading securities markets are significantly higher than they
were at the same time in 1994.
But recently, several events occurred to challenge the markets:
- - Early in July, the Federal Reserve Board acknowledged that economic growth had
slowed so much that a recession might now be possible. In response, the
Federal Reserve eased short-term interest rates by a small but symbolic 25
basis points. This action was significant because, since February 1994, the
Fed had been raising interest rates to slow down what was considered high
enough growth to rekindle troublesome inflation.
- - Then, midway into July, the stock market took a brief tumble. After a two-day
period of anxiety, the market recovered and finished the month well ahead. But
such a sudden, severe mini-correction served to remind investors that the
current bull market will probably come to an end someday and that some sectors
may be overextended today.
- - Finally, the late July release of the gross domestic product (GDP) revealed
that growth in the economy in the second quarter was almost nonexistent. The
economy has not experienced such a low real GDP change (0.5%) in four years.
Proof of the economic slowdown was good news for investors who worry about
runaway growth and its inevitable result, inflation. At the same time, we were
pleased to see economic data that suggest that certain sectors of the economy,
such as housing and foreign trade, are poised for growth in the third and
fourth quarters. These should help provide momentum and keep us clear of a
recession. In fact, we anticipate 2% to 3% real GDP growth for the next few
quarters. Nevertheless, additional action by the Federal Reserve to lower
interest rates would not surprise us.
OUR ECONOMIC OUTLOOK
As we view the remainder of 1995, we believe that the opportunities for common
stock investors will be increasingly concentrated in higher quality investments.
Companies cannot necessarily count on the economy to provide above average
earnings support. Rather, stocks that have proven themselves with a pattern of
consistent earnings are likely to attract investor support. Specifically,
sectors that produce more consistent earnings, such as health care, consumer
nondurables, selected technology and selected capital goods can be expected to
do well. Picking the right sectors to invest in will be the key challenge for
equity investors during the next few quarters.
In addition, we look for the fixed-income markets to continue their positive
performance, as they tend to do well during periods of slow growth and low
inflation.
Leading international economies are lagging the U.S. economy. Japan and Germany,
whose economies typically follow U.S. growth, are not as robust as in past
cycles. This phenomenon makes international investing very complex currently.
Moreover, conditions in emerging market countries underline the importance of
careful research and experience in understanding how these markets work.
Nevertheless, the same fundamentals that have driven markets higher in the U.S.
are to be found in many foreign countries currently.
Political leadership also has some bearing on the progress of the economy and
the state of the financial markets. In the months preceding a presidential
election year, it has been common for incumbents to attempt to stimulate growth.
Given our Republican Congress and Democratic President, however, we do not
consider this a foregone conclusion as we move closer to 1996.
We would like to direct your attention to the performance of the subaccounts,
which are investment options available through your policy. Please take a
1
<PAGE> 2
moment to review the market and performance summaries prepared by the portfolio
managers.
<TABLE>
<CAPTION>
MONEY MARKET PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -----------------------------------------------------------------
<S> <C>
Six Months Ended 6/30/95 2.39%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
CURRENT NET YIELDS++
For Week Ended 6/30/95
Current Annualized Yield 4.68%
Compounded Effective Yield 4.79%
</TABLE>
- -----------------------------------------------------------------
The current annualized yield was 4.62% for the week ended July 31, 1995; the
compounded effective yield was 4.73%.
The KINF Money Market Portfolio benefited from the last Federal rate increase in
February in terms of higher yields. However, by the end of June, it seemed
likely that the economic slowdown would soon cause a halt in the trend to higher
rates. In fact the Federal Reserve eased monetary conditions in the beginning of
July. However, we do not anticipate an extended trend of lower rates.
We believe that the current economic slowdown will cease and some rebounding
will occur during the fourth quarter. However, to respond to the Fed's expected
action, we are slightly extending the average life of the Portfolio, which
invests in high quality short-term investments that can provide both stability
of principal and the opportunity for competitive money market yields.
Frank Rachwalski
Portfolio Manager August 2, 1995
<TABLE>
<CAPTION>
TOTAL RETURN PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- -----------------------------------------------------------------
<S> <C>
Six Months Ended 6/30/95 14.59%
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/95
<TABLE>
<CAPTION>
1 YEAR 5 YEAR INCEPTION TO DATE
---------------- ---------------- ------------------
<S> <C> <C>
6.42% 8.05% 6.37%
</TABLE>
- ---------------------------------------------------------
Average annual total return performance reflects surrender charges as follows:
one-year (9%) and five year (5%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
The first six months of 1995 saw significant changes for the KINF Total Return
Portfolio, including revisions to the Portfolio's investment strategy that
enabled the Portfolio to take advantage of stock and bond market rallies.
Commensurate with a change announced early in the year, we said that we normally
expect to invest approximately 60% of the Portfolio in stocks (which provide the
potential for long-term growth of capital) and 40% of the Portfolio in bonds
(which provide most of the Portfolio's yield, enabling the Portfolio to generate
current income). The Portfolio has a broad ability to invest in six basic asset
classes (domestic and international growth stocks and four types of bonds).
Throughout the six-month period, the Portfolio's domestic stock holdings led its
performance, helped alternately by global bonds and U.S. Treasuries. Halfway
into the year, the decision was made to shift funds from international equities
to take greater advantage of the domestic stock market.
The current environment of "reasonably good" corporate earnings and slow
economic growth is the "best of both worlds." Notwithstanding the stock market's
strength to date, we continue to be bullish about the opportunities of U.S.
stock market. Technology and financial stocks, in particular, remain an
emphasis.
Gary A. Langbaum,
Portfolio Manager August 1, 1995
<TABLE>
<CAPTION>
HIGH YIELD PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- ---------------------------------------------------------
<S> <C>
Six Months Ended 6/30/95 9.53%
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/95
<TABLE>
<CAPTION>
1 YEAR 5 YEAR INCEPTION TO DATE
---------------- ---------------- ------------------
<S> <C> <C>
.74% 12.40% 7.81%
</TABLE>
- ---------------------------------------------------------
Average annual total return performance reflects surrender charges as follows:
one-year (9%) and five year (5%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
The domestic bond market rebounded strongly in the first six months of 1995 as
investors were pleased to see that higher interest rates had the effect of
slowing down economic growth. It was an environment that
2
<PAGE> 3
presented many opportunities for the KINF High Yield Portfolio.
Below investment-grade bonds, the Portfolio's primary investment, continued to
out perform U.S. Treasuries.
Demand for the higher income offered by these bonds has been stimulated by the
recent decline in yields. At the same time, there has been a decline in new
issues, which also helps bond prices. This sector has benefitted from favorable
levels of supply and demand.
The Portfolio's exposure to BB-rated bonds, in particular, has also contributed
to performance. BB-rated bonds are the highest quality tier of high yield paper,
which means that their price movement tends to be more closely correlated to
Treasuries than lower quality bonds.
The favorable supply conditions and the economic slowdown that is apparently
underway combine to make us optimistic about the Portfolio's potential going
forward. Fixed-income investments perform best during times of slow growth and
moderate inflation expectations.
Michael A. McNamara
Harry E. Resis, Jr.
Co-Portfolio Managers August 1, 1995
<TABLE>
<CAPTION>
EQUITY PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- ---------------------------------------------------------
<S> <C>
Six Months Ended 6/30/95 16.51%
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/95
<TABLE>
<CAPTION>
1 YEAR 5 YEAR INCEPTION TO DATE
---------------- ---------------- ------------------
<S> <C> <C>
14.09% 12.64% 9.28%
</TABLE>
- ---------------------------------------------------------
Average annual total return performance reflects surrender charges as follows:
one-year (9%) and five year (5%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
The stock market rose to a series of record highs during the first half of 1995,
spurred by declining interest rates, favorable earnings reports and an extended
rally for technology stocks. The KINF Equity Portfolio benefitted from positions
in technology (Intel, Microsoft) and interest rate-sensitive stocks (MBNA,
NationsBank), as well as blue chip companies with international exposure (Coca
Cola, Proctor & Gamble) which gained from strong sales and a weak dollar.
Positions in retail (Home Depot, Ann Taylor) were generally weak, reflecting a
slowdown in consumer spending. These holdings, as well as defensive positions
such as foods and household products, limited the Portfolio's gains relative to
some of its peers.
Trading during the 2nd quarter included additional purchases in the technology
sector and selected stocks in the financial and consumer product sectors. New
holdings include Amgen, a leader in biotechnology, Boston Scientific, a producer
of medical devices, and more familiar names including DuPont, Goodrich, Boeing,
Scott Paper and Xerox. Selected technology stocks including Motorola and
Compuware were sold due to concerns about valuations and earnings momentum.
Several retail positions including May Dept. Stores and Ann Taylor were
eliminated in response to weak sales and earnings projections. Positions in
Nucor, Warner Lambert, W.W. Grainger, Corning Glass and Morton International
were also eliminated. A number of positions were trimmed as the Portfolio took
profits on stocks that had posted substantial gains.
Looking ahead, a slower economy and low inflation should continue to favor
growth stocks through the next several months. We expect to maintain a defensive
position in larger companies that can sustain earnings growth in this
environment.
C. Beth Cotner
Portfolio Manager August 1, 1995
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES PERCENT CHANGE IN
SUBACCOUNT ACCUMULATION UNIT VALUE+
- ---------------------------------------------------------
<S> <C>
Six Months Ended 6/30/95 11.21%
- ---------------------------------------------------------
- ---------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++
For Period Ended 6/30/95
<TABLE>
<CAPTION>
1 YEAR 5 YEAR INCEPTION TO DATE
---------------- ---------------- ------------------
<S> <C> <C>
2.18% 6.83% 6.94%
</TABLE>
- ---------------------------------------------------------
Average annual total return performance reflects surrender charges as follows:
one-year (9%) and five year (5%). The returns represent past performance only;
the investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost.
The fixed-income market rebounded strongly in the first six months of 1995 as
slower economic growth
3
<PAGE> 4
quelled investors' concerns about inflation. Despite considerable market
volatility during the second quarter, the market posted impressive gains. Early
in the second quarter, the Portfolio's Treasury holdings were increased.
Treasuries outperformed mortgages in April and May as volatility and the
prospect of prepayment alarmed mortgage investors. In June, we reduced the
allocation of Treasuries in favor of mortgages. We expect mortgages to
outperform as volatility declines in the second half of the year.
Looking ahead, we remain optimistic about the investment climate. A slower pace
of economic growth is expected to keep inflationary pressures subdued. A low
inflation environment is optimal for fixed income investments.
Paul F. Sloan
Portfolio Manager July 27, 1995
We appreciate your support as a Kemper policy owner and look forward to
continuing to serve your insurance needs.
Sincerely,
[SIG] [SIG]
John B. Scott Stephen B. Timbers
Chairman Chief Executive Officer
President Chief Investment Officer
Chief Executive Officer Kemper Financial Services, Inc.
Kemper Investors Life
Insurance Company
[PHOTO] [PHOTO]
+ The percent change in accumulation unit value is net of mortality and expense
risk charges. No adjustment has been made for the cost of insurance charge or
surrender charges. No withdrawals are assumed.
++ In determining performance for Kemper SELECT, the Fund expenses include the
deduction of management fees of .50% for the Money Market Portfolio, .55%
for the Government Securities and Total Return Portfolios and .60% for the
Equity and High Yield Portfolios. Kemper SELECT assesses a daily asset
charge that amounts to .90% per annum for mortality and expense risk. The
monthly cost of insurance for Kemper SELECT which varies by age, gender and
classification, however, is not deducted and thus is not reflected in total
return and average annual total return performance figures.
A $1,000 payment is used to calculate average annual total return.
Performance figures for Kemper SELECT assume no policy loans and no
additional payments (100% guideline premium plan). Average annual total
return measures the change in the value of an investment in the Subaccount.
Average annual total return figures reflect all fees and charges, including
early withdrawal and surrender charges as follows: one year (9%) and five
year (5%). The Money Market Subaccount's current annualized yield is the
seven-day annualized net investment income per share as of date specified.
Gains or losses are not included. The effective yield reflects compounding
of income.
There can be no assurance that the Money Market Portfolio will be able to
maintain a stable net asset value of $1.00 per share. The Subaccount is not
insured or guaranteed by the U.S. Government.
The returns are based upon historical results and are not representative of
future results. Factors affecting performance include portfolio management;
general market, economic and fiscal conditions; and operating expenses.
Investment return and principal value will fluctuate so that unit values,
when redeemed, may be worth more or less than their original cost. With
respect to the High Yield Subaccount investment in lower-rated and non-rated
securities present greater risk of loss to principal and interest than
higher-rated securities.
4
<PAGE> 5
KILICO VARIABLE SEPARATE ACCOUNT
FINANCIAL STATEMENTS
5
<PAGE> 6
KILICO VARIABLE SEPARATE ACCOUNT
COMBINED STATEMENT OF ASSETS AND LIABILITIES AND POLICY OWNERS' EQUITY
JUNE 30, 1995 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Money Government
Market Total Return High Yield Equity Securities
Combined Subaccount Subaccount Subaccount Subaccount Subaccount
-------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at current value................ $11,291 1,742 2,343 1,633 1,582 3,991
Dividends and other receivables.............. 3 3 -- -- -- --
------- ----- ----- ----- ----- -----
Total assets........................... 11,294 1,745 2,343 1,633 1,582 3,991
LIABILITIES AND POLICY OWNERS' EQUITY
Liabilities:
Mortality and expense risk................. 9 1 2 2 1 3
------- ----- ----- ----- ----- -----
Policy owners' equity........................ $11,285 1,744 2,341 1,631 1,581 3,988
======= ===== ===== ===== ===== =====
ANALYSIS OF POLICY OWNERS' EQUITY
Excess of proceeds from units sold over
payments for units redeemed................ $ 6,852 1,303 1,157 1,097 941 2,354
Accumulated net investment income............ 3,075 441 688 598 227 1,121
Accumulated net realized gain (loss) on sales
of investments............................. 732 -- 317 (31) 201 245
Unrealized appreciation (depreciation) of
investments................................ 626 -- 179 (33) 212 268
------- ----- ----- ----- ----- -----
Policy owners' equity........................ $11,285 1,744 2,341 1,631 1,581 3,988
======= ===== ===== ===== ===== =====
</TABLE>
See accompanying notes to combined financial statements.
6
<PAGE> 7
KILICO VARIABLE SEPARATE ACCOUNT
COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Money Government
Market Total Return High Yield Equity Securities
Combined Subaccount Subaccount Subaccount Subaccount Subaccount
-------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dividends and capital gains
distributions........................ $ 570 45 67 90 116 252
Mortality and expense risk charges..... 48 8 9 8 5 18
------ -- --- --- --- ---
Net investment income.................. 522 37 58 82 111 234
------ -- --- --- --- ---
Net realized and unrealized gain on
investments:
Net realized gain on sales of
investments........................ 66 -- 2 20 12 32
Change in unrealized appreciation of
investments........................ 525 -- 239 25 98 163
------ -- --- --- --- ---
Net realized and unrealized gain on
investments.......................... 591 -- 241 45 110 195
------ -- --- --- --- ---
Net increase in policy owners' equity
resulting from operations............ $1,113 37 299 127 221 429
====== == === === ==== ===
</TABLE>
See accompanying notes to combined financial statements.
