<PAGE> 1
KEMPER INVESTORS FUND
Money Market Portfolio
Total Return Portfolio
High Yield Portfolio
Growth Portfolio
Government Securities Portfolio
International Portfolio
Small Cap Growth Portfolio
Investment Grade Bond Portfolio
Value Portfolio
Small Cap Value Portfolio
Value+Growth Portfolio
Horizon 20+ Portfolio
Horizon 10+ Portfolio
Horizon 5 Portfolio
KEMPER INVESTORS FUND GRAPHIC
Annual Report
December 31, 1996
KEMPER INVESTORS FUND LOGO
<PAGE> 2
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER OF
ZURICH KEMPER INVESTMENTS, INC. (ZKI). ZKI AND ITS AFFILIATES MANAGE
APPROXIMATELY $79 BILLION IN ASSETS, INCLUDING $44 BILLION IN RETAIL MUTUAL
FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR CONTRACT HOLDER:
As we progress through the first quarter of 1997, the fundamentals of the
economy are remarkably similar to what they were one year ago. Long-term
interest rates are in the same 6.5% to 7% range they were in during the first
half of 1996. We believe the economy is growing at a rate of approximately 2.5%.
Inflation continues to be well under control, at about 3.0%.
One significant difference between today and last year is that prices of the
stocks are on average up 20%. While price movements were more volatile in 1996
than in the past few years, the patient investor was amply rewarded. The prime
element sending the stock market higher was strong positive cash flows. This
liquidity in an environment of modestly increasing corporate profits and
relatively stable interest rates pushed stocks higher for most of the year.
This higher stock market has caused many market observers to worry. While we
cannot ignore what has happened, we find no reason to be bearish over the long
term. The environment is benign to favorable for financial assets. Given steady
interest rates, moderate economic growth and continued moderate corporate
earnings growth, there are few excesses in the system. In fact, real interest
rates are probably too high considering our outlook for inflation, and we may
see them decline over time.
Naturally, we cannot rule out the possibility of a market correction. But, in
our belief, the downside would appear to be limited to 5% to 8%, which is the
size of a typical correction based on historical data. As we have said in
previous outlooks, three elements tend to move the market:
- - EARNINGS. We forecast corporate earnings to range between 0% and 5% on average
for the Standard & Poor's 500* in 1997 -- not as high as in recent years but
positive nonetheless.
- - INTEREST RATES. Rates should remain stable, and short-term interest rates may
even decline.
- - LIQUIDITY. Investors, through mutual funds, 401(k)s and qualified contribution
plans in particular, will continue to create strong demand for securities.
In order to move the market more than would be expected in a typical decline,
one or more of these elements will have to turn negative in 1997, and, while
future market conditions cannot be predicted with certainty, we fail to see what
would materially change our outlook. Our outlook going forward is that 1997
should be a lot like 1996.
While the economy continued along a relatively consistent path, the United
States took some politically significant steps in 1996. First, of course,
President Bill Clinton and a Republican Congress were re-elected by the voters.
In the first few days after the general election, especially, investors
demonstrated their support for such a balance in our leadership. But of much
greater long-term significance is the expressed commitment by both parties to
balance the federal budget and address certain entitlement programs. The first
year after an election can be a fertile time to accomplish major initiatives,
and we are hopeful that progress can be made.
The future of the Social Security system, which many experts believe will run
out of money about 20 years from now, will be a subject in which you can expect
Zurich Kemper Investments, Inc. to play a leadership role. The possible
solutions for "fixing Social Security" are finite: raise Social Security taxes,
reduce benefits, raise the retirement age, change inflation assumptions or
pursue a higher rate of return on assets contributed by workers. We believe that
a bipartisan solution will be worked out, which will include giving individuals
the option of investing a portion of their Social Security contributions in an
account earmarked for them. This change is needed to return credibility to the
system, which many Americans have lost faith in.
What to do with Social Security is a debate that spans generations and
promises to occupy much attention in the coming years. As we hope to help
advance constructive debate, we'll be advocating partial privatization for this
federal program while maintaining a safety net for many low-wage earners and
providing a seamless transition for seniors near or in retirement.
1
<PAGE> 3
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
- --------------------------------------------------------------------------------
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The
10-year Treasury rate and the prime rate are prevailing interest rates.
The other data report year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (1/31/97) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 6.58 6.64 5.81 7.47
PRIME RATE(2) 8.25 8.25 8.25 9
INFLATION RATE(3)* 3.24 2.95 2.72 2.87
THE U.S. DOLLAR(4) 4.59 4.26 O.82 -5.54
CAPITAL GOODS ORDERS(5) * 0.58 15 4.72 21.53
INDUSTRIAL PRODUCTIONS(5) * 4.32 3.38 0.39 5.68
EMPLOYMENT GROWTH(6) 2.5 2.17 1.78 3.49
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on family income and retail sales.
* Data as of December 31, 1996.
SOURCE: ECONOMICS DEPARTMENT, ZURICH KEMPER INVESTMENTS, INC.
With this letter as an economic backdrop, we encourage you to read the
following detailed report of the fund, including an interview with the fund's
portfolio management. Thank you for your continued support. We appreciate the
opportunity to serve your investment needs.
Sincerely,
Stephen B. Timbers
STEPHEN B. TIMBERS
PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER
Zurich Kemper Investments, Inc.
February 5, 1997
*THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET.
2
<PAGE> 4
MANAGEMENT SUMMARY
MONEY MARKET PORTFOLIO
It was a very good year for money markets in general but also a year of
market transition. It began with an easing of interest rates by the Federal
Reserve Board (the Fed) but, as the year progressed, fears that the economy had
gotten too healthy led to speculation that the Fed would tighten rates. During
the summer months, such an increase seemed certain, but an anticipated slowdown
in growth and a continuing low inflation level prevented the Fed from taking any
action. Economic growth did moderate, but the economy continued on its path of
expansion.
Our strategy throughout the year was to adjust the average maturity of the
portfolio to coordinate with our interest rate outlook. Given the "rich" market
and expectations for higher rates, the portfolio was generally positioned
defensively. We maintained an average maturity ranging from 25 to 40 days. At
year end, average life in the Money Market Portfolio was extended slightly to
take advantage of some additional value in the market.
The yield curve is expected to steepen a bit in 1997 but we don't expect
the Fed to consider adjusting rates until they have first quarter data to
evaluate. Going forward, we plan to take a defensive approach to managing the
portfolio, shortening average maturity structures to try to capture increases in
rates as they occur.
Frank Rachwalski
Portfolio Manager
December 31, 1996
TOTAL RETURN PORTFOLIO
Another strong year in the U.S. equity market resulted in solid performance
for the Total Return Portfolio. The bond market in 1996 was nervous about the
health of the economy and the likely direction of interest rates, which caused
most of the fixed-income markets to do a stutterstep, with the average security
returning less than its coupon. The exception was high yield bonds which
performed well, but still below the return of equities.
Rotation from strength in one industry group to strength in another group
is what kept the overall market from a sharp decline. Perpetual sector and stock
rotation keeps people cautious and controls exuberance. It's considered healthy
for the market to be skeptical--it keeps cash available for future purchases.
Contributing to the portfolio's strong performance in 1996 were a continued
favor of technology stocks and overweighted positions in finance and capital
goods. Finally, we took advantage of rising interest rates at midyear to
establish sizable positions in attractively priced financial stocks.
In 1997 we expect the Dow to exceed 7000 and close out the year above that
level. Although a market correction could occur and one can not predict market
conditions with certainty, we see nothing on the near-term horizon to warrant
any sustainable decline. We expect a slow growth economy which tends to be a
good environment for large company stocks. In a slow growth environment large
companies can control costs and are more likely to deliver expected earnings.
Gary Langbaum
Portfolio Manager
December 31, 1996
HIGH YIELD PORTFOLIO
The growing U.S. economy continued to drive strong high yield bond returns
during the fiscal year. While most fixed-income investments suffered due to the
economy's pickup, high yield bonds flourished in the higher market rate
environment that ensued. That's because stronger economic growth fueled
corporate earnings, which enabled most companies to meet the interest payments
on their outstanding bond issues. The strong stock market was also positive for
high yield bonds. It facilitated an increased number of initial public offerings
by high yield issuers, enabling many issuers to pay down their debt.
During 1996, we focused on changing the mix of the portfolio's cyclical
holdings. Companies within cyclical industries tend to flourish when the economy
is expanding but are normally the first to suffer when the economy contracts. In
the past year, issues from companies that, although cyclical, have less
cyclicality, or have some degree of independence from changes in the overall
U.S. economy were favored. These included issues from cable and media companies
and the casino and gaming industry. In the last months of the fiscal year, we
reduced our exposure to domestic cable and media issues somewhat in favor of
similar international issues, primarily in the United Kingdom.
The portfolio experienced relatively few credit concerns and the quality of
issues in the portfolio remained relatively stable. Lower B-rated bonds
represented approximately two-thirds of the portfolio's investments, while
higher quality BB-rated bonds comprised about one quarter of the portfolio. This
positioning provided a good level of income
3
<PAGE> 5
MANAGEMENT SUMMARY
for the portfolio, while mitigating some potential risk. We look for more
positive high yield market performance, although we don't expect corporate
earnings to keep pace with levels from the past couple of years. Our investment
focus will continue to be on healthy companies that are positioned to perform
well in the current slow growth economy.
Michael McNamara
Harry Resis
Portfolio Co-Managers
December 31, 1996
GROWTH PORTFOLIO
The U.S. stock markets enjoyed another strong year in 1996, despite
increasing volatility and a few modest corrections--most notably, a dip in
technology stocks during the summer.
Through the year, we continued to emphasize our "growth at a reasonable
price" philosophy, using our research capabilities to identify and take
advantage of opportunities early, then being disciplined about selling when the
stocks hit our price targets. Recognizing that stock prices tend to be driven by
earnings growth, we focused primarily on the sectors of the market that have the
fastest earnings growth: technology and telecommunications, health care,
consumer stocks and financials. Personal computer stocks such as Intel, Compaq
and Microsoft aided our technology returns while financial stocks such as
Nationsbank, Allstate and FNMA proved to be excellent performers. The portfolio
was held back by retail positions such as Autozone and Telecommunications, Inc.
As the year progressed, investors became increasingly concerned about the
strength of the economy. The result was a "flight to quality" which drove up the
prices of high-quality, large cap stocks. Our response has been to look toward
stocks in the mid cap range ($1 billion - $10 billion) that present more
compelling valuations and greater growth potential. We believe the portfolio is
well positioned for what we believe will be a rotation to these stocks during
the first half of 1997.
Steven H. Reynolds
Portfolio Manager,
Chief Investment Officer--Equities
December 31, 1996
GOVERNMENT SECURITIES PORTFOLIO
An unexpected rise in interest rates late in the first quarter negatively
affected the portfolio's performance. As investors became concerned whether the
economy could continue on its path of slow growth and low inflation, market
interest rates moved higher and prices of government securities declined. The
portfolio had been positioned with longer than average duration* in order to
take advantage of the then slow growth, declining interest rate environment.
Following this rise in interest rates, we maintained a neutral to defensive
duration positioning, reducing the portfolio's duration to a length similar to
that of the market or shorter. This action helped the portfolio as the market
traded in a choppy pattern for the rest of the period. Exposure to Treasuries
was reduced while the portfolio's mortgage investments increased. When we did
invest in Treasuries, it was primarily in short-term securities, as part of the
neutral to defensive strategy. In late September, rates began to fall and the
portfolio purchased some intermediate-term Treasuries. This action, although
somewhat bullish, kept the portfolio's duration at a neutral level.
Looking ahead, we do not anticipate a significant increase in interest
rates in the near future. In fact, given the current economic environment and
low level of inflation, rates should remain somewhat stable and could possibly
move lower. A stable environment is generally positive for mortgage investments,
which is the portfolio's primary investment. We believe there would need to be a
major change in economic fundamentals to move rates drastically one way or
another. But at this point, we do not anticipate such a change to occur.
J. Patrick Beimford
Richard Vandenberg
Portfolio Co-Managers
December 31, 1996
* DURATION IS A MEASURE OF THE PORTFOLIO'S SENSITIVITY TO INTEREST RATES; THE
LONGER THE DURATION, THE MORE SENSITIVE IT IS TO INTEREST RATE CHANGES.
4
<PAGE> 6
MANAGEMENT SUMMARY
INTERNATIONAL PORTFOLIO
The International Portfolio had a very strong year due in large part to our
broadly-based portfolio and our lesser exposure to the lagging Japanese market
compared to the Morgan Stanley Capital International EAFE Index+. In general,
markets overseas benefited from declining interest rates, positively sloped
yield curves, and very low levels of inflation. European markets as a whole
outperformed most other world markets. We also saw strong returns from Canada
and Southeast Asia. Pharmaceuticals, retail and technology were our favored
sectors in Europe, while in Southeast Asia we focused more on broad-based
conglomerates. In Canada, our holdings were generally name-specific rather than
industry focused.
Midyear, we added some exposure to Latin America. This was due to improved
economic performance and confirmation by the equity markets that they were ready
to move upward. Our primary emphasis in this region was on Mexico where we saw
the economy coming back strong after its fiscal and currency problems.
Going forward, we remain cautious about the Japanese market and expect to
maintain our underweighted position in that market during the first quarter of
1997. With many attractive companies, we may consider further increasing the
portfolio's weighting in Mexico and will continue to focus on European companies
that fill market niches and have pricing power.
Dennis Ferro
Portfolio Manager
December 31, 1996
+THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX IS AN UNMANAGED INDEX THAT
IS A GENERALLY ACCEPTED BENCHMARK FOR MAJOR OVERSEAS MARKETS.
SMALL CAP GROWTH PORTFOLIO
Small capitalization stocks generally underperformed their larger
counterparts during 1996. Investors became concerned about the ongoing strength
of the economy and turned to large, blue chip companies for their perceived
quality and liquidity. Despite these trends, the Small Cap Growth Portfolio
continued to post solid gains.
Stock picking and careful attention to valuations were key factors in the
portfolio's performance. Relying on fundamental research and our team of small
cap analysts, we were able to identify attractive growth opportunities and to
set price targets for both the buy and sell side. Health care (Dura
Pharmaceuticals, Steris, CRA Managed Care) and consumer stocks (MGM Grand,
Mohawk) led performance during the first half of the year. Financial stocks (PMI
Group, Cityscape) were also strong. A sell-off in technology stocks provided a
buying opportunity in July, allowing us to add to select positions at attractive
prices. Those stocks (Altera, Wind River Systems, Dupont Photomasks) contributed
good returns through the second half of the year. In both these areas we
continue to find attractive valuations, compelling management and excellent
fundamental stories.
Our outlook for 1997 is positive. Moderate growth and a stable interest
rate environment should create a favorable climate for small and emerging growth
stocks, although a strong economy is historically best for the small cap sector.
Given the relatively high prices at which large companies are currently trading,
we believe investors will soon recognize the more attractive prices and growth
potential offered in the small cap market.
Gary Langbaum
Portfolio Manager
December 31, 1996
INVESTMENT GRADE BOND PORTFOLIO
The Investment Grade Bond Portfolio was created in May 1996. As new funds
became available for investment, the portfolio's cash position was reduced in
favor of high grade corporate bonds. By the end of the year, a portion of the
portfolio had also been invested in high yield bonds, which provided additional
income potential for the portfolio.
At the portfolio's inception, the high grade market was struggling. From
May through August, interest rates fluctuated as investors tried to anticipate
changes in economic growth, inflation and the likelihood of an interest rate
tightening by the Federal Reserve Board. Although slightly volatile, interest
rates moved up and down within a somewhat narrow trading range. By September,
inflation was still under control and economic growth had begun to moderate,
which calmed investors' fears of an intervention by the Fed. From September
through the year's end, high grade and high yield corporate bonds enjoyed strong
performance.
Our outlook for the corporate market remains positive. We look for economic
growth to remain moderate and do not expect any meaningful inflationary
pressures to surface. We believe that if steps continue to be taken toward
balancing the budget, the market would benefit further.
Robert Cessine
Portfolio Manager
December 31, 1996
5
<PAGE> 7
MANAGEMENT SUMMARY
VALUE PORTFOLIO
The portfolio was able to capture most of the performance of the market for
the year, but also most of the volatility. The positions we held in financial
stocks (Federal National Mortgage Association and American International Group)
and oil stocks (Amoco and Atlantic Richfield) were driving forces in the
performance of this portfolio for 1996.
Going into 1997, we feel the portfolio is positioned well. It currently has
a defensive posture (oil, financial and consumer stocks) because we feel
inflation will turn out to be slightly higher than the consensus on Wall St. We
will also maintain a well diversified portfolio because we feel there will be
considerable volatility in the market.
Christian Bertelsen
Portfolio Manager
December 31, 1996
SMALL CAP VALUE PORTFOLIO
The Small Cap Value Portfolio posted solid gains from May through December
1996, even though large capitalization stocks generally dominated the market
throughout the period.
Stock picking was key to the portfolio's strong performance. Financial
stocks, which tend to trade at relatively low price to earnings ratios and often
provide yield as well, contributed consistent gains. In this area the portfolio
holds names like First Financial Caribbean Corp., Imperial Credit Industries and
PHH Corp. Energy stocks including KCS Energy, Nuevo Energy and Seitel, Inc. also
boosted the portfolio's return. A summer correction in the technology sector
created some buying opportunities. In this area we concentrated on quality
companies that offer strong earnings growth that we believe can withstand a
general downturn in the market. Although the portfolio's cable and retail
positions were less than spectacular, we are comfortable with their individual
stories and prospects and expect to continue holding them.
Our outlook for 1997 is positive. While the broad market may retreat from
its current high levels, we believe the Small Cap Value Portfolio is well
positioned for competitive performance in most climates--with the potential to
grow at a faster pace than its counterparts in an up market and to outperform
the market in the event of a downturn. Of course, there is no assumption that
our management strategy will be successful.
Christian Bertelsen
Steven Stokes
Portfolio Co-Managers
December 31, 1996
VALUE+GROWTH PORTFOLIO
In a strong year for the U.S. stock markets in general, the Value+Growth
Portfolio posted exceptional gains through detailed analysis and disciplined
emphasis on valuations.
Technology, financial and energy stocks were top performers on both the
growth and value sides of the portfolio. The portfolio's growth component
performed in line with the Russell 1000 Growth Index while the value component
strongly outperformed the Russell 1000 Value Index. Strong relative performance
on both sides of the portfolio--and a 60/40 bias toward growth stocks, which
generally outpaced value stocks through the year--boosted the portfolio's
overall performance for the period. Given the current high valuations of many
large company stocks, we've increased the portfolio's exposure to smaller
"mid-cap" companies that offer more compelling valuations and growth potential.
Looking ahead, we anticipate a slower economy, but not a recession.
Industrial production appears to be neutral, inflation should stay in check and
interest rates should remain relatively flat, although we may see a slight
decline. While this is a good environment for growth stocks, it is doubtful that
we will see the level of returns of the past two years. We will continue to
manage risk through diversification with an emphasis on valuation. Should the
economy pick up significantly, which we don't anticipate, we would be compelled
to shift the portfolio toward value stocks. At this time, however, we plan to
maintain a bias toward growth stocks.
Daniel J. Bukowski
Portfolio Manager
December 31, 1996
6
<PAGE> 8
MANAGEMENT SUMMARY
HORIZON 20+
HORIZON 10+
HORIZON 5 PORTFOLIOS
In 1996 the Horizon 20+, 10+ and 5 Portfolios accomplished their goal which
is to reduce volatility. However, it was not an ideal year to be diversified,
but a year that strongly favored large U.S. companies. Investments in assets
other than large company U.S. stocks acted as a drag on the portfolios.
Going into 1997 we feel that large U.S. companies will prevail again. With
that in mind, the allocations of the portfolios have been shifted to include
less international and small growth companies and more large growth companies.
Thomas M. Regner
Portfolio Manager
December 31, 1996
7
<PAGE> 9
PERFORMANCE UPDATE
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1)
- ------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR PORTFOLIO
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEMPER INVESTORS FUND
TOTAL RETURN PORTFOLIO 16.76% 8.70% 11.89% 13.37% (Since 3/5/82)
- ----------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund Total Return
Portfolio FROM 4/30/82 THROUGH 12/31/96
- -------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
4/30/82 12/31/85 12/31/90 12/31/96
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER INVESTORS FUND TOTAL
RETURN PORTFOLIO 10,000 17,821 30,153 63,100
- -------------------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX++ 10,000 19,574 35,870 94,867
- -------------------------------------------------------------------------------------------
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX### 10,000 21,229 35,098 63,942
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS(1)
- -------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEMPER INVESTORS FUND
HIGH YIELD PORTFOLIO 14.06% 13.09% 11.13% 13.70% (Since 3/5/82)
- --------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund High Yield
Portfolio FROM 4/30/82 THROUGH 12/31/96
- -------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
4/30/82 12/31/85 12/31/90 12/31/96
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER INVESTORS FUND HIGH
YIELD PORTFOLIO 10,000 19,485 23,428 65,796
- -------------------------------------------------------------------------------------------
SALOMON BROTHERS LONG TERM
HIGH YIELD BOND INDEX** 10,000 21,311 27,168 74,687
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS(1)
- -------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
KEMPER INVESTORS FUND
GROWTH PORTFOLIO 21.63% 13.01% 14.46% 14.65% (Since 12/9/83)
- --------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund Growth
Portfolio FROM 12/31/83 THROUGH 12/31/96
- -------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
12/31/83 12/31/85 12/31/90 12/31/96
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER INVESTORS FUND GROWTH
PORTFOLIO 10,000 13,866 19,859 58,368
- ----------------------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX++ 10,000 13,159 24,114 63,774
- ----------------------------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK
INDEX## 10,000 13,999 25,993 68,767
</TABLE>
(1) Returns measure change in the value of an investment in the underlying
Portfolio assuming reinvestment of all dividends. Average annual returns
reflect annualized results. Performance is net of the Portfolio's management
fee and other operating expenses but does not include any deduction at the
separate account or contract level for any charges that may be incurred
under a contract.
