<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE SIX MONTHS
ENDED JUNE 30, 1998
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT
For Contract Holders of Kemper Gateway Custom
- Investors Fund Series
- Scudder Variable Life Investment Fund Portfolios
[KEMPER ANNUITIES LOGO]
<PAGE> 2
INVESTORS FUND SERIES
KEMPER MONEY MARKET PORTFOLIO
KEMPER TOTAL RETURN PORTFOLIO
KEMPER HIGH YIELD PORTFOLIO
KEMPER GROWTH PORTFOLIO
KEMPER GOVERNMENT SECURITIES PORTFOLIO
KEMPER INTERNATIONAL PORTFOLIO
KEMPER SMALL CAP GROWTH PORTFOLIO
KEMPER INVESTMENT GRADE BOND PORTFOLIO
KEMPER CONTRARIAN VALUE PORTFOLIO
KEMPER SMALL CAP VALUE PORTFOLIO
KEMPER VALUE+GROWTH PORTFOLIO
KEMPER HORIZON 20+ PORTFOLIO
KEMPER HORIZON 10+ PORTFOLIO
KEMPER HORIZON 5 PORTFOLIO
KEMPER BLUE CHIP PORTFOLIO
KEMPER GLOBAL INCOME PORTFOLIO
KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
KEMPER GLOBAL BLUE CHIP PORTFOLIO
KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT, AS
STATED ON THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT
ANY TIME, BASED ON MARKET AND OTHER CONDITIONS.
1
<PAGE> 3
ECONOMIC OVERVIEW
[SILVIA PHOTO]
DR. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS.
SILVIA HOLDS A BACHELOR OF ARTS AND PH.D. IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND HAS A MASTER'S DEGREE IN ECONOMICS FROM BROWN
UNIVERSITY IN PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER, HE WAS
WITH THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, INC. IS THE INVESTMENT MANAGER FOR INVESTORS FUND
SERIES. IT IS ONE OF THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT
ORGANIZATIONS WORLDWIDE, MANAGING MORE THAN $218 BILLION IN ASSETS GLOBALLY
FOR MUTUAL FUND INVESTORS, RETIREMENT AND PENSION PLANS, INSTITUTIONAL AND
CORPORATE CLIENTS, INSURANCE COMPANIES AND PRIVATE, FAMILY AND INDIVIDUAL
ACCOUNTS. IT IS ONE OF THE 10 LARGEST MUTUAL FUND COMPLEXES IN THE UNITED
STATES.
DEAR SHAREHOLDERS,
It's been a bumpy ride for many investors in the third quarter of 1998, with
concern over corporate profits generating considerable market volatility. On
August 4, the Dow Jones Industrial Average suffered its largest single-day point
drop for the year. While this was the Dow's third largest point decline in
history, it didn't even make the top 100 in terms of percentage losses. In any
event, stock market tensions spilled over into the bond markets, fueling the
debate about whether we would finally see the end of our long-running bull
market -- or even plummet into a recession.
But investors who are riding out the stock market's abrupt short-term
adjustments should find comfort in the fact that economic fundamentals continue
to favor financial assets in the United States. In a nutshell, the nation's
economy remains strong despite its slowdown in the second half of the year.
Short-term interest rates are expected to remain low -- the federal funds rate
is holding at 5.5 percent and will most likely stay put for the remainder of the
year. There are no major tax or regulatory threats waiting in the wings. And our
economy continues to draw investors from around the world, although perhaps not
as fervently as last year.
The nation's gross domestic product (GDP), which represents the total value of
all goods and services produced within the U.S. economy, grew at an annualized
rate of 1.4 percent in the second quarter of 1998. While this was the slowest
growing quarter in the last three years, it was much stronger than consensus.
Slower growth can be attributed to several factors, including the impact of
decreased trade with Asia, domestic corrections in inventory levels and the
General Motors strike, which has since been resolved.
Real capital spending and employment growth have remained solid. Consumer
confidence remains fairly high. Home sales remain robust. Economic policy
continues to support the nation's fiscal budget surplus projection of $65
billion.
As far as inflation goes, there are two tales to be told. Prices for consumer
goods, as measured by the consumer price index (CPI), are steady. Compare this
to prices for services, which have risen between 3 and 4 percent. For investors,
this difference in pricing flexibility translates into a difference in profit
expectations. Profits of domestic service firms should be much stronger than
commodity producers dependent on export markets.
Across the Atlantic, Europe's economy appears to be growing at an even pace as
the region progresses toward the Economic and Monetary Union (EMU) slated for
January 1, 1999. One effect of the union may be a slight rise in short-term
interest rates in Europe -- not because there will be an overt change in policy,
but simply because of the convergence of some very disparate interest rates. The
average rate will likely be higher than the relatively attractive rate the
German Central Bank currently offers, for example.
In Asia, which has been making headlines around the world for more than a year
now, the latest news is from Japan, which recently installed a new prime
minister as well as a new finance minister. Much discussion will be focused on
changes in Japan's economic policy, particularly in terms of taxation and
banking reform -- and patience is in order. Most of the changes in taxation will
impact Japan in the first half of 1999. But as far as banking reform goes, those
of us familiar with bank reform in the U.S. know that this will be a two- to
five-year process. Certainly, investors are looking to Japan to spark recovery
for Asia as a whole, which continues to suffer from the "contagion" of low
currency values, seriously reduced consumer spending and general economic
malaise.
Indeed, while its full effects remain to be seen -- and felt -- by the
majority of American businesses and individuals, the Asian economic crisis has
contributed to the general uncertainty of the emotion-driven U.S. markets.
Whether it's an economic crisis abroad or political scandal at home, current
events move the investors who move the markets.
One might conclude that, as a result of today's low corporate profits and
lingering turmoil in Asia, the psychology of the markets is shifting -- even
some of Wall Street's most resolute bulls appear to be reconsidering their
long-held convictions. But with the economy's strong fundamentals in place, that
outlook may be premature. In any case, prudent investors are wise to watch for
the following economic warning signs: inflation in the form of rising wages
and/or prices; residual fallout from Asia, which
2
<PAGE> 4
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
- --------------------------------------------------------------------------------
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund
performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The 10-year
Treasury rate and the prime rate are prevailing interest rates. The other data
report year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (7/31/98) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10 -YEAR TREASURY RATE(1) 5.46 5.57 6.3 6.64
PRIME RATE(2) 8.5 8.5 8.5 8.25
INFLATION RATE(3)* 1.62 1.57 2.16 2.95
THE U.S. DOLLAR(4) 8.79 5.05 10.01 4.26
CAPITAL GOODS ORDERS(5)* 10.44 12.61 10.3 17.23
INDUSTRIAL PRODUCTION(5)* 3.66 5.38 4.69 4.08
EMPLOYMENT GROWTH(6) 2.45 2.78 2.39 2.25
</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 June 30, 1998.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
could appear in the form of reduced sales and earnings for American businesses;
and a continued widening of our trade deficit, an imbalance caused by heightened
American demand for foreign goods and services. In the months to come, investors
are likely to maintain their bias in favor of investments that have historically
been considered more conservative: larger capitalization stocks, U.S. Treasuries
and only the highest-grade corporate bonds.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
/s/ John E. Silvia
JOHN E. SILVIA
August 12, 1998
3
<PAGE> 5
MANAGEMENT SUMMARY
KEMPER MONEY MARKET PORTFOLIO
Stability has been the cornerstone of the money markets recently. Federal
Reserve policy has been on hold with a target for Federal Funds anchored at 5.5
percent. Countervailing economic considerations include inflation measures,
which have been well behaved, and the much publicized Asian problems that are
expected to place a drag on U.S. growth.
On the other hand, the economy continues to show resilient strength as
ultimately measured by Gross Domestic Product and specifically by robust housing
and employment statistics, the Index of Leading Economic Indicators, consumer
confidence and a stock market that has performed admirably.
In general, we maintained a defensive, short-average-maturity strategy
throughout much of the period. This was based on our outlook that interest rates
would perhaps remain flat or rise through time, and the yield curve offered no
income reward for lengthening the portfolio. Events unfolded as expected and we
were able to take advantage of developing market opportunities.
Going forward, our investment strategy will embody a neutral-average-maturity
policy, which will provide the flexibility to react quickly to developing market
opportunities. In this light, the Federal Reserve is expected to hold the line
on interest rates into 1998, the Asian crisis impact has been modest thus far,
inflation measures are likely to rise from current levels and we will have
little income incentive to extend the portfolio.
Frank J. Rachwalski, Jr.
Lead Portfolio Manager
KEMPER TOTAL RETURN PORTFOLIO
The growth in equity markets this year was led by large capitalization stocks,
creating a relative valuation disparity that was extreme. As a whole, those
stocks that outperformed had minimum exposures to economic cyclicality and/or
the Far East. Asia had a significant near-term impact on the earnings growth
rate of domestic companies, which led to a disparity among individual stock
valuations. While some issues did well, others did not, creating many
opportunities to identify attractive, undervalued investments.
As active stock managers, we continually sift through various candidates to
identify those offering "growth at the right price." Among those that performed
well for us last year were General Electric, which also outperformed this year
and continued its history of consistent earnings, as well as Time Warner and
selected other large capitalization issues in the pharmaceutical and financial
sectors.
We still have a full weighting in the financial sector, but have leaned more
toward opportunities in the insurance side, where we expect consolidation
similar to what has happened in the banking industry as financial institutions
merged for economies of scale. Likewise, we have been selective in the
technology area, experiencing our biggest gains from leaders like IBM and
Computer Sciences Corp., both specializing in computer services and consulting
particularly with year 2000 issues looming.
We tried to stay clear of cyclically sensitive stocks, including those in the
capital goods, transportation and industrial sectors, which have been hit hard
in the recent period.
As a Total Return Portfolio, we have the flexibility to shift assets into
bonds, which we did as certain stocks met our price targets. Bonds now
constitute 35% of total assets.
However, given the overall disparity in values in the market now, the
environment is good for stock pickers like us. Many stocks have corrected
significantly, but we will continue to be selective about adding them to the
portfolio. Overall, though, we see opportunity despite the unusual conditions,
and will continue to leverage those opportunities for our investors.
Maureen P. Lentz
Lead Portfolio Manager
KEMPER HIGH YIELD PORTFOLIO
The Asian crisis has not yet had a major impact on high yield bond issuers,
most of whom would be considered "small cap" and conduct business primarily in
the United States. We do believe, however, that all of the effects of Asia have
not yet been felt by the U.S. economy. We do not expect the impact to be severe,
but we will watch it closely and monitor its effects on the U.S. economy and the
high yield market.
Much of the new supply in the high yield market is in lower-quality bonds
(C-rated and non-rated issues). Lower credit implies more risk, but these bonds
offer higher yields to compensate for the assumed higher risk. Therefore, it is
more difficult to find higher-quality bonds today.
We have been investing more in lower-quality issues than we were a year ago,
but not simply because they are what is available. Instead, these issues make
sense given the current strength of the economy, which gives weaker credit a
great chance to flourish. When we sense the economy is beginning to shift, we
will change our strategy.
All indicators point to continued strength in the high yield market. Defaults
remain relatively low and supply and demand continue to grow at a breakneck
pace. For both income-oriented and total return-oriented investors, the high
yield market may make a great deal of sense right now, relative to the domestic
stock market.
Michael A. McNamara
Harry E. Resis, Jr.
Co-Lead Portfolio Managers
4
<PAGE> 6
MANAGEMENT SUMMARY
KEMPER GROWTH PORTFOLIO
There were two countervailing forces in the market recently. First, the
domestic economy continued strong, with low interest rates, low inflation, good
profitability and no excesses. On top of that, however, was the Asian economic
crisis and the resulting "Asian flu," which spread worldwide and ultimately
brought uncertainty to many areas of the U.S. market.
That uncertainty has created an extreme, two-tiered market of historic
proportions, a market in which the highest-quality, most predictable companies
have done very well, and companies with any exposure to Asia and any possibility
of weakness have languished. The performance gap between the few companies in
the first tier and the rest of market is the widest in many decades.
For GARP investors like us -- those who seek "growth at a reasonable price" --
this has been a difficult market. Many of the stocks that we hold or might
consider holding have simply marked time. Nonetheless, we have found many
opportunities for growth at the right price that we expect to perform well once
the market moves on to a more balanced and reasonable stage.
In the technology sector, for example, we've found very good opportunities
among semiconductor manufacturers, personal computer makers and software service
companies. Likewise, in the financial services sector, we are seeing very good
growth rates relative to value among money center banks and regional banks.
We're also finding buys in consumer stocks in the retail area and auto parts
areas.
Going forward, we look for stabilization in southeast Asia, which should
return confidence to a number of the industrial areas and lead the market to
broaden out. Once uncertainty is removed from many areas of the market, we
expect our holdings to move onto higher, healthier ground quickly. We believe we
are well positioned for that change.
Steven H. Reynolds
Lead Portfolio Manager
KEMPER GOVERNMENT SECURITIES PORTFOLIO
The big story over the past year has clearly been the Cinderella economy, in
which we've seen four percent growth, continually reduced inflation and a stable
Federal Reserve Board policy. That, combined with a Federal budget surplus and
economic troubles in Asia, conspired to push interest rates lower late last
year.
Faced with a falling interest rate environment, we worked to maintain a
relatively aggressive profile, lengthening our portfolio duration and making
substantial allocations to select mortgage issues. By January, however, we
believed that the market had fully priced the Cinderella scenario and we moved
the portfolio toward a neutral duration.
At mid-year, we again extended duration. Asia continued to be problematic and
Japan seemed unwilling to deal with its troubles, and because of the effect that
was likely to have on the U.S. economy, we felt that Federal Reserve policy
would continue to hold steady.
Going forward, we are cautiously bullish about the market, although we
recently reverted to a neutral duration to reflect a degree of uncertainty.
Overall, we believe there is still room for further reductions in interest
rates. If you compare yields here to comparable yields in other developed
countries, such as Germany and especially Japan, the U.S. is considerably
cheaper. So from a global perspective, U.S. bonds are attractive right now and
should continue to bring in investors worldwide and more opportunities for the
portfolio.
Richard L. Vandenberg
Lead Portfolio Manager
KEMPER INTERNATIONAL PORTFOLIO
The keys to our strong performance recently were several. First was our heavy
weighting in Europe. Europe is currently seeing accelerated economic growth
coupled with rapidly rising corporate profitability. Within the continent, we
have focused the portfolio into companies that are either restructuring
themselves and becoming more efficient, or companies with very strong franchise
values that are benefiting from growth in the region.
Overall, we continue to see Europe as the single strongest region next to the
United States. We have also seen some very good growth companies selling for
very reasonable prices in Canada.
Another benefit to portfolio performance was our underweighting in certain
regions, most notably southeast Asia. We had almost no money in the region at
the time of the economic decline, and we intend to avoid the area until we see
signs of economic improvement. Likewise, we are not heavy in Japan, which has
been a very ordinary performer, although we hold a number of individual stocks
of companies that are globally dominant in their sectors. Another region we have
lightly weighted is Latin America, which has been a poor performer and is
slowing economically.
Globally, we expect to see inflation remain very benign in the months ahead.
That means interest rates should be flat to down, which is good news for equity
investors and keeps us reasonably bullish, especially on markets where the
underlying economic situation is quite positive. Going forward, we will continue
our longstanding practice of picking stocks, not regions, which we believe is
the most reliable way to find good values and continue sound portfolio
performance.
Stephen Dexter
Marc Slendebroek
Co-Lead Portfolio Managers
5
<PAGE> 7
MANAGEMENT SUMMARY
KEMPER SMALL CAP GROWTH PORTFOLIO
With the economy growing at slower rates and the Asian crisis having a
negative effect on some sectors, we continue to search for small capitalization
companies that exhibit predictable earnings growth. With small cap stocks
continuing to lag their large capitalization counterparts, relatively good
values can be found in the portfolio's investment universe.
Over the past several months, the portfolio has emphasized stocks in the
broadcasting, education and consumer sectors. We believe that select equities in
these groups should continue to perform well in the low-interest-rate,
moderate-growth economic environment.
Although we believe that equities in the technology sector will be an
important part of the portfolio's long-term focus, we continue to underweight
that group in the current environment. The Asian economic crisis, combined with
overcapacity in the semiconductor sector, resulted in reduced expectations for
hardware-related companies. We currently emphasize quality software, service and
consulting companies. We are looking for better buying opportunities in personal
computer, semiconductor and other hardware equities.
Noteworthy changes in the portfolio recently include an increased weighting of
the education sector, including new positions in Sylvan Learning and ITT
Education, both of which are largely unaffected by changes in the economy. We
also took a new position in American Tower, the largest independent owner of
communication towers in the U.S. We sold our holdings in Triangle Pacific after
an announcement they will be purchased by Armstrong World.
David Burshtan
Lead Portfolio Manager
KEMPER INVESTMENT GRADE BOND PORTFOLIO
A major event in the bond markets recently was the brief but significant
downturn in corporate bonds back in January. There were two reasons behind this:
a continuing lack of investor confidence caused by the ongoing economic turmoil
in southeast Asia, and an enormous supply of corporate bonds in the market
without strong demand.
Anticipating the tension in the Asian market, we reduced our exposure to the
most illiquid and volatile corporate assets as far back as October 1997. That
gave us confidence that January's downturn was not indicative of the strength of
our corporate holdings, but instead a short-term market event. With that in
mind, we decided to ride out the storm rather than decrease our exposure to
corporate bonds. And our patience was quickly rewarded: Within two months we had
erased the January loss and were back where we wanted to be.
After recovering from the downturn, we began reducing our corporate holdings
to take advantage of opportunities in other sectors of the bond markets,
including mortgage investments, which help enhance the portfolio's income level.
Our largest payoff during the period was from issues we hold in the banking
industry. We had a fairly substantial bank position that benefited from two
merger announcements in April as well as ongoing industry consolidation. Many
other financial service issues we hold performed quite well on the coattails of
those events.
As long as the economy continues to grow moderately and there are no signs of
a recession, the corporate market should remain resilient, delivering good
returns relative to Treasuries. In that event, the portfolio should continue to
stay its current, steady course in the months ahead.
Robert Cessine
Lead Portfolio Manager
KEMPER CONTRARIAN VALUE PORTFOLIO
Over the last six to nine months, the U.S. stock market has been in a "Nifty
Fifty" mode, meaning a select group of the largest capitalization stocks --
particularly those that are growth oriented and have good fundamentals -- have
done much better than the average stock. In fact, many stocks are currently 20
or 30 percent off their highs, which we believe indicates the market is
currently experiencing a correction.
Almost by definition, this "Nifty Fifty" phenomenon favors stocks in which the
Contrarian Value Portfolio won't invest. Nonetheless, we've been pleased with
our performance to date and feel that, when an upward trend in the markets
arrives, the portfolio will be well positioned for it.
Despite current conditions, the basic structure of our portfolio hasn't
changed significantly. We continue to overweight financial stocks using a broad
array of money centers, regional banks, and insurance and financial services
companies. We feel that the combination of attractive valuations and strong
earnings growth is still fairly powerful in this group. We also have a
meaningful weighting in basic materials stocks, such as diversified forest
products, paper, chemicals and steel as well as the energy group. On the other
side of the coin, we have been underweighted in utility stocks, health care
stocks and technology stocks.
The overall tone of the market means investors need to exhibit greater caution
and care than usual and recognize the environment in which they are operating.
There are good companies out there that meet our philosophy and have very
attractive one- to three-year rates of return. We are ready to step in and buy,
even though there may be a short-term downside.
Thomas Sassi
Lead Portfolio Manager
6
<PAGE> 8
MANAGEMENT SUMMARY
KEMPER SMALL CAP VALUE PORTFOLIO
The recent period has proved difficult for small capitalization stocks in
general, and value-oriented funds specifically. Under normal conditions, value
funds do not tend to suffer the effects of a downturn as acutely as growth
funds, but in the quasi-bear market we've seen recently, that has not been the
case.
The sluggish performance of small cap stocks has been due in large part to
three factors: the current deflationary environment, an extremely strong U.S.
dollar and the troubles in Asia, ripples from which have trickled down through
large multinational corporations to impact many of the stocks in which this
portfolio invests. Some of the sectors that have not performed to our
expectations include energy, capital goods, financial services and even health
care.
Nonetheless, we have had many success stories, predominantly among our larger
holdings. A few stocks in the communications sector -- notably Jones Intercable
and Young Broadcasting -- had a very good year, as did selected holdings in the
capital goods, technology and education areas.
Looking forward, we feel the valuation gap between large caps and small caps
will narrow. It's just a question of when. Small caps have been out of favor for
two years, but we still feel something significant must change to tip the
balance, whether it's the return of inflation or an improved outlook for Asia.
Overall, we feel we have an undervalued portfolio composed of solid companies,
making us well positioned for the future. We will continue to take a bottoms-up
approach to stock picking, identifying companies with considerable value
relative to the market. We expect that strategy to serve us well when small caps
gain back their strength.
Thomas H. Forester
Lead Portfolio Manager
KEMPER VALUE+GROWTH PORTFOLIO
Overall, the market posted brisk returns during the past year, but investors
have had to hold tight through a period of ups and downs. "Gray Monday," October
27, 1997, was the most severe but not the only market turbulence investors would
experience during the period. Worries about Asia, earnings disappointments and
an uncertain Fed policy all helped stir the waters.
Generally, growth stocks outperformed value during the period, domestic stocks
were more attractive than international ones, and large company stocks fared
better than smaller ones. The changing tides of the markets were often
unpredictable. During this fast-paced period, we steered the portfolio by
focusing on individual stock selection.
Recently, the lion's share of the portfolio's assets were allocated toward
growth stocks, based on our evaluation of macroeconomic factors. As growth
outperformed value for much of the period, that decision proved to be the wise
one.
Specifically, consumer nondurable stocks enjoy the largest portion of the
portfolio, followed by finance, technology and health care. Given the
macroeconomic conditions, we've looked for openings to position the fund
defensively, and several of our consumer nondurable holdings lived up nicely to
that sector's reputation of greater resiliency in times of turmoil.
We expect volatility will continue, especially because there haven't been
sufficient indications that the turmoil in Asia is anywhere near completion.
Yet, overall, we continue to believe in the long-term potential of domestic
equity investing. We look for more restrained domestic corporate earnings to set
a slower, saner pace in the coming months.
Philip S. Fortuna
Lead Portfolio Manager
KEMPER HORIZON 20+, HORIZON 10+ AND HORIZON 5 PORTFOLIOS
The past year has been a volatile one for investors. Currency turmoil in Asia
sent global markets into a tailspin, resulting in part in "Gray Monday," October
27, 1997, when the Standard & Poor's 500 declined seven percent. Domestic equity
markets rebounded quickly, however, before settling into the tides of periodic
volatility that have characterized 1998.
In addition to the Asian crisis, concerns about an interest rate hike also
dogged the market during the early portion of the year. There have been plenty
of disappointing earnings stories, particularly among smaller companies and
technology stocks.
With the portfolios this year, our bond stake helped to provided protection
against market turbulence. Our fixed-income allocation is quality focused and
currently holds an average credit rating of AAA. We've invested in U.S.
Treasuries and mortgage-backed securities, and although the fund can invest in
high yield bonds, we have recently opted to eschew that area.
The portfolios' domestic equity exposure is divided between growth and value
stocks, and we have been steadily increasing the growth/value mix to 70/30 from
60/40. The change has paid off. In the current market, growth stocks have been
rewarded more handsomely than their value counterparts. We were also well
positioned with the portfolio's international stake, favoring Western European
holdings over Asian ones.
Going forward, we continue to adhere to our disciplined, quantitative focus.
We think that, over the long term, keeping clear-sighted and cool-headed is the
most sensible course. In fact, we plan to implement more formal quantitative
techniques to uncover and pursue attractive opportunities in the markets.
Philip S. Fortuna
Lead Portfolio Manager
7
<PAGE> 9
MANAGEMENT SUMMARY
KEMPER BLUE CHIP PORTFOLIO
Overall, the stock market posted strong gains during the period, but not
without volatility along the way. At the same time, the market favored large cap
stocks over smaller company issues, and the U.S. outperformed international
markets. These gains were made in a choppy and rotational market climate. If
nothing else, the past period proved the importance of keeping a long-term
focus. Investors who held on ended up with tidy gains.
Our performance was attributable to several factors, one of which was our
ability to anticipate the crisis in Asia. The portfolio had limited exposure to
troubled Asian markets. However, because the Asian turmoil drove down the prices
of many quality stocks, we used the period as a domestic-issue buying
opportunity.
Some of our notable acquisitions included technology issues we believe to be
undervalued, such as Hewlett-Packard and IBM, and cyclical stocks, including the
chemical companies PPG Industries and Imperial Chemical Industries.
Apart from stocks impacted by Asia, we found good values in insurance names,
an industry which is trending toward consolidation and should continue to gain
appeal. We also built up a small position in real estate investment trusts
(REITs) to help bolster yield.
Going forward, we continue to be very positive about the long-term growth
prospects of the U.S. equity markets. Investors, however, need to be prepared
for ups and downs. By taking a stock-by-stock approach, we are confident that
our focus on well-researched, large cap companies will continue to provide
shareholders with a more reliable investment vehicle.
Tracy McCormick-Chester
Lead Portfolio Manager
KEMPER GLOBAL INCOME PORTFOLIO
In the first half of the year, global bonds performed well in terms of local
currency. For example, the first-half return for the Salomon Smith Barney World
Government Bond Index was 4.28 percent, while the same index in U.S. dollar
terms was 2.79 percent. This difference was due to the strength of the U.S.
dollar against the Japanese yen, the Australian dollar and the Canadian dollar
- -- all currencies affected by the Asian economic crisis.
The bond markets of the developed nations continued to benefit from the
deflationary impact of the Asian crisis. There was a continued flight to quality
from emerging bond and equity markets.
At the start of 1998, the Global Income Portfolio was overweight in the
Australia, New Zealand and U.K. markets and underweight in the United States,
Japan and peripheral Europe markets. However, due to lower expected returns
caused by higher inflation, we removed our Australia position and reduced our
U.K. position. We increased our position in Canada because of higher expected
returns.
The portfolio maintained a long-term focus and we remained committed to
government and supranational bonds with very high credit quality. Fifty-six
percent of the portfolio was AAA bonds and the rest was AA. The average duration
was just over five years throughout the period.
The benign background to bond markets remains in place and the managers'
return forecasts are, on average, positive for government bond markets in the
developed world. Bond yields have declined in tandem with inflationary
expectations in many countries and many markets are fairly valued overall.
Despite high first-quarter growth in the U.S., the market does not expect the
Federal Reserve Board to tighten policy, and the Bundesbank is not expected to
tighten until at least the fourth quarter.
Gordon Johns
Lead Portfolio Manager
KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO
The strong performance of the Standard & Poor's 500 embodies what has happened
in the markets since the volatility of October 1997: earnings announcements
continued to be strong, and investors grew confident that problems in Asia
wouldn't have a significant impact. But in May, additional concerns about the
yen triggered more turbulence, and the market retraced a portion of its previous
advance. Only the largest growth companies held onto their gains.
That, combined with the High Return Equity Portfolio's large holdings in oil
and tobacco, led to a measure of underperformance in the first part of 1998.
However, we believe both sectors are compelling buys over the longer term. The
tobacco sector offers solid companies -- most notably Phillip Morris -- that are
selling for far less than their intrinsic value. In the oil sector, we're seeing
price pressure on certain stocks because of an 11-year low in oil prices, which
has created some outstanding buying opportunities.
Financial stocks remain the portfolio's largest sector weighting. While they
have lagged the market a bit in 1998, we still see a number of values there.
Currently, we are concentrating on regional banks involved in mergers we believe
will result in earnings expansion.
In the months ahead, we feel that volatility will continue and may even
intensify. Volatility, however, creates opportunity for contrarian investors. An
irrational market is likely to punish good stocks as well as bad ones, and that
is an opportunity to add real long-term value for our shareholders.
David N. Dreman
Lead Portfolio Manager
8
<PAGE> 10
MANAGEMENT SUMMARY
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
The financial services sector proved itself one of the best performing areas
of the stock market in the last year, fueled largely by bank mergers and
insurance companies. In March and April, the sector continued to outpace the
market, but it took a breather in May as investors grew concerned about the
prospects for higher interest rates. Nonetheless, we believe the sector offers
many of the characteristics that attract value managers and offers more than its
share of solid, long-term opportunities.
Recently, we have emphasized regional banks, which we believe will continue to
be the beneficiaries of the trend toward consolidation. We focus on the
regionals because their mergers are more symbiotic than the mega-mergers between
huge institutions. For example, at the regional level, each bank can gain
services or outlets that they previously lacked. In addition to that area, we
have also looked at smaller insurance companies with good track records, which
are harder to buy but worth the effort.
In the months ahead, we expect to see more volatility in the sector, in part
due to weakness in the Japanese yen and the potential for an additional round of
currency devaluations in Asia, all of which could spook U.S. markets. On the
upside, though, that volatility could present more chances to buy stocks that
might be unjustly out of favor -- for example, certain banks that do not do
business overseas.
Overall, we intend to apply our strict valuation criteria and look for those
financial services companies that are believed to offer limited downside
potential with the opportunity for a very strong upside.
David N. Dreman
Lead Portfolio Manager
KEMPER GLOBAL BLUE CHIP PORTFOLIO
On the global stage, continental Europe has recently proved itself a real
star. In part, the region is benefiting from a friendly interest rate
environment, created to facilitate completion of the European Monetary Union on
January 1, 1999. Furthermore, there is a growing perception -- reflected by the
market -- that European corporations are rapidly developing a new, more
productive view of the world.
With that in mind, European restructuring remains the premier theme within our
portfolios and has been a major contributor to returns. We see strength and
opportunity continuing for some years to come. However, it is an idea that is
now well appreciated by investors.
Our second most heavily weighted theme is "secure streams of income." In
addition to our past income-oriented investments in U.S. Treasury bonds and
electric utilities, we have recently added Lockheed Martin, whose profits are
underpinned by an increasing defense budget and a strong internal efficiency
plan. We have also initiated a position in American Greetings, whose long record
of success may be enhanced by some new product initiatives.
A key question for the portfolio team going forward is whether our
European-oriented themes are nearing maturity given the market's enthusiasm for
these stocks and their resulting valuations. Our response to this challenge has
been to identify companies whose valuations fully reflect their restructuring or
earning potential, and thus are potential sell candidates. Ultimately, however,
the best judge of value is the attractiveness of alternative investments. And
the search for those, as always, prompts us to examine what is going on in the
broader global context.
Diego Espinosa
Lead Portfolio Manager
KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO
Since the portfolio's inception on May 5, 1998, we've seen a number of events
of historic proportions. First among these was the formalization of the European
Monetary Union, which will result in a single currency at the start of 1999 and
the first significant step toward political unification on the continent.
The long-term benefits of this momentous event were not overlooked by the
European stock markets, many of which were up over 40 percent for the first six
months of the year. In anticipation of that opportunity, the International
Growth and Income Portfolio had a significant overweighting in the European
markets, and we profited accordingly.
Specifically, we sought out those sectors best positioned to benefit from some
of the positive changes occurring in the region, including the banking,
insurance and telecommunications industries. While we expect some profit-taking
in the markets, the long-term picture for Europe and its markets is better than
it has been for decades.
At the same time, Japan in the past six months continued to suffer from
political gridlock and an inability to address the crisis in its banking sector.
The country's economy, currency and stock market all reflected this turmoil,
making Japan a region to avoid except for a few highly selective buying
opportunities. Likewise, we underweighted the emerging markets -- including
southeast Asia -- despite a rally in the first quarter that quickly proved
fleeting.
In the months ahead, the portfolio's focus will continue to be on relative
yield -- the universe of stocks offering incrementally higher yields than their
broader markets. We believe a relative yield approach best identifies stocks
that are undervalued and helps the portfolio stay a steady course.
