<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1998
ANNUAL REPORT
For Contract Holders of Kemper Gateway Elite
- 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
[LOGO]
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's degree and Ph.D. in economics from Northeastern
University in Boston and a master's degree in economics from Brown University in
Providence, R.I. Prior to his career at Scudder Kemper Investments, he was with
the Harris Bank and also taught at Indiana University.
Scudder Kemper Investments, the investment manager for Investors Fund Series, is
one of the largest and most experienced investment management organizations in
the world, managing more than $280 billion in assets for institutional and
corporate clients, retirement and pension plans, insurance companies, mutual
fund investors and individuals. Scudder Kemper Investments offers a full range
of investment counsel and asset management capabilities based on a combination
of proprietary research and disciplined, long-term investment strategies.
DEAR SHAREHOLDER:
If you think the first quarter of 1999 has seemed rather anticlimactic compared
to 1998, you're not alone. The year began with a quiet bang in the U.S. stock
market, with the Dow Jones Industrial Average hitting an all-time high of 9,643
points in the first week of January. While stock market volatility has
continued, it seems to be fazing investors less and less. Even global events are
being taken in stride. Europe's Economic and Monetary Union (EMU) was launched
without much notice. And when Brazil's economy recently took a turn for the
worse, Wall Street was only mildly concerned. Also contributing to today's
laid-back attitude, the impeachment trial of President Clinton has all but
fizzled into obscurity without significantly affecting the U.S. economy or
markets.
Indeed, the U.S. economy looks good. The fundamentals by which we measure the
state of the economy remain strong. We continue to see solid consumer spending
growth, continued investment spending and low inflation. This suggests that
there are no internal problems for continued U.S. economic growth.
Additionally, we can expect the Federal Reserve Board to keep short-term
interest rates low. On February 3, the Fed left interest rates unchanged. It is
likely that this "hands-off" approach will continue, particularly if the U.S.
economy remains in check and there is a degree of uncertainty in the
international arena.
The U.S. budget surplus for 1998 came in at $60 billion, with another budget
surplus of between $80 billion and $100 billion expected for fiscal 1999. Growth
in the nation's gross domestic product (GDP), which represents the total value
of all goods and services produced within the U.S. economy, has remained steady.
GDP, driven by consumer spending, is expected to grow at an annualized rate of
approximately 3 percent in 1999. We also anticipate modest capital spending
growth and modest inventory growth.
The consumer price index (CPI) remains in the vicinity of 2 percent. However,
energy prices, which were down 6 to 7 percent last year and helped keep the CPI
down, are unlikely to remain so low this year.
Employment growth has slowed to 2 percent, combined with real wage growth of
between 2 percent and 2.5 percent. But real income growth is between 4 percent
and 5 percent. In addition, gains in household net worth, which tends to fuel
consumer spending, are also on the rise. Banks appear to be only a little less
willing to lend in 1999, so the threat of a general credit crunch is minimal.
On a less positive note, corporate profits have slowed in 1999, growing at a
rate of 1 percent to 3 percent on a year-over-year basis. As a result, we may
see a slowdown in capital spending this year. The current U.S. account deficit
is rising, which suggests the U.S. economy is increasingly dependent on foreign
capital inflows to finance its economic activity. This is acceptable as long as
foreign money continues to flow in. But if foreign investors, particularly the
Japanese, no longer wish to invest in the United States, we can expect problems
for interest rates and exchange rates, as well as increased uncertainty and
market volatility.
At this point, investors may be comforted by the fact that the U.S. markets
and economy have withstood the test of a tumultuous 1998. While certain
countries, such as Malaysia, Indonesia, Brazil and Russia, are still suffering
from economic crises, others, including the Philippines, South Korea, Thailand
and China, appear to have survived. As long as the Fed and the Group of Eight
leading industrial nations (G8) are committed to avoiding recession on national
and global levels, respectively, investors have a good chance of experiencing a
more stable economic environment.
At home, there has been somewhat of a slowdown in manufacturing, as reduced
U.S. exports reflect foreign economic turmoil. But the global impact of the
Asian crisis still has not hit the U.S. as hard as some analysts expected.
Indeed, Asian turmoil has not affected U.S. export volumes as much as it has
lowered import prices and helped reduce global interest rates.
Ultimately, Europe's recently inaugurated EMU is likely to bring more
flexibility and growth potential for the region. European equities may be the
beneficiaries of increased spending, as governments seek to ease fiscal and
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.