8
<PAGE> 10
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1)
- --------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER INVESTORS FUND
GOVERNMENT SECURITIES
PORTFOLIO 2.56% 6.00% 7.82% (Since 9/3/87)
- --------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund Government
Securities Portfolio FROM 9/30/87 THROUGH 12/31/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
9/30/87 12/31/90 12/31/93 12/31/96
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER INVESTORS FUND GOVERNMENT
SECURITIES PORTFOLIO 10,000 12,858 16,713 19,836
- ------------------------------------------------------------------------------------------------
SALOMON BROTHERS 30-YEAR GNMA INDEX* 10,000 14,434 19,208 22,852
</TABLE>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1)
- --------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO 16.49% 10.85% (Since 1/6/92)
- --------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
[LINE GRAPH]
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 Investment in Kemper Investors Fund International
portfolio FROM 1/31/92 THROUGH 12/31/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1/31/92 12/31/94 12/31/96
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER INVESTORS FUND
INTERNATIONAL PORTFOLIO 10,000 12,713 16,710
- ----------------------------------------------------------------------------------
EUROPE-AUSTRALASIA-FAR EAST
INDEX (EAFE INDEX)## 10,000 12,936 15,349
</TABLE>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1)
- --------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER INVESTORS FUND SMALL CAP
GROWTH PORTFOLIO 28.04% 22.98% (Since 5/2/94)
- --------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund Small Cap
Growth Portfolio FROM 5/31/94 THROUGH 12/31/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5/31/94 12/31/94 12/31/95 12/31/96
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER INVESTORS FUND SMALL CAP
GROWTH PORTFOLIO 10,000 10,366 13,484 17,265
- ------------------------------------------------------------------------------------------------
RUSSELL 2000 INDEX+++ 10,000 10,141 13,026 15,174
</TABLE>
(1) Returns measure change in the value of an investment in the underlying
Portfolio assuming reinvestment of all dividends. Average annual returns
reflect annualized results. Performance is net of the Portfolio's management
fee and other operating expenses but does not include any deduction at the
separate account or contract level for any charges that may be incurred
under a contract.
9
<PAGE> 11
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
TOTAL RETURN(1)
- --------------------------------------------------------------------------------
For the period ended December 31, 1996
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND INVESTMENT GRADE BOND
PORTFOLIO 3.57% (Since 5/1/96)
- --------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund Investment
Grade Bond Portfolio FROM 5/1/96 THROUGH 12/31/96
- -------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
5/1/96 12/31/96
- -------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND
INVESTMENT GRADE BOND PORTFOLIO 10,000 10,357
- -------------------------------------------------------------------------
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX### 10,000 10,610
</TABLE>
- --------------------------------------------------------------------------------
TOTAL RETURN(1)
- --------------------------------------------------------------------------------
For the period ended December 31, 1996
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- -------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND VALUE PORTFOLIO 17.36% (Since 5/1/96)
- -------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund Value
Portfolio FROM 5/1/96 THROUGH 12/31/96
- -------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
5/1/96 12/31/96
- -------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND VALUE PORTFOLIO 10,000 11,736
- -------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX# 10,000 11,499
</TABLE>
- --------------------------------------------------------------------------------
TOTAL RETURN(1)
- --------------------------------------------------------------------------------
For the period ended December 31, 1996
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND
SMALL CAP VALUE PORTFOLIO 1.86% (Since 5/1/96)
- --------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in Kemper Investors Fund Small Cap
Value Portfolio FROM 5/1/96 THROUGH 12/31/96
- -------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
5/1/96 12/31/96
- -------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND
SMALL CAP VALUE PORTFOLIO 10,000 10,186
- -------------------------------------------------------------------------
RUSSELL 2000 INDEX### 10,000 10,521
</TABLE>
(1) Returns measure change in the value of an investment in the underlying
Portfolio assuming reinvestment of all dividends. Average annual returns
reflect annualized results. Performance is net of the Portfolio's management
fee and other operating expenses but does not include any deduction at the
separate account or contract level for any charges that may be incurred
under a contract.
10
<PAGE> 12
PERFORMANCE UPDATE
- -------------------------------------------------------------------------------
TOTAL RETURN(1)
- -------------------------------------------------------------------------------
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND VALUE+GROWTH
PORTFOLIO 14.60% (Since 5/1/96)
- --------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
[LINE GRAPH]
- --------------------------------------------------------------------------
Growth of an assumed $10,000 Investment in Kemper Investors Fund Value+
Growth Portfolio FROM 5/1/96 THROUGH 12/31/96
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
5/1/96 12/31/96
- -------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND VALUE+GROWTH PORTFOLIO 10,000 11,460
- -------------------------------------------------------------------------------
RUSSELL 1000 INDEX+ 10,000 11,431
</TABLE>
- -------------------------------------------------------------------------------
TOTAL RETURN(1)
- -------------------------------------------------------------------------------
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND
HORIZON 20+ PORTFOLIO 15.37% (Since 5/1/96)
- --------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- --------------------------------------------------------------------------
Growth of an assumed $10,000 Investment in Kemper Investors Fund Horizon 20+
Portfolio FROM 5/1/96 THROUGH 12/31/96
- --------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
5/1/96 12/31/96
- -------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND HORIZON 20+ PORTFOLIO 10,000 11,537
- -------------------------------------------------------------------------------
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX### 10,000 10,610
- -------------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX# 10,000 11,499
</TABLE>
- -------------------------------------------------------------------------------
TOTAL RETURN(1)
- -------------------------------------------------------------------------------
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND HORIZON 10+
PORTFOLIO 11.37% (Since 5/1/96)
- --------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
- --------------------------------------------------------------------------
Growth of an assumed $10,000 Investment in Kemper Investors Fund Horizon
10+ Portfolio FROM 5/1/96 THROUGH 12/31/96
- --------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
5/1/96 12/31/96
- -------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND HORIZON 10+ PORTFOLIO 10,000 11,137
- -------------------------------------------------------------------------------
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX### 10,000 10,610
- -------------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX# 10,000 11,499
</TABLE>
(1) Returns measure change in the value of an investment in the underlying
Portfolio assuming reinvestment of all dividends. Average annual returns
reflect annualized results. Performance is net of the Portfolio's management
fee and other operating expenses but does not include any deduction at the
separate account or contract level for any charges that may be incurred
under a contract.
11
<PAGE> 13
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
TOTAL RETURN(1)
- --------------------------------------------------------------------------------
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND HORIZON 5 PORTFOLIO 9.59% (Since 5/1/96)
- --------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and principal
values fluctuate so that shares, when redeemed, may be worth more or less than
original cost.
[LINE GRAPH]
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 Investment in Kemper Investors Fund Horizon 5
Portfolio FROM 5/1/96 THROUGH 12/31/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5/1/96 12/31/96
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INVESTORS FUND HORIZON 5 PORTFOLIO 10,000 10,959
- --------------------------------------------------------------------------------
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX### 10,000 10,610
- --------------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX# 10,000 11,499
</TABLE>
+ The Russell 1000 Index is an unmanaged capitalization weighted price
only index comprised of the largest capitalized U.S. companies whose
common stocks are traded in the United States. This large
capitalization market oriented index is highly correlated with the S&P
500 Stock Index.
++ The Russell 1000 Growth Index is an unmanaged index comprised of
common stock of larger U.S. companies with greater than average growth
orientation and represents the universe of stocks from which
"earnings/growth" money managers typically select.
+++ The Russell 2000 Index is a capitalization weighted price only index
which is comprised of 2000 of the smallest stocks (on the basis of
capitalization) in the Russell 3000 Index. The largest company in the
index has an approximate market cap of $591 million.
# The Standard & Poor's 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market.
## The EAFE Index (Morgan Stanley Capital International Europe, Australasia,
Far East Index) is an unmanaged index generally accepted as a benchmark
for major overseas markets.
### The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
comprised of intermediate and long-term government and investment grade
corporate debt securities.
* The Salomon Brothers 30-Year GNMA Index is unmanaged, is on a total
return basis with all dividends reinvested and is comprised of GNMA
30-year pass throughs of single family and graduated payment mortgages.
In order for a GNMA coupon to be included in the index, it must have at
least $200 million of outstanding coupon product.
** The Salomon Brothers Long-Term High Yield Bond Index is on a total
return basis with all dividends reinvested and is comprised of high
yield bonds with a par value of $50 million or higher and a remaining
maturity of ten years or longer rated BB+ or lower by Standard &
Poor's Corporation or Ba1 or lower by Moody's Investors Service, Inc.
This index is unmanaged.
12
<PAGE> 14
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER INVESTORS FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of the Money Market, Total Return, High
Yield, Growth, Government Securities, International, Small Cap Growth,
Investment Grade Bond, Value, Small Cap Value, Value+Growth, Horizon 20+,
Horizon 10+ and Horizon 5 Portfolios, comprising the Kemper Investors Fund as of
December 31, 1996, the related statements of operations for the year then ended
and changes in net assets for each of the two years in the period then ended for
the Money Market, Total Return, High Yield, Growth, Government Securities,
International and Small Cap Growth Portfolios and the related statements of
operations and changes in net assets for the period from May 1, 1996
(commencement of operations) to December 31, 1996 for the Investment Grade Bond,
Value, Small Cap Value, Value+Growth, Horizon 20+, Horizon 10+, and Horizon 5
Portfolios, and the financial highlights for the fiscal periods since 1992.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the Portfolios of Kemper Investors Fund at December 31, 1996, the
results of their operations, the changes in their net assets and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 14, 1997
13
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
MONEY TOTAL HIGH GOVERNMENT
MARKET RETURN YIELD GROWTH SECURITIES INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $71,225,
$615,420, $275,528, $459,172, $100,612,
$132,888, $63,082, $1,964, $19,871, $12,503,
$9,330, $3,475, $5,278 and $2,410,
respectively): $71,225 697,850 284,341 492,138 101,634 162,545
- --------------------------------------------------------------------------------------------------------------------------
Cash 4 -- 153 1,261 -- 384
- --------------------------------------------------------------------------------------------------------------------------
Receivable for:
Investments sold -- 2,354 40 5,554 2,046 954
- --------------------------------------------------------------------------------------------------------------------------
Portfolio shares sold 361 249 584 145 39 94
- --------------------------------------------------------------------------------------------------------------------------
Interest and dividends 138 5,650 5,692 193 810 209
- --------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 71,728 706,103 290,810 499,291 104,529 164,186
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
Cash overdraft -- 791 -- -- 1,456 --
- --------------------------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased -- 3,287 553 8,650 18,340 --
- --------------------------------------------------------------------------------------------------------------------------
Portfolio shares redeemed 899 4,543 756 2,864 342 523
- --------------------------------------------------------------------------------------------------------------------------
Dividends 143 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Management fee 32 321 143 241 39 103
- --------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and
related expenses 3 21 14 21 14 59
- --------------------------------------------------------------------------------------------------------------------------
Other 50 38 29 32 24 26
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,127 9,001 1,495 11,808 20,215 711
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS $70,601 697,102 289,315 487,483 84,314 163,475
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
Paid-in capital $70,601 507,950 283,159 338,706 73,298 124,087
- --------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on
investments and foreign currency transactions -- 85,424 (21,460) 110,059 (5,008) 6,755
- --------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and
assets and liabilities in foreign currencies -- 82,430 8,813 32,966 1,022 29,894
- --------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- 21,298 18,803 5,752 15,002 2,739
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $70,601 697,102 289,315 487,483 84,314 163,475
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------------------------------------------------------
Shares outstanding 70,601 247,603 225,904 144,606 69,839 104,504
- --------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share
(net assets / shares outstanding) $1.00 2.815 1.281 3.371 1.207 1.564
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
14
<PAGE> 16
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SMALL INVESTMENT SMALL
CAP GRADE CAP VALUE+
GROWTH BOND VALUE VALUE GROWTH HORIZON 20+ HORIZON 10+ HORIZON 5
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C>
71,331 1,965 21,268 13,247 9,968 3,721 5,597 2,504
- ------------------------------------------------------------------------------------------------------
537 111 441 493 407 131 59 --
- ------------------------------------------------------------------------------------------------------
-- -- -- 72 -- -- -- --
- ------------------------------------------------------------------------------------------------------
105 4 84 81 21 4 35 19
- ------------------------------------------------------------------------------------------------------
8 27 31 28 12 13 41 24
- ------------------------------------------------------------------------------------------------------
71,981 2,107 21,824 13,921 10,408 3,869 5,732 2,547
- ------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- 11
- ------------------------------------------------------------------------------------------------------
2,719 108 486 598 204 107 -- --
- ------------------------------------------------------------------------------------------------------
71 -- 12 7 2 1 1 --
- ------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------
36 1 13 8 6 2 3 1
- ------------------------------------------------------------------------------------------------------
6 -- 7 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------
12 -- 1 1 -- -- 1 1
- ------------------------------------------------------------------------------------------------------
2,844 109 519 614 212 110 5 13
- ------------------------------------------------------------------------------------------------------
69,137 1,998 21,305 13,307 10,196 3,759 5,727 2,534
- ------------------------------------------------------------------------------------------------------
52,074 1,936 19,457 12,545 9,428 3,463 5,308 2,384
- ------------------------------------------------------------------------------------------------------
8,370 2 181 (154) 61 11 6 2
- ------------------------------------------------------------------------------------------------------
8,249 1 1,397 744 638 246 319 94
- ------------------------------------------------------------------------------------------------------
444 59 270 172 69 39 94 54
- ------------------------------------------------------------------------------------------------------
69,137 1,998 21,305 13,307 10,196 3,759 5,727 2,534
- ------------------------------------------------------------------------------------------------------
41,235 1,929 18,154 13,064 8,896 3,258 5,142 2,313
- ------------------------------------------------------------------------------------------------------
1.677 1.036 1.174 1.019 1.146 1.154 1.114 1.096
- ------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
MONEY TOTAL HIGH GOVERNMENT
MARKET RETURN YIELD GROWTH SECURITIES INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------------------------------------------------
Interest $4,143 19,431 26,881 3,090 6,837 320
- --------------------------------------------------------------------------------------------------------------------------
Dividends -- 6,023 105 3,920 -- 2,889
- --------------------------------------------------------------------------------------------------------------------------
4,143 25,454 26,986 7,010 6,837 3,209
- --------------------------------------------------------------------------------------------------------------------------
Less foreign taxes withheld -- -- -- -- -- 321
- --------------------------------------------------------------------------------------------------------------------------
Total investment income 4,143 25,454 26,986 7,010 6,837 2,888
- --------------------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 376 3,691 1,565 2,658 485 1,174
- --------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and
related expenses 19 86 56 88 60 280
- --------------------------------------------------------------------------------------------------------------------------
Professional fees 10 68 26 42 10 18
- --------------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 50 91 42 62 23 28
- --------------------------------------------------------------------------------------------------------------------------
Total expenses before expense absorption 455 3,936 1,689 2,850 578 1,500
- --------------------------------------------------------------------------------------------------------------------------
Less expenses absorbed by investment manager -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total expenses after expense absorption 455 3,936 1,689 2,850 578 1,500
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 3,688 21,518 25,297 4,160 6,259 1,388
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on sales of
investments and foreign currency
transactions (850) 86,269 730 111,045 (342) 7,804
- --------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from futures
transactions -- 65 (19) -- (185) --
- --------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (850) 86,334 711 111,045 (527) 7,804
- --------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) on investments and assets and
liabilities in foreign currencies 850 (4,464) 9,092 (29,470) (3,644) 14,086
- --------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments -- 81,870 9,803 81,575 (4,171) 21,890
- --------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $3,688 103,388 35,100 85,735 2,088 23,278
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from May 1, 1996 (commencement of operations) to December 31,
1996.
See accompanying Notes to Financial Statements.
16
<PAGE> 18
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SMALL INVESTMENT
CAP GRADE SMALL CAP VALUE+
GROWTH BOND VALUE VALUE GROWTH HORIZON 20+ HORIZON 10+ HORIZON 5
PORTFOLIO PORTFOLIO(A) PORTFOLIO(A) PORTFOLIO(A) PORTFOLIO(A) PORTFOLIO(A) PORTFOLIO(A) PORTFOLIO(A)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
377 36 67 57 10 15 50 31
- ----------------------------------------------------------------------------------------------------------------------
98 -- 129 85 45 12 15 5
- ----------------------------------------------------------------------------------------------------------------------
475 36 196 142 55 27 65 36
- ----------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
475 36 196 142 55 27 65 36
- ----------------------------------------------------------------------------------------------------------------------
340 4 44 33 22 6 11 5
- ----------------------------------------------------------------------------------------------------------------------
37 1 8 7 7 5 7 3
- ----------------------------------------------------------------------------------------------------------------------
4 -- 1 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
15 1 1 1 1 1 1 --
- ----------------------------------------------------------------------------------------------------------------------
396 6 54 41 30 12 19 8
- ----------------------------------------------------------------------------------------------------------------------
-- -- 1 1 3 3 4 1
- ----------------------------------------------------------------------------------------------------------------------
396 6 53 40 27 9 15 7
- ----------------------------------------------------------------------------------------------------------------------
79 30 143 102 28 18 50 29
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
8,533 2 181 (154) 61 11 6 2
- ----------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
8,533 2 181 (154) 61 11 6 2
- ----------------------------------------------------------------------------------------------------------------------
3,586 1 1,397 744 638 246 319 94
- ----------------------------------------------------------------------------------------------------------------------
12,119 3 1,578 590 699 257 325 96
- ----------------------------------------------------------------------------------------------------------------------
12,198 33 1,721 692 727 275 375 125
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 19
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
MONEY MARKET TOTAL RETURN
PORTFOLIO PORTFOLIO
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
OPERATIONS
- ---------------------------------------------------------------------------------------------------
Net investment income $ 3,688 4,123 21,518 22,128
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) (850) -- 86,334 47,119
- ---------------------------------------------------------------------------------------------------
Change in unrealized appreciation 850 (355) (4,464) 74,735
- ---------------------------------------------------------------------------------------------------
Capital contribution from investment manager -- 355 -- --
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,688 4,123 103,388 143,982
- ---------------------------------------------------------------------------------------------------
Equalization credits (charges) -- -- (891) (1,827)
- ---------------------------------------------------------------------------------------------------
Distribution from net investment income (3,688) (4,123) (22,873) (18,740)
- ---------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments -- -- (20,332) --
- ---------------------------------------------------------------------------------------------------
Total dividends to shareholders (3,688) (4,123) (43,205) (18,740)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share transactions 9,523 (22,743) (22,084) (50,115)
- ---------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 9,523 (22,743) 37,208 73,300
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 61,078 83,821 659,894 586,594
- ---------------------------------------------------------------------------------------------------
END OF YEAR $70,601 61,078 697,102 659,894
- ---------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF YEAR $ -- -- 21,298 23,521
- ---------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM MAY 1, 1996 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
INVESTMENT
GRADE BOND VALUE
PORTFOLIO PORTFOLIO
<S> <C> <C>
- ------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income $ 30 143
- ------------------------------------------------------------------------------------------
Net realized gain (loss) 2 181
- ------------------------------------------------------------------------------------------
Change in unrealized appreciation 1 1,397
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 33 1,721
- ------------------------------------------------------------------------------------------
Equalization credits 29 127
- ------------------------------------------------------------------------------------------
Net increase from capital share transactions 1,836 19,357
- ------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,898 21,205
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------
Beginning of period 100 100
- ------------------------------------------------------------------------------------------
END OF PERIOD $1,998 21,305
- ------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD $ 59 270
- ------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 20
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
HIGH YIELD GROWTH GOVERNMENT INTERNATIONAL SMALL CAP
PORTFOLIO PORTFOLIO SECURITIES PORTFOLIO PORTFOLIO GROWTH PORTFOLIO
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25,297 25,037 4,160 4,087 6,259 6,923 1,388 1,758 79 97
- -------------------------------------------------------------------------------------------------------------------
711 (2,027) 111,045 58,852 (527) 2,908 7,804 1,344 8,533 1,186
- -------------------------------------------------------------------------------------------------------------------
9,092 15,859 (29,470) 36,452 (3,644) 7,318 14,086 12,368 3,586 4,361
- -------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
35,100 38,869 85,735 99,391 2,088 17,149 23,278 15,470 12,198 5,644
- -------------------------------------------------------------------------------------------------------------------
(2,891) 36 409 249 (1,240) (2,310) (121) (37) 138 97
- -------------------------------------------------------------------------------------------------------------------
(24,806) (22,165) (5,021) (1,120) (6,507) (6,202) (2,012) (970) -- (76)
- -------------------------------------------------------------------------------------------------------------------
-- -- (58,999) (24,649) -- -- (1,044) (1,941) (1,209) --
- -------------------------------------------------------------------------------------------------------------------
(24,806) (22,165) (64,020) (25,769) (6,507) (6,202) (3,056) (2,911) (1,209) (76)
- -------------------------------------------------------------------------------------------------------------------
24,535 21,222 50,826 18,954 (5,212) (9,234) 8,893 (751) 22,637 16,799
- -------------------------------------------------------------------------------------------------------------------
31,938 37,962 72,950 92,825 (10,871) (597) 28,994 11,771 33,764 22,464
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
257,377 219,415 414,533 321,708 95,185 95,782 134,481 122,710 35,373 12,909
- -------------------------------------------------------------------------------------------------------------------
289,315 257,377 487,483 414,533 84,314 95,185 163,475 134,481 69,137 35,373
- -------------------------------------------------------------------------------------------------------------------
18,803 21,194 5,752 6,191 15,002 16,486 2,739 2,592 444 224
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP
VALUE VALUE+GROWTH HORIZON 20+ HORIZON 10+ HORIZON 5
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
102 28 18 50 29
- --------------------------------------------------------------------------------
(154) 61 11 6 2
- --------------------------------------------------------------------------------
744 638 246 319 94
- --------------------------------------------------------------------------------
692 727 275 375 125
- --------------------------------------------------------------------------------
70 41 21 44 25
- --------------------------------------------------------------------------------
12,445 9,328 3,363 5,208 2,284
- --------------------------------------------------------------------------------
13,207 10,096 3,659 5,627 2,434
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
100 100 100 100 100
- --------------------------------------------------------------------------------
13,307 10,196 3,759 5,727 2,534
- --------------------------------------------------------------------------------
172 69 39 94 54
- --------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 21
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 fourteen Portfolios.
On May 1, 1996 the Equity Portfolio and Small
Capitalization Equity Portfolio changed their names
to the Growth Portfolio and Small Cap Growth
Portfolio, respectively.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES INVESTMENT VALUATION.
Investments are stated at value.
The securities of the Portfolios (excluding the
Money Market Portfolio) 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, 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. Over-the-counter
traded fixed income options are valued based upon
prices provided by market makers. 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
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
last quoted by a recognized dealer. If such
quotations are not readily available, the rates of
exchange are 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 rates 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) on investments.
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 discount amortization on all fixed income
securities and premium amortization on
mortgage-backed securities and money market
instruments. Realized gains and losses from
investment transactions are reported on an
identified cost basis.
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 segregate cash or
other liquid assets equal to the value of the
securities purchased. At December 31, 1996, the
Government Securities Portfolio had $16,317,000 of
purchase commitments outstanding (19% of net
assets) with a corresponding amount of assets
segregated.