Sheridan Reilly
Lead Portfolio Manager
9
<PAGE> 11
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
MONEY TOTAL HIGH
MARKET RETURN YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $106,447, $723,455,
$455,780, $563,832, $102,989, $206,780, $152,361,
$29,165, $204,348, and $98,017, respectively) $106,447 836,579 463,889
- ---------------------------------------------------------------------------------------------------------------------
Cash -- 256 2,359
- ---------------------------------------------------------------------------------------------------------------------
Receivable for:
Investments sold -- 16,022 11,903
- ---------------------------------------------------------------------------------------------------------------------
Interest and dividends 127 7,058 8,333
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 106,574 859,915 486,484
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Cash overdraft 337 -- --
- ---------------------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased 2,998 13,158 14,106
- ---------------------------------------------------------------------------------------------------------------------
Dividends 224 -- --
- ---------------------------------------------------------------------------------------------------------------------
Management fee 54 388 232
- ---------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related
expenses 4 91 16
- ---------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 35 33 19
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 3,652 13,670 14,373
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS $102,922 846,245 472,111
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
Paid-in capital $102,922 692,484 460,924
- ---------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on
investments and foreign currency transactions -- 27,511 (15,784)
- ---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and
assets and liabilities in foreign currencies -- 113,124 8,109
- ---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- 13,126 18,862
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $102,922 846,245 472,111
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares outstanding 102,922 325,015 373,291
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets / shares outstanding) $1.00 2.604 1.265
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE> 12
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
KEMPER SMALL INVESTMENT KEMPER SMALL
KEMPER GOVERNMENT KEMPER CAP GRADE CONTRARIAN CAP
GROWTH SECURITIES INTERNATIONAL GROWTH BOND VALUE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
648,291 105,257 243,019 179,189 29,395 230,038 101,806
- --------------------------------------------------------------------------------------------
612 -- -- 948 205 2,177 751
- --------------------------------------------------------------------------------------------
2,524 3,434 28,178 6,943 1,079 2,049 2,573
- --------------------------------------------------------------------------------------------
525 808 852 32 305 332 85
- --------------------------------------------------------------------------------------------
651,952 109,499 272,049 187,112 30,984 234,596 105,215
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
-- 246 9,915 -- -- -- --
- --------------------------------------------------------------------------------------------
-- 13,526 28,812 4,725 3,647 4,683 2,642
- --------------------------------------------------------------------------------------------
-- -- -- -- -- -- --
- --------------------------------------------------------------------------------------------
318 43 143 92 13 140 62
- --------------------------------------------------------------------------------------------
10 7 23 6 -- 1 --
- --------------------------------------------------------------------------------------------
25 11 14 7 20 65 33
- --------------------------------------------------------------------------------------------
353 13,833 38,907 4,830 3,680 4,889 2,737
- --------------------------------------------------------------------------------------------
651,599 95,666 233,142 182,282 27,304 229,707 102,478
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
527,472 95,370 167,466 153,042 26,537 195,718 96,619
- --------------------------------------------------------------------------------------------
37,771 (5,017) 27,717 2,131 68 5,781 1,259
- --------------------------------------------------------------------------------------------
84,459 2,268 36,251 26,828 230 25,690 3,789
- --------------------------------------------------------------------------------------------
1,897 3,045 1,708 281 469 2,518 811
- --------------------------------------------------------------------------------------------
651,599 95,666 233,142 182,282 27,304 229,707 102,478
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
219,691 82,016 130,880 96,643 24,392 140,328 83,458
- --------------------------------------------------------------------------------------------
2.966 1.166 1.781 1.886 1.119 1.637 1.228
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
VALUE+ KEMPER KEMPER
GROWTH HORIZON 20+ HORIZON 10+
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $114,986, $26,601,
$34,392, $22,666, $45,516, $4,518, $10,184,
$5,159, $924 and $663, respectively) $127,310 29,778 37,319
- ------------------------------------------------------------------------------------------------------------------
Cash 891 -- 475
- ------------------------------------------------------------------------------------------------------------------
Deferred organization expense -- -- --
- ------------------------------------------------------------------------------------------------------------------
Receivable for:
Investments sold 43 445 520
- ------------------------------------------------------------------------------------------------------------------
Portfolio shares sold -- -- --
- ------------------------------------------------------------------------------------------------------------------
Interest and dividends 100 136 296
- ------------------------------------------------------------------------------------------------------------------
Reimbursement from Advisor -- -- --
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 128,344 30,359 38,610
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Cash overdraft -- 275 --
- ------------------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased 5,416 945 676
- ------------------------------------------------------------------------------------------------------------------
Management fee 71 14 18
- ------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 30 22 18
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 5,517 1,256 712
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS $122,827 29,103 37,898
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
Paid-in capital $108,459 25,777 34,498
- ------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on
investments and foreign currency transactions 1,466 4 (50)
- ------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on
investments and assets and liabilities in foreign
currencies 12,324 3,177 2,927
- ------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 578 145 523
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $122,827 29,103 37,898
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------------------------------------------------
Shares outstanding 77,750 19,474 27,766
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets / shares outstanding) $1.580 1.494 1.365
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 14
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER-
DREMAN KEMPER- KEMPER KEMPER
KEMPER KEMPER HIGH DREMAN GLOBAL INTERNATIONAL
KEMPER BLUE GLOBAL RETURN FINANCIAL BLUE GROWTH AND
HORIZON 5 CHIP INCOME EQUITY SERVICES CHIP INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
23,830 47,981 4,429 10,110 5,200 926 663
- -----------------------------------------------------------------------------------------
-- 1 99 39 9 3 50
- -----------------------------------------------------------------------------------------
-- -- -- 15 15 15 15
- -----------------------------------------------------------------------------------------
211 469 32 70 -- -- 25
- -----------------------------------------------------------------------------------------
-- 273 -- 1,422 55 -- 153
- -----------------------------------------------------------------------------------------
222 57 90 12 4 1 --
- -----------------------------------------------------------------------------------------
-- -- -- 10 11 18 22
- -----------------------------------------------------------------------------------------
24,263 48,781 4,650 11,678 5,294 963 928
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
20 -- -- -- -- -- --
- -----------------------------------------------------------------------------------------
263 1,506 -- 585 287 57 32
- -----------------------------------------------------------------------------------------
12 22 3 -- -- 1 1
- -----------------------------------------------------------------------------------------
23 10 4 31 30 33 37
- -----------------------------------------------------------------------------------------
318 1,538 7 616 317 91 70
- -----------------------------------------------------------------------------------------
23,945 47,243 4,643 11,062 4,977 872 858
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
22,580 44,763 4,628 11,055 4,929 870 859
- -----------------------------------------------------------------------------------------
(247) (16) 45 54 -- (2) (4)
- -----------------------------------------------------------------------------------------
1,164 2,465 (89) (74) 41 2 --
- -----------------------------------------------------------------------------------------
448 31 59 27 7 2 3
- -----------------------------------------------------------------------------------------
23,945 47,243 4,643 11,062 4,977 872 858
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
18,979 38,862 4,523 11,337 5,008 883 861
- -----------------------------------------------------------------------------------------
1.262 1.216 1.026 .976 .994 .988 .997
- -----------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
MONEY TOTAL HIGH
MARKET RETURN YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------
Interest $2,818 12,239 20,526
- -----------------------------------------------------------------------------------------------
Dividends(a) -- 3,706 226
- -----------------------------------------------------------------------------------------------
Total investment income 2,818 15,945 20,752
- -----------------------------------------------------------------------------------------------
Expenses:
Management fee 250 2,291 1,300
- -----------------------------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 9 107 39
- -----------------------------------------------------------------------------------------------
Professional fees 4 32 15
- -----------------------------------------------------------------------------------------------
Trustees' fees and other 3 46 21
- -----------------------------------------------------------------------------------------------
Total expenses 266 2,476 1,375
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,552 13,469 19,377
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------
Net realized gain on sales of investments and foreign
currency transactions -- 27,969 3,435
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) from futures transactions -- -- 1
- -----------------------------------------------------------------------------------------------
Net realized gain -- 27,969 3,436
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on
investments and assets and liabilities in foreign
currencies -- 34,151 (4,280)
- -----------------------------------------------------------------------------------------------
Net gain (loss) on investments -- 62,120 (844)
- -----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,552 75,589 18,533
- -----------------------------------------------------------------------------------------------
</TABLE>
(a) Less foreign taxes withheld of $343 in the Kemper International Portfolio.
See accompanying Notes to Financial Statements.
14
<PAGE> 16
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
KEMPER SMALL INVESTMENT KEMPER SMALL
KEMPER GOVERNMENT KEMPER CAP GRADE CONTRARIAN CAP
GROWTH SECURITIES INTERNATIONAL GROWTH BOND VALUE VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
622 3,191 373 155 679 879 441
- --------------------------------------------------------------------------------------------
2,685 -- 2,340 416 -- 1,926 392
- --------------------------------------------------------------------------------------------
3,307 3,191 2,713 571 679 2,805 833
- --------------------------------------------------------------------------------------------
1,876 246 824 507 64 763 341
- --------------------------------------------------------------------------------------------
45 25 119 21 9 16 24
- --------------------------------------------------------------------------------------------
3 4 8 3 3 13 4
- --------------------------------------------------------------------------------------------
61 5 19 8 11 38 4
- --------------------------------------------------------------------------------------------
1,985 280 970 539 87 830 373
- --------------------------------------------------------------------------------------------
1,322 2,911 1,743 32 592 1,975 460
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
40,136 161 28,643 3,141 123 6,843 2,675
- --------------------------------------------------------------------------------------------
-- (1) -- -- -- -- 199
- --------------------------------------------------------------------------------------------
40,136 160 28,643 3,141 123 6,843 2,874
- --------------------------------------------------------------------------------------------
45,393 (130) 4 16,073 77 10,698 (2,270)
- --------------------------------------------------------------------------------------------
85,529 30 28,647 19,214 200 17,541 604
- --------------------------------------------------------------------------------------------
86,851 2,941 30,390 19,246 792 19,516 1,064
- --------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
VALUE+GROWTH HORIZON 20+ HORIZON 10+
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------
Interest $ 141 172 409
- ------------------------------------------------------------------------------------------------------------
Dividends 582 109 118
- ------------------------------------------------------------------------------------------------------------
Total investment income 723 281 527
- ------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 354 67 88
- ------------------------------------------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 18 16 14
- ------------------------------------------------------------------------------------------------------------
Professional fees 5 5 4
- ------------------------------------------------------------------------------------------------------------
Trustees' fees and other 18 9 10
- ------------------------------------------------------------------------------------------------------------
Total expenses before expense waiver 395 97 116
- ------------------------------------------------------------------------------------------------------------
Less expenses waived and absorbed by investment manager -- -- --
- ------------------------------------------------------------------------------------------------------------
Total expenses absorbed by the Portfolio 395 97 116
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 328 184 411
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments and
foreign currency transactions 1,471 22 73
- ------------------------------------------------------------------------------------------------------------
Net realized gain from futures transactions 448 41 28
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 1,919 63 101
- ------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on
investments and assets and liabilities in foreign
currencies 8,101 2,046 1,768
- ------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 10,020 2,109 1,869
- ------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $10,348 2,293 2,280
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from May 4, 1998 (commencement of operations) to June 30,
1998.
(b) For the period from May 5, 1998 (commencement of operations) to June 30,
1998.
See accompanying Notes to Financial Statements.
16
<PAGE> 18
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER
KEMPER KEMPER KEMPER-DREMAN KEMPER-DREMAN KEMPER INTERNATIONAL
KEMPER BLUE GLOBAL HIGH RETURN FINANCIAL GLOBAL GROWTH
HORIZON 5 CHIP INCOME EQUITY SERVICES BLUE CHIP AND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(A) PORTFOLIO(A) PORTFOLIO(B) PORTFOLIO(B)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
384 117 93 15 3 1 --
- -----------------------------------------------------------------------------------------------------
50 233 -- 18 8 2 4
- -----------------------------------------------------------------------------------------------------
434 350 93 33 11 3 4
- -----------------------------------------------------------------------------------------------------
56 100 13 5 3 1 1
- -----------------------------------------------------------------------------------------------------
16 17 1 9 8 16 20
- -----------------------------------------------------------------------------------------------------
4 4 1 1 1 -- --
- -----------------------------------------------------------------------------------------------------
10 5 2 6 6 2 2
- -----------------------------------------------------------------------------------------------------
86 126 17 21 18 19 23
- -----------------------------------------------------------------------------------------------------
-- -- -- (15) (14) (18) (22)
- -----------------------------------------------------------------------------------------------------
86 126 17 6 4 1 1
- -----------------------------------------------------------------------------------------------------
348 224 76 27 7 2 3
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
(5) 118 59 3 -- (2) (4)
- -----------------------------------------------------------------------------------------------------
4 -- -- 51 -- -- --
- -----------------------------------------------------------------------------------------------------
(1) 118 59 54 -- (2) (4)
- -----------------------------------------------------------------------------------------------------
695 1,929 (65) (74) 41 2 --
- -----------------------------------------------------------------------------------------------------
694 2,047 (6) (20) 41 -- (4)
- -----------------------------------------------------------------------------------------------------
1,042 2,271 70 7 48 2 (1)
- -----------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 19
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (unaudited) AND FOR THE YEAR ENDED
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
MONEY MARKET
PORTFOLIO
-------------------
1998 1997
- -----------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 2,552 5,126
- -----------------------------------------------------------------------------------
Net realized gain (loss) -- --
- -----------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -- --
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,552 5,126
- -----------------------------------------------------------------------------------
Equalization credits (charges) -- --
- -----------------------------------------------------------------------------------
Distribution from net investment income (2,552) (5,126)
- -----------------------------------------------------------------------------------
Distribution from net realized gain -- --
- -----------------------------------------------------------------------------------
Total dividends to shareholders (2,552) (5,126)
- -----------------------------------------------------------------------------------
Net increase from capital share transactions 2,779 29,542
- -----------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 2,779 29,542
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------
Beginning of period 100,143 70,601
- -----------------------------------------------------------------------------------
END OF PERIOD $102,922 100,143
- -----------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD $ -- --
- -----------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
INTERNATIONAL
PORTFOLIO
-------------------
1998 1997
- -----------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 1,743 1,330
- -----------------------------------------------------------------------------------
Net realized gain 28,643 8,474
- -----------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) 4 6,353
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations 30,390 16,157
- -----------------------------------------------------------------------------------
Equalization credits -- 101
- -----------------------------------------------------------------------------------
Distribution from net investment income (2,412) (2,135)
- -----------------------------------------------------------------------------------
Distribution from net realized gain (7,437) (7,472)
- -----------------------------------------------------------------------------------
Total dividends to shareholders (9,849) (9,607)
- -----------------------------------------------------------------------------------
Net increase from capital share transactions 12,555 29,920
- -----------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 33,096 36,571
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------
Beginning of period 200,046 163,475
- -----------------------------------------------------------------------------------
END OF PERIOD $233,142 200,046
- -----------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD $ 1,708 3,281
- -----------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 20
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
TOTAL RETURN HIGH YIELD GROWTH GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO SECURITIES PORTFOLIO
------------------- ------------------- ------------------- ---------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
13,469 24,613 19,377 30,537 1,322 2,204 2,911 5,950
- -------------------------------------------------------------------------------------------
27,969 112,479 3,436 2,226 40,136 91,317 160 (181)
- -------------------------------------------------------------------------------------------
34,151 (3,457) (4,280) 3,576 45,393 6,100 (130) 1,376
- -------------------------------------------------------------------------------------------
75,589 133,635 18,533 36,339 86,851 99,621 2,941 7,145
- -------------------------------------------------------------------------------------------
-- (285) -- 633 -- 1,028 -- 17
- -------------------------------------------------------------------------------------------
(24,933) (21,303) (29,505) (25,931) (1,863) (2,753) (5,813) (6,694)
- -------------------------------------------------------------------------------------------
(110,811) (87,579) -- -- (93,144) (111,508) -- --
- -------------------------------------------------------------------------------------------
(135,744) (108,882) (29,505) (25,931) (95,007) (114,261) (5,813) (6,694)
- -------------------------------------------------------------------------------------------
119,404 65,426 91,419 91,308 96,739 89,145 11,856 1,900
- -------------------------------------------------------------------------------------------
59,249 89,894 80,447 102,349 88,583 75,533 8,984 2,368
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
786,996 697,102 391,664 289,315 563,016 487,483 86,682 84,314
- -------------------------------------------------------------------------------------------
846,245 786,996 472,111 391,664 651,599 563,016 95,666 86,682
- -------------------------------------------------------------------------------------------
13,126 24,294 18,862 24,028 1,897 5,320 3,045 14,263
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
SMALL CAP INVESTMENT GRADE CONTRARIAN VALUE SMALL CAP
GROWTH PORTFOLIO BOND PORTFOLIO PORTFOLIO VALUE PORTFOLIO
----------------- ----------------- ----------------- ----------------
1998 1997 1998 1997 1998 1997 1998 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
32 197 592 474 1,975 1,918 460 484
- --------------------------------------------------------------------------------
3,141 25,239 123 141 6,843 4,262 2,874 759
- --------------------------------------------------------------------------------
16,073 2,506 77 152 10,698 13,595 (2,270) 5,315
- --------------------------------------------------------------------------------
19,246 27,942 792 767 19,516 19,775 1,064 6,558
- --------------------------------------------------------------------------------
-- 100 -- 713 -- 2,045 -- 505
- --------------------------------------------------------------------------------
-- (445) (588) (41) (1,327) (389) -- (234)
- --------------------------------------------------------------------------------
(25,813) (8,458) (196) -- (5,307) -- (2,220) --
- --------------------------------------------------------------------------------
(25,813) (8,903) (784) (41) (6,634) (389) (2,220) (234)
- --------------------------------------------------------------------------------
51,434 49,139 11,792 12,067 54,445 119,644 27,526 55,972
- --------------------------------------------------------------------------------
44,867 68,278 11,800 13,506 67,327 141,075 26,370 62,801
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
137,415 69,137 15,504 1,998 162,380 21,305 76,108 13,307
- --------------------------------------------------------------------------------
182,282 137,415 27,304 15,504 229,707 162,380 102,478 76,108
- --------------------------------------------------------------------------------
281 644 469 1,207 2,518 4,042 811 927
- --------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 21
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (unaudited) AND FOR THE YEAR ENDED
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
VALUE+GROWTH
PORTFOLIO
--------------------------------
1998 1997
- ----------------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 328 327
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) 1,919 2,051
- ----------------------------------------------------------------------------------------------------
Change in unrealized appreciation 8,101 3,585
- ----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 10,348 5,963
- ----------------------------------------------------------------------------------------------------
Equalization credits -- 233
- ----------------------------------------------------------------------------------------------------
Distribution from net investment income -- (165)
- ----------------------------------------------------------------------------------------------------
Distribution from net realized gain (2,505) --
- ----------------------------------------------------------------------------------------------------
Total dividends to shareholders (2,505) (165)
- ----------------------------------------------------------------------------------------------------
Net increase from capital share transactions 45,890 52,867
- ----------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 53,733 58,898
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Beginning of period 69,094 10,196
- ----------------------------------------------------------------------------------------------------
END OF PERIOD $122,827 69,094
- ----------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD $ 578 524
- ----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
GLOBAL INCOME
PORTFOLIO
--------------------
MAY 1
TO
DEC. 31,
1998 1997
- ---------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 76 59
- ---------------------------------------------------------------------------------
Net realized gain (loss) 59 19
- ---------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) (65) (24)
- ---------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 70 54
- ---------------------------------------------------------------------------------
Equalization credits -- 15
- ---------------------------------------------------------------------------------
Distribution from net investment income (73) --
- ---------------------------------------------------------------------------------
Distribution from net realized gain (36) --
- ---------------------------------------------------------------------------------
Total dividends to shareholders (109) --
- ---------------------------------------------------------------------------------
Net increase from capital share transactions 2,537 1,976
- ---------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 2,498 2,045
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------
Beginning of period 2,145 100
- ---------------------------------------------------------------------------------
END OF PERIOD $4,643 2,145
- ---------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD $ 59 71
- ---------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE> 22
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER
BLUE CHIP
PORTFOLIO
KEMPER KEMPER KEMPER -----------------
HORIZON 20+ HORIZON 10+ HORIZON 5 MAY 1
PORTFOLIO PORTFOLIO PORTFOLIO TO
--------------- --------------- ------------------- DEC. 31,
1998 1997 1998 1997 1998 1997 1998 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
184 148 411 355 348 266 224 93
- -------------------------------------------------------------------------------
63 578 101 519 (1) 214 118 (134)
- -------------------------------------------------------------------------------
2,046 885 1,768 840 695 375 1,929 536
- -------------------------------------------------------------------------------
2,293 1,611 2,280 1,714 1,042 855 2,271 495
- -------------------------------------------------------------------------------
-- 138 -- 358 -- 376 -- 181
- -------------------------------------------------------------------------------
(159) (57) (223) (76) (154) (43) (286) --
- -------------------------------------------------------------------------------
(637) -- (670) -- (460) -- -- --
- -------------------------------------------------------------------------------
(796) (57) (893) (76) (614) (43) (286) --
- -------------------------------------------------------------------------------
10,947 11,208 13,958 14,830 9,259 10,536 26,837 17,645
- -------------------------------------------------------------------------------
12,444 12,900 15,345 16,826 9,687 11,724 28,822 18,321
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
16,659 3,759 22,553 5,727 14,258 2,534 18,421 100
- -------------------------------------------------------------------------------
29,103 16,659 37,898 22,553 23,945 14,258 47,243 18,421
- -------------------------------------------------------------------------------
145 279 523 737 448 655 31 274
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
KEMPER
KEMPER-DREMAN KEMPER-DREMAN KEMPER GLOBAL INTERNATIONAL
HIGH RETURN EQUITY FINANCIAL SERVICES BLUE CHIP GROWTH AND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------- --------------------- --------------------- ---------------------
FOR THE PERIOD MAY 4 FOR THE PERIOD MAY 4 FOR THE PERIOD MAY 5 FOR THE PERIOD MAY 5
(COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) OPERATIONS) OPERATIONS) OPERATIONS)
TO JUNE 30, 1998 TO JUNE 30, 1998 TO JUNE 30, 1998 TO JUNE 30, 1998
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
27 7 2 3
- -------------------------------------------------------------------------------------------------
54 -- (2) (4)
- -------------------------------------------------------------------------------------------------
(74) 41 2 --
- -------------------------------------------------------------------------------------------------
7 48 2 (1)
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
11,054 4,928 869 858
- -------------------------------------------------------------------------------------------------
11,061 4,976 871 857
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
1 1 1 1
- -------------------------------------------------------------------------------------------------
11,062 4,977 872 858
- -------------------------------------------------------------------------------------------------
27 7 2 3
- -------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Investors Fund Series (the "Fund") is an open-end,
diversified management investment company organized
as a business trust under the laws of
Massachusetts. The Fund offers twenty Portfolios.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES INVESTMENT VALUATION. Investments are stated at
value.
The securities of the Portfolios (excluding the
Kemper Money Market, Kemper Total Return, Kemper
Horizon 20+, Kemper Horizon 10+, Kemper Horizon 5,
Kemper Blue Chip, Kemper-Dreman High Return Equity,
Kemper-Dreman Financial Services, Kemper Global
Blue Chip and Kemper International Growth and
Income Portfolios) that are traded on a domestic
securities exchange or securities listed on The
Nasdaq Stock Market ("Nasdaq") 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. All other 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 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 Kemper Total Return, Kemper
Horizon 20+, Kemper Horizon 10+, Kemper Horizon 5,
Kemper Blue Chip, Kemper-Dreman High Return Equity,
Kemper-Dreman Financial Services, Kemper Global
Blue Chip and Kemper International Growth and
Income Portfolios which are traded on U.S. or
foreign stock exchanges are valued at the most
recent sale price reported on the exchange on which
the security is traded most extensively. If no sale
occurred, the security is then valued at the
calculated mean between the most recent bid and
asked quotations. If there are no such bid and
asked quotations, the most recent bid quotation is
used. Securities quoted on Nasdaq for which there
have been sales, are valued at the most recent sale
price reported on Nasdaq. If there are no such
sales, the value is the most recent bid quotation.
Securities which are not quoted on Nasdaq but are
traded in another over-the-counter market are
valued at the most recent sale price on such
market. If no sale occurred, the security is then
valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used.
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
Portfolio debt securities other than money market
securities with an original maturity over sixty
days are valued by pricing agents approved by the
officers of the Fund, which quotations reflect
broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents
are unable to provide such quotations, the most
recent bid quotation supplied by a bona fide market
maker shall be used. Money market instruments
purchased with an original maturity of sixty days
or less are valued at amortized cost. If it is not
possible to value a particular debt security
pursuant to the above methods, the investment
manager may calculate the price of the debt
security, subject to limitations established by the
Board. An exchange-traded options contract on
securities, currencies, futures and other financial
instruments is valued at its most recent sale price
on such exchange. If no sales occurred, the options
contract is valued at the calculated mean. If there
is no calculated mean, the options contract is
valued at the most recent bid quotation in the case
of a purchased options contract, or the most recent
asked quotation in the case of a written options
contract. An options contract on securities,
currencies and other financial instruments traded
over-the-counter is valued at the most recent bid
quotation in the case of a purchased options
contract and at the most recent asked quotation in
the case of a written options contract. Futures
contracts are valued at the most recent settlement
price. Foreign currency exchange forward contracts
are valued at the value of the underlying currency
at the prevailing exchange rate. If a security is
traded on more than one exchange, or upon one or
more exchanges and in the over-the-counter market,
quotations are taken from the market in which the
security is traded most extensively. If, in the
opinion of the Valuation Committee of the Board of
Trustees, the value of a portfolio asset as
determined in accordance with these procedures does
not represent the fair market value of the
portfolio asset, the value of the portfolio asset
is taken to be an amount which, in the opinion of
the Valuation Committee, represents fair market
value on the basis of all available information.
The value of other portfolio holdings owned by a
Fund is determined in a manner which, in the
discretion of the Valuation Committee most fairly
reflects fair market value of the property on the
valuation date.
The securities of the Kemper 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.
FOREIGN CURRENCY TRANSLATION. The books and records
of the Fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing
rates of exchange. Purchases and sales of
investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the
transactions. The Portfolios include that portion
of the results of operations resulting from changes
in foreign exchange rates with net realized and
unrealized gain (loss) on investments, as
appropriate.
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date. 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 fixed income
securities. 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 June 30, 1998, the Kemper
Government Securities Portfolio had $13,522,000 of
purchase commitments outstanding (14% 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 close
of the Exchange for all Portfolios (excluding the
Kemper Money Market Portfolio) and at 11:00 a.m.
and as of the earlier of 3:00 p.m. Central time or
the close of the Exchange for the Kemper 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's
does not take place contemporaneously with the
determination of prices of the Portfolio's foreign
securities.
FEDERAL INCOME TAXES. Each Portfolio has complied
with the special provisions of the Internal Revenue
Code available to investment companies for the six
months ended June 30, 1998. The accumulated net
realized loss on sales of investments for federal
income tax purposes at June 30, 1998 amounted to
approximately $15,769,000 in the Kemper High Yield
Portfolio, $4,453,000 in the Kemper Government
Securities Portfolio and $150,000 in the Kemper
Blue Chip Portfolio. These losses are available to
offset future taxable gains in the respective
Portfolios and, if not applied, expire during the
period 1998 through 2006.
DIVIDENDS TO SHAREHOLDERS. All Portfolios, except
the Kemper 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 Kemper Money Market Portfolio
declares a daily dividend equal to its net
investment income for that day, payable monthly.
Shareholders receive dividends in additional
shares.
24
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS
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. Prior to January 1, 1998, the
Portfolios used equalization accounting to keep a
continuing shareholder's per share interest in
undistributed net investment income unaffected by
shareholder activity. This was accomplished by
allocating a per share portion of the proceeds from
sales and the cost of redemptions of fund shares to
undistributed net investment income. As of January
1, 1998, the Portfolios discontinued using
equalization. This change has no effect on the
Portfolios' net assets, net asset value per share
or distributions to shareholders. Discontinuing the
use of book equalization will result in simpler
financial statements. The cumulative effect of the
change was to increase (decrease) undistributed net
investment income and increase (decrease) paid-in
capital previously reported through December 31,
1997 for the following Portfolios by the following
amounts (in thousands):
<TABLE>
<CAPTION>
PORTFOLIO AMOUNT
--------- ------
<S> <C>
Kemper Total Return $ (296)
Kemper High Yield (4,962)
Kemper Growth 2,882
Kemper Government Securities 8,316
Kemper International 904
Kemper Small Cap Growth 395
Kemper Investment Grade Bond 742
Kemper Contrarian Value 2,172
Kemper Small Cap Value 576
Kemper Value+Growth 274
Kemper Horizon 20+ 159
Kemper Horizon 10+ 402
Kemper Horizon 5 401
Kemper Blue Chip 181
Kemper Global Income 15
</TABLE>
ORGANIZATIONAL COSTS. Costs incurred by the
Kemper-Dreman High Return Equity, Kemper-Dreman
Financial Services, Kemper Global Blue Chip and
Kemper International Growth and Income Portfolios
in connection with their organization and initial
registration of shares have been deferred and are
being amortized on a straight-line basis over a
five year period.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. Under the Fund's management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper), the Fund pays a monthly fee based
on 1/12 of average daily net assets of each
Portfolio at an annual rate of .50% for the Kemper
Money Market Portfolio, .55% for the Kemper Total
Return and Kemper Government Securities Portfolios,
.60% for the Kemper High Yield, Kemper Growth,
Kemper Investment Grade Bond, Kemper Horizon 20+,
Kemper Horizon 10+ and Kemper Horizon 5 Portfolios,
.65% for the Kemper Small Cap Growth and Kemper
Blue Chip Portfolios, .75% for the Kemper
International, Kemper Value, Kemper Small Cap
Value, Kemper Value+Growth, and Kemper Global
Income Portfolios and 1.00% for Kemper
International Growth and Income Portfolio, .75% of
the first $250 million of average daily net assets
declining to .62% of average daily net assets in
excess of $12.5 billion for the Kemper-Dreman High
Return Equity and Kemper-Dreman Financial Services
Portfolios and 1.00% of the first $250 million of
average daily net assets declining to .90% of
average daily net assets in excess of $12.5 billion
for the Kemper
25
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS
Global Blue Chip Portfolio. For the six months
ended June 30, 1998, the Fund incurred aggregate
management fees of $9,140,000, after an expense
waiver of $10,000 by Scudder Kemper for the
Kemper-Dreman High Return Equity, Kemper-Dreman
Financial Services, Kemper Global Blue Chip and
Kemper International Growth and Income Portfolios.
In addition, Scudder Kemper has temporarily agreed
to absorb certain operating expenses of the
Kemper-Dreman High Return Equity, Kemper-Dreman
Financial Services, Kemper Global Blue Chip and
Kemper International Growth and Income Portfolios.
Under these arrangements, Scudder Kemper waived and
absorbed expenses of $69,000 for the period ended
June 30, 1998. Dreman Value Management, L.L.C.