<TABLE>
<CAPTION>
[BAR GRAPH]
NOW (1/31/99) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate(1)* 4.65 5.65 6.21 6.83
Prime rate(2) 7.75 8.50 8.50 8.25
Inflation rate(3) 1.61 1.38 2.22 3.00
The U.S. dollar(4) -4.37 3.92 7.62 4.74
Capital goods orders(5)* 11.78 10.47 15.67 4.79
Industrial production(5)* 1.88 5.09 6.12 4.87
Employment growth(6) 2.17 2.57 2.65 2.22
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. in the last five years,
inflation has been as high as 6 percent. The low, moderate inflation of the
last few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on family income and retail sales.
*Data as of December 31, 1998.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
monetary policy, foster growth and reduce unemployment. It's going to be
interesting to watch as the monetary union continues to evolve. One lesson for
investors -- particularly those with international holdings -- is to diversify.
With the democratization of the world, the globalization of trade and more free
market economies at our fingertips, international markets are becoming more and
more attractive. But if you subscribe to the concept of international
investment, be cautious -- don't put all of your investment eggs in one basket.
Other key elements to watch in 1999: the race for the next presidency and
preparedness for the year 2000. And remember, while it is nearly impossible to
predict the next big crisis, there always appears to be one just around the
bend.
Thank you for choosing to invest in the Investors Fund Series. We appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ John E. Silvia
JOHN E. SILVIA
The information contained in this piece has been taken from sources believed to
be reliable, but the accuracy of the information is not guaranteed. The opinions
and forecasts expressed are those of Dr. John E. Silvia as of February 8, 1999,
and may not actually come to pass. This information is subject to change. No
part of this material is intended as an investment recommendation.
3
<PAGE> 5
MANAGEMENT SUMMARY
KEMPER MONEY MARKET PORTFOLIO
- ------------------------------------
In general, the Money Market Portfolio maintained a defensive, short average
maturity strategy throughout much of 1998. Early in the year, the direction of
interest rates was uncertain, and the yield curve offered no income reward for
lengthening the portfolio.
For a good portion of 1998, events unfolded as we expected. We maintained a
neutral average maturity policy, which provided us with the flexibility to react
quickly to developing market opportunities.
That flexibility proved to be valuable in light of August's market volatility
and the Federal Reserve's decision to ease rates twice in October. The Money
Market Portfolio was able to provide the stability investors seek in rocky
times.
Following these events, we made the decision to lengthen the portfolio's
duration, given that the economy appears on solid footing and the Federal
Reserve appears unlikely to make any rate changes.
Going forward, we will continue to emphasize high-quality credits, which
allows us to help provide the stability and liquidity our investors expect from
the Money Market Portfolio.
Frank J. Rachwalski, Jr.
Lead Portfolio Manager
AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE PORTFOLIO SEEKS
TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO
LOSE MONEY BY INVESTING IN THE PORTFOLIO.
KEMPER TOTAL RETURN PORTFOLIO
- ------------------------------------
While there were periods of brisk market activity in 1998, volatility was ever
present. Investors grappled to make sense of the potential impact of events both
at home and abroad. Our conservative approach to growth served the portfolio
well during the market downturns while also providing good opportunities to
participate in the upswings. And during the market's turmoil, our fixed income
holdings performed as we anticipated, providing a degree of stability.
Our stock selection discipline also helped returns, with many of our large
holdings turning in nice gains. The portfolio enjoyed good performance from
telecommunication stocks, such as MCI and Ameritech. Quality technology
companies, including Cisco Systems, IBM and Sun Microsystems, also bolstered
gains. Health care was another area where our strategy paid off, with Schering-
Plough and Abbott Laboratories among the ranks of solid performers.
While our bond holdings served as stabilizing factors during the equity market
turmoil, the tradeoff was that we did not participate fully in the equity market
rebound late in 1998. As a balanced portfolio, however, that is a tradeoff with
which we feel comfortable. We understand that our investors put a premium on
steady, consistent performance.
Overall, we believe that a disciplined, diversified approach to investing
still offers strong potential for long-term investors. As we enter the new year,
we encourage investors to hold the course.
Gary Langbaum
Lead Portfolio Manager
KEMPER HIGH YIELD PORTFOLIO
- ------------------------------------
1998 proved itself a peculiar and historic year for the high-yield market. The
market experienced one of its worst months ever--and then one of its best just
three months later.