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 all Portfolios, and additionally
at 11:00 a.m. Chicago time 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. Each Portfolio has complied
with the special provisions of the Internal Revenue
Code available to investment companies and
therefore no federal income tax provision is
required. The
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
accumulated net realized loss on sales of
investments for federal income tax purposes at
December 31, 1996 amounted to approximately
$21,430,000 in the High Yield Portfolio, $4,431,000
in the Government Securities Portfolio and $40,000
in the Small Cap Value Portfolio. These losses are
available to offset future taxable gains in the
respective Portfolios and, if not applied, expire
during the period 1998 through 2005.
DIVIDENDS TO SHAREHOLDERS. All Portfolios, except
the Money Market Portfolio, declare and pay
dividends of net investment income and net realized
capital gains annually, which are recorded on the
ex-dividend date. 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.
Dividends are determined in accordance with income
tax principles which may treat certain transactions
differently from generally accepted accounting
principles. These differences are primarily due to
differing treatments for certain transactions such
as foreign currency transactions, if applicable.
EQUALIZATION ACCOUNTING. A portion of proceeds from
sales and cost of redemptions of Fund shares in all
Portfolios except the Money Market Portfolio 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.
- --------------------------------------------------------------------------------
3 TRANSACTIONS
WITH AFFILIATES The Fund has a management agreement with Zurich
Kemper Investments, Inc. (ZKI), the Fund's
investment manager for each Portfolio except the
Value and Small Cap Value Portfolios. 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,
Growth, Investment Grade Bond, Horizon 20+, Horizon
10+ and Horizon 5 Portfolios, .65% for the Small
Cap Growth Portfolio and .75% for the International
and Value+Growth Portfolios. Dreman Value Advisors,
Inc. (DVA), a wholly owned subsidiary of ZKI,
serves as the investment manager for the Value and
the Small Cap Value Portfolios and is paid a
management fee at an annual rate of .75% of average
daily net assets of such Portfolios. DVA also
serves as sub-adviser for the Value+Growth and
Horizon Portfolios, and is paid by ZKI for its
services. Zurich Investment Management Limited, an
affiliate of ZKI, serves as sub-adviser with
respect to foreign securities investments in the
applicable portfolios, and is paid by ZKI for its
services. For the year ended December 31, 1996, the
Fund incurred management fees of $10,414,000.
Kemper Distributors, Inc., an affiliate of ZKI, is
the distributor and principal underwriter for
shares of the Fund.
ZKI agreed to absorb certain operating expenses of
the following portfolios through December 31, 1996:
Investment Grade Bond, Value, Small Cap Value,
Value+Growth, Horizon 20+, Horizon 10+ and Horizon
5
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
Portfolios. Under this arrangement, ZKI absorbed
expenses of $13,000 for the period ended December
31, 1996.
Certain officers or trustees of the Fund are also
officers or directors of ZKI or DVA. During the
year ended December 31, 1996, the Fund made no
direct payments to its officers and incurred
trustees' fees of $182,000 to independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended December 31, 1996, investment
transactions (excluding short-term investments) are
as follows (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
PURCHASES FROM SALES
--------- ----------
<S> <C> <C>
Total Return Portfolio $625,164 $664,125
High Yield Portfolio 331,662 294,418
Growth Portfolio 727,992 715,730
Government Securities Portfolio 321,712 316,613
International Portfolio 161,743 142,343
Small Cap Growth Portfolio 100,192 80,205
</TABLE>
For the period from May 1, 1996 to December 31,
1996, investment transactions (excluding short-term
investments) are as follows (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
PURCHASES FROM SALES
--------- ----------
<S> <C> <C>
Investment Grade Bond Portfolio $ 1,731 $ 168
Value Portfolio 20,008 3,609
Small Cap Value Portfolio 13,568 2,856
Value+Growth Portfolio 10,385 1,115
Horizon 20+ Portfolio 4,107 743
Horizon 10+ Portfolio 6,714 1,442
Horizon 5 Portfolio 2,432 124
</TABLE>
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following tables summarize the activity in
capital shares of each Portfolio of the Fund (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
MONEY MARKET PORTFOLIO
Shares sold 149,223 $ 149,223 122,960 $ 122,960
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 3,704 3,704 4,191 4,191
------------------------------------------------------------------------------
152,927 152,927 127,151 127,151
------------------------------------------------------------------------------
Shares redeemed (143,404) (143,404) (149,894) (149,894)
------------------------------------------------------------------------------
Net increase (decrease) from
capital share transactions 9,523 $ 9,523 (22,743) $ (22,743)
------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------
TOTAL RETURN PORTFOLIO
Shares sold 36,913 $ 94,083 35,774 $ 81,265
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 17,682 43,205 8,512 18,740
------------------------------------------------------------------------------
54,595 137,288 44,286 100,005
------------------------------------------------------------------------------
Shares redeemed (62,870) (159,372) (66,098) (150,120)
------------------------------------------------------------------------------
Net decrease from capital share
transactions (8,275) $ (22,084) (21,812) $ (50,115)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO
Shares sold 101,227 $ 118,182 74,793 $ 84,004
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 21,456 24,806 19,366 22,165
------------------------------------------------------------------------------
122,683 142,988 94,159 106,169
------------------------------------------------------------------------------
Shares redeemed (101,236) (118,453) (74,907) (84,947)
------------------------------------------------------------------------------
Net increase from capital share
transactions 21,447 $ 24,535 19,252 $ 21,222
------------------------------------------------------------------------------
------------------------------------------------------------------------------
GROWTH PORTFOLIO
Shares sold 33,305 $ 104,951 40,308 $ 117,495
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 22,196 64,020 9,679 25,769
------------------------------------------------------------------------------
55,501 168,971 49,987 143,264
------------------------------------------------------------------------------
Shares redeemed (37,981) (118,145) (43,622) (124,310)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 17,520 $ 50,826 6,365 $ 18,954
------------------------------------------------------------------------------
------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
Shares sold 11,632 $ 10,799 38,793 $ 36,895
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 5,657 6,507 5,447 6,202
------------------------------------------------------------------------------
17,289 17,306 44,240 43,097
------------------------------------------------------------------------------
Shares redeemed (22,442) (22,518) (53,140) (52,331)
------------------------------------------------------------------------------
Net decrease from capital share
transactions (5,153) $ (5,212) (8,900) $ (9,234)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIO
Shares sold 41,003 $ 59,682 29,450 $ 37,549
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 2,155 3,056 2,361 2,911
------------------------------------------------------------------------------
43,158 62,738 31,811 40,460
------------------------------------------------------------------------------
Shares redeemed (36,773) (53,845) (32,312) (41,211)
------------------------------------------------------------------------------
Net increase (decrease) from
capital share transactions 6,385 $ 8,893 (501) $ (751)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
SMALL CAP GROWTH PORTFOLIO
Shares sold 28,558 $ 43,316 22,379 $ 26,856
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 840 1,209 71 76
------------------------------------------------------------------------------
29,398 44,525 22,450 26,932
------------------------------------------------------------------------------
Shares redeemed (14,446) (21,888) (8,586) (10,133)
------------------------------------------------------------------------------
Net increase from capital share
transactions 14,952 $ 22,637 13,864 $ 16,799
------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MAY 1 TO
DECEMBER 31, 1996
-------------------
SHARES AMOUNT
<S> <C> <C>
----------------------------------------------------------------------------
INVESTMENT GRADE BOND PORTFOLIO
Shares sold 1,962 $ 1,970
----------------------------------------------------------------------------
Shares redeemed (133) (134)
----------------------------------------------------------------------------
Net increase from capital share transactions 1,829 $ 1,836
----------------------------------------------------------------------------
----------------------------------------------------------------------------
VALUE PORTFOLIO
Shares sold 18,543 $19,897
----------------------------------------------------------------------------
Shares redeemed (489) (540)
----------------------------------------------------------------------------
Net increase from capital share transactions 18,054 $19,357
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SMALL CAP VALUE PORTFOLIO
Shares sold 13,865 $13,311
----------------------------------------------------------------------------
Shares redeemed (901) (866)
----------------------------------------------------------------------------
Net increase from capital share transactions 12,964 $12,445
----------------------------------------------------------------------------
----------------------------------------------------------------------------
VALUE+GROWTH PORTFOLIO
Shares sold 9,367 $ 9,935
----------------------------------------------------------------------------
Shares redeemed (571) (607)
----------------------------------------------------------------------------
Net increase from capital share transactions 8,796 $ 9,328
----------------------------------------------------------------------------
----------------------------------------------------------------------------
HORIZON 20+ PORTFOLIO
Shares sold 3,249 $ 3,460
----------------------------------------------------------------------------
Shares redeemed (91) (97)
----------------------------------------------------------------------------
Net increase from capital share transactions 3,158 $ 3,363
----------------------------------------------------------------------------
----------------------------------------------------------------------------
HORIZON 10+ PORTFOLIO
Shares sold 5,200 $ 5,375
----------------------------------------------------------------------------
Shares redeemed (158) (167)
----------------------------------------------------------------------------
Net increase from capital share transactions 5,042 $ 5,208
----------------------------------------------------------------------------
----------------------------------------------------------------------------
HORIZON 5 PORTFOLIO
Shares sold 2,326 $ 2,399
----------------------------------------------------------------------------
Shares redeemed (113) (115)
----------------------------------------------------------------------------
Net increase from capital share transactions 2,213 $ 2,284
----------------------------------------------------------------------------
</TABLE>
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6 FINANCIAL FUTURES
CONTRACTS The Government Securities Portfolio has entered
into exchange traded financial futures contracts in
order to help protect itself from anticipated
market conditions and, as such, bears the risk that
arises from entering into these contracts. At the
time a Portfolio enters into a futures contract, it
is required to make a margin deposit with its
custodian. Subsequently, gain or loss is recognized
and payments are made on a daily basis between the
Portfolio and the broker as the market value of the
futures contract fluctuates. At December 31, 1996,
the market value of assets pledged by the Portfolio
to cover margin requirements for open futures
positions was $825,000. In addition, the Portfolio
had sufficient assets segregated at the custodian
to cover its obligation under the following futures
contracts expiring in March, 1997.
<TABLE>
<CAPTION>
FACE GAIN (LOSS) AT
TYPE AMOUNT POSITION 12/31/96
---------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury
Securities $3,646,000 Long $(45,000)
---------------------------------------------------------------------
U.S. Treasury
Securities 7,422,000 Short 57,000
---------------------------------------------------------------------
Total $ 12,000
---------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
7 FORWARD FOREIGN
CURRENCY CONTRACTS In order to protect itself against a decline in the
value of a particular foreign currency against the
U.S. Dollar, the International Portfolio has
entered into a forward contract 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 net unrealized gain on this
contract is reflected in the accompanying financial
statements. The Portfolio also bears the credit
risk if the counterparty fails to perform under the
contract. At December 31, 1996, the Portfolio had
the following forward foreign currency contract
outstanding with a settlement date in January,
1997:
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY AMOUNT IN GAIN AT
TO BE DELIVERED U.S. DOLLARS 12/31/96
------------------------------------------------------------------
<S> <C> <C>
906,400,000 Japanese Yen $8,092,000 $239,000
------------------------------------------------------------------
</TABLE>
26
<PAGE> 28
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------
MONEY MARKET PORTFOLIO
----------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------
Net investment income and dividends
declared .05 .06 .04 .03 .03
- ------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------
TOTAL RETURN 5.03% 5.66 3.96 2.83 3.43
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses .60% .55 .53 .56 .57
- ------------------------------------------------------------------------------------------
Net investment income 4.90% 5.52 3.95 2.79 3.38
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $70,601 61,078 83,821 68,177 75,270
- ------------------------------------------------------------------------------------------
</TABLE>
NOTES TO MONEY MARKET PORTFOLIO
The total returns for 1995 and 1994 include the effect of a capital contribution
from the investment manager. Without the capital contribution, the total returns
would have been 5.11% and 3.47%, respectively.
<TABLE>
<CAPTION>
--------------------------------------------------
TOTAL RETURN PORTFOLIO
--------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 2.579 2.112 2.586 2.473 2.658
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .084 .084 .069 .069 .061
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .322 .453 (.313) .214 (.026)
- -----------------------------------------------------------------------------------------------
Total from investment operations .406 .537 (.244) .283 .035
- -----------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .090 .070 .060 .050 .080
- -----------------------------------------------------------------------------------------------
Distribution from net realized gain .080 -- .170 .120 .140
- -----------------------------------------------------------------------------------------------
Total dividends .170 .070 .230 .170 .220
- -----------------------------------------------------------------------------------------------
Net asset value, end of year $ 2.815 2.579 2.112 2.586 2.473
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 16.76% 25.97 (9.50) 12.13 1.69
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses .59% .60 .61 .59 .60
- -----------------------------------------------------------------------------------------------
Net investment income 3.21% 3.52 3.13 3.19 3.41
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $697,102 659,894 586,594 643,830 528,007
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 90% 118 128 191 160
- -----------------------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions for the year ended December 31,
1996 was $.0574.
- -----------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 29
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------------------------
HIGH YIELD PORTFOLIO
---------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.259 1.185 1.338 1.209 1.144
- ----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .120 .125 .116 .120 .125
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .042 .069 (.149) .109 .070
- ----------------------------------------------------------------------------------------------------
Total from investment operations .162 .194 (.033) .229 .195
- ----------------------------------------------------------------------------------------------------
Less distribution from net investment income .140 .120 .120 .100 .130
- ----------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.281 1.259 1.185 1.338 1.209
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN 14.06% 17.40 (2.25) 20.00 17.76
- ----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------------
Expenses .65% .65 .65 .63 .64
- ----------------------------------------------------------------------------------------------------
Net investment income 9.70% 10.27 9.49 9.54 10.44
- ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $289,315 257,377 219,415 233,964 162,158
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate 98% 90 98 84 57
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
GROWTH PORTFOLIO
--------------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 3.262 2.665 2.935 2.631 2.642
- ----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .030 .034 .018 .004 .007
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .589 .793 (.138) .370 .082
- ----------------------------------------------------------------------------------------------------
Total from investment operations .619 .827 (.120) .374 .089
- ----------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .040 .010 -- .010 .005
- ----------------------------------------------------------------------------------------------------
Distribution from net realized gain .470 .220 .150 .060 .095
- ----------------------------------------------------------------------------------------------------
Total dividends .510 .230 .150 .070 .100
- ----------------------------------------------------------------------------------------------------
Net asset value, end of year $ 3.371 3.262 2.665 2.935 2.631
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN 21.63% 32.97 (4.02) 14.63 3.57
- ----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------------
Expenses .64% .64 .66 .64 .64
- ----------------------------------------------------------------------------------------------------
Net investment income .94% 1.15 .69 .30 .65
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $487,483 414,533 321,708 284,461 203,624
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate 175% 88 106 78 78
- ----------------------------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions for the year ended December 31, 1996
was $.0558.
- ----------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 30
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-----------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
-----------------------------------------------
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.269 1.142 1.267 1.277 1.287
- -------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .085 .084 .067 .060 .064
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (.057) .123 (.102) .020 .006
- -------------------------------------------------------------------------------------------
Total from investment operations .028 .207 (.035) .080 .070
- -------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .090 .080 .060 .060 .050
- -------------------------------------------------------------------------------------------
Distribution from net realized gain -- -- .030 .030 .030
- -------------------------------------------------------------------------------------------
Total dividends .090 .080 .090 .090 .080
- -------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.207 1.269 1.142 1.267 1.277
- -------------------------------------------------------------------------------------------
TOTAL RETURN 2.56% 18.98 (2.74) 6.48 5.90
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses .66% .65 .63 .60 .61
- -------------------------------------------------------------------------------------------
Net investment income 7.09% 7.08 5.69 5.05 6.08
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $84,314 95,185 95,782 121,912 98,814
- -------------------------------------------------------------------------------------------
Portfolio turnover rate 325% 275 606 534 492
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------
INTERNATIONAL PORTFOLIO
-------------------------------------------------
JANUARY 6
TO
YEAR ENDED DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.371 1.244 1.306 .993 1.000
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .011 .018 .009 .010 .010
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .212 .139 (.056) .313 (.017)
- -----------------------------------------------------------------------------------------------
Total from investment operations .223 .157 (.047) .323 (.007)
- -----------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .020 .010 -- .009 --
- -----------------------------------------------------------------------------------------------
Distribution from net realized gain .010 .020 .015 .001 --
- -----------------------------------------------------------------------------------------------
Total dividends .030 .030 .015 .010 --
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.564 1.371 1.244 1.306 .993
- -----------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 16.49% 12.83 (3.59) 32.83 (.72)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------------------------
Expenses .96% .92 .93 .92 1.11
- -----------------------------------------------------------------------------------------------
Net investment income .89% 1.39 .74 .86 1.01
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $163,475 134,481 122,710 88,880 19,447
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 87% 126 107 116 129
- -----------------------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions for the year ended December 31,
1996 was $.0183. Foreign commissions usually are lower than U.S. commissions when expressed as
cents per share due to the lower per share price of many non-U.S. securities.
- -----------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 31
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-----------------------------------
SMALL CAP GROWTH PORTFOLIO
-----------------------------------
YEAR ENDED
DECEMBER 31, MAY 2 TO
1996 1995 DECEMBER 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------
Net asset value, beginning of period $1.346 1.039 1.000
- -------------------------------------------------------------------------------
Income from investment operations:
Net investment income .002 .005 .008
- -------------------------------------------------------------------------------
Net realized and unrealized gain .369 .307 .031
- -------------------------------------------------------------------------------
Total from investment operations .371 .312 .039
- -------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .005 --
- -------------------------------------------------------------------------------
Distribution from net realized gain .040 -- --
- -------------------------------------------------------------------------------
Total dividends .040 .005 --
- -------------------------------------------------------------------------------
Net asset value, end of period $1.677 1.346 1.039
- -------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 28.04% 30.07 3.95
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------
Expenses .75% .87 1.25
- -------------------------------------------------------------------------------
Net investment income .15% .42 .91
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $69,137 35,373 12,909
- -------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 156% 81 58
- -------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions for the year ended
December 31, 1996 was $.0570.
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT
GRADE SMALL VALUE+ HORIZON HORIZON HORIZON
BOND VALUE CAP VALUE GROWTH 20+ 10+ 5
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
FOR THE PERIOD MAY 1 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $1.000 1.000 1.000 1.000 1.000 1.000 1.000
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .031 .015 .013 .008 .012 .018 .023
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .005 .159 .006 .138 .142 .096 .073
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .036 .174 .019 .146 .154 .114 .096
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.036 1.174 1.019 1.146 1.154 1.114 1.096
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 3.57% 17.36 1.86 14.60 15.37 11.37 9.59
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION (ANNUALIZED):
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses .87% .90 .90 .90 .81 .78 .83
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.93% 2.42 2.25 .97 1.71 2.69 3.60
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION (ANNUALIZED):
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses .87% .92 .92 1.01 1.13 1.01 1.01
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.93% 2.40 2.23 .86 1.39 2.46 3.42
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $1,998 21,305 13,307 10,196 3,759 5,727 2,534
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 75% 57 61 25 60 76 13
- ---------------------------------------------------------------------------------------------------------------------------------
Average commission rate paid per
share
on stock transactions -- $.0500 .0500 .0596 .0458 .0455 .0490
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 32
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
CORPORATE OBLIGATIONS VALUE
- ----------------------------------------------------------
<S> <C>
- ----------------------------------------------------------
BANKING--2.8%
- ----------------------------------------------------------
Credit Lyonnais N.A. Inc.
5.49%, 1/22/97 $ 1,994
- ----------------------------------------------------------
BUSINESS LOANS--22.6%
- ----------------------------------------------------------
Astro Capital Corp.
5.48%, 2/3/97 1,990
BTM Capital Corporation
5.45%, 1/21/97 1,994
Banner Receivables Corporation
5.50%, 2/20/97 1,985
Broadway Capital Corp.
5.41%, 1/15/97 1,996
Gotham Capital Corporation
5.50%, 1/9/97 1,997
(a) Heller Financial, Inc.
5.36%, 1/2/97 2,000
Ranger Funding Corporation
5.43%, 1/28/97 1,992
Strategic Asset Funding Corp.
5.48%, 1/31/97 1,991
--------------------------------------------------
15,945
- ----------------------------------------------------------
CAPITAL AND EQUIPMENT LENDING--8.5%
- ----------------------------------------------------------
IBM Credit Corp.
5.26%, 2/28/97 1,999
Mitsubishi Motors Credit of America,
Inc.
5.49%, 1/13/97 1,996
SRD Finance Inc.
5.45%, 1/9/97 1,998
--------------------------------------------------
5,993
- ----------------------------------------------------------
CAPTIVE BUSINESS LENDING--12.7%
- ----------------------------------------------------------
CSW Credit, Inc.
5.41%, 1/29/97 1,992
Enterprise Funding Corp.
5.50%, 1/28/97 1,992
(a) FINOVA Capital Corporation
5.68%, 1/15/97 2,000
Orix America, Inc.
5.70%, 3/17/97 2,965
--------------------------------------------------
8,949
- ----------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--2.8%
- ----------------------------------------------------------
Coca-Cola Enterprises Inc.
5.40%, 1/14/97 1,996
- ----------------------------------------------------------
DIVERSIFIED FINANCE--11.3%
- ----------------------------------------------------------
APEX Funding Corp.
5.49%, 1/31/97 $ 1,991
Dynamic Funding Corporation
5.51%, 1/8/97 1,998
STRAIT Capital Corporation
5.45%, 1/21/97 1,994
Sigma Finance, Inc.
5.48%, 3/27/97 1,974
--------------------------------------------------
7,957
- ----------------------------------------------------------
FINANCIAL SERVICES--16.9%
- ----------------------------------------------------------
(a) Bear Stearns Companies Inc.
5.66%, 1/21/97 2,000
(a) Goldman Sachs Group, L.P.
5.93%, 1/27/97 2,000
(a)(b) Lehman Brothers Holdings Inc.
5.81%, 1/15/97 2,000
(a) Merrill Lynch & Co., Inc.
5.58%, 1/21/97 2,000
Nomura Holding America Inc.
5.61%, 4/29/97 1,964
Salomon Inc.
6.42%, 4/21/97 1,962
--------------------------------------------------
11,926
- ----------------------------------------------------------
UTILITIES--12.0%
- ----------------------------------------------------------
GTE Corporation
5.54%, 1/24/97 1,993
Gulf Coast Waste Authority, Texas
5.42%, 1/27/97 2,000
NYNEX Corporation
5.50%, 3/28/97 1,974
New Hampshire
Industrial Development Authority
5.45%, 2/18/97 2,500
--------------------------------------------------
8,467
--------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--89.6%
(AVERAGE MATURITY: 35 DAYS) 63,227
--------------------------------------------------
</TABLE>
31
<PAGE> 33
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BANK OBLIGATIONS VALUE
- -------------------------------------------------------------
<S> <C>
CERTIFICATES OF DEPOSIT
U.S. BANKS--8.5%
- -------------------------------------------------------------
(a)AmSouth Bank of Alabama
5.46%, 1/7/97 $ 1,999
(a)Bankers Trust Company
5.40%, 1/1/97 1,999
(a)Old Kent Bank
3.75%, 1/1/97 2,000
-----------------------------------------------------
5,998
-----------------------------------------------------
<CAPTION>
BANK OBLIGATIONS VALUE
- -------------------------------------------------------------
<S> <C>
CERTIFICATES OF DEPOSIT
FOREIGN BANK--2.8%
- -------------------------------------------------------------
Sumitomo Bank, Ltd.