7
<PAGE> 8
KILICO VARIABLE SEPARATE ACCOUNT
COMBINED STATEMENTS OF CHANGES IN POLICY OWNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) AND
THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
Money Market
Combined Subaccount
------------------------- -------------------------
Six months Six months
ended June Year ended ended June Year ended
30, December 31, 30, December 31,
1995 1994 1995 1994
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Operations:
Net investment income................................................ $ 522 615 37 43
Net realized gain (loss) on sales of investments..................... 66 55 -- --
Change in unrealized appreciation (depreciation)
of investments..................................................... 525 (1,154) -- --
-------- ------ ----- -----
Net increase (decrease) in policy owners' equity
resulting from operations........................................ 1,113 (484) 37 43
-------- ------ ----- -----
Account unit transactions:
Proceeds from units sold............................................. 17 514 15 507
Net transfers (to) from subaccounts.................................. -- -- 396 14
Payments for units redeemed.......................................... (289) (563) (14) (96)
-------- ------ ----- -----
Net increase (decrease) in policy owners' equity
from account unit transactions................................... (272) (49) 397 425
-------- ------ ----- -----
Total increase (decrease) in policy owners' equity..................... 841 (533) 434 468
Policy owners' equity:
Beginning of year.................................................... 10,444 10,977 1,310 842
-------- ------ ----- -----
End of year.......................................................... $ 11,285 10,444 1,744 1,310
======== ====== ===== =====
</TABLE>
See accompanying notes to combined financial statements.
8
<PAGE> 9
<TABLE>
<CAPTION>
Government
Total Return High Yield Equity Securities
Subaccount Subaccount Subaccount Subaccount
- --------------------------- --------------------------- --------------------------- ---------------------------
Six months Year Six months Year Six months Year Six months Year
ended ended ended ended ended ended ended ended
June 30, December 31, June 30, December 31, June 30, December 31, June 30, December 31,
1995 1994 1995 1994 1995 1994 1995 1994
- ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
58 188 82 88 111 57 234 239
2 20 20 28 12 (1) 32 8
239 (458) 25 (171) 98 (143) 163 (382)
----- ----- ----- ----- ----- ----- ----- -----
299 (250) 127 (55) 221 (87) 429 (135)
----- ----- ----- ----- ----- ----- ----- -----
-- -- -- 6 2 1 -- --
(36) (455) (150) 13 329 (71) (539) 499
(46) (133) (60) (177) (92) (75) (77) (82)
----- ----- ----- ----- ----- ----- ----- -----
(82) (588) (210) (158) 239 (145) (616) 417
----- ----- ----- ----- ----- ----- ----- -----
217 (838) (83) (213) 460 (232) (187) 282
2,124 2,962 1,714 1,927 1,121 1,353 4,175 3,893
----- ----- ----- ----- ----- ----- ----- -----
2,341 2,124 1,631 1,714 1,581 1,121 3,988 4,175
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
9
<PAGE> 10
KILICO VARIABLE SEPARATE ACCOUNT
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
(1) GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION.
KILICO Variable Separate Account (the "Separate Account") is a unit investment
trust registered under the Investment Company Act of 1940, as amended,
established by Kemper Investors Life Insurance Company ("KILICO"). The Separate
Account receives and invests premiums under a variable life insurance policy
("Policy"). The Separate Account is divided into five Subaccounts and each
Subaccount invests exclusively in a corresponding Portfolio of the Kemper
Investors Fund (The "Fund"), an open-end diversified management investment
company. The Fund has added two additional Subaccounts, the International
Portfolio and the Small Capitalization Equity Portfolio, which are not available
investment vehicles to policy owners of the Separate Account.
SECURITY VALUATION.
The investments are stated at current value which is based on the closing bid
price, net asset value, at June 30, 1995.
SECURITY TRANSACTIONS AND INVESTMENT INCOME.
Security transactions are accounted for on the trade date (date when KILICO
accepts risks of providing insurance coverage to the insured). Dividends and
capital gains distributions are recorded as income on the ex-dividend date.
Realized gains and losses from security transactions are reported on an
identified cost basis.
ACCOUNT UNIT TRANSACTIONS.
Proceeds from a Policy are automatically allocated to the Money Market
Subaccount on the trade date for a 15 day period. At the end of this period, the
Separate Account value (cash value) may be allocated to other Subaccounts as
designated by the owner of the Policy.
ACCUMULATION UNIT VALUATION.
On each day the New York Stock Exchange (the "Exchange") is open for trading,
the accumulation unit value is determined as of the earlier of 3:00 p.m.
(Chicago time) or the close of the Exchange by dividing the total value of each
Subaccount's investments and other assets, less liabilities, by the number of
accumulation units outstanding in the respective Subaccount.
FEDERAL INCOME TAXES.
The operations of the Separate Account are included in the Federal income tax
return of KILICO. Under existing Federal income tax law, investment income and
realized capital gains and losses of the Separate Account increase liabilities
under the contract and are, therefore, not taxed. Thus the Separate Account may
realize net investment income and capital gains and losses without Federal
income tax consequences.
10
<PAGE> 11
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
(2) SUMMARY OF INVESTMENTS
Investments, at cost, at June 30, 1995, are as follows (in thousands):
<TABLE>
<CAPTION>
Shares
Owned Cost
----- --------
<S> <C> <C>
INVESTMENT PORTFOLIO
Kemper Investors Fund Money Market Portfolio....................................................... 1,742 $ 1,742
Kemper Investors Fund Total Return Portfolio....................................................... 993 2,164
Kemper Investors Fund High Yield Portfolio......................................................... 1,387 1,666
Kemper Investors Fund Equity Portfolio............................................................. 551 1,370
Kemper Investors Fund Government Securities Portfolio.............................................. 3,349 3,723
--------
TOTAL INVESTMENTS.............................................................................. $ 10,665
=======
</TABLE>
The underlying investments and significant industry concentrations are
summarized below.
MONEY MARKET PORTFOLIO: This Portfolio invests primarily in short-term
obligations of major banks and corporations. At June 30, 1995, no industry
exceeded 20% of the Portfolio's assets.
TOTAL RETURN PORTFOLIO: This Portfolio's investments will normally consist of
fixed-income and equity securities. Fixed-income securities will include bonds
and other debt securities and preferred stocks. Equity investments normally will
consist of common stocks and securities convertible into or exchangeable for
common stocks, however, the Portfolio may also make private placement
investments (which are normally restricted securities). At June 30, 1995, the
Portfolio had 21.4% of its assets invested in U.S. Government obligations. No
other industry exceeded 20% of the Portfolio's assets.
HIGH YIELD PORTFOLIO: This Portfolio invests in fixed-income securities, a
substantial portion of which are high yielding fixed-income securities. These
securities ordinarily will be in the lower rating categories of recognized
rating agencies or will be non-rated, and generally will involve more risk than
securities in the higher rating categories. At June 30, 1995, no industry
exceeded 20% of the Portfolio's assets.
EQUITY PORTFOLIO: This Portfolio's investments normally will consist of common
stocks and securities convertible into or exchangeable for common stocks,
however, it may also make private placement investments (which are normally
restricted securities). At June 30, 1995, no industry exceeded 20% of the
Portfolio's assets.
GOVERNMENT SECURITIES PORTFOLIO: This Portfolio invests primarily in U.S.
Government Securities. The Portfolio will also invest in fixed-income securities
other than U.S. Government securities and will engage in options and financial
futures transactions. At June 30, 1995, the Portfolio had 95.8% of its assets
invested in U.S. Government obligations. No other industry exceeded 20% of the
Portfolio's assets.
(3) TRANSACTIONS WITH AFFILIATES
KILICO assesses a monthly charge to the Subaccounts for the cost of insurance.
The cost of insurance charge is allocated among the Subaccounts in the
proportion of each Subaccount to the Separate Account value. Cost of insurance
charges totaled approximately $76,700 for the six months ended June 30, 1995.
Additionally, KILICO
11
<PAGE> 12
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
assesses a daily charge to the Subaccounts for mortality and expense risk
assumed by KILICO at an annual rate of .90% of assets.
Proceeds payable on the surrender of a Policy are reduced by the amount of any
applicable contingent deferred sales charge. During the six months ended June
30, 1995, KILICO received contingent deferred sales charges of approximately
$2,900.
Kemper Financial Services, Inc., an affiliated company, is the investment
manager of the Portfolios of the Fund which serve as the underlying investments
of the Separate Account.
(4) POLICY OWNERS' EQUITY
Policy owners' equity at June 30, 1995 is as follows (in thousands, except unit
value; differences are due to rounding):
<TABLE>
<CAPTION>
Number Policy
of Unit Owners'
Units Value Equity
----- ----- --------
<S> <C> <C> <C>
Money Market Subaccount................................................................... 1,186 1.472 $ 1,744
Total Return Subaccount................................................................... 1,409 1.660 2,341
High Yield Subaccount..................................................................... 887 1.842 1,631
Equity Subaccount......................................................................... 773 2.045 1,581
Government Securities Subaccount.......................................................... 2,305 1.730 3,988
--------
TOTAL POLICY OWNERS' EQUITY....................................................... $ 11,285
========
</TABLE>
12
<PAGE> 13
KEMPER INVESTORS FUND
FINANCIAL STATEMENTS
13
<PAGE> 14
KEMPER INVESTORS FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small
Money Total High Government Capitalization
Market Return Yield Equity Securities International Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost:
$64,246, $521,105, $252,733,
$281,233, $103,642, $112,281 and
$17,939, respectively):......... $64,246 587,681 249,486 351,676 106,168 124,731 20,481
Cash.............................. 535 1,332 728 148 367 4,473 220
Receivable for:
Investments sold................ -- 49,660 1,020 10,075 79 2,263 353
Interest and dividends.......... 130 5,483 5,694 530 817 399 3
------- ------- ------- ------- ------ ------- ------
Total assets................ 64,911 644,156 256,928 362,429 107,431 131,866 21,057
LIABILITIES AND NET ASSETS
Payable for:
Investments purchased........... -- 8,794 4,031 3,739 12,176 4,808 336
Dividends....................... 148 -- -- -- -- -- --
Management fee.................. 27 291 130 175 44 79 11
Custodian and transfer agent
fees and related expenses..... 3 72 13 21 5 75 5
Other........................... 20 13 17 16 11 17 5
------- ------- ------- ------- ------ ------- ------
Total liabilities........... 198 9,170 4,191 3,951 12,236 4,979 357
------- ------- ------- ------- ------ ------- ------
Net assets........................ $64,713 634,986 252,737 358,478 95,195 126,887 20,700
======= ======= ======= ======= ====== ======= ======
ANALYSIS OF NET ASSETS
Excess of amounts received from
issuance of shares over amounts
paid on redemptions of shares on
account of capital.............. $64,713 562,647 269,868 280,409 83,602 118,276 17,987
Undistributed net realized gain
(loss) on sales of investments
and foreign currency
transactions.................... -- (7,669) (23,410) 3,818 (5,235) (5,081) 65
Net unrealized appreciation
(depreciation) on investments
and assets and liabilities in
foreign currencies.............. -- 66,576 (3,247) 70,443 2,526 12,056 2,542
Undistributed net investment
income.......................... -- 13,432 9,526 3,808 14,302 1,636 106
------- ------- ------- ------- ------ ------- ------
Net assets applicable to shares
outstanding..................... $64,713 634,986 252,737 358,478 95,195 126,887 20,700
======= ======= ======= ======= ====== ======= ======
THE PRICING OF SHARES
Shares outstanding, no par
value........................... 64,713 269,455 214,228 124,869 79,883 100,465 17,337
======= ======= ======= ======= ====== ======= ======
Net asset value and redemption
price per share (Net
assets / shares outstanding).... $ 1.00 2.357 1.180 2.871 1.192 1.263 1.194
======= ======= ======= ======= ====== ======= ======
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 15
KEMPER INVESTORS FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small
Money Total High Government Capitalization
Market Return Yield Equity Securities International Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest.......................... $2,384 10,361 13,790 613 3,996 327 93
Dividends......................... -- 3,254 11 2,233 -- 1,521 23
------ ------ ------ ------ ------ ------ -----
2,384 13,615 13,801 2,846 3,996 1,848 116
Less foreign taxes withheld....... -- -- -- -- -- 153 --
------ ------ ------ ------ ------ ------ -----
Total investment income......... 2,384 13,615 13,801 2,846 3,996 1,695 116
Expenses:
Management fee.................... 195 1,675 720 979 272 451 54
Custodian and transfer agent fees
and related expenses............ 6 69 21 14 14 47 9
Professional fees................. 5 23 8 11 3 4 --
Trustees' fees and other.......... 1 49 22 26 13 17 4
------ ------ ------ ------ ------ ------ -----
Total expenses.................. 207 1,816 771 1,030 302 519 67
------ ------ ------ ------ ------ ------ -----
Net investment income............... 2,177 11,799 13,030 1,816 3,694 1,176 49
Net realized and unrealized gain
(loss) on investments:
Net realized gain (loss) on sales
of investments and foreign
currency transactions........... -- 19,310 (3,281) 4,670 1,901 (5,056) 193
Net realized gain from futures
transactions.................... -- -- -- -- 243 -- --
------ ------ ------ ------ ------ ------ -----
Net realized gain (loss)........ 2,177 19,310 (3,281) 4,670 2,144 (5,056) 193
Change in net unrealized
appreciation on investments and
assets and liabilities in
foreign currencies.............. -- 54,417 12,891 44,459 5,178 8,616 2,240
------ ------ ------ ------ ------ ------ -----
Net gain on investments............. -- 73,727 9,610 49,129 7,322 3,560 2,433
------ ------ ------ ------ ------ ------ -----
Net increase in net assets resulting
from operations................... $2,177 85,526 22,640 50,945 11,016 4,736 2,482
====== ====== ====== ====== ====== ====== =====
</TABLE>
15
<PAGE> 16
KEMPER INVESTORS FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
Money Market Total Return
Portfolio Portfolio
--------------------- ---------------------
1995 1994 1995 1994
-------- ------ ------- -------
<S> <C> <C> <C> <C>
Operations:
Net investment income...................................................... $ 2,177 4,049 11,799 19,352
Net realized gain (loss)................................................... -- -- 19,310 (26,384)
Change in net unrealized appreciation (depreciation)....................... -- (495) 54,417 (55,621)
-------- ------ ------- -------
Net increase (decrease) in net assets resulting from operations.......... 2,177 3,554 85,526 (62,653)
Equalization credits (charges)............................................... -- -- (892) 721
Dividends to shareholders:
Distribution from net investment income.................................... (2,177) (4,049) (18,740) (15,302)
Distribution from net realized gain on investments......................... -- -- -- (42,771)
Distribution in excess of net realized gain on investments................. -- -- -- (586)
-------- ------ ------- -------
Total dividends to shareholders.............................................. (2,177) (4,049) (18,740) (58,659)
Net (decrease) increase from capital share transactions...................... (19,108) 15,644 (17,502) 63,355
Capital contribution from investment manager................................. -- 495 -- --
-------- ------ ------- -------
Total (decrease) increase in net assets...................................... (19,108) 15,644 48,392 (57,236)
Net assets:
Beginning of period........................................................ 83,821 68,177 586,594 643,830
-------- ------ ------- -------
End of period.............................................................. $ 64,713 83,821 634,986 586,594
======== ====== ======= =======
Undistributed net investment income at end of period......................... $ -- -- 13,432 21,265
======== ====== ======= =======
</TABLE>
(a) For the period from May 2, 1994 (commencement of operations) to December 31,
1994.