The low point occurred in August 1998, when it became clear the Asian
financial problems were not getting any better. Concurrently, financial problems
in Russia put pressure on the dealer and banking communities in the United
States, creating a serious liquidity problem in the market.
In retrospect, we see the August downturn as a technical reaction to events
external to the high-yield market. The fundamentals of the high-yield market are
healthy, and the Federal Reserve's willingness to ease interest rates has gone a
long way toward curing the liquidity crisis and getting the market back on
track.
The downturn did offer some benefits. The high-yield market was driven down to
the point where we saw good values in many of the companies on which we do
extensive research. As a result, we carried a very low cash position in the
Kemper High Yield Portfolio. We tried to stay fully invested in order to
participate fully in the turnaround, which began almost immediately after
August's correction, and, as measured by the DLJ High Yield Index, hit its peak
with a 5.62% rise in the market in November--the highest single-month increase
since March 1991.
Liquidity in the market continues to improve, and in 1999 we should have more
and more opportunities to take advantage of good values in the market. Whether
an investor is total-return-oriented or looking for income, high-yield investing
might make sense.
Michael A. McNamara
Harry E. Resis, Jr.
Co-Lead Portfolio Managers
4
<PAGE> 6
MANAGEMENT SUMMARY
KEMPER GROWTH PORTFOLIO
- ------------------------------------
During the past year, uncertainty about the global financial markets 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 on the first tier and the rest on the
second tier stood at historic levels for most of the year.
For growth-at-a-reasonable-price investors, 1998's market was a difficult one.
Nonetheless, we have found many opportunities that we expect to perform well
once the market moves on to a more reasonable stage with a broader-based market
advance.
In the technology sector, for example, we found very good opportunities among
semiconductor manufacturers, personal computer makers and software service
companies. Specifically, we initiated positions in Xerox and Dell, both of which
were reasonably priced and high quality. As that sector grew increasingly strong
during the year, however, we sold some of our holdings and reallocated the
assets toward specialty retailers and heath care stocks. The portfolio employed
a similar strategy -- selling into strength -- to take profits in some of its
financial services holdings.
Despite the volatility of the past year, we believe the portfolio's
growth-at-a-reasonable-price discipline helped the portfolio reap rewards from
many of its mature holdings and identify many attractive new holdings. As we
move forward and markets grow less volatile, we expect the portfolio to be well
positioned for long-term performance potential.
Valerie Malters
George Fraise
Co-Lead Portfolio Managers
KEMPER GOVERNMENT SECURITIES PORTFOLIO
- ------------------------------------
Without a doubt, the most significant impact on the portfolio this year was
felt as a result of the instability in foreign bond and stock markets -- first
from developments in Asia, then Russia and finally in Latin America. The
problems abroad led to strong performance by U.S. Government bonds, long
considered the safest investment in the world.
The sound performance of the portfolio in 1998 was due in part to our
adjustment of duration in response to interest rates, as well as our adjustment
of the allocation between Treasuries- and mortgage-backed securities. We did
both well this year.
Most recently, we have boosted our mortgage allocation to a neutral weighting,
because we do not believe long rates can go much lower in the near term, nor do
we believe they will trend significantly higher. So we have adopted what might
be considered a "normal" stance regarding our duration and allocation.
Going forward, we expect investors' focus to turn closer to home. Static from
foreign markets has, to this point, muddied a very favorable environment for
government bonds. Inflation remains low and economic growth appears to be solid
and sustainable. That would lead us to expect a slow-growth, low-inflation
environment that would be beneficial for bonds. We fully expect some additional
volatility in the markets as a few big hedge funds unwind some overzealous
currency and fixed-income positions. But overall, we believe the climate for
fixed-income investors is quite favorable.
Richard L. Vandenberg
Lead Portfolio Manager
KEMPER INTERNATIONAL PORTFOLIO
- ------------------------------------
Although early in the year the portfolio posted some solid numbers, fueled in
part by the strength in Europe, worldwide markets took some dramatic turns
toward the end of 1998 that dampened our performance.
Nearly all global markets fell sharply in August, but an October rebound
allowed recent market dogs to have their day. Latin American and Southeast Asian
markets surged; Hong Kong, for example, was up 33% in dollar terms for the
month. We missed the short-term gains offered by this bounce because of our
light exposure to these markets compared with the index. We maintain small
positions in these markets in part because the portfolio is generally never
highly exposed to emerging markets as a matter of policy, and because we saw
some of these areas as fundamentally weak.