5.53%, 2/28/97 $ 2,000
-----------------------------------------------------
TOTAL BANK OBLIGATIONS--11.3%
(AVERAGE MATURITY: 16 DAYS) 7,998
-----------------------------------------------------
TOTAL INVESTMENTS--100.9%
(AVERAGE MATURITY: 33 DAYS) 71,225
-----------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS--(.9)% (624)
-----------------------------------------------------
NET ASSETS--100% $70,601
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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 December
31, 1996. The dates shown represent the demand date or next interest rate
change date.
(b) Illiquid security representing 2.8% of net assets at December 31, 1996.
See accompanying Notes to Financial Statements.
32
<PAGE> 34
\PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND TOTAL RETURN PORTFOLIO
Portfolio of Investments at December 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------------
U.S. TREASURY NOTES
- ----------------------------------------------------------------
<S> <C> <C>
7.75%, 2000 $ 6,000 $ 6,279
7.875%, 2001 7,000 7,462
7.75%, 2001 9,000 9,512
6.25%, 2003 8,500 8,492
7.25%, 2004 33,000 34,726
5.875%, 2004 4,000 3,895
6.50%, 2005 4,200 4,229
-----------------------------------------------------------
74,595
- ----------------------------------------------------------------
U.S. TREASURY BONDS
- ----------------------------------------------------------------
10.75%, 2005 8,400 10,777
12.00%, 2013 1,800 2,575
12.50%, 2014 13,000 19,433
-----------------------------------------------------------
32,785
- ----------------------------------------------------------------
PROVINCE OF QUEBEC, CANADA
- ----------------------------------------------------------------
8.625%, 2005 2,000 2,202
-----------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--15.7%
(COST: $108,424) 109,582
-----------------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------------
BASIC INDUSTRIES--3.4%
- ----------------------------------------------------------------
Air Products & Chemicals 58,500shs. 4,044
Betz Laboratories 44,900 2,627
Cementos Mexicanos, S.A. de
C.V., "B," ADR 38,700 152
Crown Cork & Seal Co. 85,000 4,622
W.R. Grace & Co. 57,000 2,950
Nucor Corp. 33,500 1,708
Praxair, Inc. 93,100 4,294
Rentokil Group PLC 21,000 158
Temple-Inland Inc. 50,000 2,706
Toray Industries 23,000 142
-----------------------------------------------------------
23,403
- ----------------------------------------------------------------
CAPITAL GOODS--7.7%
- ----------------------------------------------------------------
Boeing Co. 51,000 5,425
Emerson Electric Co. 58,900 5,698
Fluor Corp. 60,000 3,765
GM Hughes Electronics Corp. 85,000 4,781
General Electric Co. 116,600 11,529
B.F. Goodrich Co. 165,000 6,682
Honda Motor Co., Ltd. 6,000 171
Illinois Tool Works 57,500 4,593
Mitsubishi Heavy Industries 18,000 143
Raytheon Co. 22,500 1,083
Sundstrand Corp. 113,200 4,811
Technip S.A. 3,468 325
(a) U.S. Filter Corp. 65,000 2,064
Westinghouse Electric Corp. 130,000 2,584
-----------------------------------------------------------
53,654
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------
CONSUMER CYCLICALS--6.9%
- ----------------------------------------------------------------
<S> <C> <C>
Brunswick Corp. 170,000 $ 4,080
CVS Corporation 76,700 3,173
Carnival Corp. 200,000 6,600
(a)Circus Circus Enterprises 47,400 1,629
(a)Consolidated Stores Corp. 170,750 5,507
Walt Disney Company 75,000 5,222
(a)Federated Department Stores 119,000 4,061
Hilton Hotels Corp. 140,000 3,658
(a)Liberty Media Group, "A" 84,000 2,399
Marriott International 64,900 3,586
(a)Mirage Resorts, Incorporated 216,000 4,671
Randstad Holding N.V. 1,172 84
Reed International PLC 8,968 169
(a)Viacom International, "B" 90,000 3,139
-----------------------------------------------------------
47,978
- ----------------------------------------------------------------
CONSUMER DURABLES--2.7%
- ----------------------------------------------------------------
Goodyear Tire & Rubber Company 74,500 3,827
Leggett & Platt Incorporated 193,100 6,686
Magna International Inc., "A" 140,500 7,833
Matsushita Electric Industrial
Co., Ltd. 10,000 163
-----------------------------------------------------------
18,509
- ----------------------------------------------------------------
CONSUMER STAPLES--3.1%
- ----------------------------------------------------------------
Dole Food Co. 3,000 102
Gillette Co. 46,000 3,576
Newell Co. 80,000 2,520
Philip Morris Companies 59,800 6,735
Procter & Gamble Co. 79,700 8,568
Rite Aid Corp. 9,263 368
-----------------------------------------------------------
21,869
- ----------------------------------------------------------------
ENERGY--4.4%
- ----------------------------------------------------------------
AMOCO Corp. 53,000 4,267
Amerada Hess Corp. 75,000 4,341
British Petroleum 11,895 143
Enron Corp. 75,200 3,243
Exxon Corp. 41,600 4,077
Mobil Corp. 31,000 3,790
Union Pacific Resources Group 45,000 2,706
Union Texas Petroleum Holdings 207,500 4,643
Unocal Corp. 85,000 3,453
-----------------------------------------------------------
30,663
</TABLE>
33
<PAGE> 35
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------
FINANCE--11.1%
- ----------------------------------------------------------------
<S> <C> <C>
H. F. Ahmanson & Co. 68,000 $ 2,210
Allstate Corp. 145,000 8,392
American Express Company 70,000 3,955
Bank of Boston 61,800 3,971
Bank of Ireland 24,613 223
CITIC Pacific Ltd. 42,000 244
Chase Manhattan Corp. 28,000 2,499
Cheung Kong Holdings Ltd. 22,000 195
Corestates Financial Corp. 45,000 2,334
Dean Witter Discover 80,000 5,300
Development Bank of Singapore 13,000 176
Federal National Mortgage
Association 148,500 5,532
First Chicago NBD Corp. 62,000 3,332
First USA 132,800 4,598
Great Western Financial Corp. 50,000 1,450
ITT Hartford Group 90,000 6,075
Internationale Nederlanden
Groep N.V. 5,838 210
Jefferson-Pilot Corp. 68,600 3,884
KeyCorp 39,900 2,015
MGIC Investment Corp. 42,700 3,245
Mellon Bank Corp. 45,000 3,195
Merrill Lynch & Co. 23,800 1,940
NationsBank 32,000 3,128
PNC Bank Corp., N.A. 92,500 3,480
Signet Banking Corp. 50,000 1,537
Travelers Group 98,666 4,477
-----------------------------------------------------------
77,597
- ----------------------------------------------------------------
HEALTH CARE--9.7%
- ----------------------------------------------------------------
Abbott Laboratories 120,000 6,090
American Home Products 100,000 5,863
(a)Amgen, Inc. 38,000 2,066
Baxter International 84,000 3,444
(a)British Bio-Technology Group 36,500 128
(a)Fresenius Medical Care, A.G. 2,090 168
(a)HealthCare COMPARE Corp. 76,100 3,225
Johnson & Johnson 190,000 9,453
Eli Lilly & Co. 100,000 7,300
Merck & Co., Inc. 83,200 6,594
(a)Novartis, ADR 61,200 3,481
Omnicare, Inc. 76,100 2,445
Perkin-Elmer Corp. 100,000 5,887
Pharmacia & Upjohn, Inc. 70,000 2,774
Roche Holding A.G.,
with warrants expiring 1998 20 156
(a)St. Jude Medical 70,000 2,984
(a)Steris Corp. 100,900 4,389
(a)Ventritex Inc. 50,000 1,231
-----------------------------------------------------------
67,678
<CAPTION>
- ----------------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
TECHNOLOGY--8.7%
- ----------------------------------------------------------------
<S> <C> <C>
Adobe Systems 44,000 $ 1,644
(a)Applied Materials, Inc. 58,000 2,084
(a)Cadence Design Systems 106,600 4,237
(a)Cisco Systems 88,000 5,599
L.M. Ericsson Telephone Co.,
"B" 8,045 249
Harris Corp. 52,000 3,568
Hewlett-Packard Co. 57,500 2,889
(a)Informix Corp. 122,000 2,486
Intel Corp. 45,000 5,892
International Business
Machines 20,000 3,020
Murata Manufacturing 5,000 165
(a)National Semiconductor Corp. 125,000 3,047
(a)Parametric Technology Corp. 43,200 2,219
Pitney Bowes Inc. 54,000 2,943
(a)Silicon Graphics Inc. 68,000 1,734
(a)Sterling Commerce 87,500 3,084
(a)Sun Microsystems 116,000 2,980
(a)Teradyne 79,000 1,926
(a)3Com Corporation 61,800 4,534
United Technologies 93,600 6,178
-----------------------------------------------------------
60,478
- ----------------------------------------------------------------
TRANSPORTATION--1.6%
- ----------------------------------------------------------------
Burlington Northern Sante Fe
Corporation 48,000 4,146
Canadian National Railway
Company 42,767 1,625
Ryder System Inc. 190,700 5,363
Swire Pacific Ltd., "A" 19,500 186
-----------------------------------------------------------
11,320
- ----------------------------------------------------------------
UTILITIES--3.7%
- ----------------------------------------------------------------
(a)Airtouch Communications 110,000 2,777
Ameritech Corp. 60,000 3,638
Cincinnati Bell 76,700 4,727
Iberdrola, S.A. 17,400 246
(a)LCI International, Inc. 90,000 1,935
SBC Communications Inc. 80,000 4,140
Salomon, Inc. convertible
preferred--Cincinnati Bell 17,000 1,024
Telefonica del Peru S.A., ADS 8,000 151
(a)WorldCom, Inc. 272,000 7,089
-----------------------------------------------------------
25,727
-----------------------------------------------------------
TOTAL COMMON STOCKS--63.0%
(COST: $360,188) 438,876
-----------------------------------------------------------
CORPORATE OBLIGATIONS
- ----------------------------------------------------------------
BASIC INDUSTRIES--1.4%
- ----------------------------------------------------------------
Boise Cascade Corp.
9.85%, 2002 $ 1,000 $ 1,125
9.45%, 2009 1,000 1,153
Crown Paper, 11.00%, 2005 795 749
Euramax International,
11.25%, 2006 1,000 1,035
Owens-Illinois, Inc.,
11.00%, 2003 3,990 4,439
Stone Container Corp.,
11.875%, 2016 1,000 1,070
Stone Container Finance Corp.,
11.50%, 2006 500 517
-----------------------------------------------------------
10,088
</TABLE>
34
<PAGE> 36
PORTFOLIO OF INVESTMENTS
(Dollars in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
CAPITAL GOODS
- ----------------------------------------------------------------
<S> <C> <C>
Nortek, Inc., 9.875%, 2004 $ 90 $ 90
- ----------------------------------------------------------------
CONSUMER CYCLICALS--6.6%
- ----------------------------------------------------------------
AMF Group
(b) 12.25%, 2006 1,000 663
10.875%, 2006 500 526
American Radio System,
9.00%, 2006 1,260 1,222
Cablevision Systems Corp.,
9.25%, 2005 1,800 1,778
Cinemark USA, Inc.,
9.625%, 2008 1,360 1,384
(b)Comcast UK Cable Partners
Ltd.,
11.20%, 2007 2,880 2,059
Delco Remy International,
10.625%, 2006 1,000 1,056
Empress River Casino,
10.75%, 2002 2,000 2,170
Federated Department Stores,
10.00%, 2001 2,000 2,183
Granite Broadcasting Corp.,
9.375%, 2005 1,240 1,204
Hayes Wheels International,
Inc.,
11.00%, 2006 1,000 1,085
(b)International CableTel Inc.,
11.50%, 2006 2,600 1,768
K-III Communications Corp.,
8.50%, 2006 750 729
News American Holdings,
9.25%, 2013 2,000 2,235
(b)PanAmSat, L.P.,
11.375%, 2003 1,800 1,665
Pathmark Stores, Inc.,
9.625%, 2003 245 235
Rogers Cantel Mobile Inc.,
11.125%, 2002 1,790 1,893
Royal Caribbean Cruises Ltd.,
8.25%, 2005 2,000 2,134
Sears Roebuck Acceptance
Corp.,
6.75%, 2005 2,000 1,971
Sinclair Broadcasting Group,
Inc.,
10.00%, 2003 1,710 1,742
TCI Communications,
8.65%, 2004 1,000 1,024
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
CONSUMER CYCLICALS--CONTINUED
- ----------------------------------------------------------------
<S> <C> <C>
(b)TeleWest Communications PLC,
11.00%, 2007 $ 4,020 $ 2,794
360 Communications,
7.125%, 2003 2,000 1,975
Time Warner Entertainment Co.,
8.875%, 2012 1,000 1,086
Time Warner Inc.,
9.125%, 2013 1,000 1,095
Trump Atlantic City,
11.25%, 2006 1,800 1,784
Univision TV,
11.75%, 2001 1,500 1,579
USA Mobile Communications,
Inc.,
9.50%, 2004 1,750 1,667
(b)Videotron Holdings PLC,
11.125%, 2004 625 545
WestPoint Stevens,
9.375%, 2005 2,050 2,114
-----------------------------------------------------------
45,365
- ----------------------------------------------------------------
CONSUMER STAPLES--.5%
- ----------------------------------------------------------------
Nabisco Inc.,
8.00%, 2000 1,000 1,034
Rite Aid Corp.
6.70%, 2001 500 500
7.125%, 2007 1,400 1,404
7.70%, 2027 300 302
-----------------------------------------------------------
3,240
- ----------------------------------------------------------------
ENERGY--1.6%
- ----------------------------------------------------------------
BHP Finance USA,
7.875%, 2002 2,000 2,115
Gulf Canada Resources Limited,
9.25%, 2004 1,500 1,586
Parker & Parsley Petroleum,
8.25%, 2007 2,000 2,150
Petronas Dagangan Bhd
7.125%, 2005 1,000 1,007
7.75%, 2015 1,000 1,034
Repsol International Finance,
7.00%, 2005 1,000 1,007
USX Corporation,
9.375%, 2012 2,000 2,333
-----------------------------------------------------------
11,232
</TABLE>
35
<PAGE> 37
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<S> <C> <C>
FINANCE--4.9%
- --------------------------------------------------------------
AB Spintab,
7.50%, 2049 $ 2,000 $ 2,017
ABN AMRO Bank,
8.25%, 2009 2,000 2,127
Abbey National First Capital,
8.20%, 2004 700 753
Abbey National PLC,
7.35%, 2049 1,300 1,315
Associates Corp, N.A.,
8.25%, 1999 2,000 2,101
BCH Cayman Islands Limited,
7.70%, 2006 1,000 1,029
Banco Central Hispano
Americano,
7.50%, 2005 1,000 1,016
Bangkok Bank Ltd.,
7.25%, 2005 2,000 1,961
Capital One Bank,
8.125%, 2000 2,000 2,073
Citicorp,
7.625%, 2005 1,000 1,039
Corporation Andina De
Formento,
7.10%, 2003 1,750 1,751
ERAC USA Finance,
6.95%, 2006 2,000 1,962
Equitable Life,
6.95%, 2005 2,000 1,969
GMAC Medium Term Note,
8.50%, 2000 2,000 2,129
Lehman Brothers Holdings,
7.25%, 2003 2,000 2,013
Merita Bank Ltd.,
6.50%, 2006 1,000 954
NationsBank Corp.,
7.50%, 2006 2,000 2,058
Skandinaviska Enskilda Banken,
6.625%, 2049 1,000 982
Societe Generale New York,
7.40%, 2006 2,000 2,040
SunTrust Banks, Atlanta,
7.25%, 2006 2,000 2,034
UBS Securities,
7.25%, 2006 1,000 1,021
---------------------------------------------------------
34,344
- --------------------------------------------------------------
HEALTH CARE--1.0%
- --------------------------------------------------------------
Columbia/HCA
Healthcare Corp.,
7.25%, 2008 $ 1,000 $ 1,015
MedPartners,
7.375%, 2006 2,000 2,009
Ornda HealthCorp.
12.25%, 2002 1,440 1,534
11.375%, 2004 380 440
Tenet Healthcare Corporation
9.625%, 2002 130 142
10.125%, 2005 1,600 1,768
---------------------------------------------------------
6,908
- --------------------------------------------------------------
TRANSPORTATION--.8%
- --------------------------------------------------------------
Delta Airlines
9.875%, 2008 738 837
9.75%, 2021 2,250 2,700
United Airlines,
9.56%, 2018 2,000 2,274
---------------------------------------------------------
5,811
- --------------------------------------------------------------
UTILITIES--.4%
- --------------------------------------------------------------
Southwestern Bell Telephone,
6.625%, 2005 1,000 986
Tenaga Nasional Berhad,
7.875%, 2004 1,750 1,844
---------------------------------------------------------
2,830
---------------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--17.2%
(COST: $117,325) 119,908
---------------------------------------------------------
MONEY MARKET INSTRUMENTS--4.2%
Yield--5.92% to 7.15%
Due--January 1997
(COST: $29,483) 29,500 29,484
---------------------------------------------------------
TOTAL INVESTMENTS--100.1%
(COST: $615,420) 697,850
---------------------------------------------------------
LIABILITIES, LESS OTHER
ASSETS--(.1)% (748)
---------------------------------------------------------
NET ASSETS--100% $697,102
---------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO TOTAL RETURN PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Deferred interest obligation; currently zero coupon under the terms of the
initial offering.
Based on the cost of investments of $615,420,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $85,747,000, the
gross unrealized depreciation was $3,317,000 and the net unrealized appreciation
on investments was $82,430,000.
See accompanying Notes to Financial Statements.
36
<PAGE> 38
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------
<S> <C> <C>
GOVERNMENT OBLIGATIONS
- ---------------------------------------------------------------
U.S. Treasury Notes
8.875%, 1997 $ 1,000 $ 1,027
5.875%, 2001 8,000 7,884
Republic of Argentina,
9.25%, 2001 800 812
United Mexican States,
9.75%, 2001 800 828
----------------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--3.6%
(Cost: $10,631) 10,551
----------------------------------------------------------
CORPORATE OBLIGATIONS
- ---------------------------------------------------------------
AEROSPACE--2.7%
- ---------------------------------------------------------------
Airplanes Pass Through Trust,
10.875%, 2019 1,190 1,318
Fairchild Corporation,
12.00%, 2001 2,840 2,868
Howmet Inc.,
10.00%, 2003 270 297
K & F Industries, Inc.
11.875%, 2003 470 505
10.375%, 2004 1,510 1,589
UNC, Inc.,
11.00%, 2006 1,080 1,161
----------------------------------------------------------
7,738
- ---------------------------------------------------------------
BROADCASTING, CABLESYSTEMS AND PUBLISHING--15.1%
- ---------------------------------------------------------------
Adelphia Communication
Corporation
12.50%, 2002 165 169
11.875%, 2004 240 242
Affinity Group, Inc.,
11.50%, 2003 1,460 1,529
American Radio Systems,
9.00%, 2006 1,410 1,368
(a) American Telecasting
14.50%, 2004 970 461
14.50%, 2005 590 251
(a) Bell Cablemedia PLC
11.95%, 2004 3,140 2,732
11.875%, 2005 150 121
Big Flower Press, Inc.,
10.75%, 2003 1,257 1,339
CAI Wireless Systems,
12.25%, 2002 1,000 490
(a) CS Wireless,
11.375%, 2006 2,520 920
Cablevision Systems Corporation
9.25%, 2005 420 415
9.875%, 2013 730 719
10.50%, 2016 1,220 1,254
9.875%, 2023 550 533
Century Communications Corp.,
11.875%, 2003 1,100 1,166
(a) Charter Communications,
14.00%, 2007 1,870 1,103
(a) Comcast UK Cable Partners Ltd.,
11.20%, 2007 4,630 3,310
Comcast Corporation
9.125%, 2006 690 707
9.50%, 2008 730 758
<CAPTION>
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------
BROADCASTING, CABLESYSTEMS AND PUBLISHING--CONTINUED
- ---------------------------------------------------------------
<S> <C> <C>
(a) Echostar Communications,
12.875%, 2004 $ 2,095 $ 1,723
Frontiervision,
11.00%, 2006 1,020 1,030
Granite Broadcasting Corp.
10.375%, 2005 1,220 1,255
9.375%, 2005 640 622
Intermedia Capital Partners,
11.25%, 2006 1,260 1,310
(a) International Cabletel Inc.
12.75%, 2005 3,750 2,794
11.50%, 2006 450 306
Multicanal Participacoes,
12.625%, 2004 820 887
Neodata Services,
12.00%, 2003 1,610 1,695
Newsquest Capital PLC,
11.00%, 2006 1,700 1,759
(a) People's Choice TV Unit,
13.125%, 2004 2,050 861
Sinclair Broadcasting Group,
Inc.,
10.00%, 2003 1,890 1,925
Sullivan Broadcasting
10.25%, 2005 410 418
13.25%, 2006 810 891
Telewest Communications PLC
9.625%, 2006 1,350 1,384
(a) 11.00%, 2007 2,365 1,644
(a) UIH Australia Pacific, Inc.,
14.00%, 2006 2,350 1,222
Univision TV,
11.75%, 2001 370 389
(a) Videotron Holdings PLC
11.125%, 2004 745 650
11.00%, 2005 1,020 821
Young Broadcasting Inc.,
11.75%, 2004 440 484
----------------------------------------------------------
43,657
- ---------------------------------------------------------------
BUSINESS SERVICES--2.3%
- ---------------------------------------------------------------
Allied Waste Industries,
10.25%, 2006 600 631
Corporate Express Inc.,
9.125%, 2004 1,300 1,332
Intertek Finance,
10.25%, 2006 650 679
Monarch Marking Systems,
12.50%, 2003 1,270 1,499
Outdoor Systems, Inc.,
9.375%, 2006 1,640 1,689
Universal Outdoor Holdings,
Inc.,
9.75%, 2006 760 787
----------------------------------------------------------
6,617
</TABLE>
37
<PAGE> 39
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
CHEMICALS AND AGRICULTURE--4.5%
- ----------------------------------------------------------------
<S> <C> <C>
Agriculture, Mining and
Chemicals, Inc.,
10.75%, 2003 $ 940 $ 1,001
Atlantis Group, Inc.,
11.00%, 2003 1,735 1,813
(a)Brooks Fiber,
11.875%, 2006 1,670 1,071
Hines Horticulture,
11.75%, 2005 610 656
NL Industries Inc.,
11.75%, 2003 1,710 1,813
Pioneer Americas Acquisition
Corporation,
13.375%, 2005 1,000 1,130
Polymer Group Inc.,
12.25%, 2002 897 982
Rexene Corporation,
11.75%, 2004 2,180 2,442
Terra Industries Inc.,
10.50%, 2005 840 914
UCC Investors Holdings, Inc.