serves as sub-adviser with respect to the
investment and reinvestment of assets in the
Kemper-Dreman High Return Equity and Kemper-Dreman
Financial Services Portfolios, and is paid by
Scudder Kemper for its services.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation (SFAC), a subsidiary of Scudder Kemper,
is responsible for determining the daily net asset
value per share and maintaining the portfolio and
general accounting records of each Portfolio. SFAC
receives no fee for its services to each Portfolio
other than Kemper-Dreman High Return Equity,
Kemper-Dreman Financial Services, Kemper Global
Blue Chip and Kemper International Growth and
Income Portfolios. The Portfolios incurred no
accounting fees for the period ended June 30, 1998,
after a fee waiver of $29,000 by Scudder Kemper.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. During the six months ended June
30, 1998, the Fund made no direct payments to its
officers and incurred trustees' fees of $147,000 to
independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended June 30, 1998, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
PORTFOLIO PURCHASES FROM SALES
--------- --------- ----------
<S> <C> <C>
Kemper Total Return $344,118 $327,159
Kemper High Yield 343,231 248,579
Kemper Growth 356,056 345,213
Kemper Government Securities 77,712 77,079
Kemper International 102,661 87,118
Kemper Small Cap Growth 223,456 202,123
Kemper Investment Grade Bond 20,803 11,665
Kemper Contrarian Value 99,165 50,314
Kemper Small Cap Value 48,522 16,210
Kemper Value+Growth 46,349 11,570
Kemper Horizon 20+ 13,750 3,507
Kemper Horizon 10+ 17,010 3,838
Kemper Horizon 5 11,473 2,365
Kemper Blue Chip 40,645 14,814
Kemper Global Income 5,443 2,982
</TABLE>
For the period from May 4, 1998 to June 30, 1998,
investment transactions (excluding short-term
investments) are as follows (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
PORTFOLIO PURCHASES FROM SALES
--------- --------- ----------
<S> <C> <C>
Kemper-Dreman High Return Equity $6,901 $58
Kemper-Dreman Financial Services 4,762 3
</TABLE>
26
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS
For the period from May 5, 1998 to June 30, 1998,
investment transactions (excluding short-term
investments) are as follows (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
PORTFOLIO PURCHASES FROM SALES
--------- --------- ----------
<S> <C> <C>
Kemper Global Blue Chip $954 $155
Kemper International Growth and Income 708 41
</TABLE>
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following tables summarize the activity in
capital shares of each Portfolio of the Fund (in
thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------
KEMPER MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 64,856 $ 64,856 279,361 $ 279,361
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 2,556 2,556 5,015 5,015
-----------------------------------------------------------------------------
67,412 67,412 284,376 284,376
-----------------------------------------------------------------------------
Shares redeemed (64,633) (64,633) (254,834) (254,834)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 2,779 $ 2,779 29,542 $ 29,542
-----------------------------------------------------------------------------
KEMPER TOTAL RETURN PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 12,733 $ 77,618 20,361 $ 52,952
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 52,164 135,743 46,559 108,883
-----------------------------------------------------------------------------
64,897 213,361 66,920 161,835
-----------------------------------------------------------------------------
Shares redeemed (18,741) (93,957) (35,664) (96,409)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 46,156 $119,404 31,256 $ 65,426
-----------------------------------------------------------------------------
KEMPER HIGH YIELD PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 77,160 $ 98,201 153,373 $ 184,650
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 23,375 29,505 22,228 25,931
-----------------------------------------------------------------------------
100,535 127,706 175,601 210,581
-----------------------------------------------------------------------------
Shares redeemed (29,435) (36,287) (99,314) (119,273)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 71,100 $ 91,419 76,287 $ 91,308
-----------------------------------------------------------------------------
KEMPER GROWTH PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 11,423 $ 35,192 17,325 $ 49,729
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 31,337 95,007 49,988 114,261
-----------------------------------------------------------------------------
42,760 130,199 67,313 163,990
-----------------------------------------------------------------------------
Shares redeemed (10,686) (33,460) (24,302) (74,845)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 32,074 $ 96,739 43,011 $ 89,145
-----------------------------------------------------------------------------
</TABLE>
27
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------
KEMPER GOVERNMENT SECURITIES PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 16,602 $ 17,607 17,121 $ 16,263
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 5,053 5,813 5,997 6,694
-----------------------------------------------------------------------------
21,655 23,420 23,118 22,957
-----------------------------------------------------------------------------
Shares redeemed (11,438) (11,564) (21,158) (21,057)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 10,217 $ 11,856 1,960 $ 1,900
-----------------------------------------------------------------------------
KEMPER INTERNATIONAL PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 13,323 $ 23,274 36,340 $ 58,360
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 5,583 9,849 6,447 9,607
-----------------------------------------------------------------------------
18,906 33,123 42,787 67,967
-----------------------------------------------------------------------------
Shares redeemed (11,895) (20,568) (23,422) (38,047)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 7,011 $ 12,555 19,365 $ 29,920
-----------------------------------------------------------------------------
KEMPER SMALL CAP GROWTH PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 16,497 $ 31,333 34,187 $ 62,047
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 13,797 25,813 6,358 8,904
-----------------------------------------------------------------------------
30,294 57,146 40,545 70,951
-----------------------------------------------------------------------------
Shares redeemed (3,440) (5,712) (11,990) (21,812)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 26,854 $ 51,434 28,555 $ 49,139
-----------------------------------------------------------------------------
KEMPER INVESTMENT GRADE BOND PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 11,040 $ 12,287 13,271 $ 13,473
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 715 784 40 41
-----------------------------------------------------------------------------
11,755 13,071 13,311 13,514
-----------------------------------------------------------------------------
Shares redeemed (1,226) (1,279) (1,377) (1,447)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 10,529 $ 11,792 11,934 $ 12,067
-----------------------------------------------------------------------------
KEMPER CONTRARIAN VALUE PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 42,427 $ 68,715 100,098 $ 135,103
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 3,981 6,634 324 389
-----------------------------------------------------------------------------
46,408 75,349 100,422 135,492
-----------------------------------------------------------------------------
Shares redeemed (13,083) (20,904) (11,573) (15,848)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 33,325 $ 54,445 88,849 $ 119,644
-----------------------------------------------------------------------------
</TABLE>
28
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------
KEMPER SMALL CAP VALUE PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 23,105 $ 29,353 55,160 $ 63,180
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 1,664 2,220 239 234
-----------------------------------------------------------------------------
24,769 31,573 55,399 63,414
-----------------------------------------------------------------------------
Shares redeemed (3,314) (4,047) (6,460) (7,442)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 21,455 $ 27,526 48,939 $ 55,972
-----------------------------------------------------------------------------
KEMPER VALUE+GROWTH PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 29,735 $ 46,425 42,473 $ 56,712
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 1,557 2,505 161 165
-----------------------------------------------------------------------------
31,292 48,930 42,634 56,877
-----------------------------------------------------------------------------
Shares redeemed (2,025) (3,040) (3,047) (4,010)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 29,267 $ 45,890 39,587 $ 52,867
-----------------------------------------------------------------------------
KEMPER HORIZON 20+ PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 7,340 $ 10,885 9,642 $ 12,277
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 532 796 51 56
-----------------------------------------------------------------------------
7,872 11,681 9,693 12,333
-----------------------------------------------------------------------------
Shares redeemed (491) (734) (858) (1,125)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 7,381 $ 10,947 8,835 $ 11,208
-----------------------------------------------------------------------------
KEMPER HORIZON 10+ PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 10,096 $ 14,046 13,389 $ 16,073
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 651 893 70 75
-----------------------------------------------------------------------------
10,747 14,939 13,459 16,148
-----------------------------------------------------------------------------
Shares redeemed (483) (981) (1,099) (1,318)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 10,264 $ 13,958 12,360 $ 14,830
-----------------------------------------------------------------------------
KEMPER HORIZON 5 PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 7,185 $ 8,997 10,209 $ 11,525
-----------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 486 614 40 43
-----------------------------------------------------------------------------
7,671 9,611 10,249 11,568
-----------------------------------------------------------------------------
Shares redeemed (344) (352) (910) (1,032)
-----------------------------------------------------------------------------
Net increase from capital
share transactions 7,327 $ 9,259 9,339 $ 10,536
-----------------------------------------------------------------------------
</TABLE>
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 1 TO
JUNE 30, 1998 DECEMBER 31, 1997
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------
KEMPER BLUE CHIP PORTFOLIO
------------------------------------------------------------------------------
Shares sold 22,940 $27,402 17,303 $18,608
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 232 286 -- --
------------------------------------------------------------------------------
23,172 27,688 17,303 18,108
------------------------------------------------------------------------------
Shares redeemed (825) (851) (888) (963)
------------------------------------------------------------------------------
Net increase from capital
share transactions 22,347 $26,837 16,415 $17,645
------------------------------------------------------------------------------
KEMPER GLOBAL INCOME PORTFOLIO
------------------------------------------------------------------------------
Shares sold 2,738 $ 2,837 2,953 $ 2,947
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 107 109 -- --
------------------------------------------------------------------------------
2,845 2,946 2,953 2,947
------------------------------------------------------------------------------
Shares redeemed (407) (409) (968) (971)
------------------------------------------------------------------------------
Net increase from capital
share transactions 2,438 $ 2,537 1,985 $ 1,976
------------------------------------------------------------------------------
<CAPTION>
MAY 4 TO
JUNE 30, 1998
-------------------
SHARES AMOUNT
------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------------
KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO
------------------------------------------------------------------------------
Shares sold 11,342 $11,059
---------------------------------------------------------------------------
Shares redeemed (6) (5)
---------------------------------------------------------------------------
Net increase from capital share transactions 11,336 $11,054
---------------------------------------------------------------------------
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
------------------------------------------------------------------------------
Shares sold 5,022 $ 4,943
---------------------------------------------------------------------------
Shares redeemed (15) (15)
---------------------------------------------------------------------------
Net increase from capital share transactions 5,007 $ 4,928
---------------------------------------------------------------------------
<CAPTION>
MAY 5 TO
JUNE 30, 1998
-----------------
SHARES AMOUNT
------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP PORTFOLIO
------------------------------------------------------------------------------
Shares sold 882 $ 869
---------------------------------------------------------------------------
Net increase from capital share transactions 882 $ 869
---------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO
------------------------------------------------------------------------------
Shares sold 860 $ 858
---------------------------------------------------------------------------
Net increase from capital share transactions 860 $ 858
---------------------------------------------------------------------------
</TABLE>
30
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6 FINANCIAL FUTURES
CONTRACTS The Kemper Value+Growth, Kemper Horizon 20+, Kemper
Horizon 10+, Kemper Horizon 5, Kemper-Dreman High
Return Equity and Kemper Government Securities
Portfolios have entered into exchange traded
financial futures contracts in order to take
advantage of anticipated market conditions and, as
such, bear 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 Portfolios and the broker as the market
value of the futures contract fluctuates. At June
30, 1998, the market value of assets pledged by the
Portfolios to cover margin requirements for open
futures positions was $50,000, $80,000, $30,000,
$30,000, $88,000 and $123,000 for the Kemper
Value+Growth, Kemper Horizon 20+, Kemper Horizon
10+, Kemper Horizon 5, Kemper-Dreman High Return
Equity and Kemper Government Securities Portfolios,
respectively. The Portfolios also have liquid
assets in their portfolios in excess of the face
amount of open futures contracts. At June 30, 1998,
the Portfolios had the following futures contracts
open, with expirations in September, 1998:
<TABLE>
<CAPTION>
FACE GAIN
PORTFOLIO TYPE AMOUNT POSITION AT 6/30/98
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Value+Growth S&P 500 $6,075,000 Long $318,000
-------------------------------------------------------------------------------
Kemper Horizon 20+ S&P 500 1,381,000 Long 48,000
-------------------------------------------------------------------------------
Kemper Horizon 10+ S&P 500 552,000 Long 19,000
-------------------------------------------------------------------------------
Kemper Horizon 5 S&P 500 552,000 Long 19,000
-------------------------------------------------------------------------------
Kemper-Dreman High
Return Equity S&P 500 2,450,000 Long 65,000
-------------------------------------------------------------------------------
Kemper Government U.S. Treasury Note 1,318,000 Short 1,000
Securities U.S. Treasury Bond 246,000 Long 2,000
-------------------------------------------------------------------------------
3,000
-------------------------------------------------------------------------------
</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 Kemper Global Income Portfolio has
entered into forward contracts to deliver foreign
currency in exchange for U.S. dollars as described
below. The Portfolio bears the market risk that
arises from changes in foreign exchange rates, and
accordingly, the net unrealized gain or loss
amounts on these contracts are reflected in the
accompanying financial statements. The Portfolio
also bears the credit risk (which is limited to the
unrealized gain, if any) if the counterparty fails
to perform under the contract. At June 30, 1998,
the Portfolio had the following forward currency
contracts outstanding with settlement dates in July
and September, 1998:
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY AMOUNT IN GAIN AT
TO BE DELIVERED U.S. DOLLARS 6/30/98
-----------------------------------------------------------------------------
<C> <S> <C> <C>
1,013,000 Canadian Dollars $692,000 $ 3,000
-----------------------------------------------------------------------------
606,000 New Zealand Dollars 324,000 10,000
-----------------------------------------------------------------------------
NET UNREALIZED GAIN $13,000
-----------------------------------------------------------------------------
</TABLE>
31
<PAGE> 33
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-------------------------------------------------
KEMPER MONEY MARKET PORTFOLIO
-------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------
Net investment income .03 .05 .05 .06 .04
- ---------------------------------------------------------------------------------------------------
Less dividends declared .03 .05 .05 .06 .04
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.58% 5.25 5.03 5.66 3.96
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses .53% .55 .60 .55 .53
- ---------------------------------------------------------------------------------------------------
Net investment income 5.16% 5.14 4.90 5.52 3.95
- ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $102,922 100,143 70,601 61,078 83,821
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTE TO KEMPER 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>
-------------------------------------------------
KEMPER TOTAL RETURN PORTFOLIO
-------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 2.822 2.815 2.579 2.112 2.586
- -------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .084 .090 .084 .084 .069
- -------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .188 .377 .322 .453 (.313)
- -------------------------------------------------------------------------------------------------------
Total from investment operations .272 .467 .406 .537 (.244)
- -------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .090 .090 .090 .070 .060
- -------------------------------------------------------------------------------------------------------
Distribution from net realized gain .400 .370 .080 -- .170
- -------------------------------------------------------------------------------------------------------
Total dividends .490 .460 .170 .070 .230
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 2.604 2.822 2.815 2.579 2.112
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 9.63% 19.96 16.76 25.97 (9.50)
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses .59% .60 .59 .60 .61
- -------------------------------------------------------------------------------------------------------
Net investment income 3.32% 3.32 3.21 3.52 3.13
- -------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $846,245 786,996 697,102 659,894 586,594
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 71% 122 90 118 128
- -------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 34
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-----------------------------------------------------
KEMPER HIGH YIELD PORTFOLIO
----------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.296 1.281 1.259 1.185 1.338
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .057 .116 .120 .125 .116
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .002 .019 .042 .069 (.149)
- -------------------------------------------------------------------------------------------------
Total from investment operations .059 .135 .162 .194 (.033)
- -------------------------------------------------------------------------------------------------
Less distribution from net investment
income .090 .120 .140 .120 .120
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.265 1.296 1.281 1.259 1.185
- -------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 4.54% 11.61 14.06 17.40 (2.25)
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------
Expenses .63% .65 .65 .65 .65
- -------------------------------------------------------------------------------------------------
Net investment income 8.93% 9.20 9.70 10.27 9.49
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $472,111 391,664 289,315 257,377 219,415
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 84% 90 98 90 98
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------
KEMPER GROWTH PORTFOLIO
----------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 3.001 3.371 3.262 2.665 2.935
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .007 .012 .030 .034 .018
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .468 .448 .589 .793 (.138)
- -------------------------------------------------------------------------------------------------
Total from investment operations .475 .460 .619 .827 (.120)
- -------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .010 .020 .040 .010 --
- -------------------------------------------------------------------------------------------------
Distribution from net realized gain .500 .810 .470 .220 .150
- -------------------------------------------------------------------------------------------------
Total dividends .510 .830 .510 .230 .150
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $ 2.966 3.001 3.371 3.262 2.665
- -------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.46% 21.34 21.63 32.97 (4.02)
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------
Expenses .63% .65 .64 .64 .66
- -------------------------------------------------------------------------------------------------
Net investment income .42% .42 .94 1.15 .69
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $651,599 563,016 487,483 414,533 321,708
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 114% 170 175 88 106
- -------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 35
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
--------------------------------------------------
KEMPER GOVERNMENT SECURITIES PORTFOLIO
--------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.207 1.207 1.269 1.142 1.267
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .034 .084 .085 .084 .067
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .005 .016 (.057) .123 (.102)
- -----------------------------------------------------------------------------------------------
Total from investment operations .039 .100 .028 .207 (.035)
- -----------------------------------------------------------------------------------------------
Less dividends
Distribution from net investment income .080 .100 .090 .080 .060
- -----------------------------------------------------------------------------------------------
Distribution from net realized gain -- -- -- -- .030
- -----------------------------------------------------------------------------------------------
Total dividends .080 .100 .090 .080 .090
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.166 1.207 1.207 1.269 1.142
- -----------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 3.33% 8.96 2.56 18.98 (2.74)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------------------------
Expenses .63% .64 .66 .65 .63
- -----------------------------------------------------------------------------------------------
Net investment income 6.37% 7.12 7.09 7.08 5.69
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $95,666 86,682 84,314 95,185 95,782
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 158% 179 325 275 606
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------
KEMPER INTERNATIONAL PORTFOLIO
------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.615 1.564 1.371 1.244 1.306
- ---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .015 .011 .011 .018 .009
- ---------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .231 .130 .212 .139 (.056)
- ---------------------------------------------------------------------------------------------------
Total from investment operations .246 .141 .223 .157 (.047)
- ---------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .020 .020 .020 .010 --
- ---------------------------------------------------------------------------------------------------
Distribution from net realized gain .060 .070 .010 .020 .015
- ---------------------------------------------------------------------------------------------------
Total dividends .080 .090 .030 .030 .015
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.781 1.615 1.564 1.371 1.244
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.28% 9.46 16.49 12.83 (3.59)
- ---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------
Expenses .88% .91 .96 .92 .93
- ---------------------------------------------------------------------------------------------------
Net investment income 1.58% .71 .89 1.39 .74
- ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $233,142 200,046 163,475 134,481 122,710
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 83% 79 87 126 107
- ---------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 36
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------------------------------
KEMPER SMALL CAP GROWTH PORTFOLIO
---------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31, MAY 2 TO
ENDED JUNE ------------------------- DECEMBER 31,
30, 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.969 1.677 1.346 1.039 1.000
- ----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .001 .004 .002 .005 .008
- ----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .256 .488 .369 .307 .031
- ----------------------------------------------------------------------------------------------------------
Total from investment operations .257 .492 .371 .312 .039
- ----------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .010 -- .005 --
- ----------------------------------------------------------------------------------------------------------
Distribution from net realized gain .340 .190 .040 -- --
- ----------------------------------------------------------------------------------------------------------
Total dividends .340 .200 .040 .005 --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.886 1.969 1.677 1.346 1.039
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.47% 34.20 28.04 30.07 3.95
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ----------------------------------------------------------------------------------------------------------
Expenses .69% .71 .75 .87 1.25
- ----------------------------------------------------------------------------------------------------------
Net investment income .04% .20 .15 .42 .91
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $182,282 137,415 69,137 35,373 12,909
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 278% 330 156 81 58
- ----------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 37
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER
INVESTMENT GRADE CONTRARIAN VALUE
BOND PORTFOLIO PORTFOLIO
---------------------------------- ----------------------------------
SIX MONTHS YEAR MAY 1 SIX MONTHS YEAR MAY 1
ENDED ENDED TO ENDED ENDED TO
JUNE 30, DEC. 31, DEC. 31, JUNE 30, DEC. 31, DEC. 31,
1998 1997 1996 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.118 1.036 1.000 1.518 1.174 1.000
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .016 .066 .031 .031 .031 .015
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .018 .026 .005 .134 .323 .159
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .034 .092 .036 .165 .354 .174
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .030 .010 -- .010 .010 --
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain .010 -- -- .040 -- --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends .040 .010 -- .050 .010 --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.119 1.118 1.036 1.637 1.518 1.174
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 3.74% 9.04 3.57 11.10 30.38 17.36
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION (ANNUALIZED)
- ------------------------------------------------------------------------------------------------------------------------
Expenses .80% .80 .87 .81 .80 .90
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 5.55% 6.23 4.93 1.94 2.38 2.42
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION (ANNUALIZED)
- ------------------------------------------------------------------------------------------------------------------------
Expenses .80% .80 .87 .81 .80 .92
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 5.55% 6.23 4.93 1.94 2.38 2.40
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $27,304 15,504 1,998 229,707 162,380 21,305
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 171% 311 75 58 46 57
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE TO ALL PORTFOLIOS: Data for the period ended June 30, 1998 is unaudited.
36
<PAGE> 38
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
SMALL CAP VALUE+ HORIZON 20+
VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
-------------------------------- -------------------------------- --------------------------------
SIX MONTHS YEAR MAY 1 SIX MONTHS YEAR MAY 1 SIX MONTHS YEAR MAY 1
ENDED ENDED TO ENDED ENDED TO ENDED ENDED TO
JUNE 30, DEC. 31, DEC. 31, JUNE 30, DEC. 31, DEC. 31, JUNE 30, DEC. 31, DEC. 31,
1998 1997 1996 1998 1997 1996 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
1.227 1.019 1.000 1.425 1.146 1.000 1.378 1.154 1.000
- ----------------------------------------------------------------------------------------------------------
.004 .012 .013 .043 .012 .008 .008 .020 .012
- ----------------------------------------------------------------------------------------------------------
.027 .206 .006 .152 .277 .138 .158 .214 .142
- ----------------------------------------------------------------------------------------------------------
.031 .218 .019 .195 .289 .146 .166 .234 .154
- ----------------------------------------------------------------------------------------------------------
-- .010 -- -- .010 -- .010 .010 --
- ----------------------------------------------------------------------------------------------------------
.030 -- -- .040 -- -- .040 -- --
- ----------------------------------------------------------------------------------------------------------
.030 .010 -- .040 .010 -- .050 .010 --
- ----------------------------------------------------------------------------------------------------------
1.228 1.227 1.019 1.580 1.425 1.146 1.494 1.378 1.154
- ----------------------------------------------------------------------------------------------------------
2.29 21.73 1.86 13.62 25.47 14.60 12.11 20.48 15.37
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
.81 .84 .90 .82 .84 .90 .85 .93 .81
- ----------------------------------------------------------------------------------------------------------
1.01 1.18 2.25 .69 .95 .97 1.64 1.58 1.71
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
.81 .84 .92 .82 .84 1.01 .85 .93 1.13
- ----------------------------------------------------------------------------------------------------------
1.01 1.18 2.23 .69 .95 .86 1.64 1.58 1.39
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
102,478 76,108 13,307 122,827 69,094 10,196 29,103 16,659 3,759
- ----------------------------------------------------------------------------------------------------------
42 22 61 26 50 25 26 75 60
- ----------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 39
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER
HORIZON 10+ HORIZON 5
PORTFOLIO PORTFOLIO
---------------------------------- ----------------------------------
SIX MONTHS YEAR MAY 1 SIX MONTHS YEAR MAY 1
ENDED ENDED TO ENDED ENDED TO
JUNE 30, DEC. 31, DEC. 31, JUNE 30, DEC. 31, DEC. 31,
1998 1997 1996 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.289 1.114 1.000 1.224 1.096 1.000
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) .002 .034 .018 .012 .043 .023
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .114 .151 .096 .066 .095 .073
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .116 .185 .114 .078 .138 .096
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .010 .010 -- .010 .010 --
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain .030 -- -- .030 -- --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends .040 .010 -- .040 .010 --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.365 1.289 1.114 1.262 1.224 1.096
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 9.01% 16.77 11.37 6.37 12.70 9.59
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER
EXPENSE ABSORPTION (ANNUALIZED)
- ------------------------------------------------------------------------------------------------------------------------
Expenses .77% .83 .78 .89 .97 .83
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 2.80% 2.77 2.69 3.73 3.63 3.60
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE
EXPENSE ABSORPTION (ANNUALIZED)
- ------------------------------------------------------------------------------------------------------------------------
Expenses .77% .83 1.01 .89 .97 1.01
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.80% 2.77 2.46 3.73 3.63 3.42
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $37,898 22,553 5,727 23,945 14,258 2,534
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 21% 67 76 22 89 13
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE TO ALL PORTFOLIOS: Data for the period ended June 30, 1998 is unaudited.
38
<PAGE> 40
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER
KEMPER-DREMAN KEMPER-DREMAN KEMPER INTERNATIONAL
KEMPER KEMPER HIGH RETURN FINANCIAL GLOBAL GROWTH AND
BLUE CHIP GLOBAL INCOME EQUITY SERVICES BLUE CHIP INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------- --------------------- -------------- ------------- --------- -------------
SIX MONTHS MAY 1 SIX MONTHS MAY 1 FOR THE PERIOD MAY 4 FOR THE PERIOD MAY 5
ENDED TO ENDED TO (COMMENCEMENT OF (COMMENCEMENT OF
JUNE 30, DEC. 31, JUNE 30, DEC. 31, OPERATIONS) TO OPERATIONS) TO
1998 1997 1998 1997 JUNE 30, 1998 JUNE 30, 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
1.115 1.000 1.029 1.000 1.000 1.000 1.000 1.000
- --------------------------------------------------------------------------------------------------------------
.005 .017 (.003) .036 .002 .001 -- --
- --------------------------------------------------------------------------------------------------------------
.106 .098 .030 (.007) (.026) (.007) (.012) (.003)
- --------------------------------------------------------------------------------------------------------------
.111 .115 .027 .029 (.024) (.006) (.012) (.003)
- --------------------------------------------------------------------------------------------------------------
.010 -- .020 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
-- -- .010 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
.010 -- .030 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
1.216 1.115 1.026 1.029 .976 .994 .988 .997
- --------------------------------------------------------------------------------------------------------------
9.23 11.54 2.72 2.87 (2.42) (.61) (1.20) (.30)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
.82 .95 1.07 1.10 1.63 .99 1.57 1.12
- --------------------------------------------------------------------------------------------------------------
1.46 2.07 4.66 5.36 3.28 1.64 2.01 3.63
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
.82 .95 1.07 1.10 3.11 4.29 22.44 26.99
- --------------------------------------------------------------------------------------------------------------
1.46 2.07 4.66 5.36 1.80 (1.66) (18.86) (22.24)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
47,243 18,421 4,643 2,145 11,062 4,977 872 858
- --------------------------------------------------------------------------------------------------------------
108 78 200 290 2 -- 20 42
- --------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 41
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
CORPORATE OBLIGATIONS VALUE
- ----------------------------------------------------------
<S> <C>
- ----------------------------------------------------------
BANKING--5.8%
- ----------------------------------------------------------
Deutsche Bank Financial, Inc.
5.55%, 7/6/98 $ 2,998
Svenska Handelsbanken
5.57%, 7/9/98 2,996
-----------------------------------------------------
5,994
- ----------------------------------------------------------
BUSINESS LOANS--21.5%
- ----------------------------------------------------------
Broadway Capital Corp.
5.68%, 7/28/98 2,987
Enterprise Funding Capital Corp.
5.62%, 8/28/98 2,973
Golden Manager's Acceptance Corp.
5.62%, 7/10/98 3,994
Madison Funding Corp.
5.64%, 7/13/98 3,992
Quincy Capital Corp.
5.58%, 7/22/98 2,224
Receivables Capital Corp.
5.57%, 7/10/98 2,996
Wood Street Funding Corp.
5.58%, 8/7/98 2,983
-----------------------------------------------------
22,149
- ----------------------------------------------------------
CAPITAL AND EQUIPMENT LENDING--14.5%
- ----------------------------------------------------------
Ace Overseas Corp.
5.63%, 9/8/98 2,968
Caterpillar Financial Services Corp.
5.57%, 8/26/98 3,966
Centric Capital Corp.
5.60%, 8/14/98 2,980
Fountain Square Commercial Funding
Corp.
5.58%, 7/6/98 2,998
(a) Sigma Finance, Inc.
5.63%, 7/1/98 2,000
-----------------------------------------------------
14,912
- ----------------------------------------------------------
CAPTIVE BUSINESS LENDING--12.6%
- ----------------------------------------------------------
CSW Credit, Inc.
5.58%, 7/28/98 3,983
(a) FINOVA Capital Corp.
5.74%, 9/11/98 3,000
Girsa Funding Corp.
5.61%, 7/31/98 2,986
Philip Morris Capital Corp.
5.54%, 7/2/98 2,999
-----------------------------------------------------
12,968
- ----------------------------------------------------------
CONSUMER LENDING--2.9%
- ----------------------------------------------------------
Transamerica Finance Corp.
5.58%, 8/17/98 2,978
-----------------------------------------------------
<CAPTION>
- ----------------------------------------------------------
VALUE
- ----------------------------------------------------------
<S> <C>
- ----------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--5.8%
- ----------------------------------------------------------
Fortune Brands, Inc.
5.56%, 7/14/98 $ 2,994
Tribune Co.
5.54%, 7/8/98 2,997
-----------------------------------------------------
5,991
- ----------------------------------------------------------
DIVERSIFIED FINANCE--2.9%
- ----------------------------------------------------------
Variable Funding Capital Corp.
5.57%, 7/10/98 2,996
-----------------------------------------------------
- ----------------------------------------------------------
FINANCIAL SERVICES--15.1%
- ----------------------------------------------------------
(a) Bear Stearns Cos., Inc.
5.62%, 7/20/98 2,000
(a) Goldman Sachs Group, L.P.
5.58%, 7/11/98 2,000
(a) Lehman Brothers Holdings, Inc.
5.71%, 7/20/98 2,000
Merrill Lynch & Co., Inc.
5.62%, 7/6/98 2,000
(a) 5.58%, 8/12/98 2,484
(a) J.P. Morgan & Co., Inc.
5.55%, 8/7/98 2,998
(a) Morgan Stanley, Dean Witter,
Discover & Co.
5.61%, 9/18/98 2,000
-----------------------------------------------------
15,482
- ----------------------------------------------------------
HEALTH CARE--2.9%
- ----------------------------------------------------------
Baxter International, Inc.
5.56%, 7/24/98 2,989
-----------------------------------------------------
- ----------------------------------------------------------
MANUFACTURING/INDUSTRIAL--4.9%
- ----------------------------------------------------------
Cooper Industries, Inc.
6.25%, 7/1/98 2,000
Monsanto Co.
5.53%, 7/6/98 2,998
-----------------------------------------------------
4,998
- ----------------------------------------------------------
MUNICIPAL OBLIGATION--2.9%
- ----------------------------------------------------------
California, Pollution Control Revenue
5.62%, 9/11/98 3,000
-----------------------------------------------------
</TABLE>
40
<PAGE> 42
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
VALUE
- ----------------------------------------------------------
UTILITIES--5.8%
- ----------------------------------------------------------
<S> <C>
AES Hawaii, Inc.
5.55%, 7/2/98 $ 3,000
GTE Corp.
5.61%, 7/23/98 2,990
-----------------------------------------------------
5,990
-----------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--97.6%
(AVERAGE MATURITY: 28 DAYS) 100,447
-----------------------------------------------------
- ----------------------------------------------------------
CERTIFICATES OF DEPOSIT AND BANK NOTES
- ----------------------------------------------------------
(a) AmSouth Bank of Alabama
5.55%, 7/23/98 2,000
(a) Bank One
5.64%, 7/7/98 2,000
(a) Mellon Bank, N.A.
5.60%, 8/7/98 2,000
-----------------------------------------------------
TOTAL CERTIFICATES
OF DEPOSIT AND BANK NOTES--5.8%
(AVERAGE MATURITY: 21 DAYS) 6,000
-----------------------------------------------------
TOTAL INVESTMENTS--103.4%
(AVERAGE MATURITY: 26 DAYS) 106,447
-----------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(3.4)% (3,525)
-----------------------------------------------------
NET ASSETS--100% $102,922
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER MONEY MARKET PORTFOLIO OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at June 30,
1998. The dates shown represent the demand date or next interest rate change
date.
See accompanying Notes to Financial Statements.
41
<PAGE> 43
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ---------------------------------------------------------
U.S. TREASURY BONDS
- ---------------------------------------------------------
<S> <C> <C>
10.75%, 2003 $ 4,265 $ 5,175
10.75%, 2005 10,495 13,652
10.375%, 2009 4,865 6,080
9.125%, 2009 4,870 5,703
12.75%, 2010 9,200 13,101
13.875%, 2011 16,180 24,563
12.00%, 2013 10,120 15,008
10.625%, 2015 23,300 35,827
8.75%, 2020 4,000 5,501
6.50%, 2026 3,100 3,443
6.00%, 2026 1,030 1,072
6.625%, 2027 1,900 2,146
6.125%, 2027 725 777
----------------------------------------------------
132,048
- ---------------------------------------------------------
U.S. TREASURY NOTES
- ---------------------------------------------------------
7.75%, 2000 6,000 6,199
6.375%, 2000 1,000 1,012
7.875%, 2001 7,000 7,459
7.75%, 2001 9,000 9,481
6.625%, 2002 3,340 3,462
6.25%, 2003 1,800 1,852
5.50%, 2003 8,000 7,995
7.25%, 2004 1,750 1,899
5.875%, 2004 175 178
7.50%, 2005 1,005 1,112
7.00%, 2006 7,540 8,236
6.625%, 2007 275 295
5.625%, 2008 250 253
5.50%, 2008 4,760 4,756
----------------------------------------------------
54,189
- ---------------------------------------------------------
PROVINCE OF QUEBEC, CANADA
- ---------------------------------------------------------
8.625%, 2005 1,500 1,696
----------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--22.2%
(Cost: $182,767) 187,933
----------------------------------------------------
COMMON STOCKS
- ---------------------------------------------------------
BASIC INDUSTRIES--.7%
- ---------------------------------------------------------
PPG Industries, Inc. 65,000shs. 4,522
Sealed Air Corp. 35,175 1,379
----------------------------------------------------
5,901
- ---------------------------------------------------------
CAPITAL GOODS--5.0%
- ---------------------------------------------------------
B.F. Goodrich Co. 210,000 10,421
Emerson Electric Co. 100,000 6,036
General Electric Co. 180,000 16,380
Raytheon Co., "A" 44,992 2,593
Sundstrand Corp. 75,000 4,294
York International Corp. 60,000 2,614
----------------------------------------------------
42,338
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ---------------------------------------------------------
- ---------------------------------------------------------
CONSUMER CYCLICALS--10.1%
- ---------------------------------------------------------
<S> <C> <C>
(b) Ascend Communications, Inc. 40,000 $ 1,982
Black & Decker Corp. 80,000 4,880
(b) Consolidated Stores Corp. 117,500 4,259
Dana Corp. 100,000 5,350
(b) Federated Department Stores 90,000 4,843
(b) FORE Systems, Inc. 100,000 2,650
(b) General Motors Corp., Class
H 80,000 3,770
Home Depot 40,000 3,323
May Department Stores Co. 72,000 4,716
Owens Corning 80,000 3,265
(b) Proffitt's, Inc. 90,000 3,634
R.R. Donnelley & Sons Co. 260,000 11,895
(b) SPX Corp. 40,000 2,575
Sears, Roebuck & Co. 160,000 9,770
Time Warner, Inc. 130,000 11,107
(b) Univision Communications,
Inc. 190,000 7,078
----------------------------------------------------
85,097
- ---------------------------------------------------------
CONSUMER DURABLES--3.1%
- ---------------------------------------------------------
Federal-Mogul Corp. 100,000 6,750
Goodyear Tire & Rubber Co. 80,000 5,155
Leggett & Platt, Inc. 240,000 6,000
Stanley Works 200,000 8,313
----------------------------------------------------
26,218
- ---------------------------------------------------------
CONSUMER STAPLES--3.4%
- ---------------------------------------------------------
Best Foods 110,000 6,387
H.J. Heinz Co. 60,000 3,368
Kimberly Clark Corp. 80,000 3,670
McCormick & Co., Inc. 200,000 7,144
Sara Lee Corp. 40,000 2,238
Unilever, N.V., ADR 80,000 6,315
----------------------------------------------------
29,122
- ---------------------------------------------------------
ENERGY--4.9%
- ---------------------------------------------------------
AMOCO Corp. 50,000 2,081
Atlantic Richfield Co. 30,000 2,344
Chevron Corp. 80,000 6,645
Enron Corp. 200,000 10,812
Exxon Corp. 83,200 5,933
Mobil Corp. 70,000 5,364
Royal Dutch Petroleum Co. 40,000 2,193
Texaco, Inc. 40,000 2,388
Unocal Corp. 100,000 3,575
----------------------------------------------------
41,335
- ---------------------------------------------------------
FINANCE--10.9%
- ---------------------------------------------------------
Allstate Corp. 40,000 3,662
American Express Co. 30,000 3,420
American General Corp. 180,000 12,814
AmSouth Bancorporation 75,000 2,948
</TABLE>
42
<PAGE> 44
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Associates First Capital
Corp. 40,000 $ 3,075
Beneficial Corp. 70,000 10,723
CIGNA Corp. 120,000 8,280
Federal Home Loan Mortgage
Corp. 40,000 1,882
Federal National Mortgage
Association 40,000 2,430
H.F. Ahmanson & Co. 55,000 3,905
Household International 105,000 5,224
Jefferson-Pilot Corp. 147,900 8,569
Morgan Stanley, Dean Witter,
Discover & Co. 45,000 4,112
PNC Bank Corp., N.A. 90,000 4,843
SLM Holding Corp. 40,000 1,960
Torchmark Corp. 140,000 6,405
Washington Mutual, Inc. 120,000 5,213
Wells Fargo & Co. 8,000 2,952
-----------------------------------------------------
92,417
- ----------------------------------------------------------
HEALTH CARE--9.1%
- ----------------------------------------------------------
Abbott Laboratories 200,000 8,175
(b) ALZA Corp. 190,000 8,217
American Home Products Corp. 160,000 8,280
Biomet, Inc. 250,000 8,266
Bristol-Myers Squibb Co. 54,000 6,207
Glaxo Wellcome, PLC 185,000 11,065
(b) HEALTHSOUTH Corp. 140,000 3,736
Novartis, ADR 95,000 7,861
Perkin-Elmer Corp. 85,000 5,286
Rhone-Poulence, S.A., with
warrants 65,000 4,084
Schering-Plough Corp. 65,000 5,956
-----------------------------------------------------
77,133
- ----------------------------------------------------------
TECHNOLOGY--7.4%
- ----------------------------------------------------------
Alcatel Alsthom 180,000 7,324
(b) Analog Devices 110,000 2,702
(b) Cisco Systems 45,000 4,143
(b) Computer Sciences Corp. 160,000 10,240
(b) Gartner Group, "A" 134,300 4,701
Hewlett-Packard Co. 65,000 3,892
International Business
Machines Corp. 100,000 11,481
Motorola 45,000 2,365
(b) Parametric Technology Corp. 200,000 5,425
(b) Sterling Commerce, Inc. 60,000 2,910
(b) Sun Microsystems 170,000 7,384
-----------------------------------------------------
62,567
- ----------------------------------------------------------
TRANSPORTATION--1.2%
- ----------------------------------------------------------
CSX Corp. 70,000 3,185
Canadian Pacific, Ltd. 150,000 4,256
Norfolk Southern Corp. 100,000 2,981
-----------------------------------------------------
10,422
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
UTILITIES--4.4%
- ----------------------------------------------------------
<S> <C> <C>
AT&T Corp. 140,000 $ 7,997
(b) AirTouch Communications 20,000 1,169
Ameritech Corp. 120,000 5,385
Cincinnati Bell, Inc. 290,000 8,301
SBC Communications, Inc. 100,000 4,000
Sprint Corp. 90,000 6,345
(b) WorldCom, Inc. 80,000 3,874
-----------------------------------------------------
37,071
-----------------------------------------------------
TOTAL COMMON STOCKS--60.2%
(Cost: $404,122) 509,621
-----------------------------------------------------
CORPORATE OBLIGATIONS
- ----------------------------------------------------------
ASSET BACKED SECURITIES--.1%
- ----------------------------------------------------------
Pacific Gas & Electric,
6.42%, 2008 $ 400 409
Southern California Edison
Co.