See accompanying notes to financial statements.
16
<PAGE> 17
<TABLE>
<CAPTION>
Government Small
High Yield Equity Securities International Capitalization
Portfolio Portfolio Portfolio Portfolio Equity Portfolio
- ------------------- ------------------- ------------------ ------------------- -----------------
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994(a)
- ------- ------- ------- ------- ------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
13,030 21,022 1,816 2,041 3,694 6,026 1,176 828 49 37
(3,281) (6,998) 4,670 23,805 2,144 (6,812) (5,056) 1,853 193 (128)
12,891 (19,015) 44,459 (37,642) 5,178 (2,415) 8,616 (7,631) 2,240 302
- ------- ------- ------- ------- ------ ------- ------- ------- ------ ------
22,640 (4,991) 50,945 (11,796) 11,016 (3,201) 4,736 (4,950) 2,482 211
381 (1,390) 111 432 (1,259) (2,672) 21 422 36 60
(22,165) (19,251) (1,120) -- (6,202) (5,312) (970) -- (76) --
-- -- (24,649) (14,929) -- (2,095) (1,941) (1,170) -- --
-- -- -- -- -- (561) -- -- -- --
- ------- ------- ------- ------- ------ ------- ------- ------- ------ ------
(22,165) (19,251) (25,769) (14,929) (6,202) (7,968) (2,911) (1,170) (76) --
32,466 11,083 11,483 63,540 (4,142) (12,289) 2,331 39,528 5,349 12,538
-- -- -- -- -- -- -- -- -- --
- ------- ------- ------- ------- ------ ------- ------- ------- ------ ------
33,322 (14,549) 36,770 37,247 (587) (26,130) 4,177 33,830 7,791 12,809
219,415 233,964 321,708 284,461 95,782 121,912 122,710 88,880 12,909 100
- ------- ------- ------- ------- ------ ------- ------- ------- ------ ------
252,737 219,415 358,478 321,708 95,195 95,782 126,887 122,710 20,700 12,909
======= ======= ======= ======= ====== ======= ======= ======= ====== ======
9,526 18,280 3,808 3,001 14,302 18,069 1,636 1,716 106 97
======= ======= ======= ======= ====== ======= ======= ======= ====== ======
</TABLE>
17
<PAGE> 18
KEMPER INVESTORS FUND
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE FUND
Kemper Investors Fund (the "Fund") is an open-end, diversified management
investment company organized as a business trust under the laws of
Massachusetts. The Fund offers multiple Portfolios, currently consisting of the
Money Market, Total Return, High Yield, Equity, Government Securities,
International and Small Capitalization Equity Portfolios. The Fund has an
unlimited number of authorized shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION.
Investments are stated at value.
The securities of the Total Return, High Yield, Equity, Government Securities,
International and Small Capitalization Equity Portfolios that are traded on a
domestic securities exchange or securities listed on the NASDAQ National Market
are valued at the last sale price on the exchange or market where primarily
traded or listed or, if there is no recent sale, at the last current bid
quotation. Portfolio securities that are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges where primarily traded. A security that
is listed or traded on more than one exchange is valued at the quotation on the
exchange determined to be the primary market for that security by the Board of
Trustees or its delegates. Securities not so traded or listed are valued at the
last current bid quotation if market quotations are available. Fixed income
securities are valued by using market quotations, or independent pricing
services that use prices provided by market makers or estimates of market values
obtained from yield data relating to instruments or securities with similar
characteristics. Equity options are valued at the last sale price unless the bid
price is higher or the asked price is lower, in which event such bid or asked
price is used. Exchange traded fixed income options are valued at the last sale
price unless there is no sale price, in which event prices provided by market
makers are used. Over-the-counter traded fixed income options are valued based
upon prices provided by market makers. Financial futures and options thereon are
valued at the settlement price established each day by the board of trade or
exchange on which they are traded. Forward foreign currency contracts and
foreign currencies are valued at the forward and current exchange rates,
respectively, prevailing on the day of valuation. Other securities and assets
are valued at fair value as determined in good faith by the Board of Trustees.
The securities of the Money Market Portfolio are stated at amortized cost, which
approximates market value. In the event that a deviation of 1/2 of 1% or more
exists between the Portfolio's $1.00 per share net asset value, calculated at
amortized cost, and the net asset value calculated by reference to market
quotations, or if there is any other deviation that the Board of Trustees
believes would result in a material dilution to shareholders or purchasers, the
Board of Trustees will promptly consider what action, if any, should be
initiated.
CURRENCY TRANSLATION.
The books and records of the Fund are maintained in U.S. Dollars. All assets and
liabilities initially expressed in foreign currency values are converted into
U.S. Dollars at the mean between the bid and offered quotations of such
currencies against the U.S. Dollar as last quoted by a recognized dealer. If
such quotations are not readily available, the rate of exchange is determined in
good faith by the Board of Trustees. Income and expenses and purchases and sales
of investments are translated into U.S. Dollars at the rate of exchange
prevailing on the respective dates of such transactions. The Portfolios include
that portion of the results of operations resulting from changes in foreign
exchange rates with the net realized and unrealized gain (loss) from
investments, as appropriate.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon as
the information is available to the Fund. Interest income is recorded on the
accrual basis and includes premium and discount amortization on money market
instruments and mortgage-backed securities; it also includes original issue and
market discount amortization on long-term fixed income securities. Realized
gains and losses from investment transactions are reported on an identified cost
basis. Gains and losses on premiums from expired options are recognized on date
of expiration. Realized and unrealized gains or losses on financial futures,
options and forward foreign currency contracts are included in net realized and
unrealized gain (loss) on investments, as appropriate.
Several of the Portfolios may purchase securities with delivery or payment to
occur at a later date. At the time a Portfolio enters into a commitment to
purchase a security, the transaction is recorded and the value of the security
is reflected in the net asset value. The value of the security may vary with
market fluctuations. No interest accrues to the Portfolio until payment takes
place. At the time the Portfolio enters into this type of transaction it is
required to designate cash or other liquid assets equal to the value of the
securities purchased. At June 30, 1995, the Government Securities Portfolio had
$11,951,000 of purchase commitments outstanding (13% of net assets) with a
corresponding amount of assets designated.
EXPENSES.
Expenses arising in connection with a Portfolio are allocated to that Portfolio.
Other Fund expenses are allocated among the Portfolios in proportion to their
relative net assets.
FUND SHARE VALUATION.
Shares of each Portfolio of the Fund are offered on a continuous basis to the
separate accounts of participating insurance companies where permitted by law.
On each day the New York Stock Exchange is open for trading, each Portfolio
determines its net asset value per share (NAV) by dividing the total value of
the Portfolio's investments and other assets, less liabilities, by the number of
Portfolio shares outstanding. The NAV is determined as of the earlier of 3:00
p.m. Chicago time or the close of the Exchange for the Total Return, High Yield,
Equity, Government Securities, International and Small Capitalization Equity
Portfolios and at 11:00 a.m. and as of the earlier of 3:00 p.m. Chicago time or
the close of the Exchange for the Money Market Portfolio. Because of the need to
obtain prices as of the close of trading on various exchanges throughout the
world, the calculation of net asset value for the International Portfolio does
not take place contemporaneously with the determination of prices of the Fund's
foreign securities.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS.
Each Portfolio has complied with the special provisions of the Internal Revenue
Code available to investment companies for the six months ended June 30, 1995.
The accumulated net realized loss on sales of investments for federal income tax
purposes at June 30, 1995 amounted to approximately $7,879,000 in the Total
Return Portfolio, $23,396,000 in the High Yield Portfolio, $4,668,000 in the
Government Securities Portfolio and $4,925,000 in the International Portfolio.
These losses are available to offset future taxable gains in their respective
Portfolios and, if not applied, expire during the period 1998 through 2003.
Distributions to shareholders are determined in accordance with income tax
principles which may treat certain transactions differently from generally
accepted accounting principles.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Dividends payable to shareholders are recorded by the Total Return, High Yield,
Equity, Government Securities, International and Small Capitalization Equity
Portfolios on the ex-dividend date. Net realized capital gains, if any, reduced
by capital loss carryovers, will be distributed at least annually.
The Money Market Portfolio declares a daily dividend equal to its net investment
income for that day, payable monthly.
Shareholders will receive dividends in additional shares.
EQUALIZATION ACCOUNTING.
A portion of proceeds from sales and cost of redemptions of Fund shares in the
Total Return, High Yield, Equity, Government Securities, International and Small
Capitalization Equity Portfolios is credited or charged to undistributed net
investment income so that income per share available for distribution is not
affected by sales or redemptions of shares.
OTHER CONSIDERATIONS.
The High Yield Portfolio invests a substantial portion of its assets in high
yield bonds. These bonds ordinarily are in the lower rating categories of
recognized rating agencies or are non-rated, and thus involve more risk than
higher rated bonds.
Kemper Financial Services, Inc. (KFS), the Fund's investment manager, may serve
as a member of various bondholders' committees. These committees represent the
interests of bondholders in restructuring negotiations and court proceedings. As
a result of participation on such committees, KFS may receive material,
non-public information with respect to bonds the Fund owns. Accordingly, the
Fund may be temporarily precluded from effecting transactions in such bonds due
to various restraints imposed by federal and state securities laws involving the
possession of material, non-public information.
(3) TRANSACTIONS WITH AFFILIATES
The Fund has a management agreement with KFS. For management services and
facilities furnished, the Fund pays a fee, based on average daily net assets, at
an annual rate of .50% for the Money Market Portfolio, .55% for the Total Return
and Government Securities Portfolios, .60% for the High Yield and Equity
Portfolios, .65% for the Small Capitalization Equity Portfolio and .75% for the
International Portfolio. For the six months ended June 30, 1995, the Fund
incurred management fees of $4,346,000. Kemper Distributors, Inc., an affiliate
of KFS, is the distributor and principal underwriter for shares of the Fund.
Kemper Asset Holdings, Inc. (KAHI), a subsidiary of Kemper Corporation, the
parent company of Kemper Financial Services, Inc., arranged for the issuance of
an irrevocable letter of credit from the Bank of New York for the benefit of the
Fund. The letter of credit supports the payment of $3,000,000 of principal plus
interest on the Orange County, California obligation held in the Money Market
Portfolio. In early July, the letter of credit was increased to $3,201,000, the
maturity of the obligation was extended to June 30, 1996 and the interest rate
was increased by .95%. The Fund and KAHI are parties to an agreement related to
the letter of credit which provides, among other things, that, in connection
with a payment of principal or interest under the letter of credit, the Fund
will transfer to KAHI any proceeds received under the Orange County obligation.
The Fund has a custodian and a transfer agent agreement with Investors Fiduciary
Trust Company, which was 50% owned by KFS until January 31, 1995 when KFS
completed the sale of IFTC to a third party. For the six months ended June 30,
1995, the Fund incurred custodian and transfer agent fees and related expenses
of $180,000.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the six months ended June 30, 1995, the Fund made no direct payments to
its officers and incurred trustees' fees of $47,000 to independent trustees.
(4) INVESTMENT TRANSACTIONS
For the six months ended June 30, 1995 investment transactions (excluding
temporary short-term investments) are as follows (in thousands):
<TABLE>
<CAPTION>
Small
Total High Government Capitalization
Return Yield Equity Securities International Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Purchases............................. $ 481,973 153,929 110,869 208,006 64,669 11,000
--------- --------- --------- ---------- ------ ------
Proceeds from sales................... $ 493,079 117,897 123,471 207,949 61,346 5,297
--------- --------- --------- ---------- ------ ------
</TABLE>
(5) CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund (in
thousands):
<TABLE>
<CAPTION>
Six months ended June 30, 1995
--------------------------------------------------------------------------------------------------------------------
Money Government Small
Market Total Return High Yield Equity Securities International Capitalization
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Equity Portfolio
--------- ---------------- -------------- -------------- -------------- --------------- ----------------
(a) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
--------- ------ ------ ------ ------ ------ ------- ------ ------- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold... $ 52,643 22,021 $ 48,283 48,951 $54,432 19,110 $52,474 24,100 $21,955 16,475 $21,455 9,229 $ 9,965
Shares issued
in reinvestment
of dividends... 2,256 8,512 18,740 19,366 22,165 9,679 25,769 5,447 6,202 3,339 2,911 70 76
--------- ------ -------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
54,899 30,533 67,023 68,317 76,597 28,789 78,243 29,547 28,157 19,814 24,366 9,299 10,041
Less shares
redeemed... 74,007 38,768 84,525 39,294 44,131 24,641 66,760 33,556 32,299 17,969 22,035 4,381 4,692
--------- ------ -------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
Net (decrease)
increase from
capital share
transactions.. $(19,108) (8,235) $(17,502) 29,023 $32,466 4,148 $11,483 (4,009) $(4,142) 1,845 $ 2,331 4,918 $ 5,349
======== ====== ======== ====== ======= ===== ======= ====== ======= ===== ======= ===== =======
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1994
---------------------------------------------------------------------------------------------------------------------------
Small
Money Government Capitalization
Market Total Return High Yield Equity Securities International Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio(b)
--------- ----------------- ------------------- ----------------- ----------------- ----------------- ---------------
(a) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
--------- ------ --------- -------- --------- ------ --------- ------- -------- ------ --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold... $218,865 55,759 $127,333 105,586 $122,106 63,325 $173,691 18,859 $ 17,396 78,847 $ 99,933 16,090 $16,218
Shares issued
in reinvestment
of dividends... 3,923 27,538 58,659 16,697 19,251 5,689 14,929 7,004 7,968 952 1,170 -- --
-------- ------ -------- ------- -------- ------ -------- ------ -------- ------ -------- ------ -------
222,788 83,297 185,992 122,283 141,357 69,014 188,620 25,863 25,364 79,799 101,103 16,090 16,218
Less shares
redeemed... 207,144 54,564 122,637 111,925 130,274 45,216 125,080 38,208 37,653 49,218 61,575 3,671 3,680
-------- ------ -------- ------- -------- ------ -------- ------ -------- ------ -------- ------ -------
Net increase
(decrease)
from capital
share
transactions.. $ 15,644 28,733 $ 63,355 10,358 $ 11,083 23,798 $ 63,540 (12,345) $(12,289) 30,581 $ 39,528 12,419 $12,538
======== ====== ======== ====== ======== ====== ======== ======= ======== ====== ======== ====== =======
</TABLE>
(a) For the Money Market Portfolio, dollar amounts and number of shares are the
same.
(b) For the period from May 2, 1994 (commencement of operations) to December 31,
1994.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(6) FINANCIAL FUTURES CONTRACTS
In order to protect itself against future changes in market conditions which
otherwise might affect adversely the value of securities the Government
Securities Portfolio holds, the Portfolio has entered into exchange traded
financial futures contracts as described below. The Portfolio bears the market
risk that arises from changes in the value of these financial instruments.