10.50%, 2002 840 907
11.00%, 2003 300 321
-------------------------------------------------------------
13,050
- ----------------------------------------------------------------
COMMUNICATIONS--9.3%
- ----------------------------------------------------------------
(a)Call-Net Enterprises Inc.,
13.25%, 2004 1,000 822
(a)Cellular, Inc.,
11.75%, 2003 1,795 1,633
(a)Comunicacion Cellular,
13.125%, with warrants, 2003 2,200 1,628
CommNet Cellular,
11.25%, 2005 730 777
(a)ICG Holdings,
13.50%, 2005 3,000 2,130
IMPSAT Corporation,
12.125%, 2003 870 913
Intermedia Communications of
Florida, Inc.,
13.50%, with warrants, 2005 1,870 2,186
(a)Millicom International Cellular S.A.,
13.50%, 2006 2,700 1,677
Netsat Servicos,
12.75%, 2004 650 680
Nextlink Communications,
12.50%, 2006 850 917
Paging Network, Inc.
10.125%, 2007 1,200 1,230
10.00%, 2008 300 306
(a)PanAmSat, L.P.,
11.375%, 2003 3,615 3,344
Rogers Cantel
11.125%, 2002 2,570 2,718
9.375%, 2008 520 546
9.75%, 2016 440 465
(a)Shared Technologies,
12.25%, 2006 810 674
USA Mobile Communications, Inc. II
14.00%, 2004 1,220 1,379
9.50%, 2004 530 505
Vanguard Cellular Systems,
9.375%, 2006 1,380 1,390
Western Wireless
10.50%, 2006 290 304
10.50%, 2007 500 523
-------------------------------------------------------------
26,747
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
CONSTRUCTION MATERIALS--3.5%
- ----------------------------------------------------------------
<S> <C> <C>
American Standard Inc.
(a) 10.50%, 2005 $ 1,110 $ 1,032
9.25%, 2016 1,300 1,352
(a)Building Materials Corporation
of America,
11.75%, 2004 3,895 3,379
Nortek,
9.875%, 2004 2,170 2,175
Triangle Pacific Corporation,
10.50%, 2003 2,185 2,332
-------------------------------------------------------------
10,270
- ----------------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--7.1%
- ----------------------------------------------------------------
AMF Group
(a) 12.25%, 2006 2,940 1,948
10.875%, 2006 2,440 2,565
Avondale Mills,
10.25%, 2006 1,620 1,677
Cinemark USA, Inc.,
9.625%, 2008 1,140 1,160
Coinmach Corporation,
11.75%, 2005 2,630 2,847
(a)Dr. Pepper Bottling Holdings, Inc.,
11.625%, 2003 1,330 1,257
Herff Jones, Inc.,
11.00%, 2005 500 535
Pillowtex Corp.,
10.00%, 2006 550 572
Premier Parks Inc.,
12.00%, 2003 1,460 1,602
(a)Six Flags Theme Park,
12.25%, 2005 3,250 3,088
Van De Kamps, Inc.,
12.00%, 2005 600 665
West Point Stevens, Inc.,
9.375%, 2005 2,550 2,630
-------------------------------------------------------------
20,546
- ----------------------------------------------------------------
DRUGS AND HEALTH CARE--3.4%
- ----------------------------------------------------------------
Dade International Inc.,
11.125%, 2006 930 1,014
Genesis Health Venture,
9.25%, 2006 780 803
Magellan Health Services,
11.25%, 2004 1,890 2,107
Ornda Healthcorporation,
11.375%, 2004 1,840 2,132
Scholastic Brands,
11.00%, 2007 760 775
Tenet Healthcare,
10.125%, 2005 1,560 1,724
Unison Healthcare,
12.25%, 2006 1,170 1,199
-------------------------------------------------------------
9,754
</TABLE>
38
<PAGE> 40
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
ENERGY AND RELATED SERVICES--6.5%
- ----------------------------------------------------------------
<S> <C> <C>
Benton Oil & Gas Co.,
11.625%, 2003 $ 1,215 $ 1,340
Chesapeake Energy Corporation,
10.50%, 2002 1,265 1,379
Clark USA, Inc.,
10.875%, 2005 890 917
Coda Energy,
10.50%, 2006 1,460 1,548
Empire Gas Corporation,
7.00%, with warrants, 2004 900 772
Ferrellgas Partners, L.P.,
9.375%, 2006 1,000 1,035
Flores & Rucks Inc.
13.50%, 2004 1,310 1,569
9.75%, 2006 80 84
Forcenergy Gas Exploration,
9.50%, 2006 530 554
Gulf Canada Resources Limited
9.25%, 2004 1,690 1,787
9.625%, 2005 930 1,002
Mesa Operating Co.,
10.625%, 2006 1,180 1,288
Parker Drilling Corp.,
9.75%, 2006 550 580
Plains Resources,
10.25%, 2006 950 1,016
Santa Fe Energy Resources Inc.,
11.00%, 2004 1,040 1,149
United Meridian Corp.,
10.375%, 2005 870 953
Vintage Petroleum,
9.00%, 2005 1,810 1,851
-------------------------------------------------------------
18,824
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
FINANCIAL SERVICES, HOME BUILDERS AND REAL ESTATE--3.8%
- ----------------------------------------------------------------
<S> <C> <C>
Continental Homes Holding,
10.00%, 2006 $ 1,116 $ 1,158
Forecast Group L.P.,
11.375%, 2000 765 708
Fortress Group,
13.75%, 2003 660 702
Hovnanian Kent,
11.25%, 2002 1,858 1,891
Kaufman & Broad Home Corp.,
9.625%, 2006 1,180 1,184
J.M. Peters Company,
12.75%, 2002 1,300 1,248
Presley Companies,
12.50%, 2001 1,545 1,483
Ryland Group,
10.50%, 2006 1,470 1,536
Toll Brothers Inc.,
8.75%, 2006 1,100 1,107
-------------------------------------------------------------
11,017
- ----------------------------------------------------------------
HOTELS AND GAMING--4.3%
- ----------------------------------------------------------------
Eldorado Resorts,
10.50%, 2006 1,840 1,950
Empress River Casino,
10.75%, 2002 2,170 2,354
Harrahs Entertainment
8.75%, 2000 500 509
10.875%, 2002 80 85
Harvey's Casino Resorts,
10.625%, 2006 380 407
MGM Grand Hotel Finance
Corporation,
12.00%, 2002 1,175 1,262
Players International,
10.875%, 2005 1,380 1,366
Station Casinos Inc.,
10.125%, 2006 1,550 1,554
Trump Atlantic City,
11.25%, 2006 3,000 2,974
-------------------------------------------------------------
12,461
</TABLE>
39
<PAGE> 41
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
MANUFACTURING, METALS AND MINING--14.0%
- ----------------------------------------------------------------
<S> <C> <C>
Aftermarket Technology,
12.00%, 2004 $ 1,380 $ 1,547
Alvey Systems,
11.375%, 2003 1,050 1,102
Bar Technologies,
13.50%, with warrants, 2001 750 816
Collins & Aikman Corporation,
11.50%, 2006 2,130 2,322
Crain Industries, Inc.,
13.50%, 2005 990 1,120
Day International Group, Inc.,
11.125%, 2005 1,680 1,777
Delco Remy International,
10.625%, 2006 1,580 1,669
Essex Group Incorporated,
10.00%, 2003 1,290 1,329
Euramax International PLC,
11.25%, 2006 1,580 1,635
Fairfield Manufacturing
Company,
11.375%, 2001 780 815
(a)Foamex-JPS Automotive L.P.,
14.00%, with warrants, 2004 940 804
Foamex L.P.,
11.25%, 2002 1,970 2,098
GS Technologies
12.00%, 2004 380 396
12.25%, 2005 620 654
Great Dane Holdings Company,
12.75%, 2001 995 1,000
Gulf States Steel,
13.50%, with warrants, 2003 1,660 1,569
Hayes Wheels International, Inc.,
11.00%, 2006 2,020 2,192
IMO Industries,
11.75%, 2006 810 753
JPS Automotive Products Corp.,
11.125%, 2001 1,670 1,787
Jordan Industries,
10.375%, 2003 1,560 1,544
Knoll Inc.,
10.875%, 2006 870 961
Motors and Gears, Inc.,
10.75%, 2006 1,200 1,236
Newflo Corporation,
13.25%, 2002 1,050 1,160
Penda Industries, Inc.,
10.75%, 2004 550 540
Renco Metals,
11.50%, 2003 660 693
Spinnaker Industries,
10.75%, 2006 510 533
Terex Corporation Unit,
13.25%, 2002 1,030 1,128
Thermadyne Industries, Inc.
10.25%, 2002 1,320 1,386
10.75%, 2003 1,576 1,655
UCAR Global,
12.00%, 2005 1,550 1,788
WCI Steel Inc.,
10.00%, 2004 1,500 1,523
Weirton Steel Corp.,
11.375%, 2004 1,000 1,013
-------------------------------------------------------------
40,545
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
PAPER, FOREST PRODUCTS AND CONTAINERS--8.9%
- ----------------------------------------------------------------
<S> <C> <C>
BPC Holding Corp.,
12.50%, 2006 $ 750 $ 795
Berry Plastics Corporation,
12.25%, 2004 1,140 1,254
Container Corporation of
America,
11.25%, 2004 585 629
Crown Paper,
11.00%, 2005 1,315 1,239
Florida Coast Paper Company,
12.75%, 2003 390 425
Four M Corporation,
12.00%, 2006 560 588
Gaylord Container Corporation,
12.75%, 2005 1,730 1,912
Maxxam Group, Inc.
(a) 12.25%, 2003 440 372
12.00%, 2003 520 533
11.25%, 2003 1,653 1,711
National Fiberstock
Corporation,
11.625%, 2002 760 807
Owens-Illinois, Inc.
11.00%, 2003 670 745
9.95%, 2004 1,125 1,192
9.75%, 2004 2,230 2,341
Plastic Container,
10.00%, 2006 270 278
Printpack, Inc.
9.875%, 2004 340 352
10.625%, 2006 1,170 1,217
Riverwood International
10.25%, 2006 1,350 1,330
10.875%, 2008 2,070 1,925
Speciality Paperboard,
9.375%, 2006 1,155 1,181
Stone Container Corporation
11.50%, 2006 2,180 2,256
11.875%, 2016 1,740 1,862
U.S. Can Corp.,
10.125%, 2006 880 926
-------------------------------------------------------------
25,870
- ----------------------------------------------------------------
RETAILING--3.5%
- ----------------------------------------------------------------
Ameriking,
10.75%, 2006 330 340
Brunos,
10.50%, 2005 2,450 2,597
Cole National Group,
9.875%, 2006 1,110 1,143
(b)Color Tile, Inc.,
10.75%, 2001 1,470 59
Dominick's Finer Foods,
10.875%, 2005 400 443
Finlay Fine Jewelry
Corporation,
10.625%, 2003 2,020 2,131
Guitar Center Management,
11.00%, 2006 520 551
Pamida Holdings,
11.75%, 2003 1,500 1,290
Pathmark Stores, Inc.
12.625%, 2002 1,040 1,082
9.625%, 2003 590 564
-------------------------------------------------------------
10,200
</TABLE>
40
<PAGE> 42
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
PRICIPAL
AMOUNT OR
NUMBER
OF SHARES Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY--.6%
Communication and Power
Industry, Inc.,
12.00%, 2005 $ 585 $ 657
Computervision Corporation,
11.375%, 1999 1,080 1,131
-----------------------------------------------------
1,788
- -------------------------------------------------------------------------------------
TRANSPORTATION--.2%
(a) Transtar Holdings, L.P.,
13.375%, 2003 631 498
-----------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--89.7%
(COST: $250,207) 259,582
-----------------------------------------------------
- -------------------------------------------------------------------------------------
(B) COMMON AND PREFERRED STOCKS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beatrice Foods 31,584shs. 565
Benedek Unit
preferred 5,000 493
warrants 5,000 18
Capital Pacific Holdings 3,634 4
Computervision Corporation 130,160 1,204
Echostar Communications 14,987 330
Gaylord Container Corporation 122,950 753
Grand Union Company 54,520 273
Intelcom Group, Inc., warrants 4,851 59
Rite Aid Corporation 6,150 244
Sullivan Broadcasting 12,960 130
Waxman Industries, Inc.,
warrants 52,274 150
-----------------------------------------------------
TOTAL COMMON AND PREFERRED
STOCKS--1.5%
(COST: $4,705) 4,223
-----------------------------------------------------
- -------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET
INSTRUMENTS--3.5%
Yield--6.26% to 6.51%
Due--January 1997
(COST: $9,985) $ 10,000 $ 9,985
-----------------------------------------------------
TOTAL INVESTMENTS--98.3%
(COST: $275,528) 284,341
-----------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.7% 4,974
-----------------------------------------------------
NET ASSETS--100% $289,315
-----------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
NOTES TO HIGH YIELD PORTFOLIO OF INVESTMENTS
(a) Deferred interest obligation; currently zero coupon under terms of the
initial offering.
(b) 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.
Based on the cost of investments of $275,528,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $15,482,000, the
gross unrealized depreciation was $6,669,000 and the net unrealized appreciation
on investments was $8,813,000.
See accompanying Notes to Financial Statements.
41
<PAGE> 43
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--4.2%
Cementos Mexicanos, S.A.
de C.V. "B," ADR 131,800 $ 517
W.R. Grace & Co. 154,400 7,990
Pall Corp. 250,000 6,375
Praxair, Inc. 100,000 4,613
Toray Industries 76,000 468
(a)Tubos de Acero de Mexico,
S.A., ADR 18,500 294
-----------------------------------------------------
20,257
- --------------------------------------------------------------------------------
CAPITAL GOODS--10.1%
Boeing Co. 25,200 2,681
Fluor Corp. 71,900 4,512
GM Hughes Electronics Corp. 100,000 5,625
B.F. Goodrich Co. 240,000 9,720
Honda Motor Co., Ltd. 19,000 542
Mitsubishi Heavy Industries 61,000 484
Rentokil Group PLC 75,000 565
Technip S.A. 4,634 434
(a)U.S. Filter Corp. 230,000 7,302
(a)United Waste Systems 44,000 1,512
Westinghouse Electric Corp. 500,000 9,938
York International Corp. 106,000 5,923
-----------------------------------------------------
49,238
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS--24.6%
(a)Autozone 385,000 10,587
Brunswick Corp. 350,000 8,400
Carnival Corp. 150,000 4,950
(a)Consolidated Stores Corp. 343,750 11,086
(a)Cox Communications 450,000 10,406
(a)Federated Department Stores 218,900 7,470
Heilig-Meyers 350,000 5,687
Home Depot 176,500 8,847
(a)Liberty Media Group, "A" 276,100 7,886
(a)Lone Star Steakhouse &
Saloon 300,000 8,025
(a)MGM Grand 140,000 4,883
Manpower, Inc. 150,000 4,875
(a)Mirage Resorts, Incorporated 200,000 4,325
Randstad Holding N.V. 3,725 269
Reed International PLC 31,114 586
(a)Tele-Communications, Inc. 693,000 9,052
(a)Tommy Hilfiger Corporation 155,000 7,440
Wendy's International 250,000 5,125
------------------------------------------------------
119,899
- --------------------------------------------------------------------------------
CONSUMER DURABLES--1.2%
Goodyear Tire and Rubber
Company 100,000 5,137
Matsushita Electric Industrial
Co., Ltd. 30,000 488
-----------------------------------------------------
5,625
- --------------------------------------------------------------------------------
CONSUMER STAPLES--3.8%
Dole Food Co. 300,000 10,163
Newell Co. 100,000 3,150
Philip Morris Companies 32,900 3,705
Procter & Gamble Co. 14,200 1,527
-----------------------------------------------------
18,545
- --------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCKS
- --------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
<S> <C> <C> <C>
ENERGY--2.8%
Baker Hughes, Inc. 150,000 $ 5,175
British Petroleum 42,270 506
Halliburton Co. 130,000 7,833
-----------------------------------------------------
13,514
- --------------------------------------------------------------------------------
FINANCE--1.8%
Bank of Ireland 73,759 668
CITIC Pacific Ltd. 90,000 522
Cheung Kong Holdings Ltd. 51,000 453
Development Bank of Singapore 35,000 473
Federal National Mortgage
Association 75,000 2,794
Internationale Nederlanden
Groep N.V. 19,497 701
Charles Schwab Corporation 100,000 3,200
-----------------------------------------------------
8,811
- --------------------------------------------------------------------------------
HEALTH CARE--19.6%
(a)ALZA Corp. 220,700 5,711
(a)Amgen, Inc. 90,000 4,894
(a)Biogen 180,000 6,975
(a)British Bio-Technology Group 118,000 414
Columbia/HCA Healthcare Corp. 70,000 2,853
(a)Fresenius Medical Care, AG 6,640 534
Guidant Corporation 210,000 11,970
(a)HealthCare COMPARE Corp. 100,000 4,237
(a)IDEXX Laboratories 170,000 6,120
Johnson & Johnson 191,000 9,502
Eli Lilly & Co. 65,000 4,745
(a)Nellcor Puritan Bennett
Incorporated 270,000 5,906
Omnicare Inc. 163,000 5,236
Perkin-Elmer Corp. 165,000 9,714
Roche Holding A.G.,
with warrants expiring 1998 67 522
(a)St. Jude Medical 48,000 2,046
United Healthcare Corp. 225,000 10,125
(a)Ventritex Inc. 170,000 4,186
-----------------------------------------------------
95,690
- --------------------------------------------------------------------------------
TECHNOLOGY--13.1%
Alco Standard Corporation 80,000 4,130
(a)Cadence Design Systems 270,000 10,733
(a)Ceridian Corporation 184,000 7,452
(a)Cisco Systems 75,000 4,772
(a)Compaq Computer Corp. 35,000 2,599
(a)Electronic Arts 285,000 8,532
L.M. Ericsson Telephone Co.,
"B" 16,329 505
Intel Corp. 37,800 4,949
Linear Technology Corp. 37,500 1,645
Murata Manufacturing 15,000 498
(a)Sterling Commerce 325,000 11,456
(a)Sun Microsystems 185,000 4,752
(a)TCI Satellite 69,300 684
Texas Instruments 19,700 1,256
-----------------------------------------------------
63,963
- --------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 44
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
TRANSPORTATION--1.9%
- ----------------------------------------------------------------
<S> <C> <C>
Burlington Northern
Sante Fe Corporation 40,000 $ 3,455
Canadian National
Railway Company 53,372 2,028
Ryder System Inc. 21,000 591
Southwest Airlines Co. 130,600 2,890
Swire Pacific Ltd., "A" 44,000 420
-----------------------------------------------------------
9,384
- ----------------------------------------------------------------
UTILITIES--5.9%
- ----------------------------------------------------------------
(a)AirTouch Communications 224,000 5,656
Iberdrola, S.A 45,000 637
(a)LCI International, Inc. 400,000 8,600
Frontier Corporation 100,000 2,263
(a)Paging Network, Inc. 260,000 3,965
Telefonica del Peru S.A., ADS 27,500 519
(a)WorldCom, Inc. 275,000 7,167
-----------------------------------------------------------
28,807
-----------------------------------------------------------
TOTAL COMMON STOCKS--89.0%
(Cost: $400,767) 433,733
-----------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.46% to 7.15%
Due--January and February 1997
Baxter International $10,000 $ 9,986
Countrywide Home Loans 10,000 9,976
Houston Lighting 10,000 9,997
Whirlpool Financial Corporation 10,000 9,985
Other 18,500 18,461
-----------------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--12.0%
(COST: $58,405) 58,405
-----------------------------------------------------------
TOTAL INVESTMENTS--101.0%
(COST: $459,172) 492,138
-----------------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(1.0)% (4,655)
-----------------------------------------------------------
NET ASSETS--100% $487,483
-----------------------------------------------------------
</TABLE>
- ------------------------------------------------------------------------------
NOTES TO GROWTH PORTFOLIO OF INVESTMENTS
- ------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $459,172,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $46,877,000, the
gross unrealized depreciation was $13,911,000 and the net unrealized
appreciation on investments was $32,966,000.
See accompanying Notes to Financial Statements.
43
<PAGE> 45
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GOVERNMENT NATIONAL Pass-through Certificates 7.00% 2022-2024 $14,750 $ 14,467
MORTGAGE 7.125 2022 2,991 3,057
ASSOCIATION - 58.6% 7.50 2022-2027 10,851 10,877
(Cost: $48,395) 8.00 2016-2026 11,101 11,390
8.50 2016-2027 4,365 4,527
9.00 2016-2027 3,270 3,449
9.50 2013-2022 682 740
10.00 2016 821 904
--------------------------------------------------------------------------
49,411
- ----------------------------------------------------------------------------------------------------------------
U.S. TREASURY Notes 8.875 1998 5,000 5,261
SECURITIES - 17.5% 8.75 2000 5,000 5,418
(Cost: $15,114) 7.00 2006 1,600 1,663
Bonds 11.875 2003 870 1,135
9.125 2009 484 558
9.125 2018 555 703
--------------------------------------------------------------------------
14,738
- ----------------------------------------------------------------------------------------------------------------
FEDERAL HOME Pass-through Certificates 7.00 2023-2024 9,782 9,626
LOAN MORTGAGE
CORPORATION - 11.4%
(Cost: $9,155)
- ----------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL Pass-through Certificates 6.50 2025 508 486
MORTGAGE 7.00 2027 3,000 2,935
ASSOCIATION - 10.8% 7.50 2025-2027 4,757 4,752
(Cost: $9,064) 8.00 2024-2025 904 921
--------------------------------------------------------------------------
9,094
- ----------------------------------------------------------------------------------------------------------------
CANADIAN PROVINCIAL Province of Ontario 7.625 2004 500 526
OBLIGATIONS - 1.3% Province of Quebec 8.625 2005 500 551
(Cost: $1,094)
--------------------------------------------------------------------------
1,077
--------------------------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--99.6%
(Cost: $82,822) 83,946
--------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
(A) CORPORATE American Express Master Trust 7.60 2002 2,500 2,603
OBLIGATIONS - 16.2% BHP Finance USA 7.875 2002 500 529
Banco Central Hispano 7.50 2005 500 508
Chase Credit Company 5.55 2003 2,500 2,425
Equitable Life 6.95 2005 500 492
Green Tree Financial Corp. 7.00 2026 2,500 2,529
Nabisco Inc. 6.70 2002 500 497
NationsBank Corp. 9.50 2004 500 574
Olympic Automobile Receivable 7.00 2004 2,500 2,545
Sears Roebuck Acceptance Corp. 6.75 2005 500 493
Southwestern Bell Telephone 6.625 2005 500 493
--------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--16.2%
(Cost: $13,790) 13,688
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE> 46
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE Dated December, 1996. Collateralized by Federal Home Loan Mortgage
AGREEMENT- 4.7% Association and Federal National Mortgage Association securities which are
(Cost: $4,000) monitored daily to ensure their market value exceeds the carrying value of
the repurchase agreement.