6.22%, 2004 100 101
6.28%, 2005 50 51
-----------------------------------------------------
561
- ----------------------------------------------------------
BASIC INDUSTRIES--1.7%
- ----------------------------------------------------------
Case Credit Corp.,
6.75%, 2007 500 511
Euramax International, PLC,
11.25%, 2006 2,850 3,078
Gaylord Container Corp.,
9.875%, 2008 2,500 2,419
MMI Products, Inc.,
11.25%, 2007 400 438
Plainwell, Inc.,
11.00%, 2008 870 874
Renco Steel Holdings,
10.875%, 2005 2,500 2,506
Riverwood International,
10.25%, 2006 2,650 2,710
Stone Container Corp.
11.50%, 2006 500 566
12.58%, 2016 1,000 1,115
-----------------------------------------------------
14,217
- ----------------------------------------------------------
CAPITAL GOODS--.2%
- ----------------------------------------------------------
Neenah Corp.,
11.125%, 2007 1,000 1,090
Raytheon Co.,
6.75%, 2007 650 668
-----------------------------------------------------
1,758
- ----------------------------------------------------------
CONSUMER CYCLICALS--5.5%
- ----------------------------------------------------------
AFC Enterprises, Inc.,
10.25%, 2007 700 743
AMF Bowling World
(a) 12.25%, 2006 612 490
10.875%, 2006 2,100 2,239
American Radio Systems,
9.00%, 2006 1,260 1,348
Big Flower Press, Inc.,
8.875%, 2007 2,500 2,544
</TABLE>
43
<PAGE> 45
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
CONSUMER CYCLICALS--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
CSC Holdings, Inc.,
9.25%, 2005 $ 1,800 $ 1,922
Cinemark USA, Inc.,
9.625%, 2008 1,360 1,401
Cole National Group,
9.875%, 2006 2,640 2,851
Comcast Cable
Communications, Inc.,
8.50%, 2027 325 391
Comcast Corp.,
9.375%, 2005 1,500 1,605
(a) Comcast UK Cable Partners,
Ltd.,
11.20%, 2007 2,880 2,394
Dayton Hudson Corp.,
7.50%, 2006 600 645
Delco Remy International,
10.625%, 2006 1,000 1,075
Empress River Casino,
10.75%, 2002 2,000 2,172
Federated Department Stores,
Inc.,
10.00%, 2001 1,350 1,473
Granite Broadcasting Corp.,
9.375%, 2005 1,240 1,276
Hayes Wheels International,
Inc.,
11.00%, 2006 1,500 1,695
K-III Communications Corp.,
8.50%, 2006 750 761
Kinder-Care Learning
Centers,
9.50%, 2009 500 504
News American Holdings,
Inc.,
9.25%, 2013 405 490
Pathmark Stores, Inc.,
9.625%, 2003 2,545 2,570
Rogers Cantel Mobile, Inc.,
8.80%, 2007 2,100 2,079
Royal Caribbean Cruises,
Ltd.,
8.25%, 2005 1,250 1,365
Sinclair Broadcasting Group,
Inc.,
8.75%, 2007 850 873
Tele-Communications, Inc.,
9.80%, 2012 1,100 1,417
(a) TeleWest Communications,
PLC,
11.00%, 2007 4,020 3,311
Time Warner, Inc.
9.125%, 2013 425 516
9.15%, 2023 450 566
United Artists Theatre Co.,
9.75%, 2008 550 549
Viacom, Inc.,
8.00%, 2006 2,500 2,569
Windy Hill Pet Food Company,
Inc.,
9.75%, 2007 1,300 1,359
WorldCom, Inc.
7.75%, 2007 225 244
7.75%, 2027 825 924
-----------------------------------------------------
46,361
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
CONSUMER DURABLES--.3%
- ----------------------------------------------------------
<S> <C> <C>
Del Webb Corp.,
9.75%, 2008 $ 2,600 $ 2,590
Kevco,
10.375%, 2007 345 359
Nortek, Inc.,
9.875%, 2004 90 92
-----------------------------------------------------
3,041
- ----------------------------------------------------------
ENERGY--.7%
- ----------------------------------------------------------
Benton Oil & Gas Co.,
11.625%, 2003 500 530
Clark Refining & Marketing,
Inc.,
8.875%, 2007 1,000 999
Dailey International, Inc.,
9.50%, 2008 280 274
Espirito Santos Centrais
Electricas S.A.,
10.00%, 2007 490 412
GTE North, Inc.,
6.90%, 2008 1,350 1,417
Gulf Canada Resources, Ltd.,
9.25%, 2004 1,500 1,566
GulfMark Offshore, Inc,
8.75%, 2008 1,120 1,086
-----------------------------------------------------
6,284
- ----------------------------------------------------------
FINANCE--2.1%
- ----------------------------------------------------------
AB Spintab,
7.50%, 2049 800 835
ABN Amro Bank
8.25%, 2009 1,250 1,360
Abbey National, PLC,
6.69%, 2005 775 792
AEGON, N.V.,
8.00%, 2006 1,000 1,103
BCH Cayman Islands,
7.50%, 2005 1,070 1,128
Crestar Financial Corp.,
8.25%, 2002 600 643
Den Danske Bank,
6.375%, 2008 1,250 1,235
FINOVA Capital Corp.,
6.50%, 2002 550 557
Fleet Financial Group, Inc.
8.125%, 2004 100 109
8.625%, 2007 625 718
Ford Motor Credit Corp.,
7.75%, 2005 600 647
General Electric Capital
Corp.
8.75%, 2007 1,100 1,293
8.625%, 2008 400 471
Lehman Brothers Holdings
7.25%, 2003 250 260
7.375%, 2007 1,000 1,057
Morgan Stanley Group, Inc.,
6.875%, 2007 750 778
NationsBank Corp.,
9.50%, 2004 600 696
Repsol International
Finance,
7.00%, 2005 1,000 1,042
</TABLE>
44
<PAGE> 46
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Scotland International
Finance
Co., B.V.,
8.80%, 2004 $ 250 $ 279
Skandinaviska Enskilda
Banken,
6.625%, 2049 1,000 1,004
Svenska Handelsbanken,
7.125%, 2049 650 667
Wells Fargo & Co.,
6.875%, 2006 750 780
-----------------------------------------------------
17,454
- ----------------------------------------------------------
HEALTH CARE--.4%
- ----------------------------------------------------------
Magellan Health Services,
9.00%, 2008 2,500 2,475
(a) Paragon Health Networks,
10.50%, 2007 1,500 990
-----------------------------------------------------
3,465
- ----------------------------------------------------------
TRANSPORTATION--.5%
- ----------------------------------------------------------
Continental Airlines
7.75%, 2014 474 511
6.90%, 2018 400 409
Norfolk Southern Corp.,
7.35%, 2007 600 645
TFM, S.A. de C.V.,
10.25%, 2007 2,500 2,463
-----------------------------------------------------
4,028
- ----------------------------------------------------------
UTILITIES--1.3%
- ----------------------------------------------------------
American Cellular Corp.,
10.50%, 2008 970 968
(a) Call-Net Enterprises, Inc.,
13.25%, 2004 500 478
Commonwealth Edison
7.375%, 2004 850 887
7.00%, 2005 250 259
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
UTILITIES--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
(a) Diamond Cable
Communications, PLC
11.75%, 2005 $ 260 $ 214
10.75%, 2007 740 545
Hyder, PLC,
6.875%, 2007 550 563
(a) McLeod, Inc.,
10.50%, 2007 2,800 2,086
(a) NTL, Inc.
12.75%, 2005 330 290
11.50%, 2006 2,270 1,839
(a) Nextel Communications,
9.95%, 2008 3,575 2,297
Yorkshire Power Finance,
6.496%, 2008 450 447
-----------------------------------------------------
10,873
-----------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--12.8%
(Cost: $105,584) 108,042
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--3.7%
Yield--5.63% to 6.25%
Due--July 1998
(Cost: $30,982) 31,000 30,983
-----------------------------------------------------
TOTAL INVESTMENTS--98.9%
(Cost: $723,455) 836,579
-----------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.1% 9,666
-----------------------------------------------------
NET ASSETS--100% $846,245
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER TOTAL RETURN PORTFOLIO OF INVESTMENTS
(a) Deferred interest obligation; currently zero coupon under the terms of the
initial offering.
(b) Non-income producing security.
Based on the cost of investments of $723,455,000 for federal income tax purposes
at June 30, 1998 the gross unrealized appreciation was $119,758,000, the gross
unrealized depreciation was $6,634,000 and the net unrealized appreciation on
investments was $113,124,000.
See accompanying Notes to Financial Statements.
45
<PAGE> 47
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
GOVERNMENT OBLIGATIONS AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
REPUBLIC OF KOREA
- ----------------------------------------------------------
8.875%, 2008 $ 2,000 $ 1,830
- ----------------------------------------------------------
UNITED MEXICAN STATES
- ----------------------------------------------------------
8.625%, 2008 2,010 1,948
--------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--.8%
(Cost: $3,940) 3,778
--------------------------------------------------
CORPORATE OBLIGATIONS
- ----------------------------------------------------------
BROADCASTING, CABLESYSTEMS AND PUBLISHING--14.6%
- ----------------------------------------------------------
Affinity Group, Inc.,
11.50%, 2003 1,590 1,669
American Banknote Corp.,
11.25%, with warrants,
2007 1,200 1,182
(b) American Lawyer,
12.25%, 2008 220 141
American Radio Systems,
9.00%, 2006 1,260 1,348
(a)(b) Australis Holdings
14.00%, 2000 355 249
15.00%, with warrants, 2002 3,660 366
Big Flower Press, Inc.,
8.875%, 2007 2,390 2,432
Busse Broadcasting,
11.625%, 2000 680 729
CCA Holdings,
13.00%, 1999 1,000 1,530
CSC Holdings, Inc.
9.25%, 2005 620 662
7.875%, 2007 270 284
8.125%, 2009 870 927
9.875%, 2013 1,145 1,274
10.50%, 2016 1,640 1,935
Capstar Broadcasting
9.25%, 2007 1,610 1,686
(b) 12.75%, 2009 1,020 775
Century Communications Corp.
9.50%, 2005 300 325
8.375%, 2007 550 567
Chancellor Media Corp.,
8.125%, 2007 2,140 2,169
(b) Charter Communications,
14.00%, 2007 1,870 1,538
Comcast Cellular Holdings,
Inc.,
9.50%, 2007 4,010 4,180
Comcast Corp.,
9.125%, 2006 2,630 2,817
(b) Comcast UK Cable Partners, Ltd.,
11.20%, 2007 4,630 3,849
(b) DIVA Systems Corp.,
12.625%, 2008 1,600 752
(b) Diamond Cable
Communication, PLC
13.25%, 2004 1,990 1,873
11.75%, 2005 730 601
10.75%, 2007 410 302
EZ Communications,
9.75%, 2005 590 648
Frontiervision
11.00%, 2006 1,260 1,399
(b) 11.875%, 2007 1,510 1,193
Granite Broadcasting Corp.,
10.375%, 2005 670 711
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
BROADCASTING, CABLESYSTEMS AND PUBLISHING--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Interep National Radio Sales,
Inc.
10.00%, 2008 $ 1,060 $ 1,068
Intermedia Capital Partners,
11.25%, 2006 1,300 1,463
Mediacom LLC,
8.50%, 2008 580 578
NTL, Inc.
(b) 12.75%, 2005 3,680 3,238
10.00%, 2007 550 587
Newsquest Capital, PLC,
11.00%, 2006 960 1,085
(b) PX Escrow Corp.,
9.625%, 2006 2,680 1,930
Price Communications Corp.,
9.125%, 2006 1,330 1,333
Rogers Communications,
8.875%, 2007 630 635
SFX Entertainment, Inc.,
9.125%, 2008 4,105 4,023
Salem Communications Corp.,
9.50%, 2007 770 803
Sinclair Broadcasting Group, Inc.
9.00%, 2007 350 362
8.75%, 2007 940 966
Star Choice,
13.00%, with warrants,
2005 750 808
Sullivan Broadcasting
10.25%, 2005 410 467
13.25%, 2006 810 1,353
TeleWest Communications, PLC
9.625%, 2006 1,200 1,262
(b) 11.00%, 2007 3,715 3,060
(b) Transwestern Holdings,
11.875%, 2008 420 277
Transwestern Publishing,
9.625%, 2007 1,140 1,163
(b) 21st Century Telecom Group,
Inc.,
12.25%, with warrants, 2008 1,000 583
(b) UIH Australia Pacific, Inc.,
14.00%, with warrants,
2006 750 450
(b) United International Holdings,
10.75%, 2008 2,400 1,476
--------------------------------------------------
69,083
- ----------------------------------------------------------
BUSINESS SERVICES--1.9%
- ----------------------------------------------------------
Allied Waste Industries
10.25%, 2006 790 867
(b) 11.30%, 2007 1,770 1,294
Corporate Express, Inc.,
4.50%, 2000 1,700 1,564
General Binding Corp.,
9.375%, 2008 640 650
Intertek Finance,
10.25%, 2006 940 982
Outdoor Systems, Inc.
9.375%, 2006 2,395 2,539
8.875%, 2007 1,130 1,175
--------------------------------------------------
9,071
- ----------------------------------------------------------
CHEMICALS AND AGRICULTURE--2.9%
- ----------------------------------------------------------
Agriculture, Mining and
Chemicals, Inc.,
10.75%, 2003 1,790 1,897
Atlantis Group, Inc.,
11.00%, 2003 1,735 1,791
</TABLE>
46
<PAGE> 48
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
CHEMICALS AND AGRICULTURE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Hines Horticulture,
11.75%, 2005 $ 610 $ 668
Huntsman Polymer Corp.,
11.75%, 2004 2,180 2,392
NL Industries, Inc.
11.75%, 2003 1,330 1,470
(b) 13.00%, 2005 1,350 1,401
Octel Developments, PLC,
10.00%, 2006 510 521
Terra Industries Inc.,
10.50%, 2005 870 940
Texas Petrochemicals,
11.125%, 2006 1,410 1,523
UCC Investors Holdings,
Inc.,
10.50%, 2002 840 951
--------------------------------------------------
13,554
- ----------------------------------------------------------
COMMUNICATIONS --16.5%
- ----------------------------------------------------------
American Cellular Corp.,
10.50%, 2008 2,590 2,584
Birch Telecom,
14.00%, 2008 660 661
(b) Call-Net Enterprises, Inc.
13.25%, 2004 460 440
9.27%, 2007 1,050 742
Communication and Power
Industry, Inc.,
12.00%, 2005 585 655
(b) Communications Cellular,
13.125%, with warrants,
2003 2,200 1,831
(b) Crown Castle International Corp.,
10.625%, 2007 2,500 1,700
Dobson Communication Corp.,
11.75%, 2007 3,000 3,218
Econophone, Inc.,
13.50%, with warrants,
2007 2,275 2,647
Esprit Telecom
11.50%, 2007 1,095 1,128
10.875%, 2008 660 653
Exodus Communications, Inc.,
11.25%, 2008 600 602
(b) Focal Communications Corp.,
12.125%, 2008 1,180 702
GCI General Communication, Inc.,
9.75%, 2007 1,520 1,573
(b) ICG Holdings,
13.50%, 2005 3,120 2,652
(b) ICG Services, Inc.
10.00%, 2008 1,200 732
9.875%, 2008 700 420
(b) IPC Information Systems,
10.875%, 2008 1,900 1,368
Impsat, S.A.,
12.375%, 2008 2,335 2,370
Interamerica Communications,
14.00%, 2007 280 274
Intermedia Communications of
Florida, Inc.
(b) 12.50%, 2006 660 540
(b) 11.25%, 2007 2,700 1,971
8.875%, with warrants, 2007 570 760
(b) KMC Telecom Holdings, Inc.,
12.50%, 2008 1,950 1,160
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
COMMUNICATIONS--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Level 3 Communications
10.375%, 2007 $ 450 $ 497
9.125%, 2008 2,500 2,431
Long Distance International,
12.25%, 2008 1,300 1,313
MGC Communications,
13.00%, with warrants,
2004 1,290 1,316
McLeod, Inc.,
(b) 10.50%, 2007 2,320 1,728
9.25%, 2007 870 903
Metronet Communications
12.00%, with warrants,
2007 550 641
(b) 10.75%, 2007 630 414
(b) 9.95%, 2008 2,350 1,454
(b) Millicom International
Cellular, S.A.,
13.50%, 2006 2,510 1,942
Netia Holdings
(b) 11.25%, 2007 795 529
10.25%, 2007 225 216
(b) Nextel Communication
9.75%, 2004 1,480 1,441
10.65%, 2007 4,185 2,830
9.75%, 2007 530 345
9.95%, 2008 800 514
Nextlink Communications
12.50%, 2006 950 1,070
(b) 9.45%, 2008 920 570
9.00%, 2008 1,170 1,173
(b) PTC International
Finance, B.V.,
10.75%, 2007 1,810 1,235
Performance Systems
International, Inc.,
10.00%, 2005 1,000 1,020
(b) Pinnacle Holdings,
10.00%, 2008 1,800 1,181
Primus Telecommunications Group,
11.75%, with warrants,
2004 1,000 1,080
RCN Corp.
10.00%, 2007 1,080 1,112
(b) 11.00%, 2008 900 536
(b) 9.80%, 2008 1,400 840
Rogers Cantel,
9.75%, 2016 2,180 2,284
(b) SBA Communication,
12.00%, 2008 2,800 1,750
Satelites Mexicanos, S.A. de
C.V.,
10.125%, 2004 770 751
(b) Spectrasite Holdings, Inc.,
12.00%, 2008 1,800 1,004
Teligent, Inc.
11.50%, 2007 800 812
(b) 11.50%, 2008 1,000 553
USA Mobile Communications,
Inc. II,
14.00%, 2004 1,190 1,312
US Xchange, LLC,
15.00%, 2008 990 1,020
Vanguard Cellular Systems,
9.375%, 2006 1,140 1,197
Versatel Telecom,
13.25%, 2008 910 956
</TABLE>
47
<PAGE> 49
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
COMMUNICATIONS--CONTINUED
- ----------------------------------------------------------
Viatel, Inc.
(b) 12.50%, 2008 $ 1,880 $ 1,147
11.25%, 2008 880 924
Western Wireless Corp.,
10.50%, 2007 1,200 1,287
Winstar Communication
15.00%, 2007 970 1,276
11.00%, 2008 190 189
Winstar Equipment Corp.,
12.50%, 2004 190 215
Winstar Equipment Corp. II,
12.50%, 2004 1,180 1,333
--------------------------------------------------
77,724
- ----------------------------------------------------------
CONSTRUCTION MATERIALS--4.2%
- ----------------------------------------------------------
Airxcel,
11.00%, 2007 1,250 1,309
American Standard, Inc.,
9.25%, 2016 1,445 1,488
Brand Scaffold Services,
Inc.,
10.25%, 2008 500 507
(b) Building Materials
Corporation of America,
11.75%, 2004 3,895 3,837
Desa International,
9.875%, 2007 2,950 2,891
Falcon Building Products,
Inc.,
9.50%, 2007 670 657
Kevco,
10.375%, 2007 1,615 1,680
Nortek, Inc.
9.875%, 2004 1,240 1,274
9.125%, 2007 1,300 1,328
Terex Corp.,
8.875%, 2008 3,600 3,537
Waxman Industries, Inc.
(b) 12.75%, 2004 400 376
(a) 52,274 warrants, expiring 2004 114
Werner Holdings,
10.00%, 2007 750 780
--------------------------------------------------
19,778
- ----------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--10.8%
- ----------------------------------------------------------
AMF Bowling World
(b) 12.25%, 2006 1,800 1,442
10.875%, 2006 3,640 3,881
Aurora Foods, Inc.,
8.75%, 2008 390 395
Avondale Mills,
10.25%, 2006 1,670 1,787
CEX Holdings, Inc.,
9.625%, 2008 720 728
Cinemark USA, Inc.
9.625%, 2008 1,380 1,421
8.50%, 2008 850 837
Clearview Cinema Group,
Inc.,
10.875%, 2008 995 1,015
Coinmach Corp.,
11.75%, 2005 3,990 4,429
Doskocil Manufacturing Co.,
10.125%, 2007 850 890
Dyersburg Corp.,
9.75%, 2007 1,260 1,203
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--CONTINUED
- ----------------------------------------------------------
Grupa Azucarero Mexico, S.A.
de C.V.,
11.50%, 2005 $ 1,210 $ 980
Hedstrom Corp.,
10.00%, 2007 790 810
Herff Jones, Inc.,
11.00%, 2005 900 981
IMPAC Group, Inc.,
10.125%, 2008 3,800 3,795
Imperial Home Decor Group, Inc.,
11.00%, 2008 900 934
Kinder-Care Learning Centers,
9.50%, 2009 3,080 3,103
La Petite Academy, Inc.,
10.00%, 2008 1,640 1,656
Mastellone Hermonos,
11.75%, 2008 1,440 1,433
NBTY, Inc.,
8.625%, 2007 1,690 1,715
Outboard Marine,
10.75%, 2008 650 657
Perkins Family Restaurant,
L.P.,
10.125%, 2007 600 633
Pillowtex Corp.,
9.00%, 2007 500 514
Premier Parks, Inc.,
12.00%, 2003 780 864
Purina Mills, Inc.,
9.00%, 2010 2,650 2,723
(b) Restaurant Co.,
11.25%, 2008 1,350 812
Riddell Sports, Inc.,
10.50%, 2007 1,095 1,103
(b) Sealy Mattress,
10.875%, 2007 500 326
Six Flags Theme Park,
12.25%, 2005 3,850 4,370
(b) Spin Cycle,
12.75%, 2005 1,520 1,072
United Artists Theatre Co.,
9.75%, 2008 3,730 3,721
Van De Kamps, Inc.,
12.00%, 2005 900 1,031
--------------------------------------------------
51,261
- ----------------------------------------------------------
DRUGS AND HEALTH CARE--3.3%
- ----------------------------------------------------------
Abbey Healthcare Group,
Inc.,
9.50%, 2002 1,380 1,359
Dade International, Inc.,
11.125%, 2006 1,730 1,929
Jackson Products, Inc.,
9.50%, 2005 790 786
Magellan Health Services,
9.00%, 2008 2,890 2,861
Mediq, Inc.,
11.00%, 2008 980 1,004
Multicare Co.,
9.00%, 2007 1,190 1,174
Paracelsus Healthcare,
10.00%, 2006 970 960
(b) Paragon Health Networks,
Inc.,
10.50%, 2007 4,020 2,653
Vencor,
9.875%, 2005 2,770 2,725
--------------------------------------------------
15,451
</TABLE>
48
<PAGE> 50
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
ENERGY AND RELATED SERVICES--5.1%
- ----------------------------------------------------------
AEI Holdings,
10.00%, 2007 $ 780 $ 776
Bellweather Exploration Co.,
10.875%, 2007 1,290 1,364
Benton Oil & Gas Co.
11.625%, 2003 1,515 1,606
9.375%, 2007 860 843
Chesapeake Energy Corp.,
9.625%, 2005 1,330 1,333
Clark Refining & Marketing, Inc.,
8.875%, 2007 600 599
Coho Energy, Inc.,
8.875%, 2007 630 597
Dailey International,
9.50%, 2008 160 157
Denbury Management,
9.00%, 2008 1,050 1,019
Espirito Santos Centrais
Electricas, S.A.,
10.00%, 2007 940 790
Flores & Rucks, Inc.,
9.75%, 2006 1,010 1,093
Forcenergy Gas Exploration,
9.50%, 2006 1,220 1,217
GulfMark Offshore, Inc.,
8.75%, 2008 670 650
Mariner Energy,
10.50%, 2006 720 727
Michael Petroleum Corp.,
11.50%, 2005 600 586
Pacalta Resources, Ltd.,
10.75%, 2004 2,050 2,029
Parker Drilling Corp.,
9.75%, 2006 1,840 1,877
Pen Holdings, Inc.,
9.875%, 2008 1,205 1,208
Plains Resources,
10.25%, 2006 655 681
RAM Energy,
11.50%, 2008 600 594
Rutherford-Moran Oil Corp.,
10.75%, 2004 570 610
Seven Seas Petroleum, Inc.,
12.50%, 2005 640 640
Stone Energy Corp.,
8.75%, 2007 1,290 1,288
United Meridian Corp.,
10.375%, 2005 1,490 1,632
--------------------------------------------------
23,916
- ----------------------------------------------------------
FINANCIAL SERVICES, HOME BUILDING AND REAL ESTATE--3.5%
- ----------------------------------------------------------
Beazer Homes,
8.875%, 2008 1,895 1,848
Del Webb Corp.
9.75%, 2008 1,590 1,584
9.375%, 2009 1,610 1,590
Falcon Holding Group L.P.
(b) 9.285%, 2010 1,530 983
8.375%, 2010 1,660 1,668
Forecast Group, L.P.,
11.375%, 2000 1,025 1,004
Fortress Group,
13.75%, 2003 880 999
Hovnanian Enterprises,
11.25%, 2002 2,358 2,443
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
FINANCIAL SERVICES, HOME BUILDING
AND REAL ESTATE--CONTINUED
- ----------------------------------------------------------
Ryland Group, Inc.,
8.25%, 2008 $ 1,710 $ 1,633
UDC Homes,
12.50%, 2000 970 989
Williams Scotsman, Inc.,
9.875%, 2007 1,560 1,619
--------------------------------------------------
16,360
- ----------------------------------------------------------
HOTELS AND GAMING--2.0%
- ----------------------------------------------------------
Eldorado Resorts,
10.50%, 2006 2,010 2,221
Empress River Casino,
10.75%, 2002 1,640 1,781
HMH Properties
9.50%, 2005 1,650 1,794
8.875%, 2007 940 1,056
Hard Rock Hotel,
9.25%, 2005 450 462
Harvey's Casino Resorts,
10.625%. 2006 960 1,070
Players International,
10.875%, 2005 660 719
Trump Atlantic City,
11.25%, 2006 375 362
--------------------------------------------------
9,465
- ----------------------------------------------------------
MANUFACTURING, METALS AND MINING--9.6%
- ----------------------------------------------------------
Accuride,
9.25%. 2008 1,400 1,400
Aftermarket Technology,
12.00%, 2004 1,035 1,141
Alvey Systems,
11.375%, 2003 600 650
Bar Technologies,
13.50%, with warrants,
2001 1,060 1,178
Centaur Mining,
11.00%, 2007 800 816
Collins & Aikman Corp.,
11.50%, 2006 1,030 1,143
Day International Group,
Inc.,
11.125%, 2005 1,480 1,613
Delco Remy International,
10.625%, 2006 1,630 1,752
Doe Run Co.,
12.00%, 2003 300 303
E-P Acquisition, Inc.,
9.375%, 2008 250 251
Earle M. Jorgensen Co.,
9.50%, 2005 620 601
Euramax International, PLC,
11.25%, 2006 1,800 1,944
Foamex, L.P.
13.50%, 2005 1,240 1,432
9.875%,2007 485 524
GS Technologies
12.00%, 2004 380 412
12.25%, 2005 620 686
Great Central Mines LTD,
8.875%, 2008 780 766
(b) Grove Holdings LLC,
11.56%, 2009 340 192
Grove Investors,
14.50%, 2010 650 660
</TABLE>
49
<PAGE> 51
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
MANUFACTURING, METALS AND MINING--CONTINUED
- ----------------------------------------------------------
Grove Worldwide LLC,
9.25%, 2008 $ 320 $ 318
Hayes Wheels International, Inc.
11.00%, 2006 1,750 1,978
9.125%, 2007 250 261
JPS Automotive Products
Corp.,
11.125%, 2001 1,780 1,967
Knoll, Inc.,
10.875%, 2006 1,456 1,638
MMI Products, Inc.,
11.25%, 2007 1,125 1,232
Metal Management, Inc.,
10.00%, 2008 970 957
Metal USA, Inc.,
8.625%, 2008 1,430 1,387
Motors and Gears, Inc.,
10.75%, 2006 1,200 1,272
NSM Steel
12.00%, 2006 1,450 1,262
12.25%, 2008 1,645 1,431
Neenah Corp.,
11.125%, 2007 4,050 4,415
Park-Ohio Industries,
9.25%, 2007 1,480 1,510
Prestolite Electric,
9.625%, 2008 915 931
Renco Metals,
11.50%, 2003 1,005 1,075
Renco Steel Holdings,
10.875%, 2005 1,000 1,003
Rental Service Corp.,
9.00%, 2008 300 299
Scovill Fasteners,
11.25%, 2007 800 820
Venture Holdings,
9.50%, 2005 1,230 1,244
Wells Aluminum Corp.,
10.125%, 2005 1,400 1,473
Wheeling-Pitt Corp.,
9.25%, 2007 1,540 1,571
--------------------------------------------------
45,508
- ----------------------------------------------------------
PAPER, FOREST PRODUCTS AND CONTAINERS--8.6%
- ----------------------------------------------------------
AEP Industries, Inc.,
9.875%, 2007 550 565
BPC Holding Corp.,
12.50%, 2006 750 806
BWAY Corp.,
10.25%, 2007 870 935
Berry Plastics Corp.,
12.25%, 2004 1,330 1,436
Doman Industry, Ltd.
8.75%, 2004 210 205
9.25%, 2007 970 970
Fonda Group,
9.50%, 2007 840 811
Gaylord Container Corp.
9.75%, 2007 890 881
9.875%, 2008 2,500 2,419
Graham Packaging Co.
9.25%, 2008 570 564
8.75%, 2008 520 517
(b) 10.75%, 2009 580 358
Huntsman Corp.,
9.50%, 2007 1,700 1,700
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
PAPER, FOREST PRODUCTS AND CONTAINERS--CONTINUED
- ----------------------------------------------------------
Maxxam Group, Inc.
(b) 12.25%, 2003 $ 440 $ 464
11.25%, 2003 1,653 1,744
Millar Western Forest
Products Ltd.,
9.875%, 2008 2,400 2,352
National Fiberstock Corp.,
11.625%, 2002 860 903
Norampac,
9.50%, 2008 1,720 1,746
Pindo Deli Finance Mauritius,
Ltd.,
10.75%, 2007 60 41
Plainwell, Inc.,
11.00%, 2008 4,405 4,427
Printpack, Inc.
9.875%, 2004 530 556
10.625%, 2006 1,440 1,512
Repap Enterprises, Inc.,
9.00%, 2004 660 667
Riverwood International
10.25%, 2006 1,420 1,452
10.625%, 2007 1,520 1,581
10.875%, 2008 3,930 3,959
(b) SF Holdings Group, Inc.,
12.75%, 2008 1,000 535
Spinnaker Industries,
10.75%, 2006 1,450 1,472
Stone Container Corp.
12.25%, 2002 1,020 1,040
11.50%, 2006 1,745 1,976
Tjiwi Kimia Finance
Mauritius, Ltd.,
10.00%, 2004 70 48
U.S. Can Corp.,
10.125%, 2006 2,120 2,226
--------------------------------------------------
40,868
- ----------------------------------------------------------
RETAILING--5.8%
- ----------------------------------------------------------
AFC Enterprises, Inc.,
10.25%, 2007 2,370 2,515
Advantica Restaurant
Company,
11.25%, 2008 1,485 1,566
Ameriking,
10.75%, 2006 920 994
Cole National Group,
9.875%, 2006 440 475
8.625%, 2007 1,390 1,418
(a) Color Tile, Inc.,
10.75%, 2001 1,470 15
Finlay Enterprises,
9.00%, 2008 500 504
Finlay Fine Jewelry Corp.,
8.375%, 2008 700 705
Galey & Lord,
9.125%, 2008 2,800 2,702
Guitar Center Management,
11.00%, 2006 880 977
Iron Age Holdings, Corp.
9.875%, 2008 600 599
(b) 12.125%, 2009 570 321
J. Crew Group
10.375%, 2007 1,205 1,145
(b) 13.125%, 2008 3,010 1,686
</TABLE>
50
<PAGE> 52
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
RETAILING--CONTINUED
- ----------------------------------------------------------
Jafra Cosmetics International,
Inc.,
11.75%, 2008 $ 1,750 $ 1,759
Krystal Co.,
10.25%, 2007 710 731
Nine West Group,
9.00%, 2007 550 534
Pamida Holdings,
11.75%, 2003 800 832
Pathmark Stores, Inc.,
9.625%, 2003 1,340 1,353
Petro Stopping Centers,
L.P.,
10.50%, 2007 2,520 2,696
Phillips-Van Heusen Corp.,
9.50%, 2008 960 956
Specialty Retailers, Inc.