At the time the Portfolio enters into a futures contract, it is required to make
a margin deposit with its custodian of a specified amount of cash or eligible
securities. Subsequently, gain or loss is recognized and payments are made on a
daily basis between the Portfolio and the broker as the market price of the
futures contract fluctuates. At June 30, 1995, the market value of investments
pledged by the Portfolio to cover margin requirements for open futures positions
was $354,000. At June 30, 1995, the Portfolio had outstanding financial futures
contracts as follows:
<TABLE>
<CAPTION>
Face Expiration Loss at
Type Amount Position Month 6/30/95
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
U.S. Treasury Bonds $14,700,000 Long September 1995 $58,000
- -------------------------------------------------------------------------------
</TABLE>
(7) FORWARD FOREIGN CURRENCY CONTRACTS
In order to protect itself against a decline in the value of particular foreign
currencies against the U.S. Dollar, the International Portfolio has entered into
forward contracts to deliver foreign currency in exchange for U.S. Dollars as
described below. The Portfolio bears the market risk that arises from changes in
foreign exchange rates, and accordingly, the unrealized loss on these contracts
is reflected in the accompanying financial statements. The Portfolio also bears
the credit risk if the counterparty fails to perform under the contract. At June
30, 1995, the Portfolio had outstanding forward foreign currency contracts as
follows:
<TABLE>
<CAPTION>
Contract Unrealized
Foreign Currency amount in Loss
to be delivered U.S. Dollars Settlement at 6/30/95
(in thousands) (in thousands) Date (in thousands)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------
7,367 French Francs $ 1,455 July 1995 $ 64
- ----------------------------------------------------------------------------------------
1,026,000 Japanese Yen 12,000 July 1995 85
- ----------------------------------------------------------------------------------------
6,752 Netherland Guilders 4,200 July 1995 158
- ----------------------------------------------------------------------------------------
2,472 Swiss Francs 2,070 July 1995 78
- ----------------------------------------------------------------------------------------
Net unrealized loss $385
- ----------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, 1995 1994 1993 1992 1991
------------- ------ ------ ------ ------
<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 and dividends declared....................... .03 .04 .03 .03 .06
------------- ------ ------ ------ ------
Net asset value, end of period..................................... $1.00 1.00 1.00 1.00 1.00
============ ====== ====== ====== ======
TOTAL RETURN (%)................................................... 2.82 3.96 2.83 3.43 5.89
RATIOS TO AVERAGE NET ASSETS (%):
Expenses........................................................... .53 .53 .56 .57 .56
Net investment income.............................................. 5.63 3.95 2.79 3.38 5.80
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)......................... $64,713 83,821 68,177 75,270 76,479
</TABLE>
NOTE TO MONEY MARKET PORTFOLIO:
The total return for 1994 includes the effect of a capital contribution from the
investment manager. Without the capital contribution, the total return would
have been 3.47%.
TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, 1995 1994 1993 1992 1991
------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......................... $2.112 2.586 2.473 2.658 2.071
Income from investment operations:
Net investment income....................................... .044 .069 .069 .061 .080
Net realized and unrealized gain (loss) on investments...... .271 (.313) .214 (.026) .677
------------- ------- ------- ------- -------
Total from investment operations.............................. .315 (.244) .283 .035 .757
Less dividends:
Distribution from net investment income..................... .070 .060 .050 .080 .110
Distribution from net realized gain on investments.......... -- .168 .120 .140 .060
Distribution in excess of net realized gain on
investments............................................... -- .002 -- -- --
------------- ------- ------- ------- -------
Total dividends............................................... .070 .230 .170 .220 .170
------------- ------- ------- ------- -------
Net asset value, end of period................................ $2.357 2.112 2.586 2.473 2.658
============ ======= ======= ======= =======
TOTAL RETURN (%).............................................. 15.11 (9.50) 12.13 1.69 37.90
RATIOS TO AVERAGE NET ASSETS (%):
Expenses...................................................... .60 .61 .59 .60 .61
Net investment income......................................... 3.87 3.13 3.19 3.41 3.46
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands).................... $ 634,986 586,594 643,830 528,007 412,772
Portfolio turnover rate (%)................................... 164 128 191 160 187
</TABLE>
23
<PAGE> 24
FINANCIAL HIGHLIGHTS--(CONTINUED)
HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, 1995 1994 1993 1992 1991
------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................. $1.185 1.338 1.209 1.144 .914
Income from investment operations:
Net investment income.......................................... .066 .116 .120 .125 .140
Net realized and unrealized gain (loss) on investments......... .049 (.149) .109 .070 .300
------------- ------- ------- ------- -------
Total from investment operations................................. .115 (.033) .229 .195 .440
Less distributions from net investment income.................... .120 .120 .100 .130 .210
------------- ------- ------- ------- -------
Net asset value, end of period................................... $1.180 1.185 1.338 1.209 1.144
============ ======= ======= ======= =======
TOTAL RETURN (%)................................................. 10.02 (2.25) 20.00 17.76 51.83
RATIOS TO AVERAGE NET ASSETS (%):
Expenses......................................................... .64 .65 .63 .64 .67
Net investment income............................................ 10.86 9.49 9.54 10.44 12.95
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)....................... $ 252,737 219,415 233,964 162,158 121,608
Portfolio turnover rate (%)...................................... 90 98 84 57 31
</TABLE>
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, 1995 1994 1993 1992 1991
------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................. $2.665 2.935 2.631 2.642 1.681
Income from investment operations:
Net investment income.......................................... .015 .018 .004 .007 .017
Net realized and unrealized gain (loss) on investments......... .421 (.138) .370 .082 .974
------------- ------- ------- ------- -------
Total from investment operations................................. .436 (.120) .374 .089 .991
Less dividends:
Distribution from net investment income........................ .010 -- .010 .005 .030
Distribution from net realized gain on investments............. .220 .150 .060 .095 --
------------- ------- ------- ------- -------
Total dividends.................................................. .230 .150 .070 .100 .030
------------- ------- ------- ------- -------
Net asset value, end of period................................... $2.871 2.665 2.935 2.631 2.642
============ ======= ======= ======= =======
TOTAL RETURN (%)................................................. 17.03 (4.02) 14.63 3.57 59.47
RATIOS TO AVERAGE NET ASSETS (%):
Expenses......................................................... .63 .66 .64 .64 .67
Net investment income............................................ 1.11 .69 .30 .65 .83
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)....................... $ 358,478 321,708 284,461 203,624 118,983
Portfolio turnover rate (%)...................................... 72 106 78 78 106
</TABLE>
24
<PAGE> 25
FINANCIAL HIGHLIGHTS--(CONTINUED)
GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, 1995 1994 1993 1992 1991
------------- ------------- ------------- ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $1.142 1.267 1.277 1.287 1.175
Income from investment operations:
Net investment income................. .044 .067 .060 .064 .090
Net realized and unrealized gain
(loss) on investments............... .086 (.102) .020 .006 .082
------ ----- ----- ----- -----
Total from investment operations........ .130 (.035) .080 .070 .172
Less dividends:
Distribution from net investment
income.............................. .080 .060 .060 .050 .060
Distribution from net realized gain on
investments......................... -- .024 .030 .030 --
Distribution in excess of net realized
gain on investments................. -- .006 -- -- --
------ ----- ----- ----- -----
Total dividends......................... .080 .090 .090 .080 .060
------ ----- ----- ----- -----
Net asset value, end of period.......... $1.192 1.142 1.267 1.277 1.287
====== ===== ===== ===== =====
TOTAL RETURN (%)........................ 11.71 (2.74) 6.48 5.90 15.22
RATIOS TO AVERAGE NET ASSETS (%):
Expenses................................ .61 .63 .60 .61 .63
Net investment income................... 7.47 5.69 5.05 6.08 7.42
SUPPLEMENTAL DATA:
Net assets at end of period (in
thousands)............................ $95,195 95,782 121,912 98,814 59,064
Portfolio turnover rate (%)............. 404 606 534 492 141
</TABLE>
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
January 6,
Six months Year ended 1992 to
ended December 31, December 31,
June 30, 1995 1994 1993 1992
------------- -------- ------ ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................... $1.244 1.306 .993 1.000
Income from investment operations:
Net investment income........................................ .012 .009 .010 .010
Net realized and unrealized gain (loss)
on investments............................................. .037 (.056) .313 (.017)
--------- ------- ------ ------
Total from investment operations............................... .049 (.047) .323 (.007)
Less dividends:
Distribution from net investment income...................... .010 -- .009 --
Distribution from net realized gain on investments........... .020 .015 .001 --
--------- ------- ------ ------
Total dividends................................................ .030 .015 .010 --
--------- ------- ------ ------
Net asset value, end of period................................. $1.263 1.244 1.306 .993
========= ======= ====== ======
TOTAL RETURN (%)............................................... 3.98 (3.59) 32.83 (.72)
RATIOS TO AVERAGE NET ASSETS (%):
Expenses....................................................... .86 .93 .92 1.11
Net investment income.......................................... 1.96 .74 .86 1.01
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands)..................... $ 126,887 122,710 88,880 19,447
Portfolio turnover rate (%).................................... 115 107 116 129
</TABLE>
25
<PAGE> 26
FINANCIAL HIGHLIGHTS--(CONTINUED)
SMALL CAPITALIZATION EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Six months May 2, 1994
ended to
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......................... $1.039 1.000
Income from investment operations:
Net investment income....................................... .003 .008
Net realized and unrealized gain on investments............. .157 .031
------ -----
Total from investment operations.............................. .160 .039
Less distributions from net investment income................. .005 --
------ -----
Net asset value, end of period................................ $1.194 1.039
====== =====
TOTAL RETURN (%).............................................. 15.39 3.95
RATIOS TO AVERAGE NET ASSETS (%):
Expenses...................................................... .81 1.25
Net investment income......................................... .59 .91
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands).................... $20,700 12,909
Portfolio turnover rate (%)................................... 76 58
</TABLE>
- ---------------
NOTE: Ratios for all Portfolios have been determined on an annualized basis.
Total return is not annualized.
26
<PAGE> 27
KEMPER INVESTORS FUND
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Value
-------
<S> <C>
CORPORATE OBLIGATIONS
CAPTIVE BUSINESS FINANCE--18.5%
(a)American Honda Finance Corporation 6.19%,
8/9/95...................................... $ 1,999
Caterpillar Financial Services Corporation
6.06%, 8/11/95.............................. 1,986
CSW Credit, Inc.
6.01%, 8/3/95............................... 1,989
(a)Finova Capital Corporation
6.16%, 9/15/95.............................. 2,000
Freedom Asset Funding Corporation
5.96%, 7/14/95.............................. 1,996
Phillip Morris Capital Corporation
5.99%, 7/31/95.............................. 1,990
-------
11,960
CONSUMER FINANCE AND BANKING--6.2%
(a)Beneficial Corporation
6.04%, 7/12/95.............................. 2,000
Chrysler Financial Corporation
6.04%, 8/30/95.............................. 1,980
-------
3,980
CONSUMER PRODUCTS AND SERVICES--12.3%
American Home Products Corporation
6.03%, 8/10/95.............................. 1,987
Coca-Cola Enterprises Inc.
5.99%, 7/10/95.............................. 1,997
Dayton Hudson Corporation
6.03%, 7/21/95.............................. 1,993
Whirlpool Corporation
6.14%, 7/19/95.............................. 1,994
-------
7,971
CORPORATE FINANCING--9.2%
(a)Beta Finance Corporation
5.57%, 7/5/95............................... 2,000
GTE Finance Corporation
6.05%, 8/14/95.............................. 1,985
Windmill Funding Corporation
6.01%, 8/1/95............................... 1,990
-------
5,975
ENERGY--3.1%
AES Shady Point, Inc.
5.97%, 7/21/95.............................. 1,993
FINANCIAL SERVICES--12.4%
(a)Bear Stearns Companies Inc.
6.13%, 7/21/95.............................. 2,000
(a)CS First Boston, Inc.
6.16%, 7/12/95.............................. 2,000
<CAPTION>
Value
-------
<S> <C>
Dean Witter, Discover & Company
6.01%, 8/11/95.............................. $ 1,987
(a)Salomon Inc.
6.41%, 7/3/95............................... 2,000
-------
7,987
MANUFACTURING AND INDUSTRIAL PRODUCTS--10.0%
Bridgestone/Firestone, Inc.
5.99%, 7/21/95.............................. 1,993
Cooper Industries, Inc.
5.96%, 7/7/95............................... 2,498
DIC Americas, Inc.
6.01%, 7/12/95.............................. 1,996
-------
6,487
(b)MUNICIPAL OBLIGATION--4.6%
(a)Orange County, California
6.06%, 7/10/95 (maturity), $3,000,000
(par)....................................... 2,190
Letter of credit from The Bank of New York.... 810
-------
3,000
RECEIVABLES FINANCING--19.9%
First Brands Commercial, Inc.
6.00%, 9/25/95.............................. 1,972
Heller Financial, Inc.
6.04%, 9/27/95.............................. 1,971
(a)Sanwa Business Credit Corporation
6.03%, 7/6/95............................... 3,000
SFC (USA) Inc.
6.04%, 8/31/95.............................. 1,980
Strait Capital Corporation
6.05%, 8/31/95.............................. 1,980
Working Capital Management Co. L.P.
6.01%, 7/28/95.............................. 1,991
-------
12,894
-------
TOTAL CORPORATE OBLIGATIONS--96.2%
(average maturity: 30 days)..................... 62,247
FOREIGN GOVERNMENT OBLIGATION--3.1%
(a)Kingdom of Sweden
6.06%, 7/11/95.............................. 1,999
(maturity: 10 days)
TOTAL INVESTMENTS--99.3%
(average maturity: 30 days)..................... 64,246
CASH AND OTHER ASSETS,
LESS LIABILITIES--.7%........................... 467
-------
NET ASSETS--100%................................ $64,713
=======
</TABLE>
See accompanying notes to portfolio of investments.
27
<PAGE> 28
NOTES TO MONEY MARKET PORTFOLIO OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at June 30,
1995. The dates shown represent the demand date or next interest rate change
date.
(b) Illiquid security. See Note (3) of the Notes to Financial Statements.
See accompanying notes to financial statements.