In 1998, as in other years, we focused on the fundamentals of valuation and
growth to try to achieve a strong, long-term track record. We do not change the
way we run the fund to suit short-term circumstances. When markets fluctuate as
they did in 1998, there are going to be times in which our management style does
not look appealing. But eventually, markets have tended to stabilize and widen
their scope to focus on the long-term fundamentals.
We firmly believe that the investor who is comfortable riding through some
bumpy market patches may be rewarded as huge economic regions like Europe and
Japan hit their full strides.
Steve Dexter
Marc Slendebroek
Co-Lead Portfolio Managers
5
<PAGE> 7
MANAGEMENT SUMMARY
KEMPER SMALL CAP GROWTH PORTFOLIO
- ------------------------------------
1998 was yet another positive year for the Small Cap Growth Portfolio, its
fourth in a row. In spite of heavy volatility at points during the year and an
inhospitable market climate for small caps, we continued to find many good
values within the portfolio's investment universe. That means that the portfolio
is not only well positioned for the near term, but we believe its future is
bright as well.
Over the past several months, the portfolio has emphasized stocks in several
sectors, including retail, broadcasting and education. Although the market has
not favored small caps in general, some holdings in these groups have performed
well in the current economic environment, which is distinguished by low interest
rates and moderate growth.
We believe that equities in the technology sector will continue to be an
important part of the portfolio's long-term focus. In particular, select
software and semiconductor equipment stocks are attractive at the current time.
Although it is difficult to predict when small cap stocks may begin to
outperform their large cap counterparts, we remain bullish on the portfolio's
prospects. We will maintain our disciplined investment focus and continue to
search for attractive investment opportunities in the current environment.
David H. Burshtan
Lead Portfolio Manager
KEMPER INVESTMENT GRADE BOND PORTFOLIO
- ------------------------------------
The Investment Grade Bond Portfolio came through the year unscathed by a
choppy market environment. The portfolio normally has a higher allocation of
corporate bonds in its mix than many of its peers, a fact that could have
spelled trouble in a year that favored only Treasury securities. But we
maintained a higher-quality portfolio than many similar portfolios and we held
fewer corporates than we usually do, and during the flight to quality in 1998,
that higher quality worked to the portfolio's advantage.
We made several portfolio adjustments during the year, among them increasing
the allocation to Treasuries and reducing our allocation to corporate bonds.
There were several points during the year when what happened overseas
dramatically affected the corporate market. All through the spring, we lightened
up on corporates, and that worked in our favor during a very difficult August
and October in the corporate market.
We also lengthened the portfolio's duration for most of the year to take
advantage of the flight to quality in the market and the deflationary tone set
by events overseas. By increasing the portfolio's duration, we increased its
sensitivity to a drop in interest rates, which improved the portfolio's total
return as rates declined.
Going forward, we see the economy slowing a bit, but we do not see anything
like a recession on the horizon. The money that poured into Treasuries during
the year will likely be redeployed into corporate or mortgage bonds, which
should improve those markets. Consequently, we intend to pursue a strategy of
increasing mortgages in the portfolio at the appropriate time.
Robert Cessine
Lead Portfolio Manager
KEMPER CONTRARIAN VALUE PORTFOLIO
- ------------------------------------
For a good portion of the year, the U.S. stock market continued in a "Nifty
Fifty" mode, meaning that a handful of the largest capitalization stocks
outperformed a vast majority of the market. While the dominance of these issues
was challenged somewhat by the market's volatility in 1998, stocks with smaller
capitalizations still did not enjoy an extended period of prominence.
The Contrarian Value Portfolio, therefore, continues to wait out the bias
toward these mega-cap growth stocks. But despite the fact the market has
primarily favored stocks in which the Contrarian Value Portfolio won't invest,
we've been pleased with our performance to date and continue to add stocks that
we believe can bring long-term value to the portfolio -- stocks that appear to
have limited downside risk and solid return potential.
Among these are issues in which the portfolio already maintained positions,
including Amoco, General Electric, Hewlett-Packard and Kimberly-Clark. We
believe that the combination of attractive valuations and strong earnings growth
is still fairly powerful in this group. Other holdings that performed well
during the course of the year were Philip Morris and AMP.
We also continued to maintain a weighting in basic materials stocks, such as
diversified forest products, paper, chemicals and steel, and the energy group as
well.
We look forward to the fact that, sooner or later, the market's "Nifty Fifty"
orientation will shift, which may create even more opportunities for the
Contrarian Value Portfolio. In the meantime, market volatility and other
conditions continue to afford us opportunities to find good values among quality
companies. We will continue to capitalize on these openings when they occur and
keep the portfolio well positioned for the long term.