8.50%, 2005 270 277
9.00%, 2007 470 488
TravelCenters of America, Inc.,
10.25%, 2007 1,880 1,965
--------------------------------------------------
27,213
- ----------------------------------------------------------
TECHNOLOGY--1.1%
- ----------------------------------------------------------
Axiohm Transaction
Solutions, Inc.,
9.75%, 2007 960 960
MTS Systems Corp.,
9.375%, 2005 2,510 2,479
Viasystems, Inc.,
9.75%, 2007 1,700 1,666
--------------------------------------------------
5,105
- ----------------------------------------------------------
TRANSPORTATION--.9%
- ----------------------------------------------------------
Canadian Airlines Corp.,
10.00%, 2005 1,000 1,016
TFM, S.A. de C.V.,
10.25%, 2007 1,540 1,517
Trans World Airlines, Inc.,
11.375%, 2006 960 960
(b) Transtar Holdings, L.P.,
13.375%, 2003 631 585
--------------------------------------------------
4,078
--------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--90.8%
(Cost: $421,306) 428,435
--------------------------------------------------
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------
COMMON AND PREFERRED STOCKS--1.8%
- -------------------------------------------------------------
Benedek Unit, PIK,
preferred with warrants $ 5,000shs. $ 17
(a) Capital Pacific Holdings 3,634 3
(a) Clark USA, PIK, preferred 2,750 290
Crown American Realty Trust,
preferred 25,070 1,344
(a) Dobson Communication
PIK, preferred 762 814
(a) Eagle-Picher Holdings,
preferred 170 978
(a) EchoStar Communications
Corp. 7,387 178
(a) Empire Gas Corp., warrants 2,070 10
(a) Foamex International,
warrants 940 19
(a) Gaylord Container Corp. 122,950 945
(a) Gulf States Steel, warrants 1,810 9
(a) Intelcom Group, Inc. 4,851 90
(a) Nextel, PIK, preferred 1,512 1,557
(a) Nextlink Communication,
convertible preferred 2,500 128
(a) SF Holdings, PIK, preferred 30 269
Sinclair Capital, preferred 13,000 1,430
(a) Sullivan Broadcasting 12,960 389
(a) 21st Century Telecom Group,
Inc., preferred 207 209
-----------------------------------------------------
TOTAL COMMON AND
PREFERRED STOCKS--1.8%
(Cost: $7,537) 8,679
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--4.9%
Yield--5.63% to 6.25%
Due--July 1998
(Cost: $22,997) $23,000 22,997
-----------------------------------------------------
TOTAL INVESTMENTS--98.3%
(Cost: $455,780) 463,889
-----------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.7% 8,222
-----------------------------------------------------
NET ASSETS--100% $472,111
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER HIGH YIELD PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) 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.
(b) Deferred interest obligation; currently zero coupon under terms of the
initial offering.
PIK denotes that interest or dividend is paid in kind.
Based on the cost of investments of $455,780,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $14,492,000, the gross
unrealized depreciation was $6,383,000 and the net unrealized appreciation on
investments was $8,109,000.
See accompanying Notes to Financial Statements.
51
<PAGE> 53
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
BASIC INDUSTRIES--.6%
- ----------------------------------------------------------
Monsanto Co. 72,900 $ 4,073
- ----------------------------------------------------------
COMPUTER SYSTEMS AND SOFTWARE--15.7%
- ----------------------------------------------------------
(a) Cadence Design Systems, Inc. 576,000 18,000
Compaq Computer Corp. 95,600 2,713
Computer Associates
International 119,900 6,662
(a) Gartner Group, "A" 442,800 15,498
Hewlett-Packard Co. 151,700 9,083
(a) Parametric Technology Corp. 355,700 9,648
(a) PeopleSoft, Inc. 171,400 8,056
(a) Seagate Technology 282,000 6,715
(a) Sterling Commerce, Inc. 222,800 10,806
(a) Sun Microsystems 343,700 14,929
-----------------------------------------------------
102,110
- ----------------------------------------------------------
CONSUMER CYCLICALS--8.1%
- ----------------------------------------------------------
(a) AutoZone, Inc. 47,200 1,507
(a) Consolidated Stores Corp. 213,900 7,754
Federal-Mogul Corp. 90,300 6,095
(a) Federated Department Stores 193,000 10,386
Goodyear Tire & Rubber Co. 84,000 5,410
Magna International, Inc.,
"A" 90,400 6,204
May Department Stores Co. 151,200 9,904
(a) Proffitt's, Inc. 134,700 5,439
-----------------------------------------------------
52,699
- ----------------------------------------------------------
CONSUMER STAPLES--2.0%
- ----------------------------------------------------------
Avon Products 33,900 2,627
Coca Cola Co. 30,000 2,565
Gillette Co. 80,800 4,580
International Flavors &
Fragrances 21,600 938
Wm. Wrigley Jr. Co. 25,100 2,460
-----------------------------------------------------
13,170
- ----------------------------------------------------------
ENERGY--9.8%
- ----------------------------------------------------------
BJ Services Co. 308,000 8,951
Baker Hughes, Inc. 359,200 12,415
(a) Cooper Cameron Corp. 117,500 5,992
Diamond Offshore Drilling,
Inc. 154,000 6,160
Halliburton Co. 133,500 5,949
Schlumberger, Ltd. 229,000 15,644
(a) Transocean Offshore, Inc. 204,400 9,096
-----------------------------------------------------
64,207
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
FINANCE--24.6%
- ----------------------------------------------------------
American Express Co. 58,700 $ 6,692
American General Corp. 120,000 8,542
Banc One Corp. 98,340 5,489
BankAmerica Corp. 13,500 1,167
Chase Manhattan Corp. 20,000 1,510
CIGNA Corp. 180,000 12,420
Citicorp 23,000 3,433
Crestar Financial Corp. 105,900 5,778
Federal Home Loan Mortgage
Corp. 140,800 6,626
Federal National Mortgage
Association 170,000 10,327
Hartford Financial Services 79,500 9,093
Household International 300,300 14,940
MBIA, Inc. 90,000 6,739
MGIC Investment Corp. 119,900 6,842
Merrill Lynch & Co. 70,400 6,494
Morgan Stanley, Dean Witter,
Discover & Co. 112,300 10,261
NationsBank Corp. 185,300 14,175
PNC Bank Corp., N.A. 120,300 6,474
Travelers Group 229,700 13,927
UNUM Corp. 50,000 2,775
Washington Mutual, Inc. 151,200 6,568
-----------------------------------------------------
160,272
- ----------------------------------------------------------
HEALTH CARE--16.9%
- ----------------------------------------------------------
American Home Products Corp. 139,600 7,224
Baxter International 71,900 3,869
Bristol-Myers Squibb Co. 62,200 7,149
Eli Lilly & Co. 146,800 9,698
Guidant Corp. 58,500 4,172
(a) HEALTHSOUTH Corp. 170,600 4,553
Medtronic, Inc. 173,800 11,080
Perkin-Elmer Corp. 49,400 3,072
Pfizer, Inc. 72,500 7,880
Schering-Plough Corp. 45,000 4,123
SmithKline Beecham Group
PLC, ADR 151,800 9,184
United Healthcare Corp. 306,600 19,469
Warner-Lambert Co. 160,700 11,149
(a) Wellpoint Health Networks 98,600 7,296
-----------------------------------------------------
109,918
- ----------------------------------------------------------
SEMICONDUCTORS AND NETWORKING--10.2%
- ----------------------------------------------------------
(a) Analog Devices 205,500 5,048
(a) Applied Materials, Inc. 79,800 2,354
(a) Ascend Communications, Inc. 79,300 3,930
(a) Cisco Systems 165,100 15,200
Intel Corp. 138,000 10,229
(a) Lam Research Corp. 110,000 2,104
Linear Technology Corp. 94,000 5,669
(a) Microchip Technology 187,800 4,906
(a) Novellus Systems 48,700 1,738
(a) Solectron Corp. 120,000 5,047
(a) Teradyne, Inc. 245,600 6,570
(a) Xilinx, Inc. 100,000 3,400
-----------------------------------------------------
66,195
</TABLE>
52
<PAGE> 54
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
TELECOMMUNICATIONS--7.5%
- ----------------------------------------------------------
Alcatel Alsthom 140,000 $ 5,696
(a) CBS, Inc. 197,000 6,255
(a) Chancellor Media Corp. 136,300 6,768
Interpublic Group of
Companies 111,400 6,761
(a) Nokia Corp., ADR 39,000 2,830
(a) Tellabs, Inc. 141,500 10,135
(a) WorldCom, Inc. 210,900 10,215
-----------------------------------------------------
48,660
- ----------------------------------------------------------
TRANSPORTATION--2.4%
- ----------------------------------------------------------
CSX Corp. 116,700 5,310
Norfolk Southern Corp. 167,100 4,982
(a) US Airways Group, Inc. 41,500 3,289
(a) Wisconsin Central
Transportation Corp. 110,000 2,406
-----------------------------------------------------
15,987
-----------------------------------------------------
TOTAL COMMON STOCKS--97.8%
(Cost: $552,832) 637,291
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--1.7%
Yield--5.83% to 6.25%
Due--July 1998
(Cost: $11,000) $11,000 11,000
-----------------------------------------------------
TOTAL INVESTMENTS--99.5%
(Cost: $563,832) 648,291
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.5% 3,308
-----------------------------------------------------
NET ASSETS--100% $651,599
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER GROWTH PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $563,832,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $101,486,000, the gross
unrealized depreciation was $17,027,000 and the net unrealized appreciation on
investments was $84,459,000.
See accompanying Notes to Financial Statements.
53
<PAGE> 55
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COUPON PRINCIPAL
GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GOVERNMENT Adjustable Rate Mortgages 7.00% 2022 $ 2,154 $ 2,204
NATIONAL MORTGAGE Pass-through Certificates 6.50 2028 6,000 5,989
ASSOCIATION--49.4% 7.00 2011-2028 14,475 14,736
(Cost: $45,550) 7.50 2022-2028 10,624 10,931
8.00 2016-2024 8,244 8,583
8.50 2016-2027 2,509 2,650
9.00 2016-2027 1,027 1,102
9.50 2013-2022 490 531
10.00 2016 463 509
-----------------------------------------------------------------------------
47,235
- ------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY Notes 8.75 2000 5,000 5,319
SECURITIES--16.5% 7.875 2001 1,000 1,066
(Cost: $16,047) 7.00 2006 1,600 1,748
Bonds 11.875 2003 870 1,121
9.125 2009 484 567
9.125 2018 555 777
8.125 2021 4,000 5,208
-----------------------------------------------------------------------------
15,806
- ------------------------------------------------------------------------------------------------------------------------
FEDERAL HOME Pass-through Certificates 7.00 2023-2024 8,120 8,247
LOAN MORTGAGE
CORPORATION--8.6%
(Cost: $7,609) -------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE Pass-through Certificates 6.50 2025 498 498
ASSOCIATION--6.7% 7.00 2028 4,958 5,028
(Cost: $6,377) 7.50 2025 381 391
8.00 2024-2025 503 521
-----------------------------------------------------------------------------
6,438
- ------------------------------------------------------------------------------------------------------------------------
CANADIAN PROVINCIAL Province of Ontario 7.625 2004 500 538
OBLIGATIONS--1.1% Province of Quebec 8.625 2005 500 565
(Cost: $1,094)
-----------------------------------------------------------------------------
1,103
-----------------------------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--82.3%
(Cost: $76,677) 78,829
-----------------------------------------------------------------------------
</TABLE>
54
<PAGE> 56
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COUPON PRINCIPAL
TYPE RATE MATURITY AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(A) CORPORATE
OBLIGATIONS--14.0%
American Express Master Trust 7.60% 2002 $ 2,500 $ 2,622
BCH Cayman Island 7.50 2005 500 527
(Cost: $13,283) Chase Credit Co. 5.55 2003 2,500 2,482
Equitable Life 6.95 2005 500 517
Ford Motor Credit 8.00 2002 500 532
Green Tree Financial Corp. 7.00 2027 2,500 2,527
NCNB/NationsBank Corp. 9.50 2004 500 580
Olympic Automobile Receivable 7.00 2004 2,500 2,559
Sears Roebuck Acceptance Corp. 6.75 2005 500 513
Southwestern Bell Telephone 6.625 2005 500 514
-------------------------------------------------------------------------------
13,373
- ------------------------------------------------------------------------------------------------------------------------
LONG CALL OPTION--.1%
(Cost: $29)
U.S. Treasury Bond Futures
September 1998, 120 14 cts. 55
-------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
MONEY MARKET
INSTRUMENTS--13.6%
Yield--6.20%
Due--July 1998
(Cost: $13,000) Merrill Lynch & Co. 13,000 13,000
-------------------------------------------------------------------------------
TOTAL INVESTMENTS--110.0%
(Cost: $102,989) 105,257
-------------------------------------------------------------------------------
LIABILITIES, LESS CASH AND OTHER ASSETS--(10.0)% (9,591)
-------------------------------------------------------------------------------
NET ASSETS--100% $ 95,666
-------------------------------------------------------------------------------
</TABLE>
NOTES TO KEMPER 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 $102,989,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $2,748,000, the gross
unrealized depreciation was $480,000 and the net unrealized appreciation on
investments was $2,268,000.
See accompanying Notes to Financial Statements.
55
<PAGE> 57
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
EUROPE
- ----------------------------------------------------------
UNITED KINGDOM--14.8%
- ----------------------------------------------------------
Rentokil Group, PLC
SERVICES COMPANY 960,000 $ 6,904
Unilever, PLC
FOOD RETAILER 400,643 4,265
Glaxo Wellcome, PLC
PHARMACEUTICAL COMPANY 118,553 3,558
British Petroleum
PETROLEUM PRODUCER 233,827 3,410
Vodafone Group
TELECOMMUNICATION PROVIDER 262,486 3,331
Compass Group, PLC
CONTRACT CATERING 260,000 2,989
Royal Bank of Scotland
Group, PLC
BANKING 135,000 2,343
Barclays, PLC
BANKING 77,876 2,245
BBA Group, PLC
DIVERSIFIED ENGINEERING
COMPANY 289,364 2,182
Norwich Union
FINANCIAL SERVICES 201,000 1,459
Marks & Spencer, PLC
CONSUMER GOODS AND FOOD
RETAILER 110,681 1,007
Select Appointments
Holdings, PLC
TEMPORARY EMPLOYMENT 59,510 844
-----------------------------------------------------
34,537
- ----------------------------------------------------------
NETHERLANDS--12.5%
- ----------------------------------------------------------
Getronics, N.V.
INFORMATION AND
COMMUNICATION SERVICES 101,770 5,278
Vedior, N.V.
TEMPORARY EMPLOYMENT 165,101 4,667
Unique International, N.V.
TEMPORARY EMPLOYMENT 104,197 3,534
Koninklijke Ahold, N.V.
FOOD RETAILER 109,929 3,529
ING Groep, N.V.
BANKING AND INSURANCE 49,665 3,252
Akzo Nobel, N.V.
INDUSTRIAL COMPANY 14,002 3,113
Aalberts Industries, N.V.
CAPITAL GOODS AND
COMPONENTS 80,260 2,348
AEGON, N.V.
INSURANCE COMPANY 20,520 1,785
Nedcon Groep
MANUFACTURER OF RACKING
SYSTEMS 42,875 1,574
-----------------------------------------------------
29,080
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
FRANCE--13.3%
- ----------------------------------------------------------
AXA-UAP, S.A.
INSURANCE COMPANY 62,153 $ 6,990
Groupe Danone, S.A.
FOOD PRODUCER 20,063 5,532
Alcatel Alsthom
INFRASTRUCTURE EQUIPMENT
MANUFACTURER 23,279 4,740
Elf Aquitaine
OIL AND GAS PRODUCER 33,098 4,653
Societe Generale
BANKING 17,372 3,612
Banque Nationale de Paris
BANKING 41,300 3,375
Carrefour, S.A.
FOOD RETAILER 1,940 1,227
Technip, S.A.
ENGINEERING COMPANY 6,400 782
-----------------------------------------------------
30,911
- ----------------------------------------------------------
SWITZERLAND--9.3%
- ----------------------------------------------------------
UBS
BANKING 22,400 8,329
Nestle, S.A.
FOOD PRODUCER 3,190 6,827
Novartis
PHARMACEUTICAL COMPANY 1,707 2,841
Adecco, S.A.
TEMPORARY EMPLOYMENT 5,700 2,570
Ciba Specialty Chemicals,
A.G.
CHEMICAL PRODUCER 8,940 1,148
-----------------------------------------------------
21,715
- ----------------------------------------------------------
ITALY--9.0%
- ----------------------------------------------------------
Telecom Italia Mobile
MOBILE TELECOMMUNICATIONS
PROVIDER 1,015,000 6,207
Telecom Italia, SpA
TELECOMMUNICATIONS
PROVIDER 801,000 5,896
Assicurazioni Generali
INSURANCE COMPANY 139,500 4,536
Istituto Mobiliare Italiano, S.p.A.
BANKING 269,500 4,245
-----------------------------------------------------
20,884
- ----------------------------------------------------------
GERMANY--6.0%
- ----------------------------------------------------------
Mannesmann, A.G.
CAPITAL GOODS PRODUCER 68,100 6,999
VIAG, A.G.
DIVERSIFIED MANUFACTURING
COMPANY 7,200 4,954
SAP, A.G.
COMPUTER SOFTWARE COMPANY 3,500 2,123
-----------------------------------------------------
14,076
</TABLE>
56
<PAGE> 58
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
SPAIN--4.6%
- ----------------------------------------------------------
<S> <C> <C>
Telefonica de Espana, S.A.
TELECOMMUNICATIONS COMPANY 100,178 $ 4,639
Banco Bilbao Vizcaya, S.A.
BANKING 44,898 2,308
Bankinter, S.A.
BANKING 33,000 2,145
Banco Santander, S.A.
BANKING 61,472 1,576
-----------------------------------------------------
10,668
- ----------------------------------------------------------
IRELAND--1.7%
- ----------------------------------------------------------
Bank of Ireland
BANKING 197,396 4,048
-----------------------------------------------------
- ----------------------------------------------------------
SWEDEN--1.3%
- ----------------------------------------------------------
ABB AB
ENGINEERING COMPANY 170,000 2,366
Industri-Matematik
International Corp.
SERVICE SOFTWARE
APPLICATIONS 56,100 614
-----------------------------------------------------
2,980
- ----------------------------------------------------------
PORTUGAL--.7%
- ----------------------------------------------------------
Electricidade de Portugal,
S.A
ELECTRICITY PROVIDER 72,810 1,693
-----------------------------------------------------
TOTAL EUROPEAN
COUNTRIES--73.2% 170,592
-----------------------------------------------------
PACIFIC REGION
- ----------------------------------------------------------
JAPAN--8.4%
- ----------------------------------------------------------
Sony Corp.
ELECTRONICS MANUFACTURER 43,400 3,737
Fuji Photo Film Co., Ltd.
PRECISION INSTRUMENTS
MANUFACTURER 78,000 2,715
Ricoh Co., Ltd.
PRECISION INSTRUMENTS
MANUFACTURER 185,000 1,947
Honda Motor Co., Ltd.
AUTOMOBILE MANUFACTURER 54,000 1,922
Toray Industries
TEXTILE MANUFACTURER 360,000 1,868
Sanwa Bank, Ltd.,
preferred stock
BANKING 72,000 1,580
Murata Manufacturing
ELECTRONICS COMPONENTS
MANUFACTURER 47,000 1,524
Bellsystem 24, Inc.
TELEMARKETING FIRM 10,000 1,499
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
JAPAN--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Canon, Inc.
PRECISION INSTRUMENTS
MANUFACTURER 58,000 $ 1,316
Toppan Printing Co., Ltd.
PRINTING SERVICES 78,000 834
Noritsu Koki Co., Ltd.
PRECISION INSTRUMENTS
MANUFACTURER 30,440 680
-----------------------------------------------------
19,622
- ----------------------------------------------------------
HONG KONG--1.3%
- ----------------------------------------------------------
HSBC Holdings, PLC
BANKING 83,174 2,034
CITIC Pacific, Ltd.
CONGLOMERATE 500,000 884
-----------------------------------------------------
2,918
-----------------------------------------------------
TOTAL PACIFIC REGION--9.7% 22,540
-----------------------------------------------------
COMMONWEALTH COUNTRIES
- ----------------------------------------------------------
CANADA--6.4%
- ----------------------------------------------------------
Petro-Canada
OIL AND GAS COMPANY 282,700 4,576
Hudson's Bay Co.
DEPARTMENT STORE RETAILER 133,500 3,058
BCE, Inc.
TELECOMMUNICATIONS COMPANY 56,000 2,373
Mackenzie Financial Corp.
FINANCIAL SERVICES 153,900 2,166
Canadian National Railway
RAILROAD COMPANY 34,700 1,845
(a) Boardwalk Equities, Inc.
REAL ESTATE COMPANY 85,000 982
-----------------------------------------------------
15,000
- ----------------------------------------------------------
AUSTRALIA--1.7%
- ----------------------------------------------------------
St. George Bank
BANKING 335,575 2,170
Qantas Airways S.A.
TRANSPORTATION 123,000 1,851
-----------------------------------------------------
4,021
- ----------------------------------------------------------
NEW ZEALAND--.3%
- ----------------------------------------------------------
Restaurant Brands
New Zealand, Ltd.
RESTAURANT 1,490,000 719
-----------------------------------------------------
TOTAL COMMONWEALTH
COUNTRIES--8.4% 19,740
-----------------------------------------------------
</TABLE>
57
<PAGE> 59
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF
LATIN AMERICA SHARES VALUE
- ----------------------------------------------------------
MEXICO--2.0%
- ----------------------------------------------------------
<S> <C> <C>
Fomento Economico Mexicano
de C.V., "B", ADR
BEER AND SOFT DRINK
MANUFACTURER 49,000 $ 1,522
Kimberly-Clark de Mexico,
S.A. de C.V.
PAPER PRODUCTS PRODUCER 392,700 1,382
Grupo Elektra, S.A. de C.V.,
GDR
INDUSTRIAL CONGLOMERATE 902,500 887
Industrias Bachoco, S.A.
POULTRY PRODUCER 70,050 850
-----------------------------------------------------
4,641
- ----------------------------------------------------------
BRAZIL--1.7%
- ----------------------------------------------------------
Telebras, S.A.
TELEPHONE COMPANY 26,000 2,839
Petroleo Brasileiro, S.A.
OIL AND GAS COMPANY 6,550 1,212
-----------------------------------------------------
4,051
-----------------------------------------------------
TOTAL LATIN AMERICA
COUNTRIES--3.7% 8,692
-----------------------------------------------------
TOTAL COMMON STOCKS--95.0%
(Cost: $185,325) 221,564
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.50% to 6.00%
Due--July 1998
Madison Funding Co. $6,500 $ 6,985
Morgan Stanley Group, Inc. 6,500 6,500
Other 8,000 7,970
-----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--9.2%
(Cost: $21,455) 21,455
-----------------------------------------------------
TOTAL INVESTMENTS--104.2%
(Cost: $206,780) 243,019
-----------------------------------------------------
LIABILITIES, LESS OTHER
ASSETS--(4.2)% (9,877)
-----------------------------------------------------
NET ASSETS--100% $233,142
-----------------------------------------------------
</TABLE>
At June 30, 1998, the Kemper International Portfolio had the following industry
diversification (dollars in thousands):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
VALUE %
-----------------------------------------------------------------------------------------
<S> <C> <C>
Finance $ 62,064 26.6
-----------------------------------------------------------------------------------------
Consumer Cyclicals 46,397 19.9
-----------------------------------------------------------------------------------------
Utilities 29,559 12.7
-----------------------------------------------------------------------------------------
Capital Goods 21,211 9.1
-----------------------------------------------------------------------------------------
Technology 18,031 7.7
-----------------------------------------------------------------------------------------
Consumer Staples 17,340 7.4
-----------------------------------------------------------------------------------------
Energy 13,851 5.9
-----------------------------------------------------------------------------------------
Health Care 6,399 2.8
-----------------------------------------------------------------------------------------
Transportation 3,696 1.6
-----------------------------------------------------------------------------------------
Basic Industries 3,016 1.3
-----------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 221,564 95.0
-----------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS AND OTHER NET ASSETS 11,578 5.0
-----------------------------------------------------------------------------------------
NET ASSETS $233,142 100.0
-----------------------------------------------------------------------------------------
</TABLE>
NOTES TO KEMPER INTERNATIONAL PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $206,780,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $46,148,000, the gross
unrealized depreciation was $9,909,000 and the net unrealized appreciation on
investments was $36,239,000.
See accompanying Notes to Financial Statements.
58
<PAGE> 60
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ------------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--.7%
- ------------------------------------------------------------
(a) Superior Services, Inc. 43,400 $ 1,305
- ------------------------------------------------------------
CAPITAL GOODS--.5%
- ------------------------------------------------------------
(a) Hawk Corp. 47,900 844
- ------------------------------------------------------------
CONSUMER CYCLICALS--14.8%
- ------------------------------------------------------------
(a) Bright Horizons Family
Solutions, Inc. 102,900 2,881
Cinar Films, Inc. 222,500 4,339
Four Seasons Hotels, Inc. 92,200 3,250
(a) Neiman-Marcus Group 73,000 3,171
(a) Pacific Sunwear of
California 65,250 2,284
Royal Caribbean
Cruises, Ltd. 96,000 7,632
(a) SFX Entertainment, Inc. 75,000 3,441
----------------------------------------------------
26,998
- ------------------------------------------------------------
CONSUMER DURABLES--2.0%
- ------------------------------------------------------------
U.S. Industries 150,750 3,731
- ------------------------------------------------------------
CONSUMER STAPLES--9.8%
- ------------------------------------------------------------
(a) American Italian Pasta
Co. 75,000 2,794
(a) Corn Products
International 72,500 2,456
(a) Duane Reade Inc. 100,000 3,000
(a) Hearst-Argyle Television,
Inc. 58,800 2,352
(a) NBTY, Inc. 212,000 3,895
(a) Papa John's
International, Inc. 45,000 1,775
(a) Sonic Corp. 67,500 1,510
----------------------------------------------------
17,782
- ------------------------------------------------------------
ENERGY--1.2%
- ------------------------------------------------------------
(a) Global Industries 130,000 2,194
----------------------------------------------------
- ------------------------------------------------------------
FINANCE--14.4%
- ------------------------------------------------------------
(a) ABR Information Services 76,500 1,817
Commercial Federal Corp. 93,000 2,941
(a) Financial Federal Corp. 108,800 2,917
Flag Financial Corp. 52,500 873
Peoples Heritage
Financial Group 200,000 4,725
Protective Life Insurance
Co. 60,000 2,201
(a) Silicon Valley Bancshares 77,000 2,741
Texas Regional Bancshares 54,200 1,775
(a) Trammell Crow Co. 74,900 2,504
(a) UniCapital Corp. 152,100 2,909
(a) United Panam Financial
Corp. 76,100 780
----------------------------------------------------
26,183
- ------------------------------------------------------------
HEALTH CARE--6.3%
- ------------------------------------------------------------
(a) Envoy Corp. 48,400 2,293
(a) Hanger Orthopedic Group 135,800 2,767
Omnicare, Inc. 65,000 2,478
Province Healthcare Co. 70,600 1,955
(a) Serologicals Corp. 60,000 1,935
----------------------------------------------------
11,428
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
SERVICES--16.9%
- ------------------------------------------------------------
<S> <C> <C>
(a) Education Management
Corp. 87,800 $ 2,886
G&K Services 68,500 2,988
(a) ITT Educational Services 148,700 4,795
(a) Lamar Advertising Co. 100,000 3,587
(a) Outdoor Systems, Inc. 256,062 7,170
Stewart Enterprises, Inc. 110,000 2,929
(a) Sylvan Learning Systems,
Inc. 197,500 6,468
----------------------------------------------------
30,823
- ------------------------------------------------------------
TECHNOLOGY--21.5%
- ------------------------------------------------------------
(a) American Tower Corp. 253,000 6,309
Broadcom Corp. 19,500 1,436
(a) CBT Group 35,000 1,872
(a) Cambridge Technology
Partners 40,000 2,185
(a) DoubleClick Inc. 36,500 1,814
(a) Intuit, Inc. 40,000 2,450
(a) J.D. Edwards & Co. 70,000 3,006
(a) Jacor Communications 53,300 3,145
Linear Technology Corp. 35,000 2,111
(a) Mercury Interactive Corp. 65,000 2,901
(a) Network Appliance, Inc. 40,000 1,557
(a) Network Associates, Inc. 50,000 2,394
Pittway Corp. 43,000 3,177
(a) Preview Travel, Inc. 33,600 1,155
(a) Tech Data Corp. 30,000 1,286
(a) Whittman-Hart, Inc. 49,000 2,370
----------------------------------------------------
39,168
- ------------------------------------------------------------
UTILITIES--2.0%
- ------------------------------------------------------------
(a) McLeodUSA, Inc. 50,000 1,944
(a) STAR Telecommunications, Inc. 80,000 1,790
----------------------------------------------------
3,734
----------------------------------------------------
TOTAL COMMON STOCKS--90.1%
(Cost: $137,362) 164,190
----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.53% to 6.25%
Due--July 1998
ConAgra, Inc. $ 4,000 4,000
Merrill Lynch & Co., Inc. 4,000 4,000
Other 7,000 6,999
----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--8.2%
(Cost: $14,999) 14,999
----------------------------------------------------
TOTAL INVESTMENTS--98.3%
(Cost: $152,361) 179,189
----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.7% 3,093
----------------------------------------------------
NET ASSETS--100% $182,282
----------------------------------------------------
</TABLE>
59
<PAGE> 61
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
NOTES TO KEMPER SMALL CAP GROWTH PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $152,361,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $29,192,000, the gross
unrealized depreciation was $2,364,000 and the net unrealized appreciation on
investments was $26,828,000.
See accompanying Notes to Financial Statements.
60
<PAGE> 62
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER INVESTMENT GRADE BOND PORTFOLIO
Portfolio of Investments at June 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
GOVERNMENT OBLIGATIONS AMOUNT VALUE
- -----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES
5.50%, 2003 $ 225 $ 225
7.875%, 2004 100 112
7.75%, 2005 530 587
---------------------------------------------------
924
- -----------------------------------------------------------
U.S. TREASURY BONDS
- -----------------------------------------------------------
10.75%, 2003 2,450 2,986
6.125%, 2027 1,270 1,361
----------------------------------------------------
4,347
- -----------------------------------------------------------
MORTGAGE BACKED SECURITIES
- -----------------------------------------------------------
FNMA, 5.75%, 2008 1,000 995
FNMA, 7.00%, 2028 1,051 1,066
--------------------------------------------------
2,061
- -----------------------------------------------------------
GOVERNMENT AGENCY
- -----------------------------------------------------------
Tennessee Valley Authority,
6.25%, 2017 100 104
- -----------------------------------------------------------
CANADIAN PROVINCIAL OBLIGATIONS
- -----------------------------------------------------------
Province of Quebec,
8.625%, 2005 500 565
--------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--29.3%
(Cost: $7,926) 8,001
--------------------------------------------------
CORPORATE OBLIGATIONS
- -----------------------------------------------------------
ASSET BACKED SECURITIES--.7%
- -----------------------------------------------------------
Pacific Gas & Electric,
6.42%, 2008 100 102
Southern California Edison
Co.
6.22%, 2004 50 50
6.28%, 2005 50 51
--------------------------------------------------
203
- -----------------------------------------------------------
AEROSPACE--2.1%
- -----------------------------------------------------------
Lockheed Martin Corp.
6.75%, 2003 400 410
7.25%, 2006 150 159
--------------------------------------------------
569
- -----------------------------------------------------------
BANKS--8.1%
- -----------------------------------------------------------
ABN-Amro Holding, N.V.,
8.25%, 2009 100 109
Abbey National, PLC
6.70%, 2049 400 400
6.69%, 2005 25 26
BCH Cayman Islands, Ltd.
7.50%, 2005 100 105
7.70%, 2006 70 75
Capital One Bank,
8.125%, 2000 100 103
Crestar Financial Corp.,
8.25%, 2002 100 107
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
BANKS--CONTINUED
- -----------------------------------------------------------
<S> <C> <C>
Den Danske Bank,
6.375%, 2008 $ 350 $ 346
Fleet Financial Group, Inc.
8.125%, 2004 25 27
8.625%, 2007 175 201
Kansallis Osake Bank,
10.00%, 2002 100 112
NationsBank Corp.,
9.50%, 2004 200 232
Riggs National Corp.,
8.50%, 2006 100 105
Scotland International,
8.80%, 2004 50 56
Svenska Handelsbanken,
7.125%, 2049 100 103
Wells Fargo & Co.,
6.875%, 2006 100 104
--------------------------------------------------
2,211
- -----------------------------------------------------------
COMMUNICATIONS, MEDIA AND ELECTRONICS--7.8%
- -----------------------------------------------------------
Comcast Cable,
8.50%, 2027 100 120
GTE Corp.,
6.90%, 2008 100 105
News American Holdings,
Inc.
9.25%, 2013 75 91
8.15%, 2036 300 336
Tele-Communications, Inc.,
9.80%, 2012 350 451
Time Warner, Inc.
9.125%, 2013 350 425
9.15%, 2023 200 252
Viacom, Inc.,
7.75%, 2005 175 186
WorldCom, Inc.
7.75%, 2007 50 54
7.75%, 2027 100 112
--------------------------------------------------
2,132
- -----------------------------------------------------------
CONSUMER PRODUCTS, SERVICES AND RETAIL--5.1%
- -----------------------------------------------------------
CSC Holdings, Inc.,
7.875%, 2007 200 211
Dayton Hudson Corp.,
7.50%, 2006 100 107
Dimon, Inc.,
8.875%, 2006 50 49
Federated Department
Stores,
10.00%, 2001 200 218
May Department Stores Co.,
6.875%, 2005 50 52
Phillip Morris Cos.,
7.20%, 2007 150 155
Raytheon Co.,
6.75%, 2007 150 154
Royal Caribbean Cruises,
Ltd.,
8.25%, 2005 120 131
</TABLE>
61
<PAGE> 63
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
CONSUMER PRODUCTS, SERVICES AND RETAIL--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Sears Roebuck Acceptance
Corp.,
7.00%, 2007 $ 150 $ 157
Sony Corp.,
6.125%, 2003 150 150
--------------------------------------------------
1,384
- ----------------------------------------------------------
ENERGY AND CHEMICALS--1.1%
- ----------------------------------------------------------
USX Corp.,
6.850%, 2008 300 302
- ----------------------------------------------------------
FINANCIAL SERVICES--6.3%
- ----------------------------------------------------------
AEGON, N.V.,
8.00%, 2006 200 221
Associates Corp.,
6.625%, 2001 200 203
Case Credit Corp.,
6.75%, 2007 200 205
FINOVA Capital Corp.,
6.50%, 2002 100 101
General Electric Capital
Corp.