28
<PAGE> 29
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
U.S. Treasury Notes
7.875%, 1998.................... $ 4,000 $ 4,188
7.75%, 2000..................... 10,000 10,689
7.875%, 2001.................... 7,000 7,642
7.75%, 2001..................... 9,000 9,734
6.25%, 2003..................... 8,500 8,529
7.25%, 2004..................... 33,000 35,270
U.S. Treasury Bonds
7.25%, 2016..................... 19,000 20,178
8.75%, 2017..................... 32,000 39,400
--------
TOTAL U.S. GOVERNMENT
OBLIGATIONS--21.4%
(Cost: $131,126).................. 135,630
(B)FOREIGN GOVERNMENT OBLIGATIONS
Government of Canada
8.00%, 1998..................... 800 596
6.50%, 2004..................... 1,150 761
Kingdom of Denmark
6.00%, 1999..................... 6,000 1,038
9.00%, 2000..................... 7,000 1,345
8.00%, 2003..................... 2,000 360
Dutch State Loan
7.75%, 2000..................... 1,000 684
6.50%, 2003..................... 2,000 1,262
Republic of Finland,
11.00%, 1999.................... 12,000 3,063
French Treasury
8.50%, 2000..................... 5,250 1,138
9.50%, 2001..................... 5,500 1,249
6.75%, 2003..................... 7,000 1,376
Government of Ireland
6.25%, 1999..................... 540 818
6.25%, 2004..................... 600 824
New Zealand Government
8.00%, 1998..................... 500 334
6.50%, 2000..................... 2,900 1,841
8.00%, 2004..................... 1,000 685
Republic of Portugal,
11.875%, 2000................... 220,000 1,519
--------
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS--3.0%
(Cost: $17,667)................... 18,893
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS
CHEMICALS--1.1%
Air Products & Chemicals.......... 60,000 $ 3,345
Monsanto Co. ..................... 37,000 3,335
--------
6,680
COMMUNICATIONS AND MEDIA--3.4%
(b)AirTouch Communications........ 60,000 1,710
AT&T........................... 130,500 6,933
(a)DSC Communications Corp. ...... 83,300 3,873
(a)Gillett Holdings, Inc. ........ 33,652 698
Singapore Press Holdings, Ltd.. 10,400 156
(a)Tele-Communications, Inc. ..... 140,000 3,281
(a)Tellabs Operations............. 48,000 2,310
(a)Viacom International
"A" Shares................... 12,456 579
"B" Shares................... 50,377 2,336
--------
21,876
COMPUTER SOFTWARE AND
ELECTRONICS--11.3%
AMP, Inc. ........................ 50,000 2,113
(a)Applied Materials, Inc. ....... 30,300 2,625
(a)Atmel Corporation.............. 41,400 2,293
(a)Cisco Systems.................. 105,000 5,309
(a)Compaq Computer Corp. ......... 40,000 1,815
Computer Associates
International.................. 100,000 6,775
First Data Corporation......... 70,800 4,027
First Financial Management
Corporation.................. 31,000 2,651
General Motors Corp., "E"...... 100,100 4,354
Hewlett-Packard, Co. .......... 100,000 7,450
Intel Corp. ................... 150,600 9,535
(a)Microsoft Corp. ............... 100,000 9,037
(a)Oracle Systems Corp. .......... 155,000 5,987
(a)Silicon Graphics Inc. ......... 117,300 4,677
(a)Sun Microsystems............... 65,000 3,152
--------
71,800
CONSUMER PRODUCTS
AND SERVICES--10.7%
Aalberts Industries, N.V. ........ 8,559 482
Coca-Cola Co. .................... 180,000 11,475
ConAgra Inc. ..................... 50,000 1,744
CPC International................. 60,000 3,705
Duracell International Inc. ...... 40,000 1,730
</TABLE>
29
<PAGE> 30
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
Gillette Co. ..................... 120,000 $ 5,355
Greencore Group PLC............... 55,000 414
Manpower Inc. .................... 25,200 643
Newell Co. ....................... 95,200 2,332
PepsiCo........................... 195,000 8,897
Philip Morris Companies........... 172,800 12,852
Procter & Gamble Co. ............. 134,200 9,646
Rubbermaid........................ 70,000 1,942
Sara Lee Corp. ................... 150,000 4,275
Shaw Industries................... 148,200 2,519
--------
68,011
DRUGS AND HEALTH CARE--8.4%
Abbott Laboratories............... 116,600 4,722
Columbia/HCA Healthcare Corp...... 100,400 4,342
(b)Forest Laboratories.............. 96,000 4,260
Johnson & Johnson................. 100,000 6,762
Eli Lilly & Co.................... 80,000 6,280
Merck & Co., Inc.................. 165,200 8,095
Pfizer............................ 90,000 8,314
SmithKline Beecham, PLC........... 140,000 6,335
United Healthcare Corp............ 65,000 2,689
(b)U.S. Bioscience with warrants
expiring 1998................... 4,703 37
U.S. Healthcare................... 51,300 1,571
--------
53,407
ELECTRICAL EQUIPMENT--2.2%
Emerson Electric Co............... 58,900 4,211
General Electric Co............... 138,600 7,814
York International Corp........... 54,200 2,439
--------
14,464
ENERGY AND RELATED SERVICES--2.4%
Enron Corp........................ 152,200 5,346
Mobil Corp........................ 65,000 6,240
Noble Affiliates.................. 100,000 2,550
Union Texas Petroleum Holdings.... 60,000 1,267
--------
15,403
ENTERTAINMENT AND RESTAURANTS--2.9%
Harrah's Entertainment............ 135,000 3,797
La Quinta Motor Inns.............. 55,000 1,485
McDonald's Corp................... 150,000 5,869
(b)Promus Companies................. 67,500 1,485
Tabcorp Holdings Ltd.............. 100,360 208
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
Walt Disney Company............... 100,000 $ 5,563
--------
18,407
FINANCIAL SERVICES AND REAL
ESTATE--6.3%
(a)Allied Irish Banks PLC........... 24,400 115
American General Corp............. 50,000 1,688
American International Group,
Inc............................. 60,000 6,840
Banc One Corporation.............. 120,000 3,870
Boatmen's Bancshares.............. 120,100 4,234
CITIC Pacific Ltd................. 98,000 246
Federal National Mortgage
Association..................... 40,000 3,775
First USA......................... 45,100 2,001
General Re Corp................... 25,000 3,347
(b)Goldlion Holdings Ltd.,
warrants expiring 1995 and
1996............................ 325,000 1
MBNA Corporation.................. 111,500 3,763
MGIC Investment Corp.............. 68,600 3,216
NationsBank....................... 50,000 2,681
Providian Corp.................... 75,000 2,719
Road Builder...................... 27,000 90
Sanyo Shinpan Finance Co., Ltd.... 4,100 299
Sumitomo Corp..................... 32,000 291
(b)Wai Kee Holdings Ltd., warrants
expiring 1996................... 192,000 3
--------
39,179
MANUFACTURING--2.2%
Alco Standard Corporation......... 35,000 2,796
Allied-Signal..................... 29,000 1,291
Boeing Co......................... 60,000 3,757
Georgia-Pacific Corp.............. 40,000 3,470
Xerox Corporation................. 22,500 2,638
--------
13,952
RETAILING AND DISTRIBUTION--3.2%
(b)CUC International................ 60,300 2,533
Federated Department Stores....... 75,000 1,931
Hagemeyer N.V..................... 4,391 196
Home Depot........................ 163,703 6,650
May Department Stores Co.......... 75,000 3,122
(b)Thrifty Payless Holdings......... 47,500 154
Wal-Mart Stores................... 211,600 5,660
--------
20,246
</TABLE>
30
<PAGE> 31
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares
or
Principal
Amount Value
---------- --------
<S> <C> <C>
TRANSPORTATION--.5%
Koninklijke Van Ommeren........... 20 $ 1
Union Pacific Corp................ 40,000 2,215
(b)Wisconsin Central Transportation
Corp........................... 19,700 965
--------
3,181
--------
TOTAL COMMON STOCKS--54.6%
(Cost: $288,745).................. 346,606
CORPORATE OBLIGATIONS
BROADCASTING, CABLESYSTEMS
AND PUBLISHING--1.9%
CF Cable TV Inc., 11.625%, 2005... $ 510 541
Century Communications Corp.,
9.50%, 2005..................... 1,500 1,489
Comcast Corporation,
10.625%, 2012................... 1,500 1,605
Continental Cablevision, Inc.,
9.50%, 2013..................... 2,000 2,060
Rogers Cablesystems Limited,
10.00%, 2005.................... 1,050 1,079
Time Warner Entertainment
Company, L.P., 8.375%, 2033..... 1,000 979
Time Warner, Inc. 9.15%, 2023..... 1,000 1,036
Univision TV, 11.75%, 2001........ 1,500 1,613
Viacom International Inc., 8.00%,
2006............................ 1,500 1,455
--------
11,857
COMMUNICATIONS AND
MEDIA--1.7%
Cinemark USA Inc., 12.00%, 2002... 570 613
Cox Communications,
6.875%, 2005.................... 2,000 1,972
MCI Communications, 7.50%, 2004... 2,000 2,078
News American Holdings, 9.25%,
2013............................ 2,000 2,239
Rogers Cantel 11.125%, 2002....... 1,790 1,857
TCI Communications, 8.65%, 2004... 2,000 2,104
--------
10,863
CONSUMER PRODUCTS
AND SERVICES--.8%
Nabisco, 6.70%, 2002.............. 1,000 988
Philip Morris Companies, Inc.,
7.25%, 2003..................... 1,000 1,016
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
RJR Nabisco
8.00%, 2000..................... $ 1,000 $ 1,048
8.75%, 2005..................... 2,000 2,055
--------
5,107
DRUGS AND HEALTH CARE--.9%
American Home Products, 7.90%,
2005............................ 2,000 2,140
Columbia/HCA Healthcare Corp.,
6.91%, 2005..................... 2,000 1,976
National Medical Enterprises
9.625%, 2002.................... 130 137
10.125%, 2005................... 1,370 1,449
--------
5,702
ENERGY AND RELATED
SERVICES--2.0%
Cincinnati Gas and Electric
Company, 7.20%, 2023............ 2,000 1,901
Commonwealth Edison Co., 8.125%,
2007............................ 2,000 2,031
Gulf Canada Resources, Ltd.,
9.25%, 2004..................... 1,500 1,464
Philips Electronics N.V., 8.375%,
2006............................ 2,000 2,204
Texas Utilities Company,
6.75%, 2003..................... 2,000 1,984
TransTexas Gas Corporation,
11.50%, 2002.................... 1,500 1,539
WRT Energy Corp.
13.875%, 2002................... 130 129
Westinghouse Electric Corp.,
8.875%, 2001.................... 750 799
8.625%, 2012.................... 500 517
--------
12,568
ENVIRONMENTAL SERVICES--.2%
Browning-Ferris Industries,
7.875%, 2005.................... 1,000 1,076
FINANCIAL SERVICES AND
REAL ESTATE--3.0%
ABN AMRO Bank, 8.25%, 2009........ 2,000 2,134
Abbey National First Capital,
8.20%, 2004..................... 2,000 2,170
Associates Corp., N.A., 8.25%,
1999............................ 2,000 2,130
Capital One Bank
8.125%, 1998.................... 1,000 1,035
8.125%, 2000.................... 1,000 1,048
</TABLE>
31
<PAGE> 32
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
Comdata Network, Inc.
12.50%, 1999.................... $ 1,480 $ 1,613
13.25%, 2002.................... 20 22
Commercial Credit, 7.375%, 2005... 2,000 2,063
(b)Export-Import Bank Japan,
4.375%, 2003.................... 38,000 498
First USA Bank, Medium Term Note,
8.10%, 1997..................... 2,000 2,050
GMAC, Medium Term Note, 8.50%,
2000............................ 2,000 2,154
(b)IBRD Japan,
4.75%, 2004..................... 20,000 272
(b)Japan Development Bank,
6.50%, 2001..................... 55,000 794
Lehman Brothers Holdings, 8.375%,
1999............................ 1,000 1,042
--------
19,025
MANUFACTURING--1.0%
Great Dane Holding, 12.75%,
2001............................ 300 296
Lockheed Corp., 6.75%, 2003....... 2,000 1,996
Nortek Inc., 9.875%, 2004......... 90 81
Owens-Illinois, Inc., 11.00%,
2003............................ 3,990 4,379
--------
6,752
RETAILING AND
DISTRIBUTION--1.0%
Federated Department Stores, Inc.,
convertible, 9.72%, 2004........ 100 101
Grand Union Company,
12.00%, 2004.................... 1,000 968
<CAPTION>
Principal
Amount Value
---------- --------
<S> <C> <C>
May Department Stores Co., 7.50%,
2015............................ $ 1,000 $ 1,007
Pathmark Stores, Inc.,
11.625%, 2002................... 1,500 1,571
Penn Traffic Company
8.625%, 2003.................... 1,000 940
10.65%, 2004.................... 400 417
9.625%, 2005.................... 100 94
Sears Roebuck & Co., 6.25%,
2004............................ 1,500 1,436
--------
6,534
TRANSPORTATION--1.1%
Burlington Motor Holdings Inc.,
11.50%, 2003.................... 3,200 2,560
Delta Airlines, 9.75%, 2021....... 2,000 2,234
United Airlines
11.21%, 2004.................... 1,000 1,213
3.907%, 2018.................... 1,000 1,061
--------
7,068
--------
TOTAL CORPORATE
OBLIGATIONS--13.6%
(Cost: $83,567)................... 86,552
--------
TOTAL INVESTMENTS--92.6%
(Cost: $521,105).................. 587,681
CASH AND OTHER ASSETS, LESS
LIABILITIES--7.4%................... 47,305
--------
NET ASSETS--100%.................... $634,986
========
</TABLE>
32
<PAGE> 33
NOTES TO TOTAL RETURN PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
(b) Principal amount shown is in local currency.
Based on the cost of investments of $521,105,000 for federal income tax purposes
at June 30, 1995, the aggregate gross unrealized appreciation was $72,807,000,
the aggregate gross unrealized depreciation was $6,231,000 and the net
unrealized appreciation on investments was $66,576,000.
See accompanying notes to financial statements.
33
<PAGE> 34
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
GOVERNMENT OBLIGATIONS--4.1%
(Cost: $10,359)
U.S. Treasury Notes
8.875%, 1996..................... $ 8,500 $ 8,659
7.375%, 1997..................... 1,700 1,756
--------
10,415
CORPORATE OBLIGATIONS
BROADCASTING, CABLESYSTEMS AND
PUBLISHING--17.4%
Act III Broadcasting, Inc.,
9.625%, 2003..................... 330 332
Adelphia Communications
Corporation, 12.50%, 2002........ 1,730 1,721
Affinity Group, Inc., 11.50%,
2003............................. 1,460 1,455
(b)Australis Media Ltd.,
convertible, 14.00%, 2003........ 2,220 1,160
(b)Bell Cablemedia PLC, 11.95%,
2004............................. 2,860 1,902
Big Flower Press, Inc., 10.75%,
2003............................. 1,900 1,905
CF Cable TV Inc., 11.625%, 2005.... 740 784
Cablevision Industries Corporation,
10.75%, 2002..................... 2,015 2,201
Cablevision Systems Company
9.875%, 2013..................... 1,345 1,419
9.875%, 2023..................... 280 293
Century Communications Corporation
9.50%, 2000...................... 300 302
11.875%, 2003.................... 1,360 1,442
9.50%, 2005...................... 2,690 2,670
Comcast Corporation
9.375%, 2005..................... 1,120 1,126
9.50%, 2008...................... 1,330 1,327
10.625%, 2012.................... 1,850 1,980
Continental Cablevision, Inc.,
9.50%, 2013...................... 4,270 4,398
Granite Broadcasting Corp.,
10.375%, 2005.................... 1,420 1,425
(b)International CableTel
Incorporated, 12.75%, 2005....... 3,670 2,165
Katz Corporation, 12.75%, 2002..... 960 1,037
(b)Neodata Services, 12.00%,
2003............................. 1,210 1,010
Rogers Cablesystems Limited
9.625%, 2002..................... 780 786
10.00%, 2005..................... 800 822
Sinclair Broadcasting Group, Inc.,
10.00%, 2003..................... 1,620 1,616
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Summit Communications Group, Inc.,
10.50%, 2005..................... $ 1,200 $ 1,302
Univision TV, 11.75%, 2001......... 370 398
Viacom International Inc., 8.00%,
2006............................. 4,880 4,734
Videotron Groupe, 10.625%, 2005.... 500 526
(b)Videotron Holdings PLC, 11.12%,
2004............................. 1,250 819
Webcraft Technologies, Inc.,
9.375%, 2002..................... 640 560
Young Broadcasting Corporation,
11.75%, 2004..................... 260 286
--------
43,903
BUSINESS SERVICES--4.0%
Comdata Network, Inc.