Merrill Lynch Government Securities,
Inc.
(held at The Chase Manhattan Bank, N.A., subcustodian)
7.00%, 1/2/97 $ 4,000 $ 4,000
--------------------------------------------------------------------------
TOTAL INVESTMENTS--120.5%
(Cost: $100,612) 101,634
--------------------------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(20.5)% (17,320)
--------------------------------------------------------------------------
NET ASSETS--100% $ 84,314
--------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO GOVERNMENT SECURITIES PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) The portfolio may invest up to 35% of total assets in fixed income
securities other than U.S. Government Securities.
Based on the cost of investments of $100,612,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $1,791,000, the
gross unrealized depreciation was $769,000, and the net unrealized appreciation
on investments was $1,022,000.
See accompanying Notes to Financial Statements.
45
<PAGE> 47
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- -------------------------------------------------------------------------------------------------------
EUROPE
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
NETHERLANDS--13.6%
- -------------------------------------------------------------------------------------------------------
ABN AMRO Bank 42,103 $ 2,736
BANKING
Aalberts Industries N.V. 61,445 1,510
CAPITAL GOODS AND COMPONENTS
Aegon N.V. 49,929 3,178
INSURANCE COMPANY
GTI Holding 6,540 826
ENGINEERING SERVICES
Goudsmit N.V. 20,310 1,808
TEMPORARY EMPLOYMENT AGENCY
Gucci Group N.V. 20,300 1,361
LUXURY GOODS MANUFACTURER
Internationale Nederlanden
Groep N.V. 101,228 3,640
BANKING AND INSURANCE
Koninklijke Ahold N.V. 47,889 2,990
FOOD RETAILER
Randstad Holding N.V. 9,750 703
BUSINESS SERVICES
Royal Dutch Petroleum 9,065 1,587
PETROLEUM PRODUCER
Wolters Kluwer 15,000 1,990
PUBLISHER
-----------------------------------------------------
22,329
- -------------------------------------------------------------------------------------------------------
UNITED KINGDOM--13.4%
- -------------------------------------------------------------------------------------------------------
BBA Group PLC 277,214 1,679
DIVERSIFIED ENGINEERING
COMPANY
Barclays PLC 96,000 1,642
BANKING
(a)British Bio-Technology Group 450,000 1,579
PHARMACEUTICAL COMPANY
British Petroleum 171,530 2,056
PETROLEUM PRODUCER
Dixons Group PLC 216,306 2,014
ELECTRONICS RETAILER
Glaxo Wellcome 185,000 3,006
PHARMACEUTICAL COMPANY
Granada Group PLC 200,000 2,955
ENTERTAINMENT AND
COMMUNICATIONS COMPANY
Laura Ashley Holdings PLC 332,000 963
RETAILER
Next PLC 110,000 1,071
RETAILER
Pearson PLC 43,600 560
MEDIA AND ENTERTAINMENT
COMPANY
Reed International PLC 136,000 2,564
PUBLISHER
Rentokil Group PLC 240,000 1,809
SERVICES COMPANY
-----------------------------------------------------
21,898
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
SWITZERLAND--6.4%
- -------------------------------------------------------------------------------------------------------
Alusuisee-Lonza Holding 2,000 $ 1,559
ALUMINUM, CHEMICALS AND
PACKAGING MANUFACTURER
(a)Novartis 4,160 4,749
PHARMACEUTICAL COMPANY
Roche Holding A.G., with
warrants expiring 1998 525 4,089
PHARMACEUTICAL COMPANY
-----------------------------------------------------
10,397
- -------------------------------------------------------------------------------------------------------
SPAIN--5.6%
- -------------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya 49,600 2,673
BANKING
Empresa Nacional de
Electricidad S.A. 20,000 1,421
ELECTRIC UTILITY
Iberdrola, S.A. 250,000 3,536
ELECTRIC UTILITY
PRYCA Centros, S.A. 70,000 1,480
FOOD RETAILER
-----------------------------------------------------
9,110
- -------------------------------------------------------------------------------------------------------
IRELAND--5.1%
- -------------------------------------------------------------------------------------------------------
Bank of Ireland 278,473 2,521
BANKING
Greencore Group PLC 258,797 1,643
FOOD PRODUCER
Independent Newspapers PLC 443,201 2,250
PUBLISHER
Kerry Group PLC 70,280 717
FOOD PROCESSING
Waterford Wedgewood PLC 977,315 1,257
FINE CHINA AND CRYSTAL
MANUFACTURER
-----------------------------------------------------
8,388
- -------------------------------------------------------------------------------------------------------
FRANCE--5.1%
- -------------------------------------------------------------------------------------------------------
Carrefour S.A. 4,500 2,922
FOOD RETAILER
Christian Dior S.A. 2,500 403
LUXURY GOODS MANUFACTURER
Clarins 7,230 1,058
COSMETIC PRODUCTS
Elf Aquitaine 22,000 1,999
OIL AND GAS PRODUCER
Grand Optical Photoservice 2,500 404
PHOTO DEVELOPING AND
PRESCRIPTION OPTICAL
MANUFACTURING
Rhone Poulenc Rorer 200 16
CHEMICAL AND PHARMACEUTICAL
COMPANY
Technip S.A. 16,400 1,536
ENGINEERING COMPANY
-----------------------------------------------------
8,338
- -------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 48
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
GERMANY--4.7%
- ----------------------------------------------------------------------------
Bayer A.G. 46,000 $ 1,875
CHEMICAL COMPANY
Fresenius A.G. 17,000 1,367
PHARMACEUTICAL COMPANY
Mannesmann A.G. 4,100 1,775
CAPITAL GOODS PRODUCER
SGL CARBON A.G. 7,000 881
CHEMICAL COMPANY
Veba, A.G. 32,000 1,848
ELECTRIC UTILITY
-----------------------------------------------------
7,746
- ----------------------------------------------------------------------------
ITALY--1.8%
- ----------------------------------------------------------------------------
Bulgari SpA 55,000 1,114
LUXURY GOODS MANUFACTURER
Telecom Italia Mobile 700,000 1,766
MOBILE TELECOMMUNICATIONS
PROVIDER
-----------------------------------------------------
2,880
- ----------------------------------------------------------------------------
SWEDEN--1.4%
- ----------------------------------------------------------------------------
L.M. Ericsson Telephone Co.,
"B" 30,000 927
TELECOMMUNICATIONS EQUIPMENT
MANUFACTURER
Getinge Industrier AB 24,750 488
MEDICAL SUPPLY COMPANY
Hoganas AB 24,200 847
ENGINEERING COMPANY
-----------------------------------------------------
2,262
- ----------------------------------------------------------------------------
BELGIUM--.7%
- ----------------------------------------------------------------------------
Generale de Banque 3,200 1,146
BANKING
- ----------------------------------------------------------------------------
DENMARK--.5%
- ----------------------------------------------------------------------------
Copenhagen Airports 7,800 793
AIRPORT OPERATOR
- ----------------------------------------------------------------------------
NORWAY--.4%
- ----------------------------------------------------------------------------
Schibsted A/S 40,450 744
PUBLISHER
- ----------------------------------------------------------------------------
FINLAND--.4%
- ----------------------------------------------------------------------------
(a)Tietotehdas Oy 7,690 636
INFORMATION TECHNOLOGY
-----------------------------------------------------
TOTAL EUROPEAN
COUNTRIES--59.1% 96,667
-----------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
PACIFIC REGION
- ----------------------------------------------------------------------------
JAPAN--21.6%
- ----------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi Ltd. 88,000 $ 1,630
BANKING
Canon Inc. 110,000 2,426
PRECISION INSTRUMENTS
MANUFACTURER
Circle K Japan 27,000 1,163
CONVENIENCE RETAILER
Daifuku Co., Ltd 66,000 830
DIVERSIFIED MACHINERY
MANUFACTURER
Eisai Co., Ltd. 110,000 2,161
PHARMACEUTICAL COMPANY
Honda Motor Co., Ltd. 82,000 2,338
AUTOMOBILE MANUFACTURER
Ishikawajima-Harima
Heavy Industries 465,000 2,063
HEAVY MACHINERY MANUFACTURER
Mabuchi Motor Co., Ltd. 27,300 1,371
ENGINE MANUFACTURER
Matsushita Electric
Industrial Co., Ltd. 165,000 2,687
ELECTRONICS MANUFACTURER
Mitsubishi Heavy Industries 177,000 1,403
INDUSTRIAL EQUIPMENT
MANUFACTURER
Mitsui & Co. Ltd. 225,000 1,822
CONGLOMERATE
Miura Co., Ltd. 43,000 545
BOILER MAKER
Murata Manufacturing 63,000 2,090
ELECTRONIC COMPONENTS
MANUFACTURER
Olympus Optical Co., Ltd. 150,000 1,422
CAMERA AND OPTICAL EQUIPMENT
MANUFACTURER
Ricoh Company, Ltd. 160,000 1,833
OFFICE AUTOMATION EQUIPMENT
MANUFACTURER
Seven Eleven Japan Co., Ltd. 23,000 1,344
CONVENIENCE RETAILER
Sumitomo Metal Industries 610,000 1,498
STEEL MANUFACTURER
Tokyo Style 88,000 1,228
WOMEN'S APPAREL MANUFACTURER
Toray Industries 385,000 2,372
TEXTILE MANUFACTURER
Toyota Motor Corp. 77,000 2,209
AUTOMOBILE MANUFACTURER
Tsubakimoto Chain Co. 175,000 935
CHAIN AND CONVEYOR
MANUFACTURER
-----------------------------------------------------
35,370
- ----------------------------------------------------------------------------
</TABLE>
47
<PAGE> 49
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
HONG KONG--4.5%
- -----------------------------------------------------------
<S> <C> <C>
CITIC Pacific Ltd. 210,000 $ 1,219
CONGLOMERATE
Cheung Kong Holdings Ltd. 138,000 1,227
REAL ESTATE
HSBC Holdings PLC 46,535 996
BANKING
Henderson Land
Development Co., Ltd. 100,000 1,008
PROPERTY DEVELOPER
Hysan Development Co., Ltd. 235,000 936
PROPERTY DEVELOPER
Regal Hotels International
Holdings 3,000,000 1,047
HOTEL OPERATOR
Swire Pacific Ltd., "A" 103,000 982
CONGLOMERATE
-----------------------------------------------------
7,415
- ----------------------------------------------------------
MALAYSIA--2.7%
- -----------------------------------------------------------
DCB Holdings Bhd 260,000 891
BANKING
Edaran Otomobil
Nasional Berhad 33,000 330
AUTOMOBILE DISTRIBUTOR
Hume Industries Bhd 125,000 787
CONSTRUCTION MATERIAL
MANUFACTURER
Kedah Cement Berhad 156,000 309
CEMENT MANUFACTURER
Magnum Corporation Berhad 375,000 727
ENTERTAINMENT AND GAMING
Sungei Way Holdings Berhad 190,000 564
BUILDING MATERIALS COMPANY
U M W Holdings Bhd 153,000 715
EQUIPMENT MANUFACTURER
-----------------------------------------------------
4,323
- ----------------------------------------------------------
SINGAPORE--.8%
- ----------------------------------------------------------
Development Bank of Singapore 61,000 824
BANKING
Fraser & Neave Ltd. 41,000 422
BEER AND SOFT DRINK
MANUFACTURER
-----------------------------------------------------
1,246
-----------------------------------------------------
TOTAL PACIFIC REGION--29.6% 48,354
-----------------------------------------------------
COMMONWEALTH COUNTRIES
- ----------------------------------------------------------
CANADA--5.0%
- ----------------------------------------------------------
Canadian National
Railway Company 84,000 3,192
RAILWAY COMPANY
Petro-Canada 232,700 2,531
OIL AND GAS COMPANY
(a)Philip Environmental 166,500 2,414
WASTE COLLECTION AND
RECYCLING COMPANY
-----------------------------------------------------
8,137
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
AUSTRALIA--1.2%
- ----------------------------------------------------------
<S> <C> <C>
Aristocrat 152,105 $ 395
ENTERTAINMENT
Tabcorp Holdings Ltd. 338,400 1,613
ENTERTAINMENT AND GAMING
-----------------------------------------------------
2,008
- ----------------------------------------------------------
NEW ZEALAND--.7%
- ----------------------------------------------------------
Tranz Rail Holdings Ltd. 63,100 1,116
TRANSPORTATION
-----------------------------------------------------
TOTAL COMMONWEALTH COUNTRIES--6.9%
11,261
-----------------------------------------------------
LATIN AMERICA
- ----------------------------------------------------------
MEXICO--3.3%
- ----------------------------------------------------------
Cementos Mexicanos, S.A. de
C.V., "B," ADR 415,100 1,628
CEMENT PRODUCER
Fomento Economico Mexicano de
C.V., "B," ADR 287,000 976
BEER AND SOFT DRINK
MANUFACTURER
Grupo Carso, S.A. de C.V., ADR 164,000 865
INDUSTRIAL CONGLOMERATE
Grupo Televisa, S.A., GDR 29,000 743
MEDIA AND BROADCASTING
COMPANY
(a)Tubos de Acero de
Mexico, S.A., ADR 70,500 1,119
STEEL MANUFACTURER
-----------------------------------------------------
5,331
- ----------------------------------------------------------
PERU--.4%
- ----------------------------------------------------------
Telefonica del Peru S.A., ADS 38,700 730
TELECOMMUNICATION SERVICES
- ----------------------------------------------------------
BRAZIL--.1%
- ----------------------------------------------------------
(a)Iochpe-Maxion 3,505,000 202
AUTO PARTS AND MACHINERY
MANUFACTURER
-----------------------------------------------------
TOTAL LATIN AMERICAN COUNTRIES--3.8%
6,263
-----------------------------------------------------
TOTAL COMMON STOCKS--99.4%
(COST: $132,888) 162,545
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.6% 930
-----------------------------------------------------
NET ASSETS--100% $163,475
-----------------------------------------------------
</TABLE>
48
<PAGE> 50
PORTFOLIO OF INVESTMENTS
At December 31, 1996, the International Portfolio had the following industry
diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
--------------------------------------------------------------------------------------
<S> <C> <C>
Finance $ 29,774 18.2
--------------------------------------------------------------------------------------
Consumer Cyclicals 29,028 17.8
--------------------------------------------------------------------------------------
Capital Goods 20,855 12.8
--------------------------------------------------------------------------------------
Health Care 17,859 10.9
--------------------------------------------------------------------------------------
Basic Industries 16,568 10.1
--------------------------------------------------------------------------------------
Technology 13,392 8.2
--------------------------------------------------------------------------------------
Consumer Staples 12,494 7.6
--------------------------------------------------------------------------------------
Utilities 9,301 5.7
--------------------------------------------------------------------------------------
Energy 8,173 5.0
--------------------------------------------------------------------------------------
Transportation 5,101 3.1
--------------------------------------------------------------------------------------
Total Common Stocks 162,545 99.4
--------------------------------------------------------------------------------------
Other Net Assets 930 0.6
--------------------------------------------------------------------------------------
Net Assets $163,475 100.0
--------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO INTERNATIONAL PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $132,888,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $32,877,000, the
gross unrealized depreciation was $3,220,000 and the net unrealized appreciation
on investments was $29,657,000.
See accompanying Notes to Financial Statements.
49
<PAGE> 51
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--6.7%
- --------------------------------------------------------------------------------------------
(a)Culligan Water Technologies 19,000 $ 770
(a)Fort Howard Corp. 62,500 1,730
Gentex Corp. 26,000 523
NuCo2, Inc. 17,000 226
Philip Environmental 65,000 943
Steel Dynamics, Inc. 23,900 457
-----------------------------------------------------
4,649
- --------------------------------------------------------------------------------------------
CAPITAL GOODS--4.2%
- --------------------------------------------------------------------------------------------
BE Aerospace, Inc. 23,000 624
(a)KLA Instruments 28,500 1,012
Precision Castparts Corp. 15,600 774
(a)Rofin-Sinar Technologies,
Inc. 40,900 481
-----------------------------------------------------
2,891
- --------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--12.3%
- --------------------------------------------------------------------------------------------
Gaylord Entertainment Co. 41,000 938
(a)Getty Communications PLC 40,000 600
(a)MGM Grand 32,500 1,133
(a)MSC Industrial Direct 31,100 1,151
Meredith Corp. 20,300 1,071
Outdoor Systems, Inc. 36,000 1,013
Pier 1 Imports 23,000 405
(a)Planet Hollywood Int'l Inc. 28,000 553
Steiner Leisure 12,500 252
U.S. Franchise Systems, Inc. 45,000 456
Univision Communications,
Inc. 9,500 352
Western Teleaservices 24,000 546
-----------------------------------------------------
8,470
- --------------------------------------------------------------------------------------------
CONSUMER DURABLES--4.2%
- --------------------------------------------------------------------------------------------
Ethan Allen Interiors 13,800 531
SPX Corp. 35,000 1,356
(a)Triangle Pacific Corp. 42,500 1,023
-----------------------------------------------------
2,910
- --------------------------------------------------------------------------------------------
CONSUMER STAPLES--4.2%
- --------------------------------------------------------------------------------------------
(a)ABR Information Services 12,000 473
CKE Restaurants 16,000 576
K-III Communications
Corporation 60,000 645
Stewart Enterprises 35,250 1,199
-----------------------------------------------------
2,893
- --------------------------------------------------------------------------------------------
ENERGY--.9%
- --------------------------------------------------------------------------------------------
Trico Marine Services, Inc. 9,500 456
Western Gas Resources 10,000 193
-----------------------------------------------------
649
<CAPTION>
- --------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
FINANCE--18.1%
- --------------------------------------------------------------------------------------------
BA Merchant Services 32,000 $ 572
(a)Coast Savings Financial 25,000 916
Columbia Banking Systems 50,000 813
Commercial Federal Corp. 18,000 864
DST Systems, Inc. 40,000 1,255
Executive Risk 22,500 833
(a)Financial Federal Corporation 62,000 1,039
HCC Insurance Holdings 27,500 660
Kansas City Southern
Industries 9,200 414
Long Island Bancorp 14,000 490
Paychex 10,000 514
Quick and Reilly Group 30,500 911
Redwood Trust 8,800 328
SunGard Data Systems 11,500 454
Texas Regional Bancshares 18,300 622
Western National Corporation 18,000 347
Wilmington Trust Corp. 37,500 1,481
-----------------------------------------------------
12,513
- --------------------------------------------------------------------------------------------
HEALTH CARE--12.4%
- --------------------------------------------------------------------------------------------
(a)CRA Managed Care, Inc. 15,000 675
(a)Dura Pharmaceuticals 25,000 1,194
Mentor Corp. 25,000 738
(a)OccuSystems, Inc. 12,300 332
Omnicare, Inc. 43,000 1,381
Physician Sales & Service 30,000 431
(a)Henry Schein, Inc. 15,500 533
(a)Sofamor-Danek Group 21,000 641
(a)Steris Corp. 38,000 1,653
(a)Total Renal Care Holdings 27,300 990
-----------------------------------------------------
8,568
- --------------------------------------------------------------------------------------------
TECHNOLOGY--23.7%
- --------------------------------------------------------------------------------------------
Adobe Systems 19,000 710
(a)Altera Corp. 22,500 1,635
(a)Analog Devices 46,000 1,558
(a)Andrew Corp. 15,000 796
(a)Ciber, Inc. 15,000 450
(a)Dupont Photomasks, Inc. 14,000 635
(a)Electronic Arts 26,000 778
(a)Gartner Group 28,500 1,110
(a)Geoworks 22,500 551
(a)HNC Software 26,500 828
(a)Informix Corp. 51,200 1,043
(a)Keane, Inc. 30,800 978
(a)Kulicke & Soffa Industries 42,500 808
(a)McAfee Associates, Inc. 10,800 472
(a)Microchip Technology 21,000 1,068
(a)Parametric Technology Corp. 11,500 591
(a)Puma Technologies 35,000 604
(a)Read-Rite Corp. 26,500 669
(a)Tellabs Operations 15,000 564
(a)Wind River Systems, Inc. 11,000 521
-----------------------------------------------------
16,369
- --------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE> 52
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION--2.4%
(a) Wisconsin Central
Transportation 41,900 $ 1,660
- ----------------------------------------------------------------------------------------------------
UTILITIES--1.1%
(a) LCI International, Inc. 36,200 778
------------------------------------------------------------------
TOTAL COMMON STOCKS--90.2%
(COST: $54,100) 62,350
------------------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.46% to 7.15%
Due--January and February 1997
Enron Corporation $ 2,500 2,500
Renaissance Energy Co. 2,500 2,486
Other 4,000 3,995
------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--13.0%
(COST: $8,982) 8,981
------------------------------------------------------------------
TOTAL INVESTMENTS--103.2%
(COST: $63,082) 71,331
------------------------------------------------------------------
LIABILITIES, LESS CASH AND OTHER
ASSETS--(3.2)% (2,194)
------------------------------------------------------------------
NET ASSETS--100% $ 69,137
------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO SMALL CAP GROWTH PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $63,082,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $9,430,000, the
gross unrealized depreciation was $1,181,000 and the net unrealized appreciation
on investments was $8,249,000.
See Accompanying Notes to Financial Statements.