8.75%, 2007 50 58
8.625%, 2008 50 59
Lehman Brothers Holdings
7.25%, 2003 50 52
7.375%, 2007 100 106
Morgan Stanley, Dean
Witter, Discover & Co.,
6.875%, 2007 200 208
Northern Trust Co.,
6.250%, 2008 500 500
--------------------------------------------------
1,713
- ----------------------------------------------------------
TRANSPORTATION--3.2%
- ----------------------------------------------------------
CSX Corp.,
7.45%, 2007 150 160
Continental Airlines, Inc.
7.75%, 2014 47 51
6.90%, 2018 50 51
Delta Air Lines Inc.,
9.75%, 2021 300 390
Ford Motor Credit,
7.75%, 2005 100 108
Norfolk Southern Corp.,
7.35%, 2007 100 107
--------------------------------------------------
867
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
UTILITIES--7.4%
- ----------------------------------------------------------
<S> <C> <C>
BellSouth
Telecommunications,
6.375%, 2028 $ 500 $ 497
Centerior Energy,
7.67%, 2004 100 105
Cleveland Electric
Illumination,
7.43%, 2009 100 104
Commonwealth Edison
7.375%, 2004 50 52
7.00%, 2005 100 104
El Paso Electric Co.,
8.90%, 2006 350 392
Hyder, PLC,
6.875%, 2007 150 153
Northwest Pipeline Corp.,
6.625%, 2007 100 103
U.S. West Capital Funding,
Inc.,
6.875%, 2028 500 503
--------------------------------------------------
2,013
--------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--41.8%
(Cost: $11,239) 11,394
--------------------------------------------------
MONEY MARKET INSTRUMENTS--36.6%
Yield--5.85%
Due--July 1998
Federal National Mortgage
Association
(Cost: $10,000) 10,000 10,000
--------------------------------------------------
TOTAL INVESTMENTS--107.7%
(Cost: $29,165) 29,395
--------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS--(7.7)% (2,091)
--------------------------------------------------
NET ASSETS--100% $27,304
--------------------------------------------------
</TABLE>
NOTE TO KEMPER INVESTMENT GRADE BOND PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $29,165,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $240,000, the gross
unrealized depreciation was $10,000 and the net unrealized appreciation on
investments was $230,000.
See accompanying Notes to Financial Statements.
62
<PAGE> 64
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER CONTRARIAN VALUE PORTFOLIO
Portfolio of Investments at June 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- -----------------------------------------------------------
BANKS--11.9%
- -----------------------------------------------------------
<S> <C> <C>
Banc One Corp. 65,320 $ 3,646
BankAmerica Corp. 35,000 3,025
Bankers Trust New York Corp. 10,000 1,161
Chase Manhattan Corp. 58,000 4,379
First Union Corp. 55,400 3,227
Golden West Financial Corp. 15,000 1,595
NationsBank Corp. 48,400 3,703
Norwest Corp. 73,200 2,736
PNC Bank Corp., N.A. 38,900 2,093
Wachovia Corp. 20,000 1,690
-----------------------------------------------------
27,255
- -----------------------------------------------------------
BASIC INDUSTRIES--11.4%
- -----------------------------------------------------------
Dow Chemical Co. 41,500 4,013
Georgia-Pacific Corp. 30,000 1,768
Louisiana-Pacific Corp. 110,000 2,008
Lubrizol Corp. 125,000 3,781
Nucor Corp. 50,000 2,300
Praxair, Inc. 80,000 3,745
Sonoco Products Co. 96,000 2,904
Timber Co. 96,200 2,219
Union Camp Corp. 21,500 1,067
Weyerhaeuser Co. 50,000 2,309
-----------------------------------------------------
26,114
- -----------------------------------------------------------
CAPITAL GOODS--7.5%
- -----------------------------------------------------------
Crown Cork & Seal Co. 43,500 2,066
General Electric Co. 72,000 6,552
Hussmann International, Inc. 30,000 557
Minnesota Mining &
Manufacturing 58,500 4,808
Pitney Bowes, Inc. 68,000 3,273
-----------------------------------------------------
17,256
- -----------------------------------------------------------
CONSUMER CYCLICALS--4.4%
- -----------------------------------------------------------
Ford Motor Co. 78,500 4,631
May Department Stores Co. 40,000 2,620
Superior Industries
International 99,000 2,791
-----------------------------------------------------
10,042
- -----------------------------------------------------------
CONSUMER STAPLES--8.0%
- -----------------------------------------------------------
Kimberly-Clark Corp. 60,000 2,752
McDonald's Corp. 45,000 3,105
Phillip Morris Cos. 243,600 9,592
Wendy's International, Inc. 130,000 3,055
-----------------------------------------------------
18,504
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
ENERGY--9.5%
- -----------------------------------------------------------
<S> <C> <C>
AMOCO Corp. 178,900 $ 7,447
Atlantic Richfield Co. 75,000 5,859
Chevron Corp. 23,500 1,952
Exxon Corp. 60,000 4,279
Texaco, Inc. 40,000 2,387
-----------------------------------------------------
21,924
- -----------------------------------------------------------
FINANCIAL SERVICES--15.5%
- -----------------------------------------------------------
American International Group 30,900 4,511
Associates First Capital
Corp. 40,574 3,119
BRE Properties, Inc. 60,000 1,564
Conseco, Inc. 35,000 1,636
Federal Home Loan Mortgage
Corp. 164,600 7,746
Federal National Mortgage
Association 113,600 6,901
H.F. Ahmanson & Co. 35,300 2,506
J.P. Morgan & Co. 30,000 3,514
Meditrust 39,652 1,108
National City Corp. 20,000 1,420
Post Properties 45,000 1,732
-----------------------------------------------------
35,757
- -----------------------------------------------------------
HEALTH CARE--6.8%
- -----------------------------------------------------------
American Home Products Corp. 80,000 4,140
Baxter International 60,000 3,229
Bristol-Myers Squibb Co. 30,000 3,448
C.R. Bard 124,500 4,739
-----------------------------------------------------
15,556
- -----------------------------------------------------------
TECHNOLOGY--9.2%
- -----------------------------------------------------------
AMP, Inc. 167,000 5,741
Diebold 105,000 3,032
Hewlett-Packard Co. 70,000 4,191
Raytheon Co. 61,500 3,636
Xerox Corp. 45,000 4,573
-----------------------------------------------------
21,173
- -----------------------------------------------------------
UTILITIES--2.6%
- -----------------------------------------------------------
Enron Corp. 47,500 2,568
GTE Corp. 60,000 3,337
-----------------------------------------------------
5,905
-----------------------------------------------------
TOTAL COMMON STOCKS--86.8%
(Cost: $173,796) 199,486
-----------------------------------------------------
</TABLE>
63
<PAGE> 65
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.53% to 6.00%
Due--July and August 1998
Bell Atlantic Corp. $11,100 $ 11,066
Merrill Lynch & Co., Inc. 10,000 10,000
Other 9,500 9,486
-----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--13.3%
(Cost: $30,552) 30,552
-----------------------------------------------------
TOTAL INVESTMENTS--100.1%
(Cost: $204,348) 230,038
-----------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(.1)% (331)
-----------------------------------------------------
NET ASSETS--100% $229,707
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE TO KEMPER CONTRARIAN VALUE PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Based on the cost of investments of $204,348,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $29,979,000, the gross
unrealized depreciation was $4,289,000 and the net unrealized appreciation on
investments was $25,690,000.
See accompanying Notes to Financial Statements.
64
<PAGE> 66
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ----------------------------------------------------------
CONSUMER DISCRETIONARY--13.7%
- ----------------------------------------------------------
<S> <C> <C>
Applebee's International 28,900 $ 647
(a) BJ's Wholesale Club 23,300 947
Brown Group, Inc. 27,700 551
Burlington Coat Factory 2,000 45
Bush Industries 41,000 892
(a) CDI Corp. 17,000 455
(a) Carmike Cinemas 15,200 409
Columbia Sportswear Co. 53,600 1,018
DIMON, Inc. 27,900 314
First Brands Corp. 41,000 1,051
(a) Footstar, Inc. 8,600 413
(a) Friedman's, Inc. 23,400 388
Haggar Apparel Co. 8,500 108
Harman International
Industries 17,200 662
Heilig-Meyers 13,200 163
Herbalife International,
Inc.
Class A 9,266 228
Class B 23,333 481
(a) Hollywood Entertainment
Corp. 28,500 387
Homebase, Inc. 14,000 111
(a) Lone Star Steakhouse &
Saloon 34,200 472
Springs Industries, Inc. 18,000 830
(a) Swisher International Group,
Inc. 50,500 404
Talbots, Inc. 5,000 131
(a) Valassis Communications 27,000 1,041
(a) Young Broadcasting Corp. 28,200 1,833
-----------------------------------------------------
13,981
- ----------------------------------------------------------
CONSUMER STAPLES--.7%
- ----------------------------------------------------------
(a) Fresh Del Monte Produce,
Inc. 8,100 153
(a) Performance Food Group 18,000 358
UST, Inc. 7,400 196
-----------------------------------------------------
707
- ----------------------------------------------------------
ENERGY--8.3%
- ----------------------------------------------------------
Atmos Energy Corp. 30,500 930
(a) Basin Exploration 29,100 513
(a) Chieftain International,
Inc. 32,500 770
Cross Timbers Oil 69,000 1,315
Giant Industries 11,500 200
KCS Energy 45,000 515
(a) Nuevo Energy Co. 27,500 883
(a) Seitel, Inc. 44,500 720
TNP Enterprises, Inc. 17,200 531
(a) Tesoro Petroleum Corp. 48,500 770
(a) Triton Energy Corp. 20,500 732
(a) Veritas DGC, Inc. 11,800 589
-----------------------------------------------------
8,468
- ----------------------------------------------------------
FINANCIAL SERVICES--24.0%
- ----------------------------------------------------------
(a) Acceptance Insurance Cos. 28,200 693
Apartment Investment &
Management Co. 15,926 629
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
FINANCIAL SERVICES--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Associated Banc Corp. 14,845 $ 559
Bank Atlantic Bancorp. 18,925 224
Chartwell Re Corp. 19,100 562
Commercial Federal Corp. 30,250 957
Commonwealth Bancorp, Inc. 7,400 170
Compass Bancshares 13,150 593
Cullen Frost Bankers 13,000 705
Doral Financial Corp. 27,600 483
Excel Legacy Corp. 5,500 24
Excel Realty Trust, Inc. 15,900 458
First Union Corp. 10,000 583
Fremont General Corp. 17,500 948
Frontier Insurance Group 12,100 273
HCC Insurance Holdings 21,300 468
HUBCO, Inc. 12,360 443
(a) Headlands Mortgage Co. 28,800 540
IMH Commercial Holdings,
Inc. 2,100 33
Imperial Credit Commercial
Mortgage Investment 149,900 1,958
Imperial Credit Industries 35,500 834
John Alden Financial Corp. 12,300 271
LandAmerica Financial Group,
Inc. 5,000 286
Nationwide Health Properties 41,100 981
North Fork Bancorporation,
Inc. 24,000 587
(a) Ocwen Financial Corp. 9,500 255
Omega Healthcare Investors,
Inc. 29,200 1,026
Pacific Bank, N.A. 6,500 358
PennCorp Financial Group 18,100 371
Peoples Heritage Financial
Group 11,600 274
Philips International Realty 28,400 467
Prentiss Properties Trust 40,300 980
Redwood Trust 21,100 371
Reliance Group Holdings,
Inc. 46,700 817
RenaissanceRe Holdings, Ltd. 6,000 278
Resource Bancshares Mortgage
Group 59,115 1,101
Royal Nelloyd Group SP ADR 49,600 496
(a) Southern Pacific Funding
Corp. 48,800 766
Sovereign Bancorp 7,555 123
(a) UniCapital Corp. 31,300 599
United Companies Financial
Corp. 14,300 223
Vermont Financial Services
Corp. 6,500 178
W.R. Berkley Corp. 10,100 405
Webster Financial Corp. 29,000 964
Winston Hotels 26,000 325
-----------------------------------------------------
24,639
</TABLE>
65
<PAGE> 67
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
HEALTH CARE--3.6%
- ----------------------------------------------------------
<S> <C> <C>
(a) CONMED Corp. 38,500 $ 886
(a) Genesis Health Ventures 25,000 625
Health Care Property
Investors, Inc. 11,700 422
(a) Hologic, Inc. 41,800 760
Integrated Health Services 27,489 1,031
-----------------------------------------------------
3,724
- ----------------------------------------------------------
MATERIALS AND PROCESSING--15.4%
- ----------------------------------------------------------
AK Steel Holding Corp. 24,200 433
AMCOL International 55,550 670
Ball Corp. 27,400 1,101
Birmingham Steel Corp. 63,350 784
(a) Buckeye Technologies, Inc. 38,300 902
Carpenter Technology Corp. 20,900 1,050
Del Webb Corp. 22,100 573
Elcor Corp. 34,750 877
Flowserve Corp. 37,526 924
Furon Co. 51,700 937
(a) Global Industrial
Technologies, Inc. 37,500 539
Intermet Corp. 57,600 1,044
(a) Lone Star Technologies 41,300 630
(a) Lydall, Inc. 37,200 542
Mississippi Chemical Corp. 29,700 488
(a) Mueller Industries, Inc. 12,000 446
Quanex Corp. 29,000 879
(a) Shaw Group 35,800 931
Trinity Industries 23,000 955
(a) Wyman-Gordon Co. 51,000 1,017
-----------------------------------------------------
15,722
- ----------------------------------------------------------
PRODUCER DURABLES--6.4%
- ----------------------------------------------------------
Albany International Corp. 41,772 1,000
Apogee Enterprises 41,600 637
Blount International, "A" 33,900 966
Briggs & Stratton Corp. 20,800 779
General Cable Corp. 34,800 1,005
Robbins & Myers, Inc. 18,700 543
Stewart & Stevenson Services 47,100 848
Watts Industries, Inc. 39,200 818
-----------------------------------------------------
6,596
- ----------------------------------------------------------
TECHNOLOGY--5.9%
- ----------------------------------------------------------
(a) Benchmark Electronics 27,000 540
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Breed Technologies, Inc. 23,700 $ 363
(a) Burr Brown Corp. 26,925 565
(a) EXAR Corp. 16,100 338
(a) HMT Technology Corp. 66,000 553
(a) Hutchinson Technology 26,700 728
(a) Learning Co. 16,100 477
(a) MasTec, Inc. 27,200 649
Scientific-Atlanta 12,500 317
(a) Tech-Sym Corp. 14,500 403
-----------------------------------------------------
6,082
- ----------------------------------------------------------
TRANSPORTATION--6.9%
- ----------------------------------------------------------
Airborne Freight Corp. 15,000 524
(a) America West Holdings 42,600 1,217
(a) Avis Rent A Car, Inc. 24,500 606
Borg-Warner Automotive, Inc. 16,300 783
(a) Budget Group, Inc. 4,000 128
(a) Dollar Thrifty Automotive
Group, Inc. 62,200 824
Fleetwood Enterprises 21,000 840
Myers Industries 22,220 533
Teekay Shipping 40,100 1,005
(a) Wisconsin Central
Transportation Corp. 28,900 632
-----------------------------------------------------
7,092
- ----------------------------------------------------------
UTILITIES--1.2%
- ----------------------------------------------------------
(a) Jones Intercable, Inc. 49,800 1,245
-----------------------------------------------------
TOTAL COMMON STOCKS--86.1%
(Cost: $84,467) 88,256
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.67% to 5.78%
Due--July 1998
Baxter International, Inc. $ 4,500 4,482
Madison Funding Corp. 4,500 4,480
Other 4,600 4,588
-----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--13.2%
(Cost: $13,550) 13,550
-----------------------------------------------------
TOTAL INVESTMENTS--99.3%
(Cost: $98,017) 101,806
-----------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--.7% 672
-----------------------------------------------------
NET ASSETS--100% $102,478
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER SMALL CAP VALUE PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $98,017,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $10,522,000, the gross
unrealized depreciation was $6,733,000 and the net unrealized appreciation on
investments was $3,789,000.
See accompanying Notes to Financial Statements.
66
<PAGE> 68
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER VALUE+GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ----------------------------------------------------------
BASIC INDUSTRIES--4.3%
- ----------------------------------------------------------
<S> <C> <C>
AMP, Inc. 15,700 $ 540
Dow Chemical Co. 3,800 367
Georgia-Pacific Corp. 1,800 106
Louisiana-Pacific Corp. 15,000 274
Lubrizol Corp. 10,000 303
Nucor Corp. 7,000 322
Praxair, Inc. 10,000 468
Sonoco Products Co. 15,400 466
Timber Co. 12,400 286
Union Camp Corp. 6,200 308
Universal Corp. 48,500 1,813
-----------------------------------------------------
5,253
- ----------------------------------------------------------
CAPITAL GOODS--7.7%
- ----------------------------------------------------------
Crown Cork & Seal Co. 5,200 247
Emerson Electric Co. 9,500 574
General Electric Co. 29,500 2,685
Minnesota Mining &
Manufacturing 8,000 658
(a) Philips Electronics, N.V. 14,400 1,224
Pitney Bowes, Inc. 9,000 433
Raytheon Co. 9,000 532
Tyco International, Ltd. 14,000 882
(a) U.S. Filter Corp. 37,900 1,064
Xerox Corp. 12,000 1,220
-----------------------------------------------------
9,519
- ----------------------------------------------------------
CONSUMER CYCLICALS--10.7%
- ----------------------------------------------------------
American Greetings Corp. 21,000 1,070
(a) AutoZone, Inc. 18,500 591
Carnival Corp. 32,000 1,268
Deluxe Corp. 11,500 412
Dillard Department Stores 28,500 1,181
Family Dollar Stores 30,000 555
Home Depot 8,500 706
(a) MGM Grand 28,000 884
May Department Stores Co. 6,500 426
NIKE 23,500 1,144
(a) Nine West Group 36,000 965
Sears, Roebuck & Co. 14,900 910
Sotheby's Holdings 15,000 336
(a) Tommy Hilfiger Corp. 16,700 1,044
V.F. Corp. 4,000 206
Wal-Mart Stores, Inc. 12,000 729
Walt Disney Co. 5,100 536
Wendy's International, Inc. 6,400 150
-----------------------------------------------------
13,113
- ----------------------------------------------------------
CONSUMER DURABLES--1.2%
- ----------------------------------------------------------
Ford Motor Co. 13,000 767
Magna International, Inc.,
"A" 3,800 261
Superior Industries
International 14,000 395
-----------------------------------------------------
1,423
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
CONSUMER STAPLES--11.0%
- ----------------------------------------------------------
<S> <C> <C>
Avon Products 13,000 $ 1,007
ConAgra 35,000 1,109
Dole Food Co. 23,000 1,143
(a) General Nutrition 21,500 669
Kimberly-Clark Corp. 7,000 321
McDonald's Corp. 15,000 1,035
Newell Co. 15,000 747
PepsiCo 30,500 1,256
Philip Morris Cos. 82,000 3,229
Procter & Gamble Co. 10,500 956
(a) Smithfield Foods 20,000 610
UST, Inc. 53,200 1,436
-----------------------------------------------------
13,518
- ----------------------------------------------------------
ENERGY--4.6%
- ----------------------------------------------------------
AMOCO Corp. 22,000 916
Atlantic Richfield Co. 9,400 734
Chevron Corp. 3,700 307
Columbus Energy Group 2,700 150
(a) Cooper Cameron Corp. 16,500 842
Enron Corp. 6,000 324
Exxon Corp. 10,200 727
(a) R&B Falcon Corp. 20,000 453
(a) Rowan Cos. 34,000 661
(a) Smith International 14,000 487
-----------------------------------------------------
5,601
- ----------------------------------------------------------
FINANCE--17.6%
- ----------------------------------------------------------
Ambac Financial Group, Inc. 15,000 877
American General Corp. 3,300 235
American International Group 3,000 438
Associates First Capital
Corp. 3,407 262
BB & T Corp. 13,000 879
BRE Properties, Inc. 9,000 235
Banc One Corp. 7,370 411
Bank of New York Co. 5,600 340
BankAmerica Corp. 3,200 277
Bankers Trust New York Corp. 1,900 221
Bear Stearns Cos. 12,700 722
Chase Manhattan Corp. 7,000 528
Federal Home Loan Mortgage
Corp. 24,700 1,162
Federal National Mortgage
Association 39,100 2,375
First Union Corp. 9,600 559
Golden West Financial Corp. 3,000 319
H.F. Ahmanson & Co. 5,000 355
Hartford Financial Services 10,000 1,144
Hibernia Corp. 39,000 787
J.P. Morgan & Co. 2,200 258
Jefferson-Pilot Corp. 9,150 530
KeyCorp 2,000 71
MBIA, Inc. 8,400 629
Meditrust 3,604 101
Merrill Lynch & Co. 13,100 1,208
MGIC Investment Corp. 7,000 399
</TABLE>
67
<PAGE> 69
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Morgan Stanley, Dean Witter,
Discover & Co. 11,000 $ 1,005
NationsBank Corp. 23,562 1,802
Norwest Corp. 7,000 262
PNC Bank Corp., N.A. 7,000 377
Post Properties 8,000 308
Republic New York Corp. 1,200 76
Safeco Corp. 14,000 636
Torchmark Corp. 14,500 663
Travelers Group 16,000 970
Wells Fargo & Co. 700 258
-----------------------------------------------------
21,679
- ----------------------------------------------------------
HEALTH CARE--14.7%
- ----------------------------------------------------------
Abbott Laboratories 23,000 940
(a) ALZA Corp. 34,500 1,492
American Home Products Corp. 41,000 2,122
Astra, A.B., ADR 36,700 752
Baxter International 10,000 538
Bristol-Myers Squibb Co. 13,700 1,575
C.R. Bard 18,500 704
Crescendo Pharmaceutical Co. 1,050 13
Eli Lilly & Co. 10,000 661
(a) First Health Group Corp. 32,000 912
General Re Corp. 2,900 735
Johnson & Johnson 7,500 553
McKesson Corp. 9,000 731
Merck & Co. 10,600 1,418
Pfizer, Inc. 4,000 435
(a) R.P. Scherer Corp. 10,000 886
Schering-Plough Corp. 12,800 1,173
Stryker Corp. 24,000 921
Tenet HealthCare Corp. 13,000 406
United Healthcare Corp. 17,100 1,086
-----------------------------------------------------
18,053
- ----------------------------------------------------------
TECHNOLOGY--17.3%
- ----------------------------------------------------------
(a) Analog Devices 10,000 246
(a) Applied Materials, Inc. 39,400 1,162
(a) Atmel Corp. 45,000 613
(a) Bay Networks 40,500 1,306
(a) Cadence Design Systems, Inc. 10,000 312
(a) Cisco Systems 25,350 2,334
Compaq Computer Corp. 56,200 1,595
(a) Computer Sciences Corp. 21,600 1,382
Diebold 18,500 534
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES
OR PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Hewlett-Packard Co. 2,800 $ 168
Intel Corp. 23,200 1,720
Linear Technology Corp. 100 6
(a) Microchip Technology 24,500 640
(a) National Semiconductor Corp. 103,500 1,365
(a) Novellus Systems 14,500 517
(a) Parametric Technology Corp. 21,000 570
(a) Quantum Corp. 30,000 623
Reynolds & Reynolds Co. 34,500 627
(a) Seagate Technology 13,000 310
(a) Sun Microsystems 26,500 1,151
(a) Teradyne, Inc. 41,500 1,110
(a) 3Com Corp. 31,975 981
(a) VLSI Technology 30,000 503
(a) Western Digital Corp. 94,900 1,121
(a) Xilinx, Inc. 10,000 340
-----------------------------------------------------
21,236
- ----------------------------------------------------------
UTILITIES--3.2%
- ----------------------------------------------------------
(a) AirTouch Communications 17,500 1,023
GTE Corp. 11,000 612
(a) WorldCom, Inc. 46,700 2,262
-----------------------------------------------------
3,897
-----------------------------------------------------
TOTAL COMMON STOCKS--92.3%
(Cost: $100,967) 113,292
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--4.74% to 5.90%
Due--July and August 1998
U.S. Treasury Bills $ 550 547
Bell Atlantic Network 5,900 5,895
Countrywide Home Loan 3,000 2,984
Other 4,600 4,593
-----------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--11.4%
(Cost: $14,019) 14,019
-----------------------------------------------------
TOTAL INVESTMENTS--103.7%
(Cost: $114,986) 127,310
-----------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(3.7)% (4,483)
-----------------------------------------------------
NET ASSETS--100% $122,827
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER VALUE+GROWTH PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $114,986,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $17,746,000, the gross
unrealized depreciation was $5,422,000 and the net unrealized appreciation on
investments was $12,324,000.
See accompanying Notes to Financial Statements.
68
<PAGE> 70
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 20+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
U.S. TREASURY SECURITIES--18.0%
- ----------------------------------------------------------
<S> <C> <C>
Notes
7.50%, 1999 $ 100 $ 102
8.875%, 2000 250 265
8.50%, 2000 800 849
6.75%, 2000 499 510
5.50%, 2000 875 874
6.625%, 2001 1,900 1,957
6.50%, 2001 380 390
7.875%, 2004 261 293
-----------------------------------------------------
5,240
- ----------------------------------------------------------
MORTGAGE BACKED SECURITIES--1.7%
- ----------------------------------------------------------
FNMA
6.01%, 2000 150 151
FHLMC
6.00%, 2006 50 50
FHLMC
6.50%, 2014 107 108
GMNA
7.00%, 2015 169 170
-----------------------------------------------------
479
-----------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--19.7%
(Cost: $5,709) 5,719
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
BASIC INDUSTRIES--3.5%
- ----------------------------------------------------------
AK Steel Holding Corp. 910shs. 16
AMCOL International 1,815 22
Ciba Specialty Chemicals 1,300 167
Crown Cork & Seal Co. 500 24
Dow Chemical Co. 500 48
Eastman Chemical Co. 200 12
Georgia-Pacific Corp. 300 18
Global Industrial
Technologies, Inc. 4,500 76
Louisiana-Pacific Corp. 2,900 53
Nucor Corp. 1,200 55
Pitney Bowes, Inc. 400 19
Rentokil Initial, PLC 12,205 88
Rowan Cos. 5,500 107
(a) Shaw Group 1,100 29
Smith International 2,000 70
Sonoco Products Co. 2,420 73
Technip, S.A. 193 24
Timber Co. 2,400 55
Toray Industries 7,500 39
Union Camp Corp. 600 30
(a) Wyman-Gordon Co. 400 8
-----------------------------------------------------
1,033
- ----------------------------------------------------------
CAPITAL GOODS--7.3%
- ----------------------------------------------------------
Applied Industrial
Technologies 600 12
Blount International, "A" 1,460 42
(a) Cooper Cameron Corp. 2,500 128
Elcor Corp. 500 13
General Electric Co. 4,300 391
Mannesmann, A.G. 3,010 309
Minnesota Mining &
Manufacturing 400 33
Murata Manufacturing 1,200 39
(a) Philips Electronics, N.V. 1,100 94
Raytheon Co. 900 53
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS--CONTINUED
- ----------------------------------------------------------
Sony Corp. 700 $ 60
Star Telecommunications,
Inc. 3,000 67
Superior Services 1,500 45
(a) Sylvan Learning Systems,
Inc. 7,550 247
Trinity Industries 570 24
Tyco International, Ltd. 2,000 126
(a) U.S. Filter Corp. 5,500 154
VIAG, A.G. 280 193
Xerox Corp. 1,000 102
-----------------------------------------------------
2,132
- ----------------------------------------------------------
CONSUMER CYCLICALS--8.7%
- ----------------------------------------------------------
Albany International Corp. 100 2
American Greetings Corp. 2,400 122
(a) AutoZone, Inc. 1,800 57
Borg-Warner Automotive, Inc. 450 22
(a) Bright Horizons Children's
Center, Inc. 2,800 78
Brown Group, Inc. 1,360 27
Carnival Corp. 3,600 143
Carrefour, S.A. 76 48
Cinar Films, Inc. 2,500 49
(a) Consolidated Graphics, Inc. 700 41
Columbia Sportswear Co. 500 10
Dillard Department Stores 2,800 116
(a) Education Management Corp. 500 16
Family Dollar Stores 5,000 93
Flowserve Corp. 986 24
Four Seasons Hotels, Inc. 1,600 56
(a) Friedman's, Inc. 1,400 23
(a) Hearst-Argyle Television,
Inc. 600 24
Home Depot 600 50
Hudson's Bay Co. 2,975 68
Kimberly-Clark Corp. 1,000 46
(a) MGM Grand 3,600 114
May Department Stores Co. 600 39
(a) Men's Wearhouse 2,100 69
Meredith Corp. 400 19
(a) Neiman-Marcus Group 2,000 87
NIKE 3,450 168
(a) Nine West Group 5,500 147
(a) Outdoor Systems, Inc. 2,925 82
(a) Outsource International 2,800 25
(a) Pacific Sunwear of
California 1,200 42
(a) Preview Travel, Inc. 500 17
Sears, Roebuck & Co. 1,900 116
(a) Tommy Hilfiger Corp. 1,500 94
Tower Automotive, Inc. 300 13
(a) Trammell Crow Co. 2,600 87
Wal-Mart Stores, Inc. 3,000 182
Walt Disney Co. 1,000 105
-----------------------------------------------------
2,521
- ----------------------------------------------------------
CONSUMER DURABLES--1.0%
- ----------------------------------------------------------
BBA Group, PLC 5,180 39
Ford Motor Co. 1,800 106
Honda Motor Co., Ltd. 1,100 39
Magna International, Inc.,
"A" 600 41
U.S. Industries 2,850 71
-----------------------------------------------------
296
</TABLE>
69
<PAGE> 71
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
CONSUMER STAPLES--9.8%
- ----------------------------------------------------------
<S> <C> <C>
(a) American Italian Pasta Co. 2,000 $ 74
Avon Products 2,000 155
Coca Cola Co. 1,700 145
ConAgra 5,000 158
Corn Products International 500 17
(a) Emmis Broadcasting Corp. 800 38
Femsa "B" Fomento Economico
Mexicano, S.A 1,240 39
Kimberly-Clark de Mexico,
S.A. de C.V. 15,400 54
Koninklijke Ahold, N.V. 7,998 257
(a) Lone Star Steakhouse &
Saloon 1,340 19
(a) MSC Industrial Direct 2,800 80
McDonald's Corp. 3,600 248
NBTY, Inc. 10,600 195
Newell Co. 3,200 159
Ocular Sciences, Inc. 200 7
PepsiCo 4,500 185
Philip Morris Cos. 11,000 433
Procter & Gamble Co. 1,500 137
Swisher International Group,
Inc. 1,500 12
UST, Inc. 6,200 167
Universal Corp. 5,000 187
Wendy's International, Inc. 1,400 33
(a) Whole Foods Market 1,000 61
-----------------------------------------------------
2,860
- ----------------------------------------------------------
ENERGY--3.5%
- ----------------------------------------------------------
AMOCO Corp. 1,200 50
Atlantic Richfield Co. 1,100 86
Atmos Energy Corp. 600 18
British Petroleum 12,586 184
Chevron Corp. 500 42
Columbia Gas System 450 25
Elf Aquitaine 1,128 159
Exxon Corp. 1,200 86
Giant Industries 1,110 19
KCS Energy 780 9
Petro-Canada 2,300 37
(a) R & B Falcon Corp. 4,500 102
Repsol, S.A. 820 45
Royal Dutch Petroleum Co. 1,396 77
TNP Enterprises, Inc. 700 22
(a) Tesoro Petroleum Corp. 1,190 19
YPF Sociedad Anonima 900 27
-----------------------------------------------------
1,007
- ----------------------------------------------------------
FINANCE--18.5%
- ----------------------------------------------------------
AXA-UAP, S.A. 2,000 225
AEGON, N.V. 2,900 252
Ambac Financial Group, Inc. 2,000 117
American General Corp. 1,000 71
AmerUS Life Holdings, Inc. 2,200 71
Associates First Capital
Corp. 471 36
BB&T Corp. 2,000 135
Banc One Corp. 770 43
Banco Bilbao Vizcaya, S.A. 1,801 93
Banco Popular Espanol 880 75
BankAmerica Corp. 400 35
Bank of Ireland 5,472 112
Bankers Trust New York Corp. 200 23
Bear Stearns Cos. 1,600 91
Chase Manhattan Corp. 800 60
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
CITIC Pacific, Ltd. 6,500 $ 11
Commercial Federal Corp. 1,650 52
Compass Bancshares 610 28
Del Webb Corp. 1,230 32
Excel Legacy Corp. 265 1
Excel Realty Trust, Inc. 765 22
Executive Risk 300 22
Federal Home Loan Mortgage
Corp. 5,900 278
Federal National Mortgage
Association 4,500 273
(a) Financial Federal Corp. 4,400 118
First Chicago NBD Corp. 200 18
First Union Corp. 1,640 96
Fleet Financial Group, Inc. 300 25
General Re Corp. 300 76
Golden West Financial Corp. 400 43
H.F. Ahmanson & Co. 1,300 92
HSBC Holdings, PLC 3,644 89
Hartford Financial Services 1,100 126
Hibernia Corp. 6,000 121
ING Groep, N.V. 2,820 185
Imperial Credit Commercial
Mortgage Investment 1,900 25
Imperial Credit Industries 1,035 24
Jefferson-Pilot Corp. 825 48
Kansas City Southern
Industries 600 30
KeyCorp 600 21
LaSalle Partners 1,200 53
MGIC Investment Corp. 1,600 91
Merrill Lynch & Co. 1,700 157
Morgan Stanley, Dean Witter,
Discover & Co. 2,000 183
NationsBank Corp. 3,262 250
PNC Bank Corp., N.A. 800 43
PennCorp Financial Group 720 15
Philips International Realty
Corp. 1,500 25
Protective Life Insurance
Co. 1,700 62
Republic New York Corp. 500 31
Resource Bancshares Mortgage
Group 1,890 35
Safeco Corp. 2,000 91
St. George Bank 41,000 266
Texas Regional Bankshares 1,650 54
Torchmark Corp. 2,100 96
Travelers Group 2,200 133
Union Bank of Switzerland 800 297
(a) UniCapital Corp. 4,200 80
(a) United Panam Financial Corp. 4,700 48
Vedior, N.V. 1,130 32
Wells Fargo & Co. 100 37
-----------------------------------------------------
5,374
- ----------------------------------------------------------
HEALTH CARE--10.0%
- ----------------------------------------------------------
Abbott Laboratories 3,000 123
(a) ALZA Corp. 4,900 212
American Home Products Corp. 4,400 228
Astra, A.B., ADR 3,366 69
Bergen Brunswig Corp. 3,000 139
Bristol-Myers Squibb Co. 800 92
(a) British Biotech, PLC 5,110 3
C.R. Bard 1,300 49
CVS Corp. 1,812 71
</TABLE>
70
<PAGE> 72
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
HEALTH CARE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
(a) CONMED Corp. 1,270 $ 29
Eli Lilly & Co. 2,000 132
(a) First Health Group Corp. 2,900 83
General Nutrition 2,000 62
(a) Genesis Health Ventures 1,000 25
Glaxo Wellcome, PLC 2,194 66
(a) Hanger Orthopedic Group,
Inc. 8,900 181
Health Care Property
Investors, Inc. 400 14
Herbalife International 1,000 21
(a) Hologic, Inc. 1,100 20
Johnson & Johnson 1,200 89
McKesson Corp. 800 65
Merck & Co. 1,200 161
Novartis 21 35
Omnicare, Inc. 2,900 111
(a) Province Healthcare Co. 4,100 114
Roche Holding, A.G. 50 49
(a) Safeskin Corp. 1,800 74
Schering-Plough Corp. 2,000 183
(a) Sofamor-Danek Group 600 52
Stryker Corp. 3,000 115
(a) Tenet Healthcare Corp. 2,500 78
United Healthcare Corp. 2,000 127
Zeneca Group, PLC 1,115 48
-----------------------------------------------------
2,920
- ----------------------------------------------------------
TECHNOLOGY--13.2%
- ----------------------------------------------------------
AMP, Inc. 1,800 62
Advanced Fibre
Communications 700 28
(a) AirTouch Communications 1,500 88
(a) American Tower Corp. 13,100 327
(a) Applied Materials, Inc. 4,900 144
Artesyn Technologies 500 8
(a) Atmel Corp. 6,500 89
(a) Bay Networks 5,000 161
CHS Electronics 500 9
Canon, Inc. 900 20
(a) Cisco Systems 3,300 304
Compaq Computer Corp. 7,150 203
(a) Computer Sciences Corp. 2,800 179
(a) Comverse Technology 100 5
Diebold 3,500 101
Fuji Photo Film Co., Ltd. 1,000 35
(a) Gartner Group, "A" 400 14
Getronics 1,050 54
(a) HMT Technology Corp. 1,600 13
Hewlett-Packard Co. 900 54
(a) ITT Educational Services 7,500 242
Intel Corp. 3,200 237
(a) Learning Co. 850 25
Linear Technology Corp. 3,000 181
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
(a) Microchip Technology 3,000 $ 78
(a) National Semiconductor Corp. 10,000 132
(a) Novellus Systems 1,800 64
Pittway Corp. 100 7
(a) Quantum Corp. 2,400 50
Reynolds & Reynolds Co. 6,300 115
(a) Sanmina Corp. 450 20
Saville Systems, PLC 600 30
(a) Seagate Technology 1,500 36
(a) Sun Microsystems 5,000 217
Telecom Italia, S.p.A 2,700 20
(a) Teradyne, Inc. 3,700 99
(a) 3Com Corp. 4,150 127
(a) VLSI Technology 5,000 84
(a) Western Digital Corp. 14,100 167
-----------------------------------------------------
3,829
- ----------------------------------------------------------
TRANSPORTATION--.2%
- ----------------------------------------------------------
FDX Corporate Holding Co. 500 31
(a) Wisconsin Central
Transportation Corp. 1,200 26
-----------------------------------------------------
57
- ----------------------------------------------------------
UTILITIES--3.4%
- ----------------------------------------------------------
GTE Corp. 1,200 67
(a) Jones Intercable, Inc. 1,435 36
(a) McLeodUSA, Inc. 2,500 97
Praxair, Inc. 700 33
Telebras, S.A. 1,200 131
Telecom Italia Mobile 33,915 207
Telefonica de Espana, S.A. 1,830 85
(a) WorldCom, Inc. 7,100 344
-----------------------------------------------------
1,000
-----------------------------------------------------
TOTAL COMMON STOCKS--79.1%
(Cost: $19,862) 23,029
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--3.5%
Yield--4.94% and 5.67%
Due--July 1998
(Cost: $1,030) $1,030 1,030
-----------------------------------------------------
TOTAL INVESTMENTS--102.3%
(Cost: $26,601) 29,778
-----------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(2.3)% (675)
-----------------------------------------------------
NET ASSETS -- 100% $29,103
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER HORIZON 20+ PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $26,601,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $4,046,000, the gross
unrealized depreciation was $869,000 and the net unrealized appreciation on
investments was $3,177,000.