12.50%, 1999..................... 1,250 1,362
13.25%, 2002..................... 1,000 1,125
Computervision Corporation
10.875%, 1997.................... 2,100 2,082
11.375%, 1999.................... 720 665
Corporate Express Inc., 9.125%,
2004............................. 1,300 1,264
Merisal, Inc., 12.50%, 2004........ 1,370 1,206
Monarch Marking Systems, 12.50%,
2003............................. 1,160 1,172
Outdoor Systems, 10.75%, 2003...... 1,250 1,194
--------
10,070
CHEMICALS--5.2%
Agriculture, Mining and Chemicals,
Inc.,
10.75%, 2003..................... 640 659
Arcadian Partners, L.P., 10.75%,
2005............................. 1,420 1,434
Atlantis Group, Inc., 11.00%,
2003............................. 1,135 1,121
G-I Holdings Inc., zero coupon,
1998............................. 2,080 1,404
Huntsman Corporation, 10.625%,
2001............................. 400 423
Pioneer Americas Acquisition Corp.,
13.375%, 2005.................... 1,500 1,538
Polymer Group Inc., 12.75%, 2002... 1,240 1,249
Rexene Corporation, 11.75%, 2004... 1,650 1,766
Terra Industry, 10.50%, 2005....... 790 806
UCC Investors Holdings, Inc.
10.50%, 2002..................... 2,280 2,314
11.00%, 2003..................... 300 305
--------
13,019
COMMUNICATIONS--6.3%
(b)Call-Net Enterprises Inc.,
13.25%, 2004..................... 1,000 600
(b)Celcaribe S.A., 13.50%, 2004...... 1,000 840
(b)Cellular, Inc., 11.75%, 2003...... 625 463
Commnet Cellular, 11.25%, 2005..... 500 503
</TABLE>
34
<PAGE> 35
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
(b)Echostar Communication,
12.875%, 2004, with
warrants expiring 2004........... $ 4,575 $ 2,511
Intermedia Communications,
convertible, 13.50%, 2005........ 1,140 1,143
Paging Network, Inc.
11.75%, 2002..................... 2,010 2,163
(a) 9.445%, 2002.................... 1,000 1,000
(b)PanAmSat, L.P., 11.375%, 2003..... 2,275 1,627
Rogers Cantel, 11.125%, 2002....... 3,570 3,703
USA Mobile Communications, Inc. II,
14.00%, 2004..................... 1,190 1,306
--------
15,859
CONSTRUCTION MATERIALS--5.4%
American Standard Inc.
10.875%, 1999.................... 2,315 2,506
11.375%, 2004.................... 1,090 1,188
(b) 10.50%, 2005.................. 1,110 844
9.25%, 2016...................... 840 840
(b)Building Materials Corporation
of
America, 11.75%, 2004............ 3,495 2,071
Nortek, Inc., 9.875%, 2004......... 1,700 1,522
Triangle Pacific Corp., 10.50%,
2003............................. 2,185 2,218
Waxman Industries, Inc.
12.25%, 1998..................... 850 816
13.75%, 1999..................... 884 747
(a)(b) 12.75%, 2004, with warrants
expiring 2004.................... 1,749 777
--------
13,529
CONSUMER PRODUCTS AND
SERVICES--7.3%
Allied Waste Industry, 12.00%,
2004............................. 550 575
Bally's Park Place Funding, Inc.,
9.25%, 2004...................... 2,690 2,528
Beatrice Foods, Inc., 12.00%,
2001............................. 2,000 1,820
Cinemark USA, Inc., 12.00%, 2002... 940 1,011
(b)Dr. Pepper Bottling Holdings,
Inc., 11.625%, 2003.............. 1,120 846
Empress River Casino, 10.75%,
2002............................. 1,090 1,090
Host Marriott Travel Plaza, 9.50%,
2005............................. 1,500 1,440
Mid-American Waste Systems Inc.,
12.25%, 2003..................... 1,100 1,122
Players International, 10.875%,
2005............................. 370 364
Santa Fe Hotel, Inc., 11.00%, 2000,
with warrants expiring 1996...... 850 783
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
(b)Six Flags Theme Park, 12.25%,
2005............................. $ 1,750 $ 1,260
Trump Taj Mahal, PIK, 11.35%,
1999............................. 5,553 4,442
Westpoint Stevens, 9.375%, 2005.... 1,200 1,158
--------
18,439
DRUGS AND HEALTH CARE--4.7%
Abbey Healthcare Group
Incorporated, 9.50%, 2002........ 1,035 1,066
Amerisource Distribution Corp.,
PIK, 11.25%, 2005................ 753 847
Charter Medical Corporation,
11.25%, 2004..................... 2,570 2,737
Dade International Inc., 13.00%,
2005............................. 840 886
National Medical Enterprises
9.625%, 2002..................... 500 529
10.125%, 2005.................... 2,350 2,485
Ornda Healthcorporation
12.25%, 2002..................... 1,505 1,667
11.375%, 2004.................... 1,560 1,704
--------
11,921
ENERGY AND RELATED
SERVICES--3.4%
Chesapeake Energy Corp., 10.50%,
2002............................. 675 665
Dual Drilling Company,
9.875%, 2004..................... 400 375
Empire Gas Corporation, 7.00%,
2004,
with warrants expiring 2004...... 900 717
Gerrity Oil & Gas, 11.75%, 2004.... 1,010 934
Global Marine Inc., 12.75%, 1999... 280 310
Gulf Canada Resources, Ltd., 9.25%,
2004............................. 1,800 1,757
HS Resources, 9.875%, 2003......... 230 223
TransTexas Gas Corporation, 11.50%,
2002............................. 2,900 2,976
WRT Energy Corp.
13.875%, 2002.................... 600 594
--------
8,551
FINANCIAL SERVICES, HOME
BUILDING AND REAL ESTATE--2.3%
Continental Homes Holding, 12.00%,
1999............................. 970 980
Forecast Group L.P., 11.375%,
2000............................. 250 145
</TABLE>
35
<PAGE> 36
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
(a)Great American Holdings, 11.00%,
1998............................. $ 675 $ 678
Hovnanian Kent
11.25%, 2002..................... 1,318 1,153
9.75%, 2005...................... 600 465
J.M. Peters, 12.75%, 2002,
with warrants expiring 2004...... 460 395
NVR Inc., 11.00%, 2003............. 970 883
Oriole Homes Corp., 12.50%, 2003... 140 122
Presley Companies, 12.50%, 2001.... 1,400 1,148
--------
5,969
MANUFACTURING, METALS AND
MINING--16.4%
Aftermarket Technology, 12.00%,
2004............................. 1,080 1,145
Algoma Steel, 12.375%, 2005........ 630 568
Amstar Corporation, 11.375%,
1997............................. 2,744 2,799
BE Aerospace, 9.75%, 2003.......... 880 880
Bluebird Body Company,
11.75%, 2002..................... 1,430 1,466
Day International Group,
11.25%, 2005..................... 430 432
Essex Group Incorporated, 10.00%,
2003............................. 900 864
Exide Corporation
10.75%, 2002..................... 580 612
12.25%, 2005..................... 410 418
Fairchild Corporation
12.00%, 2001..................... 2,390 2,043
13.00%, 2007..................... 339 278
Fairchild Industries, 12.25%,
1999............................. 1,490 1,516
Fairfield Manufacturing Company,
11.375%, 2001.................... 830 784
Foamex L.P.
11.25%, 2002..................... 930 921
11.875%, 2004.................... 1,370 1,295
(b)Foamex-JPS Automotive L.P.,
14.00%, 2004, with warrants
expiring 1999.................... 940 517
Great Dane Holding, 12.75%, 2001... 2,355 2,320
GS Technologies, 12.00%, 2004...... 1,420 1,392
Gulf States Steel, convertible,
13.50%, 2003..................... 1,000 973
Jordan Industries, 10.375%, 2003... 1,560 1,435
JPS Automotive Products
Corporation, 11.125%, 2001....... 1,110 1,088
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
K & F Industries, Inc.
13.75%, 2001..................... $ 4,930 $ 5,078
11.875%, 2003.................... 420 428
(a)Lehman (K&F) Promissory Note,
6.125%, 1997..................... 350 326
Lear Seating Corporation 8.25%,
2002............................. 250 237
Newflo Corporation, 13.25%, 2002... 1,050 1,047
Pace Industries, Inc., 10.625%,
2002............................. 1,020 966
Penda Industries Inc., 10.75%,
2004............................. 650 579
RHI Holdings, 11.875%, 1999........ 790 760
SPX Corporation, 11.75%, 2002...... 380 395
Sequa Corporation
9.625%, 1999..................... 250 247
8.75%, 2001...................... 730 681
9.375%, 2003..................... 270 248
Thermadyne Industries, Inc., PIK
10.25%, 2002..................... 1,290 1,277
10.75%, 2003..................... 1,476 1,446
Unisys Corporation
13.50%, 1997..................... 1,160 1,282
8.875%, 1997..................... 315 315
10.625%, 1999.................... 2,290 2,462
--------
41,520
PAPER AND FOREST PRODUCTS--6.3%
Berry Plastics Corporation, 12.25%,
2004, with warrants expiring
2004............................. 480 493
Container Corporation of America,
11.25%, 2004..................... 1,545 1,622
Gaylord Container Corporation
11.50%, 2001..................... 695 737
(b) 12.75%, 2005.................... 2,380 2,332
Maxxam Group, Inc.
(b) 12.25%, 2003.................... 585 348
11.25%, 2003..................... 1,030 963
Owens-Illinois, Inc.
11.00%, 2003..................... 970 1,065
9.95%, 2004...................... 2,540 2,591
9.75%, 2004...................... 2,720 2,761
Repap New Brunswick Inc.,
10.625%, 2005.................... 1,250 1,258
Sweetheart Cup Company Inc.,
10.50%, 2003..................... 900 869
S. D. Warren Company, 12.00%,
2004............................. 850 918
--------
15,957
</TABLE>
36
<PAGE> 37
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
RETAILING--11.2%
Color Tile, Inc., 10.75%, 2001..... $ 2,470 $ 1,210
Dominick's Bank Loan, 10.875%,
2005............................. 1,760 1,784
Federated Department Stores, Inc.,
convertible, 9.72%, 2004......... 420 424
Finlay Fine Jewelry Corporation,
10.625%, 2003.................... 580 560
Grand Union Company
(c) 12.25%, 2002.................... 3,990 1,022
(a) 12.00%, 2004.................... 1,100 1,064
(b)International Semi-Tech
Microelectronics Inc., 11.50%,
2003............................. 1,650 825
P & C Food Markets, 11.50%, 2001... 910 961
Pamida Holdings, 11.75%, 2003...... 1,950 1,755
Pathmark Stores, Inc.
12.625%, 2002.................... 1,000 1,065
11.625%, 2002.................... 1,655 1,734
9.625%, 2003..................... 720 702
Penn Traffic Company
8.625%, 2003..................... 1,620 1,523
9.625%, 2005..................... 1,640 1,542
Ralphs Grocery Company
(a) 9.312%, 2002.................... 335 336
(a) 9.812%, 2003.................... 335 336
10.45%, 2004..................... 1,880 1,871
(a) 10.062%, 2004................... 335 336
13.75%, 2005..................... 1,130 1,215
Southland Corporation, 5.00%,
2003............................. 5,709 4,366
Specialty Retailers, Inc., 11.00%,
2003............................. 610 567
Thrifty Payless Inc.
11.75%, 2003..................... 2,390 2,521
12.25%, 2004..................... 600 618
--------
28,337
TRANSPORTATION--1.1%
Burlington Motor Holdings Inc.,
11.50%, 2003..................... 1,350 1,080
<CAPTION>
Principal
Amount
or Number
of Shares Value
--------- --------
<S> <C> <C>
OMI Corp., 10.25%, 2003............ $ 1,625 $ 1,357
(b)Transtar Holdings, L.P.,
13.375%, 2003.................... 631 372
--------
2,809
--------
TOTAL CORPORATE
OBLIGATIONS--91.0%
(Cost: $234,274)................... 229,883
PREFERRED AND COMMON STOCKS
BCP/Essex Holdings................. 23,000 shs. 598
(c)Computervision Corporation........ 162,160 1,074
(c)Gaylord Container Corporation,
warrants expiring 1996........... 218,579 2,268
(c)Gillett Holdings, Inc............. 42,066 873
(c)Specialty Equipment Companies,
Inc.............................. 13,000 167
(c)Thrifty Payless Inc............... 31,540 103
(c)UGI Inc........................... 4,249 5
Walter Industries, Inc............. 7,469 103
--------
TOTAL PREFERRED AND COMMON
STOCKS--2.0%
(Cost: $4,103)..................... 5,191
MONEY MARKET
INSTRUMENTS--1.6%
Yield--6.21%
Due--July, 1995
(Cost: $3,997)
Cooperative Receivables
Corporation........................ $ 4,000 3,997
--------
TOTAL INVESTMENTS--98.7%
(Cost: $252,733)................... 249,486
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.3%............... 3,251
--------
NET ASSETS--100%..................... $252,737
========
</TABLE>
See accompanying notes to portfolio of investments.
37
<PAGE> 38
NOTES TO HIGH YIELD PORTFOLIO OF INVESTMENTS
(a) The following securities may require registration under the Securities Act
of 1933 or an exemption therefrom in order to effect sale in the ordinary
course of business; they were valued at cost on the dates of acquisition.
These securities were valued at fair value as determined in good faith by
the Board of Trustees of the Fund. There were no market quotations available
for unrestricted securities of the same class on the dates of acquisition or
on June 30, 1995. At June 30, 1995, the value of the Portfolio's restricted
securities was $4,083,000, which represented 1.60% of net assets.
<TABLE>
<CAPTION>
Principal
Amount
Dates of or Number Unit
Security Description Acquisition of Shares Cost
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
Grand Union Company, 12.00%, 2004 July 1992-January 1995 $1,100,000 $ 81.33
-------------------------------------------------------------------------------------------------------------------
Great American Holdings, 11.00%, 1998 July 1990-March 1992 675,000 84.15
-------------------------------------------------------------------------------------------------------------------
Lehman (K&F) Promissory Note, 6.125%, 1997 July 1994 350,000 90.75
-------------------------------------------------------------------------------------------------------------------
Paging Network, 9.445%, 2002 March 1995 1,000,000 99.75
-------------------------------------------------------------------------------------------------------------------
Ralphs Grocery Company, 9.312%-10.062%, 2002-2004 June 1995 1,005,000 100.00
-------------------------------------------------------------------------------------------------------------------
Waxman Industries, Inc., warrants expiring 2004 June 1994 52,274shs. 2.00
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Deferred interest obligation; currently zero coupon under terms of the
initial offering.