Thomas Sassi
Lead Portfolio Manager
6
<PAGE> 8
MANAGEMENT SUMMARY
KEMPER SMALL CAP VALUE PORTFOLIO
- ------------------------------------
In 1998, both small cap and value stocks bore the brunt of the recent market
volatility as many investors redeployed their assets toward U.S. Treasuries and
the bluest of the blue chip stocks. For the Small Cap Value Portfolio, that
"double whammy" translated into a generally difficult year.
In addition to the decline in small caps and value stocks, we were also
hindered by some large positions in sectors that underperformed our expectations
- -- energy and specialty finance. Energy stocks suffered in 1998 as
warmer-than-average temperatures continued during most of the year and crude oil
prices declined. The financial services sector suffered with the Russian debt
crisis and fears of a credit crunch at home.
Although we did not see many positive results in 1998, we did use the down
market as an opportunity to add value to the portfolio. We added dozens of new
names, such as Inter-tel, Inc., a digital communication firm; Southdown, Inc., a
manufacturer of concrete products; and Pacific Sun Wear, an apparel retailer.
Overall, we believe we have a diversified, undervalued portfolio of solid
companies, which helps position us well for the future. Regardless of market
conditions, we will continue to focus on a bottom-up approach to stock
selection, identifying companies with considerable value relative to the market.
When small caps gain back their strength, we expect that strategy to serve us
well.
Steven T. Stokes
Lead Portfolio Manager
KEMPER VALUE+GROWTH PORTFOLIO
- ------------------------------------
Overall, the market posted brisk returns during 1998, but investors continued
to be buffeted by periods of ups and downs. Worries about Asia and Russia and
uncertainty about Federal Reserve policy during the summer all contributed to
choppy waters.
Domestic large company growth stocks led the way during most of the year.
Although that narrow market limited near-term performance for many stocks, it
opened up many attractive buying opportunities for those with a long-term focus.
Given the markets' unpredictability, we steered away from sector-based
forecasting and instead focused on individual stock selection. Early in the
year, the majority of the portfolio's assets were allocated toward growth
stocks, although as the year progressed and we became more concerned about high
valuations, we bolstered our value allocation. By September, the portfolio's
allocation was equally weighted between growth and value issues. Although this
allocation was generally a positive move, it did limit our participation in a
late-year growth stock rally.
Specifically, the portfolio enjoyed success during the year with technology
stocks, including Sun Microsystems, although the sector as a whole proved to be
a mixed bag. Some of our financial services holdings, including FHLMC, Citigroup
and FNMA, also performed well.
We expect volatility to continue, primarily because we have not seen
sufficient indications that the turmoil in Asia, Russia and South America is
anywhere near finished. Nevertheless, we believe in the long-term potential of
domestic equity investing and in the power of thorough, disciplined stock
selection.
Philip S. Fortuna
Lead Portfolio Manager
KEMPER HORIZON 20+, HORIZON 10+ AND HORIZON 5 PORTFOLIOS
- ------------------------------------
It goes without saying that 1998 was a volatile year for investors. Although
markets did seem to calm themselves after October 1997, periodic bursts of
market unease led up to a rather large correction in August 1998. Domestic
equity markets rebounded quickly, however, before settling into the tides of
periodic volatility that characterized the last few months of the year.
The Horizon Portfolios have been able to manage market volatility due to
diversification. We do believe that over the long-term, this diversification
across multiple asset classes, including value stocks, growth stocks,
international and small company stocks, will lead to increased risk-adjusted
return potential.
With the portfolios this year, our bond stake provided protection against
market turbulence. Our fixed-income allocation was quality focused and held an
average credit rating of AAA. We have invested in U.S. Treasuries and mortgage-
backed securities, and although the fund can invest in high-yield bonds, we
opted to eschew that area for most of the year.
Within the equity portions of our portfolio, we found some success with
selected technology issues, including Sun Microsystems, and financial services
stocks, including Citigroup. Most of the portfolios' equity successes, however,
were among larger cap stocks, and our smaller cap holdings tended to place a
drag on our performance.
Going forward, we will continue to adhere to our disciplined, quantitative
focus. We believe that, over the long term, keeping clear-sighted and
cool-headed is the most sensible course. We remain confident about the longer-
term potential of a diversified approach that includes a broad variety of
assets.