51
<PAGE> 53
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND INVESTMENT GRADE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY NOTES--5.0%
(Cost: $100) $100 $ 100
------------------------------------------------------------
CORPORATE OBLIGATIONS
AEROSPACE--2.9%
Lockheed Corp.,
7.70%, 2008 10 10
Lockheed Martin,
7.25%, 2006 50 51
------------------------------------------------------------
61
- -------------------------------------------------------------------------------------------------------
BANKS--19.2%
- -------------------------------------------------------------------------------------------------------
Abbey National PLC,
7.35%, 2049 50 51
BCH Cayman Islands Limited,
7.70%, 2006 20 21
Corporation Andina De Formento,
7.10%, 2003 100 100
MBNA Corp.,
8.278%, 2026 100 101
Peoples Bank Bridgeport,
7.20%, 2006 50 49
Societe Generale,
7.40%, 2006 10 10
SunTrust Banks,
7.25%, 2006 50 51
------------------------------------------------------------
383
- -------------------------------------------------------------------------------------------------------
COMMUNICATIONS, MEDIA
AND ELECTRONICS--5.6%
- -------------------------------------------------------------------------------------------------------
News American Holdings, Inc.,
9.25%, 2013 100 112
- -------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS, SERVICES
AND RETAIL--14.1%
- -------------------------------------------------------------------------------------------------------
Dimon Inc.,
8.875%, 2006 100 105
Rite Aid Corp.,
7.70%, 2027 100 101
Royal Caribbean Cruises Ltd.,
8.25%, 2005 70 75
------------------------------------------------------------
281
- -------------------------------------------------------------------------------------------------------
DRUGS AND HEALTH CARE--2.5%
- -------------------------------------------------------------------------------------------------------
MedPartners, Inc.,
7.375%, 2006 50 50
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
ENERGY--15.5%
Enersis S.A.,
7.40%, 2016 $ 50 $ 49
Freeport-McMoRan, Inc.,
7.20%, 2026 50 49
Freeport-McMoRan Resource Partners,
Ltd.,
7.00%, 2008 100 97
Gulf Canada Resources,
8.35%, 2006 50 52
ISP Holdings,
9.00%, 2003 50 51
Parker & Parsley Petroleum,
8.25%, 2007 10 11
------------------------------------------------------------
309
- -------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--5.5%
- -------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings,
7.25%, 2003 50 51
Mellon Corp.,
7.72%, 2026 50 49
Salomon Inc.,
7.50%, 2003 10 10
------------------------------------------------------------
110
- -------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS--5.6%
- -------------------------------------------------------------------------------------------------------
Domtar, Inc.,
9.50%, 2016 50 54
James River Corporation,
9.25%, 2021 50 58
------------------------------------------------------------
112
- -------------------------------------------------------------------------------------------------------
UTILITIES--2.4%
- -------------------------------------------------------------------------------------------------------
Tenega Nasional Berhad,
7.50%, 2096 50 48
------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--73.3%
(COST: $1,465) 1,466
------------------------------------------------------------
MONEY MARKET INSTRUMENTS--20.0%
(COST: $399)
Yield--5.37%
Due--January 1997
Federal Home Loan Mortgage
Corporation 400 399
------------------------------------------------------------
TOTAL INVESTMENTS--98.3%
(COST: $1,964) 1,965
------------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.7% 33
------------------------------------------------------------
NET ASSETS--100% $ 1,998
------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE TO INVESTMENT GRADE BOND PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $1,964,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $9,000, the gross
unrealized depreciation was $8,000 and the net unrealized appreciation on
investments was $1,000.
See accompanying Notes to Financial Statements.
52
<PAGE> 54
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------
BANKS--11.2%
- ---------------------------------------------------------------------------------------------------
Banc One Corporation 6,200 $ 267
Bank of New York Co. 2,400 81
BankAmerica Corp. 1,800 179
Bankers Trust New York Corp. 1,200 104
Barnett Banks 4,400 181
Crestar Financial Corp. 1,000 74
First Chicago NBD Corp. 3,500 188
First Union Corp. 2,700 200
Fleet Financial Group, Inc. 1,200 60
KeyCorp 3,300 167
NationsBank 2,200 215
Norwest Corp. 2,100 91
Signet Banking Corp. 5,600 172
PNC Bank Corp., N.A. 5,900 222
Wells Fargo & Co. 700 189
-----------------------------------------------------
2,390
- ---------------------------------------------------------------------------------------------------
BASIC INDUSTRIES--5.1%
- ---------------------------------------------------------------------------------------------------
Champion International
Corporation 4,500 195
Dow Chemical Co. 1,500 117
Georgia-Pacific Corp. 3,000 216
Louisiana-Pacific Corp. 14,000 296
Union Camp Corp. 5,500 263
-----------------------------------------------------
1,087
- ---------------------------------------------------------------------------------------------------
CAPITAL GOODS--3.1%
- ---------------------------------------------------------------------------------------------------
General Electric Co. 2,200 218
Xerox Corporation 8,500 447
-----------------------------------------------------
665
- ---------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--6.0%
- ---------------------------------------------------------------------------------------------------
(a)Burlington Coat Factory 4,600 60
Liz Claiborne 1,300 50
Deluxe Corporation 10,000 328
(a)Fruit of the Loom 2,300 87
J.C. Penney Co. 8,000 390
Philips N.V., ADR 7,500 300
V.F. Corp. 900 61
-----------------------------------------------------
1,276
- ---------------------------------------------------------------------------------------------------
CONSUMER DURABLES--3.0%
- ---------------------------------------------------------------------------------------------------
Ford Motor Co. 20,000 637
<CAPTION>
- ---------------------------------------------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER STAPLES--11.2%
- ---------------------------------------------------------------------------------------------------
Chiquita Brands International 15,000 $ 191
Nestle S.A., ADR 8,000 426
Phillip Morris Companies 8,200 923
UST, Inc. 15,400 499
Unilever N.V., ADR 2,000 351
-----------------------------------------------------
2,390
- ---------------------------------------------------------------------------------------------------
ENERGY--11.1%
- ---------------------------------------------------------------------------------------------------
AMOCO Corp. 9,700 781
Atlantic Richfield Co. 3,000 397
Chevron Corp. 5,000 325
Columbia Gas System 5,800 369
Exxon Corp. 5,000 490
-----------------------------------------------------
2,362
- ---------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--15.7%
- ---------------------------------------------------------------------------------------------------
ADVANTA Corp. 7,000 286
H.F. Ahmanson & Co. 2,300 75
American General Corp. 5,100 208
American International Group,
Inc. 6,600 714
Beneficial Corp. 4,000 253
Federal Home Loan Mortgage Corp. 4,900 540
Federal National Mortgage
Association 15,600 581
General Re Corp. 2,000 316
Great Western Financial Corp. 6,200 180
Transamerica Corp. 2,500 197
-----------------------------------------------------
3,350
- ---------------------------------------------------------------------------------------------------
HEALTH CARE--4.6%
- ---------------------------------------------------------------------------------------------------
C.R. Bard 15,000 420
Becton Dickinson & Co. 6,000 260
Glaxo Wellcome, ADR 9,700 308
-----------------------------------------------------
988
- ---------------------------------------------------------------------------------------------------
TECHNOLOGY--5.8%
- ---------------------------------------------------------------------------------------------------
AMP Incorporated 11,000 422
Hewlett-Packard Co. 5,000 251
Raytheon Co. 5,500 265
Texas Instruments 4,500 287
-----------------------------------------------------
1,225
- ---------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 55
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UTILITIES--7.6%
AT&T 8,500 $ 370
GTE Corp. 9,000 410
SBC Communications Inc. 5,000 259
Southern Company 18,000 407
U.S. West Communications Group 5,000 161
----------------------------------------------------------
1,607
----------------------------------------------------------
TOTAL COMMON STOCKS--84.4%
(COST: $16,580) 17,977
----------------------------------------------------------
- -------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.23% to 5.51%
Due--January 1997
Federal Home Loan Mortgage
Corporation $ 1,300 $ 1,296
Federal National Mortgage
Association 2,000 1,995
----------------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--15.4%
(COST: $3,291) 3,291
----------------------------------------------------------
TOTAL INVESTMENTS--99.8%
(COST: $19,871) 21,268
----------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.2% 37
----------------------------------------------------------
NET ASSETS--100% $ 21,305
----------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
NOTES TO VALUE PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $19,871,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $1,500,000, the
gross unrealized depreciation was $103,000 and the net unrealized appreciation
on investments was $1,397,000.
See accompanying Notes to Financial Statements.
54
<PAGE> 56
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUTOS AND TRANSPORTATION--7.4%
Airborne Freight Corporation 8,900 $ 208
Fleetwood Enterprises 5,000 137
Intermet Corp. 14,500 234
Myers Industries 11,500 194
Simpson Industries 5,400 59
Walbro Corp. 8,700 159
---------------------------------------------------
991
- --------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--9.3%
(a) AMC Entertainment 8,400 121
J. Baker, Inc. 6,400 34
Bush Industries 3,500 67
Cato Corp. 9,700 48
Del Webb Corp. 13,600 223
Fedders Corporation 18,500 116
Haggar Apparel Co. 9,600 152
Heilig-Meyers 13,200 215
Hilton Hotels Corp. 4,500 118
(a) Insurance Auto Auctions 8,100 77
(a) Sports & Recreation 8,500 66
---------------------------------------------------
1,237
- --------------------------------------------------------------------------------------------------
CONSUMER STAPLES--.7%
(a) Performance Food Group 6,000 93
---------------------------------------------------
- --------------------------------------------------------------------------------------------------
ENERGY--9.3%
(a) Belden & Blake Corporation 3,500 89
(a) Chieftain International Inc. 9,000 234
Enron Global Power & Pipelines
L.L.C. 5,400 146
Giant Industries 10,000 140
KCS Energy 4,500 161
(a) Nuevo Energy Co. 4,500 234
(a) Seitel, Inc. 5,900 236
---------------------------------------------------
1,240
- --------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--18.8%
(a) Arbatax International, Inc. 3,250 21
Compass Bancshares 4,700 187
Cullen Frost Bankers 7,800 259
First Commerce Corp. 3,500 136
First Financial Caribbean
Corp. 9,400 261
First Financial Corp. 9,125 224
Guaranty National Insurance 706 12
Imperial Credit Industries 12,200 256
Integon Corp. 13,100 233
Lawyers Title Insurance Corp. 4,400 86
Liberty Bancorp 1,500 75
Long Island Bancorp 4,300 151
North Fork Bancorp 2,800 100
PHH Corporation 6,900 297
Roosevelt Financial Group 3,600 76
T.R. Financial Corporation 3,500 124
---------------------------------------------------
2,498
- --------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEGRATED OILS--1.9%
Tesoro Petroleum Corp. 17,800 $ 249
---------------------------------------------------
- --------------------------------------------------------------------------------------------------
MATERIALS AND PROCESSING--16.3%
AK Steel Holding Corp. 6,300 250
AMCOL International 11,100 175
Ball Corp. 5,900 153
Blount, Inc. 8,400 322
Carpenter Technology Corp. 7,200 264
Elcor Corp. 9,000 192
(a) Global Industrial
Technologies,
Inc. 11,400 252
(a) Lydall, Inc. 6,800 153
(a) Mueller Industries, Inc. 3,500 135
Quanex Corp. 6,300 172
Rexene Corp. 7,300 99
---------------------------------------------------
2,167
- --------------------------------------------------------------------------------------------------
PRODUCER DURABLES--8.7%
(a) Asyst Technologies 4,400 75
(a) Electroglas 10,000 161
Pacific Scientific Co. 9,800 110
Scientific-Atlanta 16,800 252
Stewart & Stevenson Services 8,600 250
(a) Teltrend 4,200 117
Watts Industries, Inc. 8,200 196
---------------------------------------------------
1,161
- --------------------------------------------------------------------------------------------------
TECHNOLOGY--9.2%
(a) Benchmark Electronics 6,900 208
(a) Burr Brown Corp. 5,800 151
(a) Diamond Multimedia Systems,
Inc. 2,700 32
(a) EXAR Corporation 7,100 110
(a) Jones Intercable Inc. 21,600 224
(a) Photronics, Inc. 2,600 71
(a) Proxima Corp. 6,400 82
(a) Read-Rite Corp. 5,100 129
(a) Tech-Sym Corporation 7,400 220
---------------------------------------------------
1,227
- --------------------------------------------------------------------------------------------------
UTILITIES--2.8%
(a) Atlantic Tele-Network 11,500 175
United Cities Gas Co. 8,500 191
--------------------------------------------------
366
- --------------------------------------------------------------------------------------------------
OTHER--.5%
Mercer International, Inc. 7,100 73
---------------------------------------------------
TOTAL COMMON STOCKS--84.9%
(COST: $10,558) 11,302
---------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE> 57
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
- --------------------------------------------------------------------------------
Yield--5.32% to 5.51%
Due--January 1997
Federal Farm Credit Bank $ 250 $ 249
Federal Home Loan Mortgage
Corporation 700 699
Federal National Mortgage
Association 1,000 997
------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--14.6%
(COST: $1,945) 1,945
------------------------------------------------------------
TOTAL INVESTMENTS--99.5%
(COST: $12,503) 13,247
------------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.5% 60
------------------------------------------------------------
NET ASSETS--100% $13,307
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO SMALL CAP VALUE PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $12,503,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $1,114,000, the
gross unrealized depreciation was $370,000 and the net unrealized appreciation
on investments was $744,000.
See accompanying Notes to Financial Statements.
56
PORTFOLIO OF INVESTMENTS
<PAGE> 58
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND VALUE+GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--3.0%
Champion International Corp. 2,000 $ 87
(a)FMC Corp. 1,200 84
Hanson PLC, ADR 10,000 68
Louisiana-Pacific Corp. 2,800 59
(a)Millennium Chemicals Inc. 250 4
------------------------------------------------------
302
- --------------------------------------------------------------------------------------------------
CAPITAL GOODS--5.5%
- --------------------------------------------------------------------------------------------------
Emerson Electric Co. 800 77
General Electric Co. 1,000 99
B.F. Goodrich Co. 2,500 101
Raytheon Co. 1,500 72
(a)U.S. Filter Corp. 3,000 95
York International Corp. 2,000 112
------------------------------------------------------
556
- --------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--22.8%
- --------------------------------------------------------------------------------------------------
American Greetings Corp. 3,600 102
(a)AutoZone 4,200 116
Brunswick Corp. 4,300 103
Carnival Corp. 3,100 102
Circuit City Stores 2,300 69
(a)Consolidated Stores Corp. 3,375 109
Dayton Hudson Corp. 2,200 86
Deluxe Corporation 3,000 98
Dillard Department Stores 1,200 37
Walt Disney Company 1,300 91
(a)Fruit of the Loom 2,100 80
Gap 3,200 96
Heilig-Meyers 6,300 102
(a)Liberty Media Group, "A" 3,000 86
(a)Lone Star Steakhouse & Saloon 4,000 107
(a)MGM Grand 1,000 35
Mattel, Inc. 2,800 78
(a)Outback Steakhouse 3,300 88
J.C. Penney Co. 1,600 78
Philips N.V., ADR 1,700 68
TJX Companies, Inc. 1,200 57
(a)Tele-Communications, Inc. 7,100 93
(a)Toys R Us 2,400 72
UST, Inc. 3,400 110
V.F. Corp. 1,000 67
(a)Viacom International, "B" 2,500 87
Wal-Mart Stores 2,200 50
Wendy's International 3,000 61
------------------------------------------------------
2,328
- --------------------------------------------------------------------------------------------------
CONSUMER DURABLES--4.3%
- --------------------------------------------------------------------------------------------------
Ford Motor Co. 2,000 64
(a)Lear Corporation 1,800 61
Leggett & Platt Incorporated 3,500 121
Magna International Inc., "A" 1,800 100
Singer Company N.V. 4,100 92
------------------------------------------------------
438
- --------------------------------------------------------------------------------------------------
CONSUMER STAPLES--2.2%
- --------------------------------------------------------------------------------------------------
(a)Imperial Tobacco Group, ADR 875 11
Philip Morris Companies 1,300 146
Quaker Oats Co. 1,800 69
------------------------------------------------------
226
<CAPTION>
- --------------------------------------------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
ENERGY--5.6%
- --------------------------------------------------------------------------------------------------
AMOCO Corp. 1,500 $ 121
Amerada Hess Corp. 1,800 104
Atlantic Richfield Co. 1,000 133
Columbia Gas System 1,800 115
Union Texas Petroleum Holdings 4,500 101
------------------------------------------------------
574
- --------------------------------------------------------------------------------------------------
FINANCE--18.1%
- --------------------------------------------------------------------------------------------------
ADVANTA Corp. 1,700 73
American General Corp. 800 33
Banc One Corporation 1,700 73
Bank of New York Co. 2,600 88
BankAmerica Corp. 600 60
Bankers Trust New York Corp. 600 52
Barnett Banks 1,500 62
Crestar Financial Corp. 700 52
Federal Home Loan Mortgage Corp. 800 88
Federal National Mortgage
Association 3,600 134
First Chicago NBD Corp. 2,000 108
First USA 3,100 107
First Union Corp. 1,300 96
Fleet Financial Group, Inc. 1,400 70
General Re Corp. 500 79
ITT Hartford Group 1,500 101
Jefferson-Pilot Corp. 1,500 85
KeyCorp 1,000 51
MGIC Investment Corp. 1,200 91
J.P. Morgan & Company 400 39
NationsBank 1,000 98
PNC Bank Corp., N.A. 2,000 75
Signet Banking Corp. 2,400 74
Travelers Group 1,200 54
------------------------------------------------------
1,843
- --------------------------------------------------------------------------------------------------
HEALTH CARE--11.3%
- --------------------------------------------------------------------------------------------------
Abbott Laboratories 1,200 61
Astra A.B., ADR 2,100 103
C.R. Bard 3,000 84
(a)Forest Laboratories 2,900 95
(a)Foundation Health Corp. 3,000 95
(a)HealthCare COMPARE Corp. 1,200 51
(a)Humana, Inc. 5,000 96
Eli Lilly & Co 900 66
Mallinckrodt Group 2,200 97
Merck & Co., Inc. 1,000 79
(a)Novartis, ADR 1,800 102
(a)St. Jude Medical 1,600 68
United Healthcare Corp. 2,100 95
(a)Value Health 3,000 58
------------------------------------------------------
1,150
- --------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE> 59
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------
TECHNOLOGY--19.1%
- ------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
AMP, Incorporated 2,200 $ 84
(a)Applied Materials, Inc. 2,700 97
(a)Atmel Corporation 2,800 93
(a)Bay Networks 3,000 63
(a)Cabletron Systems 2,500 83
(a)Cisco Systems 1,600 102
(a)Compaq Computer Corp. 1,600 119
(a)DSC Communications Corp. 3,200 57
(a)EMC Corp. 3,100 103
(a)Gateway 2000 1,900 102
Hewlett-Packard Co. 1,000 50
International Business Machines 200 30
(a)Learning Company 7,500 108
Linear Technology Corp. 2,000 88
(a)Maxim Integrated Products 2,300 99
(a)Novellus Systems 1,600 87
(a)Seagate Technology 2,400 95
(a)Silicon Graphics Inc. 4,000 102
(a)3Com Corporation 1,500 110
(a)TCI Satellite 710 7
(a)U.S. Robotics 1,500 108
(a)Western Digital Corp. 1,000 57
Xerox Corporation 2,000 105
------------------------------------------------------
1,949
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
<C> <S> <C> <C>
- ------------------------------------------------------------------------------------------------------
TRANSPORTATION--.4%
- ------------------------------------------------------------------------------------------------------
Ryder System Inc. 1,500 $ 42
- ------------------------------------------------------------------------------------------------------
UTILITIES--5.5%
- ------------------------------------------------------------------------------------------------------
AT&T 2,000 87
(a)AirTouch Communications 3,500 88
Ameritech Corp. 800 49
GTE Corp. 1,500 68
(a)Paging Network, Inc. 6,000 91
SBC Communications Inc. 600 31
Southern Company 3,000 68
(a)WorldCom, Inc. 3,000 78
------------------------------------------------------
560
------------------------------------------------------
TOTAL COMMON STOCKS--97.8%
(COST: $9,330) 9,968
------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--2.2% 228
------------------------------------------------------
NET ASSETS--100% $10,196
------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO VALUE+GROWTH PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $9,330,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $822,000, the gross
unrealized depreciation was $184,000 and the net unrealized appreciation on
investments was $638,000.
See accompanying Notes to Financial Statements.