See accompanying Notes to Financial Statements.
71
<PAGE> 73
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 10+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
U.S. TREASURY SECURITIES--35.3%
- ----------------------------------------------------------
<S> <C> <C>
Notes
8.875%, 2000 $ 1,178 $ 1,247
8.50%, 2000 1,970 2,082
6.75%, 2000 970 990
5.50%, 2000 1,700 1,699
8.00%, 2001 1,000 1,064
6.625%, 2001 2,650 2,730
6.50%, 2001 1,045 1,071
5.375%, 2001 1,200 1,196
6.25%, 2002 450 460
7.875%, 2004 750 842
-----------------------------------------------------
13,381
- ----------------------------------------------------------
MORTGAGE BACKED SECURITIES--3.5%
- ----------------------------------------------------------
FNMA 6.01%, 2000 500 503
FHLMC 6.00% 2000 174 174
FHLMC 6.50%, 2014 230 232
GMNA 7.00%, 2015 428 430
-----------------------------------------------------
1,339
-----------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--38.8%
(Cost: $14,712) 14,720
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
BASIC INDUSTRIES--3.2%
- ----------------------------------------------------------
AK Steel Holding Corp. 1,350shs. 24
AMCOL International 2,625 32
Ciba Specialty Chemicals, A.G. 1,300 167
Crown Cork & Seal Co. 500 24
Dow Chemical Co. 600 58
Eastman Chemical Co. 200 12
Georgia-Pacific Corp. 300 18
Global Industrial
Technologies, Inc. 4,500 76
Louisiana-Pacific Corp. 3,000 55
Millennium Chemicals, Inc. 107 4
Nucor Corp. 1,400 64
Pitney Bowes, Inc. 400 19
Rentokil Initial, PLC 15,248 110
Rowan Cos. 7,500 146
(a) Shaw Group 1,600 42
Smith International 2,500 87
Sonoco Products Co. 2,200 67
Technip, S.A. 350 43
Timber Co. 2,700 62
Toray Industries 9,000 47
Union Camp Corp. 500 25
(a) Wyman-Gordon Co. 600 12
-----------------------------------------------------
1,194
- ----------------------------------------------------------
CAPITAL GOODS--4.8%
- ----------------------------------------------------------
Applied Industrial
Technologies 1,050 22
Blount International, "A" 2,180 62
(a) Cooper Cameron Corp. 1,500 77
Elcor Corp. 800 20
Emerson Electric Co. 1,200 72
General Electric Co. 4,300 391
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
CAPITAL GOODS--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Mannesmann, A.G. 850 $ 87
Minnesota Mining &
Manufacturing 400 33
Murata Manufacturing 1,000 32
(a) Philips Electronics, N.V. 1,300 111
Raytheon Co. 900 53
Sony Corp. 800 69
Superior Services 1,100 33
(a) Sylvan Learning Systems, Inc. 7,400 242
Trinity Industries 830 34
Tyco International, Ltd. 2,000 126
(a) U.S. Filter Corp. 4,100 115
VIAG, A.G. 280 193
Xerox Corp. 600 61
-----------------------------------------------------
1,833
- ----------------------------------------------------------
CONSUMER CYCLICALS--6.9%
- ----------------------------------------------------------
Albany International Corp. 100 2
American Greetings Corp. 2,100 107
(a) AutoZone, Inc. 2,300 73
Borg Warner Automotive, Inc. 640 31
(a) Bright Horizons Children's
Center, Inc. 2,100 59
Brown Group, Inc. 2,000 40
Carnival Corp. 3,600 143
Carrefour, S.A. 81 51
Cinar Films, Inc. 2,700 53
Columbia Sportswear Co. 800 15
(a) Consolidated Graphics, Inc. 1,550 91
Dillard Department Stores 1,800 75
(a) Education Management Corp. 800 26
Flowserve Corp. 1,440 35
Four Seasons Hotels, Inc. 1,600 56
(a) Friedman's, Inc. 1,985 33
(a) Hearst-Argyle Television, Inc. 1,200 48
Home Depot 1,400 116
Hudson's Bay Co. 3,375 77
Kimberly-Clark Corp. 1,000 46
(a) MGM Grand 2,600 82
May Department Stores Co. 300 20
(a) Men's Wearhouse 1,950 64
Meredith Corp. 400 19
(a) Neiman-Marcus Group 2,000 87
NIKE 3,000 146
(a) Nine West Group 4,000 107
(a) Outdoor Systems, Inc. 3,675 103
(a) Outsource International 3,900 35
(a) Pacific Sunwear of California 600 21
(a) Preview Travel, Inc. 500 17
Sears, Roebuck & Co. 2,200 134
(a) Tommy Hilfiger Corp. 1,800 113
Tower Automotive, Inc. 800 34
(a) Trammell Crow Co. 3,900 130
V.F. Corp. 600 31
Wal-Mart Stores, Inc. 2,000 122
Walt Disney Co. 1,100 116
Wendy's International, Inc. 1,500 35
-----------------------------------------------------
2,593
</TABLE>
72
<PAGE> 74
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
CONSUMER DURABLES--.8%
- ----------------------------------------------------------
<S> <C> <C>
BBA Group, PLC 6,044 $ 46
Ford Motor Co. 2,000 118
Honda Motor Co., Ltd. 1,300 46
Magna International, Inc., "A" 600 41
U.S. Industries 2,250 56
-----------------------------------------------------
307
- ----------------------------------------------------------
CONSUMER STAPLES--5.7%
- ----------------------------------------------------------
(a) American Italian Pasta Co. 900 34
Coca Cola Co. 800 68
ConAgra 6,000 190
(a) Corn Products International 1,100 37
(a) Emmis Broadcasting Corp. 700 33
Femsa "B" Fomento Economico
Mexicano, S.A. 1,740 54
Imperial Tobacco Group, ADR 375 5
Kimberly-Clark de Mexico, S.A.
de C.V. 17,600 62
Koninklijke Ahold, N.V. 4,400 141
(a) Lone Star Steakhouse & Saloon 1,950 27
(a) MSC Industrial Direct 1,200 34
McDonald's Corp. 2,700 186
(a) NBTY, Inc. 11,200 206
Newell Co. 2,000 100
Ocular Sciences, Inc. 500 16
PepsiCo 2,000 82
Philip Morris Cos. 8,500 335
Procter & Gamble Co. 1,300 118
(a) Swisher International Group,
Inc. 2,200 18
UST, Inc. 6,000 162
Universal Corp. 5,500 206
(a) Whole Foods Market 1,000 61
-----------------------------------------------------
2,175
- ----------------------------------------------------------
ENERGY--3.2%
- ----------------------------------------------------------
AMOCO Corp. 2,100 87
Atlantic Richfield Co. 1,100 86
Atmos Energy Corp. 900 27
British Petroleum 17,083 249
Chevron Corp. 400 33
Columbia Gas System 750 42
Elf Aquitaine 1,439 202
Enron Corp. 800 43
Exxon Corp. 900 64
Giant Industries 1,620 28
KCS Energy 1,170 13
Petro-Canada 4,925 80
(a) R&B Falcon Corp. 3,000 68
Repsol, S.A. 960 53
Royal Dutch Petroleum Co. 1,534 85
TNP Enterprises, Inc. 900 28
(a) Tesoro Petroleum Corp. 1,760 28
-----------------------------------------------------
1,216
- ----------------------------------------------------------
FINANCE--13.7%
- ----------------------------------------------------------
AXA-UAP, S.A. 1,100 124
AEGON, N.V. 3,000 261
Ambac Financial Group, Inc. 1,500 88
American General Corp. 1,000 71
AmerUS Life Holdings, Inc. 2,700 87
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Associates First Capital Corp. 524 $ 40
Banc One Corp. 989 55
Banco Bilbao Vizcaya 2,166 111
Banco Popular Espanol 941 80
BankAmerica Corp. 400 35
Bank of Ireland 4,833 99
Bankers Trust New York Corp. 400 46
Bear Stearns Cos. 1,400 80
CITIC Pacific, Ltd. 13,500 24
Commercial Federal Corp. 1,850 59
Compass Bancshares 900 41
Del Webb Corp. 1,800 47
Excel Legacy Corp. 420 1
Excel Realty Trust, Inc. 1,120 32
Executive Risk 400 30
Federal Home Loan Mortgage
Corp. 5,900 278
Federal National Mortgage
Association 4,700 286
(a) Financial Federal Corp. 3,200 86
First Chicago NBD Corp. 500 44
First Union Corp. 1,560 91
Fleet Financial Group, Inc. 200 17
General Re Corp. 500 127
H.F. Ahmanson & Co. 1,300 92
HSBC Holdings, PLC 4,855 119
Hartford Financial Services 600 69
Hibernia Corp. 4,000 81
ING Groep, N.V. 3,287 215
Imperial Credit Commercial
Mortgage Investment 2,600 34
Imperial Credit Industries 1,490 35
Jefferson-Pilot Corp. 750 43
Kansas City Southern
Industries 600 30
KeyCorp 400 14
LaSalle Partners 500 22
MGIC Investment Corp. 1,400 80
Merrill Lynch & Co. 1,100 101
Morgan Stanley, Dean Witter,
Discover & Co. 1,000 91
NationsBank Corp. 2,912 223
PNC Bank Corp., N.A. 900 48
PennCorp Financial Group 1,050 22
Philips International Realty
Corp. 2,200 36
Protective Life Insurance Co. 1,500 55
Republic New York Corp. 400 25
Resource Bancshares Mortgage
Group 2,656 49
Safeco Corp. 1,700 77
St. George Bank 48,800 316
Texas Regional Bancshares 2,350 77
Torchmark Corp. 2,100 96
Travelers Group 3,000 182
Union Bank of Switzerland 1,000 372
(a) UniCapital Corp. 4,900 94
(a) United Panam Financial Corp. 4,700 48
Vedior, N.V. 2,014 57
Wells Fargo & Co. 100 37
-----------------------------------------------------
5,180
</TABLE>
73
<PAGE> 75
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
HEALTH CARE--7.9%
- ----------------------------------------------------------
<S> <C> <C>
Abbott Laboratories 2,400 $ 98
(a) ALZA Corp. 4,400 190
American Home Products Corp. 5,600 290
Astra, A.B., ADR 5,400 111
Bristol-Myers Squibb Co. 1,700 195
British Biotech, PLC 8,148 5
C.R. Bard 1,000 38
CVS Corp. 810 32
(a) CONMED Corp. 1,850 43
Eli Lilly & Co. 2,000 132
(a) First Health Group Corp. 2,900 83
General Nutrition 2,000 62
(a) Genesis Health Ventures 1,400 35
Glaxo Wellcome, PLC 2,521 76
(a) Hanger Orthopedic Group 8,700 177
Health Care Property
Investors, Inc. 500 18
Herbalife International 1,500 31
(a) Hologic, Inc. 1,600 29
McKesson Corp. 700 57
Merck & Co. 1,300 174
Novartis 31 52
Omnicare, Inc. 2,900 111
(a) Province Healthcare Co. 4,100 114
(a) R.P. Scherer Corp. 800 71
Roche Holding, A.G. 7 69
(a) Safeskin Corp. 1,800 74
Schering-Plough Corp. 2,500 229
(a) Sofamor-Danek Group 800 69
Stryker Corp. 3,500 134
United Healthcare Corp. 1,900 121
Zeneca Group, PLC 1,466 63
-----------------------------------------------------
2,983
- ----------------------------------------------------------
TECHNOLOGY--10.7%
- ----------------------------------------------------------
AMP, Inc. 1,900 65
Advanced Fibre Communications 800 32
(a) AirTouch Communications 2,000 117
American Tower Corp. 13,900 347
(a) Applied Materials, Inc. 4,300 127
Artesyn Technologies 1,600 26
(a) Atmel Corp. 7,000 95
(a) Bay Networks 5,000 161
CHS Electronics 1,500 27
Canon, Inc. 1,700 39
(a) Cisco Systems 3,600 330
Compaq Computer Corp. 6,350 180
(a) Computer Sciences Corp. 2,940 188
(a) Comverse Technology 300 16
Diebold 4,100 118
Fuji Photo Film Co., Ltd. 1,000 35
(a) Gartner Group, "A" 400 14
Getronics 1,230 64
(a) HMT Technology Corp. 2,300 19
Hewlett-Packard Co. 800 48
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
(a) ITT Educational Services 7,500 $ 242
Intel Corp. 3,300 245
(a) Learning Co. 1,200 36
Linear Technology Corp. 3,300 199
(a) Microchip Technology 3,300 86
(a) National Semiconductor Corp. 8,500 112
(a) Novellus Systems 2,100 75
Pittway Corp. 200 15
(a) Quantum Corp. 4,600 95
Reynolds & Reynolds Co. 6,500 118
(a) Sanmina Corp. 400 17
Saville Systems, PLC 300 15
(a) Seagate Technology 1,500 36
Star Telecommunications 3,000 67
(a) Sun Microsystems 4,100 178
Telecom Italia, S.p.A 18,600 137
(a) Teradyne, Inc. 4,000 107
(a) 3Com Corp. 4,025 124
(a) VLSI Technology 5,000 84
(a) Western Digital Corp. 1,900 22
-----------------------------------------------------
4,058
- ----------------------------------------------------------
TRANSPORTATION--.2%
- ----------------------------------------------------------
FDX Corporate Holding Co. 500 31
(a) Wisconsin Central
Transportation Corp. 1,700 37
-----------------------------------------------------
68
- ----------------------------------------------------------
UTILITIES--2.5%
- ----------------------------------------------------------
GTE Corp. 1,200 67
(a) Jones Intercable, Inc. 2,080 52
(a) McLeodUSA, Inc. 2,500 97
Praxair, Inc. 700 33
Telebras 1,600 175
Telecom Italia Mobile 27,820 170
Telefonica de Espana, S.A. 2,194 102
(a) WorldCom, Inc. 5,500 266
-----------------------------------------------------
962
-----------------------------------------------------
TOTAL COMMON STOCKS--59.6%
(Cost: $19,650) 22,569
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--.1%
Yield--4.94%
Due--July 1998
(Cost: $30) $ 30 30
-----------------------------------------------------
TOTAL INVESTMENTS--98.5%
(Cost: $34,392) 37,319
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.5% 579
-----------------------------------------------------
NET ASSETS--100% $37,898
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER HORIZON 10+ PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $34,392,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $4,033,000, the gross
unrealized depreciation was $1,106,000 and the net unrealized appreciation on
investments was $2,927,000.
See accompanying Notes to Financial Statements.
74
<PAGE> 76
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 5 PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
U. S. TREASURY SECURITIES--54.9%
- ----------------------------------------------------------
<S> <C> <C>
Notes
8.875%, 2000 $ 1,470 $ 1,557
8.50%, 2000 1,750 1,864
6.75%, 2000 1,249 1,275
5.875%, 2000 340 342
5.50%, 2000 300 300
8.00%, 2001 573 610
6.625%, 2001 2,550 2,626
6.50%, 2001 2,170 2,225
5.375%, 2001 1,000 996
6.25%, 2002 600 614
7.875%, 2004 650 730
-----------------------------------------------------
13,139
- ----------------------------------------------------------
MORTGAGE BACKED SECURITIES--4.1%
- ----------------------------------------------------------
FNMA 6.01%, 2000 350 352
FHLMC 6.00%, 2006 105 105
FHLMC 6.50%, 2014 141 142
GMNA 7.00%, 2015 394 396
-----------------------------------------------------
995
-----------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--59.0%
(Cost: $14,134) 14,134
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
BASIC INDUSTRIES--2.1%
- ----------------------------------------------------------
AK Steel Holding Corp. 430shs. 8
AMCOL International 960 12
Ciba Specialty Chemicals,
A.G. 600 77
Crown Cork & Seal Co. 200 9
Dow Chemical Co. 200 19
Eastman Chemical Co. 100 6
Georgia-Pacific Corp. 100 6
Louisiana-Pacific Corp. 1,300 24
Nucor Corp. 500 23
Pitney Bowes, Inc. 200 10
Rentokil Initial, PLC 3,200 23
Rowan Cos. 5,500 107
(a) Shaw Group 600 16
Smith International 2,000 70
Sonoco Products Co. 880 27
Technip, S.A. 169 21
Timber Co. 1,200 28
Toray Industries 1,500 8
Union Camp Corp. 200 10
(a) Wyman-Gordon Co. 200 4
-----------------------------------------------------
508
- ----------------------------------------------------------
CAPITAL GOODS--3.5%
- ----------------------------------------------------------
Applied Industrial
Technologies 600 12
Blount International, "A" 800 23
(a) Cooper Cameron Corp. 500 25
Elcor Corp. 200 5
Emerson Electric Co. 500 30
General Electric Co. 1,900 173
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
CAPITAL GOODS--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Mannesmann, A.G. 420 $ 43
Minnesota Mining &
Manufacturing 200 16
Murata Manufacturing 700 23
(a) Philips Electronics, N.V. 700 60
Raytheon Co. 400 24
Sony Corp. 400 34
Star Telecommunications,
Inc. 2,400 54
Superior Services 300 9
(a) Sylvan Learning Systems,
Inc. 2,200 72
Trinity Industries 290 12
Tyco International, Ltd. 1,000 63
(a) U.S. Filter Corp. 2,000 56
VIAG, A.G. 110 76
Xerox Corp. 250 25
-----------------------------------------------------
835
- ----------------------------------------------------------
CONSUMER CYCLICALS--4.8%
- ----------------------------------------------------------
American Greetings Corp. 800 41
(a) AutoZone, Inc. 1,100 35
Borg-Wagner Automotive, Inc. 240 12
(a) Bright Horizons Children's
Center, Inc. 1,300 36
Brown Group, Inc. 730 15
Carnival Corp. 1,600 63
Carrefour, S.A. 38 24
Columbia Sportswear Co. 300 6
(a) Consolidated Graphics, Inc. 650 38
Dillard Department Stores 700 29
(a) Education Management Corp. 500 16
Flowserve Corp. 519 13
Four Seasons Hotels, Inc. 1,200 42
(a) Friedman's, Inc. 740 12
(a) Hearst-Argyle Television,
Inc. 500 20
Hudson's Bay Co. 1,550 36
Kimberly-Clark Corp. 500 23
(a) MGM Grand 1,000 32
May Department Stores Co. 200 13
(a) Men's Wearhouse 750 25
Meredith Corp. 200 9
(a) Neiman-Marcus Group 1,600 69
NIKE 1,500 73
(a) Nine West Group 2,000 54
(a) Outdoor Systems, Inc. 1,425 40
(a) Outsource International 2,500 23
(a) Pacific Sunwear of
California 450 16
(a) Preview Travel, Inc. 200 7
Sears, Roebuck & Co. 1,000 61
(a) Tommy Hilfiger Corp. 500 31
Tower Automotive, Inc. 500 21
(a) Trammell Crow Co. 2,500 84
V.F. Corp. 200 10
Wal-Mart Stores, Inc. 1,000 61
Walt Disney Co. 500 53
Wendy's International, Inc. 600 14
-----------------------------------------------------
1,157
</TABLE>
75
<PAGE> 77
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
CONSUMER DURABLES--.6%
- ----------------------------------------------------------
<S> <C> <C>
BBA Group, PLC 2,440 $ 18
Ford Motor Co. 900 53
Honda Motor Co., Ltd. 600 21
Magna International, Inc.,
"A" 200 14
U.S. Industries 1,000 25
-----------------------------------------------------
131
- ----------------------------------------------------------
CONSUMER STAPLES--4.1%
- ----------------------------------------------------------
(a) American Italian Pasta Co. 600 22
Avon Products 500 39
ConAgra 2,500 79
(a) Corn Products International 500 17
(a) Emmis Broadcasting Corp. 400 19
Femsa "B" Fomento Economico
Mexicano, S.A. 460 14
Kimberly-Clark de Mexico,
S.A. de C.V. 9,900 35
Koninklijke Ahold, N.V. 988 32
(a) Lone Star Steakhouse &
Saloon 705 10
(a) MSC Industrial Direct 400 11
McDonald's Corp. 1,400 97
(a) NBTY, Inc. 6,600 121
Newell Co. 1,300 65
Ocular Sciences, Inc. 100 3
PepsiCo 1,700 70
Philip Morris Cos. 3,700 146
Procter & Gamble Co. 400 36
(a) Swisher International Group,
Inc. 800 6
UST, Inc. 2,000 54
Universal Corp. 2,900 108
-----------------------------------------------------
984
- ----------------------------------------------------------
ENERGY--2.3%
- ----------------------------------------------------------
AMOCO Corp. 1,000 42
Atlantic Richfield Co. 500 39
Atmos Energy Corp. 320 10
British Petroleum 10,756 157
Chevron Corp. 300 25
Columbia Gas System 150 8
Elf Aquitaine 763 107
Exxon Corp. 500 36
Giant Industries 590 10
KCS Energy 420 5
Petro-Canada 1,600 26
Repsol, S.A. 390 21
Royal Dutch Petroleum Co. 636 35
TNP Enterprises, Inc. 300 9
(a) Tesoro Petroleum Corp. 650 10
-----------------------------------------------------
540
- ----------------------------------------------------------
FINANCE--8.7%
- ----------------------------------------------------------
AXA-UAP, S.A. 515 58
AEGON, N.V. 1,400 122
American General Corp. 300 21
AmerUS Life Holdings, Inc. 500 16
Associates First Capital
Corp. 235 18
Banc One Corp. 329 18
Banco Popular Espanol 170 15
BankAmerica Corp. 200 17
Bank of Ireland 3,452 71
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
Bankers Trust New York Corp. 100 $ 12
Bear Stearns Cos. 400 23
CITIC Pacific, Ltd. 6,000 11
Commercial Federal Corp. 700 22
Compass Bancshares 320 14
Del Webb Corp. 650 17
Excel Legacy Corp. 110 1
Excel Realty Trust, Inc. 410 12
Executive Risk 200 15
Federal Home Loan Mortgage
Corp. 2,600 122
Federal National Mortgage
Association 2,100 128
(a) Financial Federal Corp. 2,100 56
First Chicago NBD Corp. 200 18
First Union Corp. 620 36
General Re Corp. 200 51
H.F. Ahmanson & Co. 600 43
HSBC Holdings, PLC 814 20
Hartford Financial Services 300 34
Hibernia Corp. 1,500 30
ING Groep, N.V. 2,051 134
Imperial Credit Commercial
Mortgage Investment 900 12
Imperial Credit Industries 550 13
Jefferson-Pilot Corp. 375 22
Kansas City Southern
Industries 300 15
KeyCorp 400 14
LaSalle Partners 300 13
MGIC Investment Corp. 500 29
Merrill Lynch & Co. 200 18
Morgan Stanley, Dean Witter,
Discover & Co. 500 46
NationsBank Corp. 887 68
PNC Bank Corp., N.A. 500 27
PennCorp Financial Group 380 8
Philips International Realty
Corp. 800 13
Protective Life Insurance
Co. 600 22
Republic New York Corp. 100 6
Resource Bancshares Mortgage
Group 945 18
Safeco Corp. 1,000 45
St. George Bank 24,400 158
Texas Regional Bankshares 1,650 54
Torchmark Corp. 700 32
Travelers Group 1,300 79
Union Bank of Switzerland 490 182
(a) UniCapital Corp. 1,200 23
Vedior, N.V. 455 13
-----------------------------------------------------
2,085
- ----------------------------------------------------------
HEALTH CARE--5.1%
- ----------------------------------------------------------
Abbott Laboratories 1,200 49
(a) ALZA Corp. 2,000 86
American Home Products Corp. 2,000 103
Astra, A.B., ADR 1,600 33
Bristol-Myers Squibb Co. 300 34
(a) British Biotech, PLC 3,550 2
C.R. Bard 300 11
CVS Corp. 428 17
</TABLE>
76
<PAGE> 78
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
HEALTH CARE--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
(a) CONMED Corp. 685 $ 16
Eli Lilly & Co. 300 20
(a) First Health Group Corp. 1,000 28
General Nutrition 1,000 31
(a) Genesis Health Ventures 500 12
Glaxo Wellcome, PLC 1,225 37
(a) Hanger Orthopedic Group 4,600 94
Health Care Property
Investors, Inc. 200 7
Herbalife International 500 10
(a) Hologic, Inc. 500 9
McKesson Corp. 500 41
Merck & Co. 500 67
Novartis 14 23
Omnicare, Inc. 1,700 65
(a) Province Healthcare Co. 2,500 69
Roche Holding, A.G. 30 30
(a) Safeskin Corp. 1,000 41
Schering-Plough Corp. 700 64
(a) Sofamor-Danek Group 300 26
Stryker Corp. 2,500 96
United Healthcare Corp. 1,000 64
Zeneca Group, PLC 780 33
-----------------------------------------------------
1,218
- ----------------------------------------------------------
TECHNOLOGY--7.0%
- ----------------------------------------------------------
AMP, Inc. 800 27
Advanced Fibre
Communications 500 20
(a) American Tower Corp. 5,300 132
(a) Applied Materials, Inc. 2,000 59
Artesyn Technologies 1,000 16
(a) Bay Networks 1,000 32
CHS Electronics 1,000 18
Canon, Inc. 400 9
(a) Cisco Systems 1,650 152
Compaq Computer Corp. 3,200 91
(a) Computer Sciences Corp. 1,400 90
(a) Comverse Technology 200 10
Diebold 1,700 49
Fuji Photo Film Co., Ltd. 2,000 70
(a) Gartner Group, "A" 200 7
Getronics 480 25
(a) HMT Technology Corp. 800 7
Hewlett-Packard Co. 300 18
(a) ITT Educational Services 1,100 35
Intel Corp. 1,400 104
(a) Learning Co. 470 14
Linear Technology Corp. 1,600 97
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
<S> <C> <C>
(a) Microchip Technology 1,700 $ 44
(a) National Semiconductor Corp. 4,000 53
(a) Novellus Systems 800 29
Pittway Corp. 100 7
(a) Quantum Corp. 1,400 29
Reynolds & Reynolds Co. 3,100 56
(a) Sanmina Corp. 150 7
Saville Systems, PLC 300 15
(a) Seagate Technology 600 14
(a) Sun Microsystems 2,300 100
Telecom Italia, S.p.A. 13,000 96
(a) Teradyne, Inc. 1,800 48
(a) 3Com Corp. 1,700 52
(a) VLSI Technology 2,000 34
(a) Western Digital Corp. 1,200 14
-----------------------------------------------------
1,680
- ----------------------------------------------------------
TRANSPORTATION--.1%
- ----------------------------------------------------------
FDX Corporate Holding Co. 200 13
(a) Wisconsin Central
Transportation Corp. 600 13
-----------------------------------------------------
26
- ----------------------------------------------------------
UTILITIES--2.1%
- ----------------------------------------------------------
GTE Corp. 600 33
(a) Jones Intercable, Inc. 750 19
(a) McLeodUSA, Inc. 1,500 58
Praxair, Inc. 300 14
Telebras, S.A. 800 87
Telecom Italia Mobile 17,180 105
Telefonica de Espana, S.A. 883 41
(a) WorldCom, Inc. 3,000 145
-----------------------------------------------------
502
-----------------------------------------------------
TOTAL COMMON STOCKS--40.4%
(Cost: $8,502) 9,666
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--.1%
Yield--4.94%
Due--July 1998
(Cost: $30) $ 30 30
-----------------------------------------------------
TOTAL INVESTMENTS--99.5%
(Cost: $22,666) 23,830
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.5% 115
-----------------------------------------------------
NET ASSETS--100% $23,945
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER HORIZON 5 PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $22,666,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $1,618,000, the gross
unrealized depreciation was $454,000 and the net unrealized appreciation on
investments was $1,164,000.
See accompanying Notes to Financial Statements.
77
<PAGE> 79
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER BLUE CHIP PORTFOLIO
Portfolio of Investments at June 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
CORPORATE OBLIGATION--.3%
- ----------------------------------------------------------
<S> <C> <C>
ALZA Corp., 5.00%, 5/1/06 $ 100 $ 128
(Cost: $99)
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
CONSUMER DISCRETIONARY--6.5%
- ----------------------------------------------------------
CVS Corp., convertible
preferred 5,000shs. 382
(a) Consolidated Stores Corp. 11,600 420
J.C. Penney Co., Inc. 9,500 687
May Department Stores Co. 5,000 327
Mirage Resorts, Inc. 18,000 384
Newell Co. 7,000 349
(a) Proffitt's, Inc. 8,000 323
U.S. Industries 7,750 192
-----------------------------------------------------
3,064
- ----------------------------------------------------------
CONSUMER STAPLES--5.2%
- ----------------------------------------------------------
Dial Corp. 19,700 511
General Mills, Inc. 5,000 342
H.J. Heinz Co. 8,300 466
McCormick & Company, Inc. 16,000 571
Procter & Gamble Co. 6,000 546
-----------------------------------------------------
2,436
- ----------------------------------------------------------
HEALTH CARE--14.3%
- ----------------------------------------------------------
Abbott Laboratories 20,000 817
(a) ALZA Corp. 2,000 86
American Home Products Corp. 12,200 631
Bausch & Lomb, Inc. 12,000 601
Becton, Dickinson & Co. 10,000 776
Bristol-Myers Squibb Co. 1,500 172
Crescendo Pharmaceuticals
Corp. 150 2
Eli Lilly & Co. 10,000 661
(a) HEALTHSOUTH Corp. 4,100 109
McKesson Corp., convertible
preferred 1,000 113
McKesson Corp. 3,400 276
Merck & Co. 5,200 696
Newell Company Health,
convertible preferred 3,000 174
Schering-Plough Corp. 8,000 733
United Healthcare Corp. 5,000 318
(a) Wellpoint Health Networks 8,100 599
-----------------------------------------------------
6,764
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
COMMUNICATIONS--4.7%
- ----------------------------------------------------------
<S> <C> <C>
AT&T Corp. 12,200 $ 697
American Tower Systems Corp.