(c) Non-income producing security. In the case of a bond, generally denotes that
issuer has defaulted on the payment of interest or has filed for bankruptcy.
"PIK" denotes that interest or dividends are paid in kind.
Based on the cost of investments of $252,733,000 for federal income tax purposes
at June 30, 1995, the aggregate gross unrealized appreciation was $7,396,000,
the aggregate gross unrealized depreciation was $10,643,000 and the net
unrealized depreciation on investments was $3,247,000.
See accompanying notes to financial statements.
38
<PAGE> 39
KEMPER INVESTORS FUND
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
COMMON STOCKS
CHEMICALS--4.4%
Air Products & Chemicals........... 65,000 $ 3,624
B.F. Goodrich Co. ................. 29,300 1,571
E.I. DuPont de Nemours & Co. ...... 75,000 5,156
Monsanto Co. ...................... 61,000 5,498
--------
15,849
COMMUNICATIONS AND MEDIA--5.5%
A T & T............................ 73,400 3,899
Cox Communications Inc. ........... 155,000 3,003
Singapore Press Holdings, Ltd...... 4,000 60
(a)Tellabs, Inc. .................... 150,400 7,238
(a)3Com Corporation.................. 40,000 2,680
(a)Viacom International "B".......... 60,093 2,787
--------
19,667
COMPUTER SOFTWARE,
ELECTRONIC DATA
PROCESSING AND
SEMI-CONDUCTORS--15.2%
Adobe Systems...................... 30,000 1,740
(a)Atmel Corporation................. 30,300 1,678
(a)Cisco Systems..................... 92,800 4,692
First Data Corporation............. 48,700 2,770
First Financial Management
Corporation...................... 80,000 6,840
General Motors Corp., "E".......... 63,000 2,741
Hewlett-Packard, Co. .............. 70,000 5,215
Informix Corp. .................... 150,000 3,806
Intel Corp. ....................... 100,000 6,331
Linear Technology Corp. ........... 50,000 3,300
Loral Corp. ....................... 38,200 1,977
(a)Microsoft Corp.................... 65,000 5,874
Reynolds & Reynolds Co. ........... 50,000 1,475
(a)Silicon Graphics Inc.............. 119,000 4,745
(a)Solectron Corp.................... 43,100 1,471
--------
54,655
CONSUMER PRODUCTS AND
SERVICES--16.9%
Alco Standard Corporation.......... 53,000 4,233
Campbell Soup Co. ................. 55,000 2,695
Coca-Cola Co. ..................... 160,000 10,200
Colgate-Palmolive Co. ............. 50,000 3,656
ConAgra Inc. ...................... 69,000 2,406
CPC International.................. 42,000 2,594
(a)CUC International................. 65,800 2,764
(a)Franklin Quest Inc. .............. 63,100 1,514
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
Gillette Co. ...................... 90,000 $ 4,016
Greencore Group PLC................ 15,000 113
Manpower Inc. ..................... 120,000 3,060
PepsiCo............................ 40,000 1,825
Philip Morris Companies............ 93,900 6,984
Procter & Gamble Co. .............. 103,000 7,403
Sara Lee Corp. .................... 120,000 3,420
Service Corp. International........ 118,000 3,732
--------
60,615
CONSTRUCTION--.6%
Fluor Corp. ....................... 43,000 2,236
Road Builder....................... 7,000 23
--------
2,259
ENERGY AND RELATED
SERVICES--1.8%
Enron Corp. ....................... 134,100 4,710
Mobil Corp. ....................... 18,000 1,728
--------
6,438
ENTERTAINMENT AND
RESTAURANTS--3.1%
Harrah's Entertainment............. 55,550 1,562
McDonald's Corp. .................. 75,000 2,934
(a)Promus Companies.................. 27,775 611
Tabcorp Holdings Ltd. ............. 25,850 54
Walt Disney Company................ 105,000 5,841
--------
11,002
FINANCIAL SERVICES AND REAL
ESTATE--9.3%
Aalberts Industries N.V............ 2,300 130
(a)Allied Irish Banks PLC............ 7,200 34
American International Group,
Inc.............................. 30,000 3,420
Boatmen's Bancshares............... 113,000 3,983
CITIC Pacific Ltd.................. 26,000 65
First USA.......................... 71,400 3,168
General Re Corp.................... 30,200 4,043
Hagemeyer N.V...................... 1,144 51
Healthcare COMPARE Corp............ 55,000 1,650
MBNA Corporation................... 180,900 6,105
Mercantile Bancorp................. 40,000 1,795
MGIC Investment Corp............... 113,000 5,297
NationsBank........................ 63,000 3,378
Sanyo Shinpan Finance Co., Ltd..... 800 58
Sumitomo Corp...................... 8,000 73
--------
33,250
</TABLE>
39
<PAGE> 40
KEMPER INVESTORS FUND
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number
of Shares Value
---------- --------
<S> <C> <C>
MANUFACTURING--11.2%
AMP, Inc........................... 20,000 $ 845
(a)Applied Materials, Inc............ 23,000 1,992
Boeing Co.......................... 86,000 5,386
(a)Crown Cork & Seal Co.............. 70,000 3,509
Emerson Electric Co................ 69,000 4,934
General Electric Co................ 85,400 4,814
Newell Co.......................... 135,000 3,308
Scott Paper Co..................... 168,000 8,316
TriMas Corp........................ 125,600 2,889
Xerox Corporation.................. 27,000 3,166
York International Corp............ 23,400 1,053
--------
40,212
MEDICAL PRODUCTS
AND SERVICES--17.2%
Abbott Laboratories................ 178,400 7,225
Amgen Inc.......................... 22,000 1,770
Boston Scientific Corp............. 50,000 1,594
Columbia/HCA Healthcare Corp....... 82,000 3,547
Eli Lilly & Co..................... 50,000 3,925
Healthsource, Inc.................. 50,000 1,750
(a)IDEXX Laboratories................ 67,200 1,747
(a)Integrated Health Services........ 100,000 3,000
Johnson & Johnson.................. 113,900 7,702
Medtronic, Inc..................... 82,000 6,324
Merck & Co., Inc................... 140,000 6,860
(a)Mid Atlantic Medical Services,
Inc.............................. 61,600 1,140
Pfizer............................. 21,800 2,014
(a)R. P. Scherer Corp................ 34,000 1,437
SmithKline Beecham PLC............. 45,000 2,036
United Healthcare Corp............. 180,000 7,448
(a)U.S. Bioscience, with warrants
expiring 1998.................... 735 2
(a)Value Health...................... 66,350 2,140
--------
61,661
RETAILING AND
DISTRIBUTION--5.9%
Federated Department Stores........ 140,000 3,605
<CAPTION>
Number
of Shares
or
Principal
Amount Value
---------- --------
<S> <C> <C>
Home Depot......................... 115,200 $ 4,680
Nabisco Holdings................... 17,500 473
(a)Office Depot...................... 74,350 2,091
(a)Starbucks Corporation............. 51,800 1,845
(a)Viking Office Products............ 54,400 1,992
Wal-Mart Stores.................... 241,700 6,465
--------
21,151
TRANSPORTATION--.8%
(a)Wisconsin Central Transportation
Corp............................. 58,200 2,852
--------
TOTAL COMMON STOCKS--91.9%
(Cost: $259,915)..................... 329,611
CONVERTIBLE CORPORATE
OBLIGATIONS--.6%
(Cost: $1,333)
Medaphis Corp., 6.50%, 2000........ $ 1,333 2,079
MONEY MARKET INSTRUMENTS
Yield--6.05% to 6.30%
Due--July 1995
Cooperative Receivables
Corporation...................... 5,000 4,997
Cox Enterprises.................... 10,000 9,993
Working Capital Management
Company.......................... 5,000 4,996
--------
TOTAL MONEY MARKET
INSTRUMENTS--5.6%
(Cost: $19,985).................... 19,986
--------
TOTAL INVESTMENTS--98.1%
(Cost: $281,233)................... 351,676
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.9%............... 6,802
--------
NET ASSETS--100%..................... $358,478
========
</TABLE>
40
<PAGE> 41
NOTES TO EQUITY PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $281,233,000 for federal income tax purposes
at June 30, 1995, the aggregate gross unrealized appreciation was $72,005,000,
the aggregate gross unrealized depreciation was $1,562,000 and the net
unrealized appreciation on investments was $70,443,000.
See accompanying notes to financial statements.
41
<PAGE> 42
KEMPER INVESTORS FUND
GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Coupon Principal
Rate Maturity Amount Value
------ --------- --------- --------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
FEDERAL HOME LOAN MORTGAGE CORPORATION--11.1%
(Cost: $10,012)
Pass-through Certificates................................................. 7.00 % 2023-2024 $10,711 $ 10,530
FEDERAL NATIONAL MORTGAGE ASSOCIATION--10.4%
(Cost: $9,678)
Pass-through Certificates................................................. 7.50 2025 1,956 1,962
8.00 2024-2025 7,825 7,972
--------
9,934
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--60.8%
(Cost: $56,488)
Pass-through Certificates................................................. 6.50 2023-2025 3,947 3,792
7.00 2022-2025 18,217 17,917
7.50 2022-2025 15,851 15,926
8.00 2016-2025 11,364 11,623
8.50 2016-2024 1,745 1,813
9.00 2016-2020 2,087 2,192
9.50 2013-2024 3,115 3,300
10.00 2016 1,184 1,286
--------
57,849
U.S. TREASURY SECURITIES--13.5%
(Cost: $12,569)
Notes..................................................................... 7.50 1997 1,000 1,025
6.87 5 2000 2,000 2,071
7.25 2004 3,000 3,205
Bonds..................................................................... 8.75 2020 1,000 1,242
7.25 2022 5,000 5,335
--------
12,878
--------
TOTAL U.S. GOVERNMENT OBLIGATIONS--95.8%
(Cost: $88,747)........................................................... 91,191
CORPORATE OBLIGATIONS
American Home Products.................................................... 7.90 2005 500 535
Commonwealth Edison Company............................................... 8.37 5 2006 500 547
Hydro-Quebec.............................................................. 7.37 5 2003 500 512
Philip Morris Companies................................................... 7.25 2003 500 508
Philips Electric N.V. .................................................... 8.37 5 2006 500 551
Sears Roebuck & Co. ...................................................... 6.25 2004 500 479
--------
TOTAL CORPORATE OBLIGATIONS--3.3%
(Cost: $3,049)............................................................ 3,132
MONEY MARKET INSTRUMENTS--12.4%
(Cost: $11,846)
Yield--5.70%
Due--September 1995
Student Loan Marketing Association........................................ 12,000 11,845
--------
TOTAL INVESTMENTS--111.5% (Cost: $103,642).................................... 106,168
LIABILITIES, LESS CASH AND OTHER ASSETS--(11.5)%.............................. (10,973)
--------
NET ASSETS--100%.............................................................. $ 95,195
========
</TABLE>
NOTE TO GOVERNMENT SECURITIES PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $103,642,000 for federal income tax purposes
at June 30, 1995, the aggregate gross unrealized appreciation was $2,972,000,
the aggregate gross unrealized depreciation was $446,000 and the net unrealized
appreciation on investments was $2,526,000.
See accompanying notes to financial statements.