58
<PAGE> 60
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND HORIZON 20+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES--18.7%
(Cost: $706)
8.00%, 1999 $ 100 $ 105
7.75%, 1999 100 105
6.00%, 1999 300 300
5.50%, 2000 200 195
---------------------------------------------------
705
- -----------------------------------------------------------
COMMON STOCKS
- -----------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--3.2%
Bayer A.G. 493shs. 20
(a) CRA Managed Care, Inc. 200 9
Cementos Mexicanos, S.A. de
C.V., "B," ADR 5,000 19
(a) FMC Corp. 300 21
(a) Global Industrial Technology,
Inc. 200 4
Hanson PLC, ADR 2,500 17
Louisiana-Pacific Corp. 600 13
Millennium Chemicals Inc. 107 2
(a) Philip Environmental 500 7
Toray Industries 1,500 9
---------------------------------------------------
121
- -----------------------------------------------------------
CAPITAL GOODS--5.1%
Blount, Inc., "A" 100 4
Emerson Electric Co. 200 19
Foster Wheeler Corporation 700 26
General Electric Co. 400 40
Honda Motor Co., Ltd. 1,100 31
PHH Corporation 200 9
Quanex Corp. 100 3
Raytheon Co. 100 5
(a) Triangle Pacific Corp. 200 5
U.S. Filter Corp. 700 22
York International Corp. 500 28
---------------------------------------------------
192
- -----------------------------------------------------------
CONSUMER CYCLICALS--16.6%
American Greetings Corp. 700 $ 20
(a) AutoZone 800 22
Brunswick Corp. 600 14
Carnival Corp. 600 20
Carrefour S.A. 32 21
Circuit City Stores 500 15
(a) Consolidated Stores Corp. 500 16
Dayton Hudson Corp. 500 20
Deluxe Corp. 500 16
Dillard Department Stores 600 19
Walt Disney Company 400 28
Ethan Allen Interiors 200 8
(a) Fruit of the Loom 1,000 38
Gap 800 24
Granada Group PLC 1,766 26
Heilig-Meyers 1,500 24
(a) Liberty Media Group, "A" 500 14
(a) Lone Star Steakhouse & Saloon 1,000 27
(a) MGM Grand 600 21
Mattel, Inc. 600 17
Meredith Corp. 200 11
Nutricia Verenigde Bedryven
N.V. 105 16
(a) Outback Steakhouse 500 13
Philips N.V., ADR 500 20
Randstad Holding N.V. 166 12
Reed International PLC 1,286 24
TJX Companies, Inc. 200 9
Talbots Inc. 100 3
(a) Tele-Communications, Inc. 700 9
(a) Toys R Us 800 24
UST, Inc. 1,000 32
V.F. Corp. 100 7
(a) Viacom International, "B" 400 14
Wal-Mart Stores 200 5
Wendy's International 800 16
---------------------------------------------------
625
- -----------------------------------------------------------
CONSUMER DURABLES--2.8%
Ford Motor Co. 300 10
Leggett & Platt Incorporated 500 17
Magna International Inc., "A" 400 22
Matsushita Electric
Industries Co., Ltd. 1,850 30
Singer Company N.V. 1,200 27
---------------------------------------------------
106
- -----------------------------------------------------------
CONSUMER STAPLES--3.5%
(a) Carriage Services, Inc. 200 4
Imperial Tobacco Group, ADR 375 5
Independent Newspapers PLC 4,860 25
(a) Insurance Auto Auctions 400 4
Koninklijke Ahold N.V. 330 21
Newell Co. 800 25
Philip Morris Companies 300 34
Quaker Oats Co. 400 15
---------------------------------------------------
133
</TABLE>
59
<PAGE> 61
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY--3.6%
AMOCO Corp. 300 $ 24
Amerada Hess Corp. 200 12
Atlantic Richfield Co. 200 27
British Petroleum 1,753 21
Columbia Gas System 300 19
Giant Industries 300 4
KCS Energy 100 4
Union Texas Petroleum Holdings 1,000 22
-----------------------------------------------------
133
- ----------------------------------------------------------------------------
FINANCE--12.8%
American General Corp. 200 8
Banc One Corporation 300 13
BankAmerica Corp. 200 20
Bank of New York Co. 500 17
Bankers Trust New York Corp. 200 17
Barnett Banks 800 33
CITIC Pacific Ltd. 4,500 26
Crestar Financial Corp. 200 15
DCB Holdings Berhad 3,000 10
Del Webb Corp. 100 2
Executive Risk 100 4
Federal Home Loan Mortgage Corp. 200 22
Federal National Mortgage
Association 800 30
(a) Financial Federal Corporation 200 3
First Chicago NBD Corp. 400 22
First USA 600 21
First Union Corp. 300 22
Fleet Financial Group, Inc. 300 15
HSBC Holding PLC, ADR 800 17
Imperial Credit Industries 200 4
Internationale Nederlanden
Groep N.V. 589 21
Kansas City Southern Industries 200 9
KeyCorp 300 15
MGIC Investment Corp. 200 15
Mercer International 300 3
J.P. Morgan & Company 200 20
NationsBank 300 29
PNC Bank Corp., N.A. 400 15
Roosevelt Financial Group 200 4
Signet Banking Corp. 400 12
Texas Regional Bankshares 100 3
Travelers Group 333 15
-----------------------------------------------------
482
- ----------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE--9.4%
Abbott Laboratories 200 $ 10
Astra A.B., ADR 500 25
C.R. Bard 1,000 28
(a) British Bio-Technology Group 4,310 15
(a) Forest Laboratories 500 16
(a) Foundation Health Corp. 700 22
(a) Fresenius Medical Care, ADS 272 22
(a) HealthCare COMPARE Corp. 400 17
(a) Humana, Inc. 1,200 23
Eli Lilly & Co. 100 7
Mallinckrodt Group 200 9
Merck & Co., Inc. 200 16
(a) Nellcor Puritan Bennett
Incorporated 1,000 22
(a) Novartis
ADR 600 34
common stock 21 24
(a) OccuSystems, Inc. 100 3
(a) St. Jude Medical 400 17
(a) Henry Schein, Inc. 100 3
(a) Steris Corp. 400 17
(a) Tenet Healthcare Corporation 200 4
United Healthcare Corp. 400 18
-----------------------------------------------------
352
- ----------------------------------------------------------------------------
TECHNOLOGY--15.3%
(a) Applied Materials, Inc. 1,000 36
(a) Atmel Corporation 800 27
(a) Bay Networks 900 19
(a) Cabletron Systems 600 20
Canon, Inc. 900 20
(a) Cisco Systems 300 19
(a) Compaq Computer Corp. 500 37
(a) EMC Corp. 700 23
L.M. Ericsson Telephone Co.,
"B" 674 21
(a) Gateway 2000 500 27
(a) Informix Corp. 1,000 20
International Business Machines 100 15
(a) Learning Company 1,700 24
Linear Technology Corp. 400 18
(a) Marshall Industries 100 3
(a) Maxim Integrated Products 200 9
Murata Manufacturing 200 7
(a) Novellus Systems 400 22
(a) Quantum Corporation 700 20
(a) Seagate Technology 300 12
(a) Silicon Graphics Inc. 600 15
(a) Sterling Commerce 800 28
(a) TCI Satellite 70 1
(a) Teradyne 1,000 24
(a) 3Com Corporation 600 44
(a) U.S. Robotics 200 14
(a) Western Digital Corp. 300 17
Xerox Corporation 600 32
-----------------------------------------------------
574
- ----------------------------------------------------------------------------
TRANSPORTATION--.9%
Canadian National Railway
Company 550 21
(a) Knight Transportation 200 4
Ryder System Inc. 300 8
-----------------------------------------------------
33
- ----------------------------------------------------------------------------
</TABLE>
60
<PAGE> 62
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
UTILITIES--4.4%
- --------------------------------------------------------------------------
AT&T 200 $ 9
(a) AirTouch Communications 600 15
Ameritech Corp. 400 24
(a) Atlantic Tele-Network 100 2
Empresa Noacional de Elec-
tricidad S.A. 288 20
Iberdrola, S.A. 1,250 18
(a) Paging Network, Inc. 1,000 15
SBC Communications Inc. 300 16
Verba, A.G. 350 20
(a) WorldCom, Inc. 1,000 26
-----------------------------------------------------
165
- --------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------
PRINCIPAL
SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCKS--77.6%
(COST: $2,669) 2,916
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--2.7%
Yield--5.27%
Due--January 1997
(COST: $100) $ 100 100
-----------------------------------------------------
TOTAL INVESTMENTS--99.0%
(COST: $3,475) 3,721
-----------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.0% 38
-----------------------------------------------------
NET ASSETS--100% $3,759
- --------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO HORIZON 20+ PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $3,475,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $296,000, the gross
unrealized depreciation was $50,000 and the net unrealized appreciation on
investments was $246,000.
See accompanying Notes to Financial Statements.
61
<PAGE> 63
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND HORIZON 10+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES--38.9%
(Cost: $2,224)
6.375%, 1999 $ 400 $ 403
6.00%, 1999 800 800
8.50%, 2000 500 534
5.50%, 2000 500 489
------------------------------------------------------
2,226
<CAPTION>
- -----------------------------------------------------------
COMMON STOCKS
- -----------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--2.1%
Bayer A.G. 771shs. 31
(a) CRA Managed Care, Inc. 200 9
Cementos Mexicanos, S.A. de C.V.,
"B," ADR 5,300 21
(a) FMC Corp. 300 21
(a) Global Industrial Technology, Inc. 100 2
Hanson PLC, ADR 1,500 10
Louisiana-Pacific Corp. 600 13
Millennium Chemicals Inc. 107 2
(a) Philip Environmental 700 10
------------------------------------------------------
119
- -----------------------------------------------------------
CAPITAL GOODS--3.1%
B.F. Goodrich Co. 500 20
Blount, Inc., "A" 200 8
Emerson Electric Co. 300 29
General Electric Co. 500 49
Honda Motor Co., Ltd. 1,300 37
PHH Corporation 100 4
Quanex Corp. 100 3
(a) Triangle Pacific Corp. 300 7
York International Corp. 400 22
------------------------------------------------------
179
- -----------------------------------------------------------
CONSUMER CYCLICALS--16.3%
American Greetings Corp. 800 23
(a) AutoZone 1,000 28
Brunswick Corp. 1,700 41
Carnival Corp. 700 23
Carrefour S.A. 52 34
Circuit City Stores 600 18
(a) Consolidated Stores Corp. 750 24
Dayton Hudson Corp. 400 16
Deluxe Corp. 1,000 33
Dillard Department Stores 600 18
Walt Disney Company 600 42
Ethan Allen Interiors 200 8
(a) Fruit of the Loom 800 30
Gap 1,000 30
Granada Group PLC 2,096 31
Heilig-Meyers 1,500 24
(a) Liberty Media Group, "A" 800 23
(a) Lone Star Steakhouse & Saloon 1,500 40
(a) MGM Grand 500 17
Mattel, Inc. 700 19
Meredith Corp. 200 11
Nutricia Verenigde Bedryven N.V. 208 32
(a) Outback Steakhouse 700 19
Philips N.V., ADR 600 24
Randstad Holding N.V. 275 20
Reed International PLC 7,108 134
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--CONTINUED
TJX Companies, Inc. 300 $ 14
Talbots Inc. 200 6
(a) Tele-Communications, Inc. 1,000 13
(a) Toys R Us 800 24
UST, Inc. 1,300 42
V.F. Corp. 300 20
(a) Viacom International, "B" 600 21
Wal-Mart Stores 600 14
Wendy's International 1,000 21
------------------------------------------------------
937
- -----------------------------------------------------------
CONSUMER DURABLES--1.7%
Ford Motor Co. 600 19
Leggett & Platt Incorporated 800 28
Matsushita Electric Industries
Co., Ltd. 1,800 29
Singer Company N.V. 900 20
------------------------------------------------------
96
- -----------------------------------------------------------
CONSUMER STAPLES--3.2%
(a) Carriage Services, Inc. 300 7
Imperial Tobacco Group, ADR 375 5
Independent Newspapers PLC 5,960 30
(a) Insurance Auto Auctions 400 4
Koninklijke Ahold N.V. 333 21
Newell Co. 1,000 32
Philip Morris Companies 400 45
Quaker Oats Co. 1,000 38
------------------------------------------------------
182
- -----------------------------------------------------------
ENERGY--3.5%
AMOCO Corp. 300 24
Amerada Hess Corp. 400 23
Atlantic Richfield Co. 250 33
British Petroleum 2,635 32
Columbia Gas System 500 32
Giant Industries 300 4
KCS Energy 100 4
Petro Canada 2,000 28
Union Texas Petroleum Holdings 900 20
------------------------------------------------------
200
- -----------------------------------------------------------
FINANCE--10.6%
American General Corp. 300 12
Banc One Corporation 500 22
BankAmerica Corp. 200 20
Bank of New York Co. 1,100 37
Bankers Trust New York Corp. 400 35
Barnett Banks 600 25
CITIC Pacific Ltd. 5,500 32
Crestar Financial Corp. 200 15
Del Webb Corp. 100 2
Executive Risk 200 7
Federal Home Loan Mortgage Corp. 200 22
Federal National Mortgage
Association 1,500 56
(a) Financial Federal Corporation 400 7
First Chicago NBD Corp. 500 27
First USA 1,400 48
</TABLE>
62
<PAGE> 64
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------------------------------------
FINANCE--CONTINUED
<S> <C> <C> <C>
First Union Corp. 300 $ 22
Fleet Financial Group, Inc. 200 10
HSBC Holdings PLC, ADR 800 17
Imperial Credit Industries 400 8
Internationale Netherlanden Groep
N.V. 914 33
Kansas City Southern Industries 200 9
KeyCorp 200 10
MGIC Investment Corp. 200 15
Mercer International 300 3
J.P. Morgan & Company 100 10
NationsBank 400 39
PNC Bank Corp., N.A. 600 23
Roosevelt Financial Group 200 4
Signet Banking Corp. 600 18
Texas Regional Bankshares 100 3
Travelers Group 400 18
------------------------------------------------------------
609
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE--5.8%
Abbott Laboratories 300 15
C.R. Bard 1,100 31
(a) Forest Laboratories 500 16
(a) Foundation Health Corp. 600 19
(a) Fresenius Medical Care, ADS 310 25
(a) Humana, Inc. 900 17
Eli Lilly & Co. 100 7
Mallinckrodt Group 200 9
Merck & Co., Inc. 400 32
(a) Novartis
ADR 300 17
common stock 26 29
(a) OccuSystems, Inc. 200 5
(a) St. Jude Medical 600 26
(a) Henry Schein, Inc. 200 7
(a) Steris Corp. 800 35
(a) Tenet Healthcare Corporation 200 4
United Healthcare Corp. 800 36
------------------------------------------------------------
330
- -----------------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY--8.9%
(a) Applied Materials, Inc. 500 $ 18
(a) Atmel Corporation 900 30
(a) Bay Networks 300 6
(a) Cabletron Systems 800 27
Canon Inc. 400 9
(a) Cisco Systems 500 32
(a) Compaq Computer Corp. 600 45
(a) DSC Communications Corp. 1,500 27
(a) EMC Corp. 500 17
L.M. Ericsson Telephone Co., "B" 751 23
(a) Gateway 2000 400 21
International Business Machines 100 15
(a) Learning Company 2,100 29
Linear Technology Corp. 600 26
(a) Marshall Industries 200 6
(a) Maxim Integrated Products 400 17
(a) Novellus Systems 400 22
(a) Seagate Technology 300 12
(a) Silicon Graphics Inc. 500 13
(a) Sterling Commerce 1,000 35
(a) TCI Satellite 100 1
(a) 3Com Corporation 400 30
(a) U.S. Robotics 300 22
Xerox Corporation 500 26
------------------------------------------------------------
509
- -----------------------------------------------------------------------------------------
TRANSPORTATION--.7%
Canadian National Railway Company 750 29
(a) Knight Transportation 200 4
Ryder Systems Inc. 300 8
------------------------------------------------------------
41
- -----------------------------------------------------------------------------------------
UTILITIES--2.9%
(a) AirTouch Communications 700 18
Ameritech Corp. 400 24
(a) Atlantic Tele-Network 200 3
Empresa Noacional de Electricidad
S.A. 485 34
(a) Paging Network, Inc. 1,600 24
SBC Communications Inc. 300 16
Southern Company 500 11
(a) WorldCom, Inc. 1,500 39
------------------------------------------------------------
169
------------------------------------------------------------
TOTAL COMMON STOCKS--58.8%
(COST: $3,054) 3,371
------------------------------------------------------------
TOTAL INVESTMENTS--97.7%
(COST: $5,278) 5,597
------------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--2.3% 130
------------------------------------------------------------
NET ASSETS--100% $5,727
------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
NOTES TO HORIZON 10+ PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $5,278,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $383,000, the gross
unrealized depreciation was $64,000 and the net unrealized appreciation on
investments was $319,000.
See accompanying Notes to Financial Statements.
63
<PAGE> 65
PORTFOLIO OF INVESTMENTS
KEMPER INVESTORS FUND HORIZON 5 PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY NOTES--56.2%
(COST: $1,426)
8.00%, 1999 $100 $ 105
6.875%, 1999 200 204
6.375%, 1999 400 404
8.50%, 2000 300 320
5.50%, 2000 400 391
- ---------------------------------------------------------------------------------
1,424
<CAPTION>
- ---------------------------------------------------------------------------------
COMMON STOCKS
- ---------------------------------------------------------------------------------
BASIC INDUSTRIES--2.2%
Bayer A.G. 246shs. 10
(a) CRA Managed Care, Inc. 100 5
Cementos Mexicanos, S.A.
de C.V., "B," ADR 3,000 12
(a) FMC Corp. 100 7
(a) Global Industrial Technology, Inc. 100 2
Hanson PLC, ADR 500 3
Louisiana-Pacific Corp. 100 2
Millennium Chemicals Inc. 100 2
(a) Philip Environmental 200 3
Toray Industries 1,500 10
---------------------------------------------------
56
- --------------------------------------------------------------------------------
CAPITAL GOODS--2.2%
Blount, Inc., "A" 100 4
Emerson Electric Co. 100 10
General Electric Co. 100 10
Honda Motor Co., Ltd. 600 17
PHH Corporation 100 4
Quanex Corp. 100 3
(a) Triangle Pacific Corp. 100 2
York International Corp. 100 6
---------------------------------------------------
56
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS--7.5%
American Greetings Corp. 100 3
Brunswick Corp. 200 5
Carnival Corp. 200 7
Carrefour S.A. 16 10
Circuit City Stores 200 6
(a) Consolidated Stores Corp. 250 8
Dayton Hudson Corp. 100 4
Dillard Department Stores 100 3
Walt Disney Company 100 7
Ethan Allen Interiors 100 4
(a) Fruit of the Loom 200 8
Granada Group PLC 666 10
Heilig-Meyers 200 3
(a) Liberty Media Group, "A" 100 3
(a) Lone Star Steakhouse & Saloon 200 5
Mattel, Inc. 200 6
Meredith Corp. 100 5
(a) Outback Steakhouse 200 5
Philips N.V., ADR 100 4
Randstad Holding N.V. 99 7
Reed International PLC 1,286 24
TJX Companies, Inc. 100 5
Talbots Inc. 100 3
(a) Tele-Communications, Inc. 200 3
(a) Toys R Us 200 6
UST, Inc. 400 13
V.F. Corp. 100 7
<CAPTION>
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER CYCLICALS--CONTINUED
<S> <C> <C>
(a) Viacom International, "B" 200 $ 7
Wal-Mart Stores 100 2
Wendy's International 300 6
---------------------------------------------------
189
- --------------------------------------------------------------------------------
CONSUMER DURABLES--1.6%
Ford Motor Co. 100 3
Leggett & Platt Incorporated 200 7
Magna International Inc., "A" 100 6
Matsushita Electric Industries
Co., Ltd. 1,350 22
Singer Company N.V. 200 4
--------------------------------------------------
42
- --------------------------------------------------------------------------------
CONSUMER STAPLES--2.0%
(a) Carriage Services, Inc. 100 2
Imperial Tobacco Group, ADR 125 2
Independent Newspapers PLC 1,285 7
(a) Insurance Auto Auctions 300 3
Koninklijke Ahold N.V. 165 10
Philip Morris Companies 200 23
Quaker Oats Co. 100 4
--------------------------------------------------
51
- --------------------------------------------------------------------------------
ENERGY--1.8%
Amerada Hess Corp. 100 6
Atlantic Richfield Co. 100 13
British Petroleum 925 11
Columbia Gas System 100 6
Giant Industries 200 3
KCS Energy 100 4
Union Texas Petroleum Holdings 100 2
--------------------------------------------------
45
- ---------------------------------------------------------------------------------
FINANCE--8.5%
American General Corp. 100 4
Banc One Corporation 100 4
BankAmerica Corp. 100 10
Bankers Trust New York Corp. 100 9
Barnett Banks 200 8
CITIC Pacific Ltd. 3,000 17
Crestar Financial Corp. 100 7
DCB Holdings Berhad 3,000 10
Del Webb Corp. 100 2
Executive Risk 100 4
Federal Home Loan Mortgage Corp. 100 11
Federal National Mortgage
Association 300 11
(a) Financial Federal Corporation 200 3
First Chicago NBD Corp. 200 11
First USA 200 7
First Union Corp. 100 7
(a) HSBC Holding PLC, ADR 400 9
Imperial Credit Industries 200 4
Internationale Netherlanden
Groep N.V. 441 16
Kansas City Southern Industries 100 5
KeyCorp 200 10
MGIC Investment Corp. 100 8
Mercer International 200 2
NationsBank 100 10
PNC Bank Corp., N.A. 200 8
Roosevelt Financial Group 100 2
</TABLE>
64
<PAGE> 66
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------------
<S> <C> <C>
Signet Banking Corp. 200 $ 6
Texas Regional Bankshares 100 3
Travelers Group 133 6
--------------------------------------------------------
214
- ----------------------------------------------------------------
HEALTH CARE--3.8%
- ----------------------------------------------------------------
Abbott Laboratories 100 5
Astra A.B., ADR 100 5
(a)British Bio-Technology Group 2,870 10
(a)Foundation Health Corp. 200 6
(a)Fresenius Medical Care, ADS 88 7
(a)Humana, Inc. 300 6
Eli Lilly & Co. 100 7
Mallinckrodt Group 100 4
Merck & Co., Inc. 100 8
(a)Novartis
ADR 100 6
common stock 9 10
(a)OccuSystems, Inc. 100 3
(a)Henry Schein, Inc. 100 3
(a)Steris Corp. 200 9
(a)Tenet Healthcare Corporation 100 2
United Healthcare Corp. 100 5
--------------------------------------------------------
96
- ----------------------------------------------------------------
TECHNOLOGY--6.4%
- ----------------------------------------------------------------
(a)Applied Materials, Inc. 200 7
(a)Atmel Corporation 200 7
(a)Bay Networks 200 4
Canon Inc. 700 15
(a)Cisco Systems 100 6
(a)Compaq Computer Corp. 200 15
(a)DSC Communications Corp. 300 5
(a)EMC Corp. 300 10
L.M. Ericsson Telephone Co. "B" 337 10
(a)Gateway 2000 100 5
International Business Machines 100 15
(a)Learning Company 300 4
Linear Technology Corp. 200 9
(a)Marshall Industries 100 3
(a)Maxim Integrated Products 100 4
<CAPTION>
- ----------------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------------
<S> <C> <C>
Murata Manufacturing 200 $ 7
(a)Novellus Systems 100 5
(a)Seagate Technology 200 8
(a)Silicon Graphics Inc. 200 5
(a)3Com Corporation 100 7
Xerox Corporation 200 11
--------------------------------------------------------
162
- ----------------------------------------------------------------
TRANSPORTATION--.2%
- ----------------------------------------------------------------
(a)Knight Transportation 100 2
Ryder Systems Inc. 150 4
--------------------------------------------------------
6
- ----------------------------------------------------------------
UTILITIES--2.5%
- ----------------------------------------------------------------
AT&T 100 4
(a)AirTouch Communications 200 5
Ameritech Corp 100 6
(a)Atlantic Tele-Network 100 2
Empresa Noacional de
Electricidad S.A. 158 11
Iberdrola, S.A. 850 12
(a)Paging Network, Inc. 200 3
SBC Communications Inc. 100 5
Verba, A.G. 175 10
(a)WorldCom, Inc. 200 5
--------------------------------------------------------
63
--------------------------------------------------------
TOTAL COMMON STOCKS--38.7%
(COST: $884) 980
--------------------------------------------------------
MONEY MARKET INSTRUMENTS--3.9%
Yield--5.27%
Due--January 1997
(COST: $100) $ 100 100
--------------------------------------------------------
TOTAL INVESTMENTS--98.8%
(COST: $2,410) 2,504
--------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.2% 30
--------------------------------------------------------
NET ASSETS--100% $2,534
--------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO HORIZON 5 PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $2,410,000 for federal income tax purposes
at December 31, 1996, the gross unrealized appreciation was $117,000, the gross
unrealized depreciation was $23,000 and the net unrealized appreciation on
investments was $94,000.
See accompanying Notes to Financial Statements.
65
<PAGE> 67
This annual report must be preceded or accompanied by
the current prospectus.
KEMPER INVESTORS LOGO
INVESTMENT MANAGERS:
Zurich Kemper Investments, Inc.
Dreman Value Advisors, Inc.
222 South Riverside Plaza Chicago, Illinois 60606
(Tel) 800-778-1482
[RECYCLE LOGO]
Printed on recycled paper.
L-6021 (2/97) 1028130
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