Class "A" 100 2
Ameritech Corp. 3,000 135
Frontier Corp. 12,000 378
SBC Communications, Inc. 5,800 232
Sprint Corp. 6,000 423
(a) WorldCom, Inc. 7,000 339
-----------------------------------------------------
2,206
- ----------------------------------------------------------
FINANCE--21.5%
- ----------------------------------------------------------
American Express Co. 5,100 581
American General Corp. 9,900 705
Associates First Capital
Corp. 10,000 769
Beneficial Corp. 4,500 689
Boston Properties, Inc. 6,200 214
CIGNA Corp. 11,400 787
Compass Bancshares 5,300 239
Equity Residential Properties
Trust 8,000 379
Federal National Mortgage
Association 10,000 607
First Chicago NBD Corp. 13,000 1,152
First Tennessee National
Corp. 8,300 316
General Growth Properties,
Inc. 2,200 82
Jefferson-Pilot Corp. 7,350 426
Lincoln National Corp. 3,000 274
Mellon Bank Corp. 3,000 209
Morgan Stanley, Dean Witter,
Discover & Co. 6,000 548
NationsBank Corp. 9,000 689
Torchmark Corp. 18,000 824
Travelers Group 7,000 424
Washington Mutual, Inc. 6,300 274
-----------------------------------------------------
10,188
- ----------------------------------------------------------
MEDIA--2.5%
- ----------------------------------------------------------
CBS Corp. 20,000 635
Univision Communication, Inc. 6,600 246
Walt Disney Co. 3,000 315
-----------------------------------------------------
1,196
- ----------------------------------------------------------
SERVICE INDUSTRIES--1.6%
- ----------------------------------------------------------
(a) Gartner Group, "A" 8,000 280
R.R. Donnelley & Sons Co. 10,300 471
-----------------------------------------------------
751
</TABLE>
78
<PAGE> 80
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
DURABLES--3.7%
- ----------------------------------------------------------
<S> <C> <C>
Boeing Co. 1,500 $ 67
Dana Corp. 10,000 535
Federal-Mogul Corp.,
convertible preferred 2,000 148
Federal-Mogul Corp. 3,000 202
Goodyear Tire & Rubber Co. 6,800 438
Owens Illinois, convertible
preferred 6,500 339
-----------------------------------------------------
1,729
- ----------------------------------------------------------
MANUFACTURING--9.0%
- ----------------------------------------------------------
Bowater, Inc. 8,000 378
Emerson Electric Co. 4,600 278
General Electric Co. 4,600 419
Imperial Chemical Industries
PLC (ADR) 7,900 510
Monsanto Co. 10,000 559
PPG Industries 6,000 417
Stanley Works 15,900 661
Temple-Inland, Inc. 300 16
Textron, Inc. 11,100 796
Union Camp Corp. 4,000 199
-----------------------------------------------------
4,233
- ----------------------------------------------------------
TECHNOLOGY--13.8%
- ----------------------------------------------------------
Alcatel Alsthom 15,000 610
(a) Cadence Design System Inc. 10,000 312
(a) Computer Sciences Corp. 8,000 512
(a) Cisco Systems 3,150 290
General Motors Corp., Class H 7,000 330
Hewlett-Packard Co. 10,900 653
International Business
Machines Corp. 6,000 689
Motorola 12,800 673
Raytheon Co. 13,043 752
(a) Seagate Technology 9,000 214
(a) Sterling Commerce, Inc. 6,000 291
(a) Sun Microsystems 12,000 521
(a) Teradyne, Inc. 3,000 80
Texas Instruments, Inc. 10,300 601
-----------------------------------------------------
6,528
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
ENERGY--8.4%
- ----------------------------------------------------------
<S> <C> <C>
Atlantic Richfield Co. 11,000 $ 859
Chevron Corp. 10,800 897
Enron Corp. 10,000 541
Exxon Corp. 8,100 578
Mobil Corp. 5,400 414
Pennzoil Co. 100 5
Texaco, Inc. 11,000 657
-----------------------------------------------------
3,951
- ----------------------------------------------------------
TRANSPORTATION--.3%
- ----------------------------------------------------------
Norfolk Southern Corp. 5,000 149
- ----------------------------------------------------------
UTILITIES--1.0%
- ----------------------------------------------------------
Cincinnati Bell, Inc. 17,200 492
-----------------------------------------------------
TOTAL COMMON STOCKS--92.5%
(Cost: $41,251) 43,687
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--4.75% to 5.85%
Due--July 1998
Federal National Mortgage
Association $3,000 3,000
Other 1,116 1,116
-----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--8.7%
(Cost: $4,166) 4,166
-----------------------------------------------------
TOTAL INVESTMENTS--101.5%
(Cost: $45,516) 47,981
-----------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(1.5)% (738)
-----------------------------------------------------
NET ASSETS--100% $47,243
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER BLUE CHIP PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $45,517,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $3,025,000, the gross
unrealized depreciation was $560,000 and the net unrealized appreciation on
investments was $2,465,000.
See accompanying Notes to Financial Statements.
79
<PAGE> 81
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GLOBAL INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
U.S. DOLLAR
CURRENCY ISSUER PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. DOLLAR--30.3% U.S. Treasury Bonds
7.50%, 2024 275 $ 341
U.S. Treasury Notes
6.375%, 2000 485 491
5.75%, 2003 280 283
5.875%, 2004 285 290
-----------------------------------------------------------------------
1,405
- --------------------------------------------------------------------------------------------------------------------
CANADIAN DOLLAR--19.6% Government of Canada
4.75%, 1999 550 372
7.50%, 2003 185 138
7.00%, 2006 225 170
8.00%, 2027 250 231
-----------------------------------------------------------------------
911
- --------------------------------------------------------------------------------------------------------------------
JAPANESE YEN--11.1% Asian Development Bank
5.00%, 2003 17,000 143
Int'l Bank for Recon. and Dev.
4.75%, 2004 15,000 131
Italian Treasury
5.00%, 2004 14,000 123
Kingdom of Spain
3.10%, 2006 15,000 121
-----------------------------------------------------------------------
518
- --------------------------------------------------------------------------------------------------------------------
NEW ZEALAND DOLLAR--9.8% Federal National Mortgage Association
7.25%, 2001 250 129
New Zealand Government
10.00%, 2002 200 114
8.00%, 2004 380 210
-----------------------------------------------------------------------
453
- --------------------------------------------------------------------------------------------------------------------
IRISH PUNT--9.1% Government of Ireland
8.00%, 2000 75 112
6.50%, 2001 50 73
8.75%, 2012 125 236
-----------------------------------------------------------------------
421
- --------------------------------------------------------------------------------------------------------------------
BRITISH POUND--4.9% Republic of Finland
7.00%, 2000 60 99
United Kingdom
8.00%, 2015 40 84
8.00%, 2021 20 44
-----------------------------------------------------------------------
227
- --------------------------------------------------------------------------------------------------------------------
FRENCH FRANC--4.5% French Treasury
6.75%, 2003 556 102
6.75%, 2004 490 91
6.00%, 2025 80 14
-----------------------------------------------------------------------
207
</TABLE>
80
<PAGE> 82
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
U.S. DOLLAR
CURRENCY ISSUER PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GERMAN MARK--3.7% Federal Republic of Germany
6.875%, 2005 120 $ 75
Government of Ireland
7.25%, 2003 160 99
----------------------------------------------------------------------------
174
- ---------------------------------------------------------------------------------------------------------------------------
ITALIAN LIRA--2.4% Italian Treasury
8.50%, 2004 170,000 113
----------------------------------------------------------------------------
TOTAL INVESTMENTS--95.4%
(Cost: $4,518) 4,429
----------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--4.6% 214
----------------------------------------------------------------------------
NET ASSETS--100% $4,643
----------------------------------------------------------------------------
</TABLE>
NOTES TO KEMPER GLOBAL INCOME PORTFOLIO OF INVESTMENTS
The Portfolio is a non-diversified investment company and may invest a
relatively high percentage of its assets in the obligations of a limited number
of issuers.
Based on the cost of investments of $4,518,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $24,000, the gross
unrealized depreciation was $113,000 and the net unrealized depreciation on
investments was $89,000.
See accompanying Notes to Financial Statements.
81
<PAGE> 83
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER-DREMAN HIGH RETURN
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ----------------------------------------------------------
BANKS--14.3%
- ----------------------------------------------------------
<S> <C> <C>
Banc One Corp. 3,000 $ 167
Bank of New York Corp. 700 42
BankAmerica Corp. 1,000 86
BankBoston Corp. 1,400 78
Bankers Trust New York Corp. 300 35
Crestar Financial Corp. 900 49
First Chicago NBD Corp. 2,600 230
First Union Corp. 3,000 175
Fleet Financial Group, Inc. 1,600 134
J.P. Morgan & Co. 300 35
KeyCorp 3,500 125
NationsBank Corp. 2,700 207
Norwest Corp. 400 15
PNC Bank Corp., N.A. 2,900 156
Republic New York Corp. 200 13
Wells Fargo & Co. 100 37
-----------------------------------------------------
1,584
- ----------------------------------------------------------
COMMUNICATIONS--1.1%
- ----------------------------------------------------------
AT&T Corp. 2,200 126
- ----------------------------------------------------------
CONSUMER DISCRETIONARY--1.9%
- ----------------------------------------------------------
Dayton Hudson Corp. 500 24
Dillard's, Inc. 200 8
(a) Fruit of the Loom, Inc. "A" 300 10
(a) Toys "R" Us, Inc. 6,600 155
Wal-Mart Stores, Inc. 300 18
-----------------------------------------------------
215
- ----------------------------------------------------------
CONSUMER STAPLES --13.7%
- ----------------------------------------------------------
Imperial Tobacco Group, ADR 2,100 30
Philip Morris Cos. 17,900 705
Quaker Oats Co. 400 22
RJR Nabisco Holdings Corp. 13,800 328
UST, Inc. 14,900 402
Universal Corp. 400 15
V.F. Corp. 300 15
-----------------------------------------------------
1,517
- ----------------------------------------------------------
ENERGY--13.1%
- ----------------------------------------------------------
AMOCO Corp. 11,600 483
Atlantic Richfield Co. 5,300 414
ENSCO International, Inc. 3,200 56
(a) Global Marine, Inc. 3,300 62
(a) Noble Drilling Corp. 2,600 63
Texaco, Inc. 5,100 304
Tidewater, Inc. 1,900 63
-----------------------------------------------------
1,445
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
FINANCIAL SERVICES--10.7%
- ----------------------------------------------------------
<S> <C> <C>
American General Corp. 200 $ 14
American International Group 300 44
Associates First Capital Corp. 200 15
Capital One Finance Corp. 1,100 137
Federal Home Loan Mortgage Corp. 6,100 287
Federal National Mortgage
Association 6,100 371
Ohio Casualty Corp. 2,100 93
St. Paul Companies, Inc. 2,200 92
Travelers Group 2,100 127
-----------------------------------------------------
1,180
- ----------------------------------------------------------
HEALTH CARE--2.7%
- ----------------------------------------------------------
Columbia/HCA Healthcare Corp. 4,900 143
(a) Humana, Inc. 2,800 87
(a) Tenet Healthcare Corp. 2,100 66
-----------------------------------------------------
296
- ----------------------------------------------------------
MANUFACTURING--2.2%
- ----------------------------------------------------------
General Electric Co. 600 55
Hanson PLC, Inc. 1,500 45
(a) Philips Electronics N.V., ADR 800 68
Xerox Corp. 700 71
-----------------------------------------------------
239
- ----------------------------------------------------------
UTILITIES--1.5%
- ----------------------------------------------------------
Energy Group PLC, ADR 3,050 170
-----------------------------------------------------
TOTAL COMMON STOCKS--61.2%
(Cost: $6,846) 6,772
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--3.75% to 6.10%
Due--July 1998
Ford Motor Credit $ 200 200
Monte Rose Capital 200 249
U.S. Treasury Bills 2,300 2,290
U.S. West Communications 200 200
Others 400 399
-----------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--30.2%
(Cost: $3,338) 3,338
-----------------------------------------------------
TOTAL INVESTMENTS--91.4%
(Cost: $10,184) 10,110
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--8.6% 952
-----------------------------------------------------
NET ASSETS--100% $11,062
-----------------------------------------------------
</TABLE>
NOTE TO KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $10,184,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $90,000, the gross
unrealized depreciation was $164,000 and the net unrealized depreciation on
investments was $74,000.
See accompanying Notes to Financial Statements.
82
<PAGE> 84
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- -------------------------------------------------------------
<S> <C> <C>
BANKS--56.9%
BankAmerica Corp. 1,900 $ 164
BankBoston Corp. 600 33
Bankers Trust New York Corp. 400 46
Chase Manhattan Corp. 1,900 143
Citicorp 1,800 269
Colonial BancGroup, Inc. 600 19
Corus Bankshares, Inc. 900 36
First Chicago NBD Corp. 3,300 292
First Hawaiian, Inc. 1,700 62
First Union Corp. 3,700 216
Firstar Corp. 1,600 61
Fleet Financial Group, Inc. 1,800 150
H.F. Ahmanson & Co. 700 50
J.P. Morgan & Co. 500 59
KeyCorp 4,100 146
Mellon Bank Corp. 900 63
National Bank of Canada 1,000 20
NationsBank Corp. 3,600 275
North Fork Bancorporation, Inc. 100 2
Norwest Corp. 2,400 90
PNC Bank Corp., N.A. 3,000 161
People's Heritage Financial
Group, Inc. 1,600 38
Popular, Inc. 700 47
Provident Financial Group 700 32
Republic New York Corp. 1,200 76
Summit Bancorp. 1,000 47
SunTrust Banks, Inc. 1,100 89
Washington Federal, Inc. 900 25
Washington Mutual, Inc. 150 7
Wells Fargo & Co. 300 111
-----------------------------------------------------
2,829
- ----------------------------------------------------------
CONSUMER FINANCE--4.4%
American Express Co. 1,500 171
SLM Holding Corp. 1,000 49
-----------------------------------------------------
220
- ----------------------------------------------------------
INSURANCE--20.4%
Allstate Corp. 1,500 138
American International Group,
Inc. 2,200 321
Chubb Corp. 600 48
CIGNA Corp. 700 48
General Re Corp. 300 76
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
INSURANCE--CONTINUED
Jefferson-Pilot Corp. 300 $ 17
Lincoln National Corp. 400 37
Marsh & McLennan Companies, Inc. 8,500 51
Ohio Casualty Corp. 1,900 84
Safeco Corp. 1,100 50
St. Paul Companies, Inc. 2,000 84
Torchmark Corp. 600 27
Transamerica Corp. 300 35
-----------------------------------------------------
1,016
- ----------------------------------------------------------
SERVICE INDUSTRIES--3.6%
Lehman Brothers Holdings, Inc. 300 23
Merrill Lynch & Co. 1,200 111
Raymond James Financial, Inc. 400 12
T. Rowe Price & Associates, Inc. 900 34
-----------------------------------------------------
180
- ----------------------------------------------------------
OTHER FINANCIAL SERVICES COMPANIES--11.2%
- ----------------------------------------------------------
Federal Home Loan Mortgage Corp. 3,900 184
Federal National Mortgage
Association 5,100 310
Golden West Financial Corp. 200 21
Household International 800 40
-----------------------------------------------------
555
-----------------------------------------------------
TOTAL COMMON STOCKS--96.5%
(Cost: $4,700) 4,800
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--3.50% to 6.10%
Due--July 1998
U.S. Treasury Bills $ 300 300
U.S. West Communications 100 100
-----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--8.0%
(Cost: $400) 400
-----------------------------------------------------
TOTAL INVESTMENTS--104.5%
(Cost: $5,159) 5,200
-----------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS--(4.5)% (223)
-----------------------------------------------------
NET ASSETS--100% $4,977
-----------------------------------------------------
</TABLE>
NOTE TO KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $5,159,000 for federal income tax purposes
at June 30, 1998, the gross unrealized appreciation was $116,000, the gross
unrealized depreciation was $75,000 and the net unrealized appreciation on
investments was $41,000.
See accompanying Notes to Financial Statements.
83
<PAGE> 85
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GLOBAL BLUE CHIP PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------
UNITED KINGDOM--.7%
- ----------------------------------------------------------
United Kingdom Treasury
Bond,
8.50%, 7/16/07 $ 3 $ 6
-----------------------------------------------------
- ----------------------------------------------------------
UNITED STATES--6.5%
- ----------------------------------------------------------
U.S. Treasury Bond,
6.375%, 8/15/27 34 37
U.S. Treasury Strip, zero
coupon, 8/15/21 76 20
-----------------------------------------------------
57
-----------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--7.2%
(Cost: $61) 63
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
ARGENTINA--1.7%
- ----------------------------------------------------------
YPF, S.A. 500shs. 15
PETROLEUM COMPANY
-----------------------------------------------------
- ----------------------------------------------------------
AUSTRALIA--1.9%
- ----------------------------------------------------------
Broken Hill Proprietary Co.,
Ltd 300 5
STEEL, MINERALS AND
PETROLEUM EXPLORATION AND
PRODUCTION
Foster's Brewing Group, Ltd. 2 5
LEADING BREWERY
Woodside Petroleum Ltd. 2 7
MAJOR OIL AND GAS PRODUCER
-----------------------------------------------------
17
- ----------------------------------------------------------
BRAZIL--1.6%
- ----------------------------------------------------------
Aracruz Celulose, S.A. 500 6
PRODUCER OF EUCALYPTUS
KRAFT PULP
Companhia Vole de Rio Doce 400 8
MINING, RAIL
TRANSPORTATION, AND
MINERAL SALES IN IRON ORE,
ALUMINUM, MANGANESE,
TITANIUM, GOLD AND COPPER
-----------------------------------------------------
14
- ----------------------------------------------------------
CANADA--4.4%
- ----------------------------------------------------------
BCE, Inc. 300 13
TELECOMMUNICATION SERVICES
Canadian National Railway 200 11
RAILROAD COMPANY
Molson Cos., Ltd., "A" 800 14
BREWERY
-----------------------------------------------------
38
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------
CHILE--1.1%
- ----------------------------------------------------------
Sociedad Quimios y Minera de
Chile, S.A. 300 $ 10
PRODUCER OF FERTILIZER,
IODINE AND INDUSTRIAL
CHEMICALS
-----------------------------------------------------
- ----------------------------------------------------------
FRANCE--2.9%
- ----------------------------------------------------------
AXA-UAP, S.A. 109 12
INSURANCE GROUP PROVIDING
INSURANCE, FINANCE AND
REAL ESTATE SERVICES
Canal Plus 29 5
LEADING PAY TELEVISION
NETWORK
Schneider, S.A. 99 8
MANUFACTURER OF ELECTRONIC
COMPONENTS AND AUTOMATED
MANUFACTURING SYSTEMS
-----------------------------------------------------
25
- ----------------------------------------------------------
GERMANY--18.6%
- ----------------------------------------------------------
Allianz, A.G. 37 12
MULTI-LINE INSURANCE
COMPANY
BASF, A.G. 284 13
LEADING INTERNATIONAL
CHEMICAL PRODUCER
BHF-Bank, A.G. 218 8
UNIVERSAL BANKING SERVICES
Bayerische Vereinsbank, A.G. 145 12
COMMERCIAL BANK
Commerzbank, A.G. 15 1
WORLDWIDE MULTI-SERVICE
BANK
Deutsche Bank, A.G. 122 10
BANK
Deutsche Telekom, A.G. 616 18
TELECOMMUNICATION SERVICES
Dresdner Bank, A.G. 25 1
UNIVERSAL BANK
Gerresheimer Glas, A.G. 747 11
MANUFACTURER OF GLASS
CONTAINERS AND TUBING
Hoechst, A.G. 207 10
CHEMICAL PRODUCER
Muenchener
Rueckversicherungs-
Gesellschaft, A.G. 31 15
INSURANCE COMPANY
Philipp Holzmann, A.G. 25 6
CONSTRUCTION ENGINEERING
SERVICES
RWE, A.G. 400 18
PRODUCER AND MARKETER OF
PETROLEUM AND CHEMICAL
PRODUCTS
</TABLE>
84
<PAGE> 86
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C> <C>
GERMANY--CONTINUED
VEBA, A.G. 156 $ 11
Electric utility,
distributor of oil and
chemicals
VIAG, A.G. 21 16
Provider of electrical
power and natural gas
services, aluminum
products, chemicals,
ceramics and glass
-----------------------------------------------------
162
HONG KONG--.2%
New World Development Co.,
Ltd. 1 2
Property investment and
development, construction
and engineering, hotels
and restaurants,
telecommunications
-----------------------------------------------------
JAPAN--1.4%
Daiwa Securities Co., Ltd. 1 4
Brokerage and other
financial services
Nichido Fire & Marine
Insurance Co., Ltd. 1 5
Property and casualty
insurance company
Nippon Oil Co., Ltd. 1 3
Oil exploration and
development
-----------------------------------------------------
12
NETHERLANDS--2.0%
AEGON, N.V. 100 9
Insurance company
ING Groep, N.V. 130 8
Insurance and financial
services
-----------------------------------------------------
17
SWEDEN--2.5%
AGA, A.B., "B" 800 12
Producer and distributor
of industrial and medical
gases
Astra, A.B., "A" 500 10
Pharmaceutical company
-----------------------------------------------------
22
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C> <C>
SWITZERLAND--6.2%
Ciba Specialty Chemicals,
A.G. 87 $ 11
Manufacturer of chemical
products for plastics,
coatings, fibers and
fabrics
Nestle, S.A. 8 18
Food manufacturer
Novartis 6 10
Pharmaceutical company
Swiss Reinsurance 6 15
Life, accident and health
insurance company
-----------------------------------------------------
54
UNITED KINGDOM--11.6%
British Telecom, PLC 1 15
Telecommunication services
Diageo, PLC 1 13
Producer and distributor
of food products, beer and
liquor; owner of fast food
restaurants
General Electric Co. 1 10
Manufacturer of power,
communications and defense
equipment and other
various electrical
components
National Grid Group, PLC 2 13
Owner and operator of
electric transmission
systems
Railtrack Group, PLC 12
Operator of railway
infrastructure
Reuters Holdings, PLC 1 13
International news agency
Shell Transport & Trading,
PLC 2 12
Part owner of Royal Dutch
Shell Co.
Unilever PLC, N.V. 1 13
Manufacturer of branded
and packaged consumer
goods, food, detergents
and personal care products
-----------------------------------------------------
101
UNITED STATES--28.3%
American Greeting Corp., "A" 200 10
Designer of greeting cards
Boeing Co. 300 13
Manufacturer of jet
airplanes
CINergy Corp. 500 17
Holding company of
electrical utilities in
Ohio, Indiana and Kentucky
Comcast Corp., "A" 200 8
Cable TV, Sound and
telecommunication systems
Duke Energy Corp. 200 12
Electric utility in the
Carolinas
Electronic Data Systems
Corp. 200 8
Provider of information
technology services
</TABLE>
85
<PAGE> 87
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
UNITED STATES--CONTINUED
Enron Corp. 300 $ 16
Major natural gas pipeline
system
First Data Corp. 200 7
Credit-card processing
services
Lockheed Martin Corp. 100 11
Manufacturer of aircraft,
missiles and space
equipment
MBIA, Inc. 100 7
Insurer of municipal bonds
Newmont Mining Corp. 300 7
International gold
exploration and mining
company
Northrop Grumman Corp. 100 10
Manufacturer of aircraft,
aircraft assemblies and
electronic systems for
military and commercial
use
P G & E Corp. 400 13
Electric and gas utility
Sabre Group Holdings, Inc. 300 11
Travel reservation system
provider
Security Capital Industrial
Trust 500 13
Global owner of corporate
distribution facilities
Sun Microsystems, Inc. 200 9
Producer of high-
performance workstations,
servers and networking
software
Tele-Communications, Inc.
"A" 200 9
Cable TV systems and
microwave services
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
UNITED STATES--CONTINUED
Tele-Communications
International, Inc. "A" 500 $ 10
Telecommunication and
broadband cable television
services
UNUM Corp. 300 17
Provider of disability,
health and life insurance
and group pension products
US Airways Group, Inc. 100 8
Major airline
Unicom Corp. 400 14
Electric utility in
northern Illinois
Williams Cos., Inc. 500 17
Gas pipeline operator,
petroleum producer
-----------------------------------------------------
247
-----------------------------------------------------
TOTAL COMMON STOCKS--84.4%
(Cost: $736) 736
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--14.6%
Yield--4.50%
Due--July 1998
Cayman Island $127 127
(Cost: $127)
-----------------------------------------------------
TOTAL INVESTMENTS--106.2%
(Cost: $924) 926
-----------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS--(6.2)% (54)
-----------------------------------------------------
NET ASSETS--100% $ 872
-----------------------------------------------------
</TABLE>
At June 30, 1998, the Kemper Global Blue Chip Portfolio had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- -------------------------------------------------------------------------------------
<S> <C> <C>
Basic Industries $209 24.0
- -------------------------------------------------------------------------------------
Finance 153 17.4
- -------------------------------------------------------------------------------------
Utilities 80 9.2
- -------------------------------------------------------------------------------------
Communications 76 8.7
- -------------------------------------------------------------------------------------
Consumer Staples 74 8.4
- -------------------------------------------------------------------------------------
Energy 70 8.0
- -------------------------------------------------------------------------------------
Transportation 30 3.5
- -------------------------------------------------------------------------------------
Health Care 21 2.3
- -------------------------------------------------------------------------------------
Technology 17 1.9
- -------------------------------------------------------------------------------------
Capital Goods 6 1.0
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 736 84.4
- -------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS AND OTHER NET ASSETS 136 15.6
- -------------------------------------------------------------------------------------
NET ASSETS $872 100.0
- -------------------------------------------------------------------------------------
</TABLE>
NOTE TO KEMPER GLOBAL BLUE CHIP PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $924,000 for federal income tax purposes at
June 30, 1998, the gross unrealized appreciation was $25,000, the gross
unrealized depreciation was $23,000 and the net unrealized appreciation on
investments was $2,000.
See accompanying notes to Financial Statements.
86
<PAGE> 88
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER INTERNATIONAL GROWTH AND
INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS--1.2%
MBL International Finance
3.00%, 11/30/02 $ 10 $ 10
(Cost: $15)
-----------------------------------------------------
COMMON STOCKS
AUSTRALIA--2.1%
Commonwealth Bank of
Australia 702 shs. 8
Banking
Foster's Brewing Group, Ltd. 4,500 10
Leading brewery
-----------------------------------------------------
18
AUSTRIA--2.3%
Bank Austria, A.G. 230 20
Banking
-----------------------------------------------------
CANADA--3.3%
BCE, Inc. 400 17
Telecommunication services
Hudson's Bay Co. 500 11
Consumer goods retailer
-----------------------------------------------------
28
FINLAND--2.7%
Merita, Ltd., "B" 1,990 12
Financial services
Metsa-Serla Oy, "B" 1,200 11
Paper manufacturer
-----------------------------------------------------
23
FRANCE--8.2%
Accor, S.A. 48 14
Travel services
Dexia France 101 14
Financing
Scor, S.A. 209 13
Property, casualty and life
reinsurance
Societe Nationale Elf
Aquitaine 100 14
Petroleum company
Sommer-Allibert 268 15
Manufacturer of plastic
products
-----------------------------------------------------
70
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
GERMANY--9.4%
BHF Bank, A.G. 341 $ 13
Banking
Bayer, A.G. 269 14
Leading chemical producer
Dyckerhoff, A.G. 26 10
Producer of cement
Hochtief, A.G. 235 11
Construction services
Metro, A.G. 250 10
Operator of building,
clothing and food stores
and supermarkets
RWE, A.G. 225 12
Producer of petroleum
products
Thyssen, A.G. 43 11
Manufacturer of capital goods
-----------------------------------------------------
81
IRELAND--2.6%
Allied Irish Bank, PLC 1,480 22
Banking
-----------------------------------------------------
ITALY--5.5%
Banca di Roma, S.p.A. 5,800 12
Banking
Banca Commerciale Italiana,
S.p.A. 2,200 13
Banking
La Rinascente SpA di
Risparmio 1,870 9
Department store chain
Telecom Italia, S.p.A. 2,640 13
Telecommunication services
-----------------------------------------------------
47
JAPAN--4.7%
Matsushita Electric Works,
Inc. 1,000 8
Leading maker of building
materials
Nintendo Co., Ltd. 100 9
Game equipment manufacturer
Nippon Meat Packers, Inc. 1,000 12
Leading meat processor
Sakura Bank Ltd. 2,000 5
Banking
Teijin, Ltd. 2,000 6
Manufacturer of polyester
products
-----------------------------------------------------
40
</TABLE>
87
<PAGE> 89
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<C> <S> <C> <C>
NETHERLANDS--4.5%
KLM Royal Dutch Air Lines,
N.V. 280 $ 12
World wide full service
airline
Koninklijke Hedlloyd Groep,
N.V. 160 6
Container shipping and
transportation
Koninklijke PTT Nederland 380 7
Telecommunication services
Royal Dutch Petroleum Co. 190 10
Owner of Royal Dutch/Shell
group
TNT Post Group, N.V. 160 4
Provider of transportation
services
-----------------------------------------------------
39
NEW ZEALAND--1.0%
Telecom Corp. of New Zealand 2,140 9
Telecommunications services
-----------------------------------------------------
NORWAY--1.2%
Christiania Bank, O.G. 2,370 10
Banking
-----------------------------------------------------
PORTUGAL--1.2%
Portugal Telecom, S.A. 180 10
Telecommunication services
-----------------------------------------------------
SPAIN--5.0%
Autopistas del Mare Nostrum,
S.A. 430 8
Builder and operator of toll
motorways
Banco Bilbao Vizcaya, S.A. 260 13
Banking
Compania Telefonica Nacional
de Espana 300 14
Telecommunication services
Iberdrola, S.A. 540 8
Electric utility
-----------------------------------------------------
43
SWEDEN--5.2%
AssiDoman, A.B. 300 8
Forestry group
OM Gruppen, A.B. 970 21
Operator of exchanges and
clearing organizations for
futures, options and stock
loans
Skanska, A.B., "B" 180 8
International construction
company
Svedala Industri, A.B. 350 8
Manufacturer of machinery for
construction
-----------------------------------------------------
45
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<C> <S> <C> <C>
SWITZERLAND--4.4%
Credit Suisse Group 75 $ 18
Banking
Georg Fisher, A.G. 25 10
Manufacturer of automotive
products
Sika Finanz, A.G. 150 10
Manufacturer of water
equipment
-----------------------------------------------------
38
UNITED KINGDOM--12.1%
Alright & Wilson, PLC 2,884 7
Manufacturer of phosphates
chemicals
British Telecom, PLC 1,060 13
Telecommunication services
Courtaulds Textiles, PLC 1,500 7
Producer of clothing
Dorling Kindersley Holdings,
PLC 2,630 9
Book publisher
EMI Group, PLC 1,200 10
Music recording and retailing
company
General Electric Co., PLC 930 8
Manufacturer of power and
other various electrical
components
Laporte, PLC 536 6
Producer of specialty
chemicals
Man (ED&F) Group, PLC 1,860 10
Commodities trading company
Rank Group, PLC 1,410 8
Diversified leisure services
Royal & Sun Alliance
Insurance Group, PLC 1,000 10
Multi-line insurance holding
company
Tomkins, PLC 1,530 9
Manufacturer of fluid
controls
Transport Development Group,
PLC 1,440 7
Distribution, storage and
transport services
-----------------------------------------------------
104
UNITED STATES--.7%
Lernout & Hauspie Speech
Products 100 6
Developer of advanced speech
technologies
-----------------------------------------------------
TOTAL COMMON STOCKS--76.1%
(Cost: $651) 653
-----------------------------------------------------
TOTAL INVESTMENTS--77.3%
(Cost: $663) 663
-----------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--22.7% 195
-----------------------------------------------------
NET ASSETS--100% $858
-----------------------------------------------------
</TABLE>
88
<PAGE> 90
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
At June 30, 1998, the Kemper International Growth and Income Portfolio had the
following industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- -------------------------------------------------------------------------------------
<S> <C> <C>
Finance $210 24.5
- -------------------------------------------------------------------------------------
Basic Industries 167 19.5
- -------------------------------------------------------------------------------------
Communications 90 10.4
- -------------------------------------------------------------------------------------
Consumer Cyclicals 58 6.7
- -------------------------------------------------------------------------------------
Transportation 32 3.7
- -------------------------------------------------------------------------------------
Consumer Staples 30 3.5
- -------------------------------------------------------------------------------------
Capital Goods 27 3.1
- -------------------------------------------------------------------------------------
Energy 24 2.8
- -------------------------------------------------------------------------------------
Utilities 9 1.0
- -------------------------------------------------------------------------------------
Technology 6 .8
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 653 76.1
- -------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS AND OTHER NET ASSETS 205 23.9
- -------------------------------------------------------------------------------------
NET ASSETS $858 100.0
- -------------------------------------------------------------------------------------
</TABLE>
NOTE TO KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $663,000 for federal income tax purposes at
June 30, 1998, the gross unrealized appreciation and gross unrealized
depreciation were each $24,000.
See accompanying Notes to Financial Statements.
89
<PAGE> 91
NOTES
90
<PAGE> 92
This annual report must be preceded or accompanied by
the current prospectus.
INVESTMENT MANAGER:
Scudder Kemper Investments, Inc.
222 South Riverside Plaza Chicago, IL 60606
(Tel) 800-778-1482
K
Printed on recycled paper.
CUST-3 (8/98) 1056310
Printed in the U.S.A. KEMPER ANNUITIES LOGO