42
<PAGE> 43
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
COMMON STOCKS
CONTINENTAL EUROPE
FINLAND--4.7%
Oy Nokia AB......................... 103,008 $ 6,020
Telecommunications company
FRANCE--4.5%
Carrefour S.A. ..................... 6,000 3,076
Food retailer
L'Oreal S.A......................... 6,400 1,607
Consumer products and services
Technip S.A......................... 16,400 1,022
Oil company
--------
5,705
GERMANY--4.3%
Mannesmann A.G...................... 7,600 2,320
Construction and engineering
company
Veba, A.G........................... 8,000 3,141
Electric utility
--------
5,461
IRELAND--3.5%
(a)Allied Irish Banks PLC............. 235,000 1,108
Banking
Greencore Group PLC................. 225,302 1,697
Food producer
Independent Newspapers Ltd.......... 90,000 494
Publisher
Irish Life Assurance PLC............ 300,000 997
Life assurance and pension
policies
Kerry Group PLC..................... 25,280 166
Food processing
--------
4,462
ITALY--.9%
Sirti SpA........................... 152,915 1,134
Telecommunications company
NETHERLANDS--11.0%
Aalberts Industries N.V............. 23,158 1,304
Hardware company
ABN Amro Bank....................... 25,092 968
Banking
Getronics NV........................ 19,500 955
Information systems
Hagemeyer N.V....................... 42,710 1,903
Trading company
Koninklijke Ahold NV................ 75,000 2,685
Food retailer and distributor
Koninklijke PTT Netherlands NV...... 25,787 926
Commercial services
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
PolyGram NV......................... 49,500 $ 2,921
Music recording company
Wolters Kluwer...................... 26,382 2,326
Multinational publishing
organization
--------
13,988
SPAIN--1.9%
Banco Bilbao Vizcaya................ 34,600 999
Banking
Repsol S.A.......................... 45,000 1,416
Oil and gas producer
--------
2,415
SWEDEN--9.4%
Astra AB............................ 90,000 2,775
Pharmaceutical company
Atlas Copco AB...................... 100,000 1,387
Industrial machinery manufacturer
LM Ericsson "B"..................... 257,740 5,132
Telecommunications equipment
manufacturer
Gambro AB........................... 92,000 1,327
Pharmaceutical company
H & M Hennes & Mauritz AB........... 21,560 1,261
Retailing
--------
11,882
SWITZERLAND--5.2%
Rhone-Poulenc....................... 200 8
Chemical and pharmaceutical
company
Roche Holdings AG................... 680 4,379
Pharmaceutical company
Union Bank of Switzerland........... 1,200 1,243
Banking
Zehnder Holdings AG................. 1,350 984
Climate control equipment
manufacturer
--------
6,614
--------
TOTAL CONTINENTAL EUROPE--45.4% 57,681
PACIFIC REGION
HONG KONG--5.1%
Cheung Kong Holding Ltd............. 188,000 931
Financial services
CITIC Pacific Ltd................... 455,000 1,144
Financial services
Hong Kong Telecommunications Ltd.... 526,000 1,040
Telecommunication services
HSBC Holdings PLC................... 87,068 1,117
Banking
Hutchison Whampoa Ltd............... 227,000 1,097
Diversified holding company
</TABLE>
43
<PAGE> 44
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
New World Development Co., Ltd...... 161,889 $ 539
Investment holding and property
investment company
Peregrine Investment Holdings....... 415,000 590
Investment banking
Wai Kee Holdings Ltd.,
warrants expiring 1996.............. 204,000 3
Construction company
--------
6,461
JAPAN--14.8%
Amada Co., Ltd...................... 25,000 213
Equipment manufacturer
Bridgestone Corp.................... 39,000 574
Manufacturer of rubber related
products
Daiichi Kangyo Bank................. 65,000 1,171
Banking
Daifuku Co., Ltd.................... 45,000 503
Manufacturer of diversified
machinery
Fuji Bank Ltd....................... 62,000 1,249
Banking
Fujisawa Pharmaceutical............. 130,000 1,360
Pharmaceutical company
JMS Co. Ltd......................... 43,000 261
Medical equipment supplier
Kurita Water Industries Ltd......... 30,000 770
Water treatment equipment and
chemical manufacturer
Kyocera Corp........................ 13,000 1,069
Electronics manufacturer
Marui Co., Ltd...................... 68,000 1,081
Retailer
Mitsubishi Heavy Industries......... 165,000 1,119
Industrial machinery manufacturer
Nippondenso Co., Ltd................ 33,000 599
Automotive components manufacturer
and supplier
NKK Corp............................ 446,000 1,045
Steel manufacturer
Omron Corp.......................... 50,000 954
Electronics manufacturer
Sanyo Shinpan Finance Co., Ltd...... 3,800 278
Consumer finance company
Seven Eleven Japan Co., Ltd......... 16,000 1,144
Convenience retailer
Sharp Corp.......................... 30,000 396
Electronics manufacturer
Sumitomo Bank Ltd................... 75,000 1,299
Banking
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
Sumitomo Corp....................... 105,000 $ 955
Holding company
Sumitomo Trust & Banking............ 120,000 1,456
Banking
Tokyo Electron Ltd.................. 12,000 410
Electronics manufacturer
(a)Ube Industries, Ltd................ 250,000 872
Diversified company
--------
18,778
MALAYSIA--1.9%
Resorts World Bhd................... 138,000 809
Operator of tourist resorts
Road Builder........................ 63,000 209
Construction company
TA Enterprise Bhd................... 125,000 431
Financial services
Telekom Malaysia.................... 135,000 1,024
Telecommunications company
--------
2,473
SINGAPORE--3.5%
Development Bank.................... 51,000 580
Banking
Fraser & Neave Ltd. ................ 108,000 1,244
Beer and soft drink manufacturer
Keppel Corp. Ltd. .................. 127,000 1,036
Conglomerate holding company
Singapore Press Holdings............ 102,000 1,525
Publisher
--------
4,385
--------
TOTAL PACIFIC REGION--25.3% 32,097
COMMONWEALTH COUNTRIES
AUSTRALIA--4.5%
Australian and New Zealand Banking
Group Ltd. ......................... 508,700 1,803
Financial services
CSL Limited......................... 269,000 563
Plasma producer
Tabcorp Holdings Ltd. .............. 1,165,300 2,412
Entertainment and gaming
TNT Ltd. ........................... 666,000 873
Transportation and logistics
--------
5,651
NEW ZEALAND--.9%
Lion Nathan Ltd..................... 591,700 1,170
Beer and soft drink manufacturer
</TABLE>
44
<PAGE> 45
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
UNITED KINGDOM--11.9%
British Petroleum................... 314,106 $ 2,251
Petroleum mining and production
company
Commercial Union PLC................ 90,000 838
Holding company
Dixons Group PLC.................... 430,000 1,755
Electronics retailer
Glaxo Wellcome PLC.................. 260,000 3,191
Pharmaceutical company
Lloyds Bank PLC..................... 95,000 942
Banking
Reed International PLC.............. 136,000 1,910
Publisher
(a)Telewest Communications............ 346,000 897
Communications utility
Tesco PLC........................... 377,970 1,744
Food retailer
Tomkins PLC......................... 430,000 1,536
Industrial manufacturer
--------
15,064
--------
TOTAL COMMONWEALTH
COUNTRIES--17.3%...................... 21,885
LATIN AMERICA AND
EMERGING MARKETS
BRAZIL--.5%
Makro Atacadista.................... 41,800 606
Food retailer
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
CHILE--.9%
(a)Provida Corporation, ADR......... 43,700 $ 1,174
Financial services
--------
TOTAL LATIN AMERICA AND
EMERGING MARKETS--1.4%................ 1,780
--------
TOTAL COMMON STOCKS--89.4%
(Cost: $100,993).................... 113,443
MONEY MARKET INSTRUMENTS
Yield--6.10% to 6.25%
Due--July 1995
Barton Capital Corporation........ $ 3,100 3,098
Houston Industries................ 5,800 5,795
Unocal Corporation................ 2,400 2,395
TOTAL MONEY MARKET
INSTRUMENTS--8.9%
(Cost: $11,288)..................... 11,288
--------
TOTAL INVESTMENTS--98.3%
(Cost: $112,281).................... 124,731
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.7%.............. 2,156
--------
NET ASSETS--100%...................... $126,887
========
</TABLE>
See accompanying notes to portfolio of investments.
45
<PAGE> 46
NOTES TO INTERNATIONAL PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
(b) Based on the cost of investments of $112,281,000 for federal income tax
purposes at June 30, 1995, the aggregate gross unrealized appreciation was
$15,868,000, the aggregate gross unrealized depreciation was $3,418,000 and
the net unrealized appreciation on investments was $12,450,000.
(c) At June 30, 1995, the International Portfolio's investments had the
following industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
Value %
--------- -----
<S> <C> <C>
Financial Services............................................................................ $ 20,019 15.8
Communications................................................................................ 15,247 12.0
Chemicals, Medical Equipment and Pharmaceuticals.............................................. 14,634 11.5
Retailing..................................................................................... 13,352 10.5
Consumer Products and Services................................................................ 12,485 9.8
Industrial Products and Services.............................................................. 7,713 6.1
Publishing.................................................................................... 6,255 4.9
Diversified................................................................................... 4,798 3.8
Energy Sources................................................................................ 4,689 3.7
Utilities..................................................................................... 3,141 2.5
Food and Beverages............................................................................ 4,277 3.4
Electrical and Electronics.................................................................... 2,829 2.2
Construction and Building Materials........................................................... 2,532 2.0
Transportation................................................................................ 873 .7
Automobiles, Parts and Service................................................................ 599 .5
--------- -----
Total Common Stocks........................................................................... 113,443 89.4
Money Market Instruments...................................................................... 11,288 8.9
--------- -----
Total Investments............................................................................. 124,731 98.3
Cash and Other Assets, Less Liabilities....................................................... 2,156 1.7
--------- -----
Net Assets.................................................................................... $ 126,887 100.0
========= =====
</TABLE>
See accompanying notes to financial statements.
46
<PAGE> 47
KEMPER INVESTORS FUND
SMALL CAPITALIZATION EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
COMMON STOCKS
BUILDING MATERIALS AND HOUSING--.4%
(a)Schuler Homes...................... 6,400 $ 78
CABLE TELEVISION, BROADCASTING AND
WIRELESS COMMUNICATIONS--3.8%
American Radio...................... 1,400 32
(a)EZ Communications.................. 2,000 37
Gaylord Entertainment Co. .......... 14,700 371
Highwaymaster....................... 1,200 18
(a)Infinity Broadcasting.............. 3,000 100
(a)Jones Intercable "A"............... 9,200 138
Sinclair Broadcasting Group......... 3,400 95
-------
791
CHEMICALS--4.7%
Ferro Corp. ........................ 6,000 159
(a)FMC Corp. ......................... 6,000 403
Lawter International................ 8,000 96
Minerals Technologies............... 5,200 187
OM Group............................ 4,800 137
-------
982
COMPUTER SOFTWARE AND
TECHNOLOGY--12.4%
(a)Alternative Resources
Corporation......................... 14,900 395
Anadigics Inc. ..................... 1,200 23
(a)Atmel Corporation.................. 3,000 166
(a)Baan Co. N.V. ..................... 500 15
(a)Broderbund Software, Inc. ......... 1,800 115
(a)CATS Software...................... 1,600 18
(a)C P Clare.......................... 5,000 100
Dendrite............................ 4,400 71
Discreet Logic...................... 300 10
(a)Gartner Group...................... 2,000 58
HNC Software........................ 100 2
(a)Integraph Corp. ................... 1,400 16
Integrated Silicon Systems.......... 1,200 63
(a)Keane, Inc. ....................... 8,000 199
(a)Lam Research Corp. ................ 1,200 77
(a)Marshall Industries................ 1,000 34
(a)Medaphis Corp. .................... 3,000 65
(a)Microchip Technology............... 6,000 218
(a)Novellus Systems................... 1,000 68
(a)Paradigm Technology................ 300 7
(a)Parametric Technology Corp. ....... 2,000 99
Pioneer-Standard Electronics........ 2,000 49
(a)7th Level, Inc. ................... 9,900 141
(a)Silicon Valley Group............... 1,300 47
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
(a)Solectron Corp. ................... 6,000 $ 205
SpyGlass Corp. ..................... 1,000 29
(a)StrataCom.......................... 700 34
(a)Ultratech Stepper, Inc. ........... 6,000 211
(a)Uunet Technology, Inc. ............ 900 25
Videoserver......................... 300 12
-------
2,572
CONSUMER PRODUCTS
AND SERVICES--7.4%
Barefoot, Inc. ..................... 10,000 139
(a)Franklin Quest Co. ................ 7,900 190
Global Direct Mail.................. 1,000 20
Hudson Foods........................ 19,500 271
(a)Kenneth Cole Productions........... 5,000 167
(a)Safety 1st......................... 9,100 179
Stewart Enterprises, Inc. .......... 7,500 251
UNIFI, Inc. ........................ 5,400 130
(a)Whole Foods Market................. 5,000 76
(a)Williams-Sonoma.................... 4,500 99
-------
1,522
ENGINEERING--1.2%
Jacobs Engineering Group............ 11,000 242
FINANCIAL SERVICES--4.4%
Aames Financial Corp. .............. 10,600 192
ADVANTA Corp. ...................... 7,200 272
(a)SPS Transaction Services........... 7,500 260
Western National Corporation........ 14,300 177
-------
901
GAMING AND LODGING--2.5%
(a)Felcor Suite Hotels................ 4,300 110
(a)Hammons John Q Hotels, Inc. ....... 10,000 140
(a)MGM Grand.......................... 3,000 82
(a)Players International.............. 1,650 33
(a)Prime Hospitality Corp. ........... 14,000 138
(a)Station Casinos Inc. .............. 800 14
-------
517
MANUFACTURING AND DISTRIBUTION--6.4%
Elsag Bailey........................ 3,000 83
Federal Signal Corp. ............... 12,000 260
Greenfield Industries............... 9,000 261
IMCO Recycling...................... 5,300 99
(a)Input/Output, Inc. ................ 2,300 83
Nordson Corp. ...................... 400 22
TriMas Corp. ....................... 20,000 460
Wabash National Corp. .............. 2,100 65
-------
1,333
</TABLE>
47
<PAGE> 48
KEMPER INVESTORS FUND
SMALL CAPITALIZATION EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995--(CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- -------
<S> <C> <C>
MEDICAL PRODUCTS AND EQUIPMENT--9.5%
Arrow International................. 6,100 $ 258
(a)Centocor Inc. ..................... 7,000 100
DENTSPLY International.............. 7,000 252
Healthdyne Technologies............. 9,000 92
(a)Heart Technology................... 7,800 151
ICU Medical......................... 5,200 73
(a)IDEXX Laboratories................. 15,000 390
(a)Isolyser........................... 1,500 54
i-STAT Corp. ....................... 1,200 44
(a)MediSense.......................... 2,400 46
(a)Research Industries................ 15,000 345
(a)Respironics........................ 5,600 80
(a)TECNOL Medical Products, Inc. ..... 3,700 81
-------
1,966
MEDICAL SERVICES--7.6%
(a)ABR Information Services........... 4,000 118
American Oncology................... 1,300 36
(a)Caremark International, Inc. ...... 15,000 300
(a)Coastal Physician Group............ 12,000 154
(a)CRA Managed Care................... 5,800 131
(a)Occusystems........................ 4,400 75
Omnicare, Inc. ..................... 12,000 325
(a)Orthodontic Centers of America..... 5,000 121
(a)Renal Treatment Centers............ 6,600 163
(a)RTW Inc............................ 8,500 155
-------
1,578
OFFICE EQUIPMENT AND SUPPLIES--3.3%
Danka Business Systems PLC.......... 11,000 266
(a)OfficeMax.......................... 7,500 209
(a)Viking Office Products............. 5,500 201
-------
676
RETAILING AND RESTAURANTS--7.7%
(a)Department 56, Inc. ............... 7,000 268
(a)General Nutrition.................. 6,600 232
(a)Gymboree........................... 5,900 172
(a)Movie Gallery...................... 4,600 161
(a)PETsMART........................... 6,000 172
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -------
<S> <C> <C>
(a)Proffitt's, Inc. .................. 6,000 $ 178
(a)Starbucks Corp. ................... 6,000 214
Tandy Corp.......................... 4,000 207
-------
1,604
TELECOMMUNICATIONS AND EQUIPMENT--7.2%
Allen Group......................... 11,000 326
(a)International CableTel............. 7,500 244
(a)LCI International, Inc. ........... 11,600 355
(a)Tellabs Operations................. 8,000 385
Teltrend Inc. ...................... 1,900 38
U.S. Robotics....................... 1,300 142
-------
1,490
TRANSPORTATION--3.6%
(a)ABC Rail Products.................. 8,000 184
(a)Copart, Inc. ...................... 5,400 123
(a)Wisconsin Central Transportation
Corp.............................. 8,800 431
-------
738
-------
TOTAL COMMON STOCKS--82.1%
(Cost: $14,448)....................... 16,990
MONEY MARKET INSTRUMENTS
Yield--5.88% to 6.02%
Due--July and September 1995
Federal Home Loan Bank............ $ 1,000 998
Federal Home Loan Mortgage
Corporation..................... 1,500 1,494
Federal National Mortgage
Association..................... 1,010 999
-------
TOTAL MONEY MARKET
INSTRUMENTS--16.8%
(Cost: $3,491)...................... 3,491
-------
TOTAL INVESTMENTS--98.9%
(Cost: $17,939)..................... 20,481
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.1%................ 219
-------
NET ASSETS--100%...................... $20,700
=======
</TABLE>
NOTES TO SMALL CAPITALIZATION EQUITY PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $17,939,000 for federal income tax purposes
at June 30, 1995, the aggregate gross unrealized appreciation was $2,920,000,
the aggregate gross unrealized depreciation was $378,000 and the net unrealized
appreciation on investments was $2,542,000.
48
<PAGE> 49
This publication may be distributed to the public
only if preceded or accompanied by a prospectus.
Distributed by
Investors Brokerage Services, Inc.
[KEMPER LOGO] Kemper Investors Life Insurance Company
1 Kemper Drive
Long Grove, IL 60049
[RECYCLED LOGO] PRINTED ON RECYCLED PAPER
L-8071S(8/95) Individual Policy form series L-8001 1031
[KEMPER LOGO]
KEMPER
SELECT
SEMI-ANNUAL REPORT
- - A Variable Life
Insurance Policy
- - KILICO Variable
Separate Account
- - Kemper Investors Fund
Period Ended June 30, 1995