Philip S. Fortuna
Lead Portfolio Manager
7
<PAGE> 9
MANAGEMENT SUMMARY
KEMPER BLUE CHIP PORTFOLIO
- ------------------------------------
Investors can take comfort from the fact that both the U.S. markets and the
Blue Chip Portfolio held up well during a tumultuous year in 1998. Despite
particularly volatile conditions at certain points during the year, we
maintained a focus on our growth-at-a-reasonable-price discipline, which helped
us identify several attractive stocks over the period and remain focused on
long-term results.
That wasn't easy, however. Our blue-chip hunting grounds were thinned out by a
flight to higher-quality stocks and the resulting higher stock prices. Because
of these steep prices, we were precluded from owning several market favorites
like Microsoft and Lucent. Nonetheless, we were able to find a handful of worthy
issues.
Thanks to market performance between August and October, we were allowed entry
points into higher-quality stocks, such as Wal-Mart, Home Depot and Pfizer, at
fairly reasonable prices.
One example of a stock that met our criteria was Motorola. The stock is
attractively priced, and our research indicates that it benefits from several
growth catalysts that may help push its price higher.
Raytheon also possesses many of the attributes we look for. It is a defense
and aerospace firm with a well-thought-out, rational expansion plan. It is also
a company with a great deal of exciting growth potential. In addition,
telecommunications stocks like AT&T and US West have appealing valuations and a
combination of growth and income potential that we like.
Going forward, we expect volatility to continue in some form. In a global
economy, it is prudent to expect that uncertainty will always be present. What
really counts is how we respond to that uncertainty. The bottom line is that we
believe a thoughtful, long-term investment discipline has the potential to
translate some volatility into opportunity for our investors.
Tracy McCormick
Lead Portfolio Manager
KEMPER GLOBAL INCOME PORTFOLIO
- ------------------------------------
Throughout most of 1998, 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 Australia,
New Zealand and U.K. markets and underweight in U.S., 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 early in the year because of
higher-than-expected returns, but decreased it later due to a weakening of the
currency. By contrast, European debt became more attractive during the year due
to a series of interest rate cuts. Japanese bonds continued to underperform, and
in October we cut in half our exposure to the market. To date, we still see few
immediate solutions to the Asian crisis being offered.
Despite concerns about several large economic powers, the outlook for many
bond markets around the globe remains strong. Bond yields have declined in
tandem with inflationary expectations in many countries, and we believe that
many markets continue to be fairly valued in general. Close on the heels of the
Federal Reserve's decision to ease rates twice, and because economic growth is
reasonable, the market does not expect the Fed to tighten its policy.
Terence Prideaux
Pankaj Shah
Co-Lead Portfolio Managers
KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO
- ------------------------------------
1998 presented investors with a strange market. Stocks that were already
overvalued skyrocketed to unbelievable heights, while fundamentally solid
companies with reasonable price-to-earnings multiples languished. The primary
beneficiaries of this narrow market were the largest growth-style stocks. For
value investors, therefore, it was a difficult period.
We continued to look for financially sound companies with low
price-to-earnings, price-to-book, price-to-cash-flow and price-to-dividend
ratios. As contrarians, we are always loath to pay a premium for any stock, and
this year was no different.
Financial services stocks made up the largest portion of the portfolio last
year, and we focused in particular on regional banks that had no foreign
exposure. As a result, the portfolio's financial services holdings withstood the
downturn in August much better than the sector as a whole. In September, we took
some positions in money-center banks and added to others at discounted prices.
The prices of these stocks rose dramatically through September and October.
On the downside, our holdings in oil and tobacco suffered at times during the
year, but we believe they have good long-term prospects.
We expect volatility to continue in 1999, so we will continue to manage the
portfolio conservatively. However, if volatility knocks down areas we like, we
will become more aggressive and take advantage of those opportunities.
David N. Dreman
Lead Portfolio Manager
8
<PAGE> 10
MANAGEMENT SUMMARY
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
- ------------------------------------
Launched in March 1998, the portfolio enjoyed a very eventful inaugural year.
At inception, the financial stocks had risen steeply and it was difficult to
find stocks that were undervalued. Then financial services stocks began to
underperform for the first time in a decade. As the sector began to stumble in
the summer, we moved in and added several quality stocks that were trading at a
discount. Since then, the market has started to climb and these holdings have
been positive for the portfolio.
Primarily, we have structured a conservative portfolio that could really take
off when the tide shifts and value stocks come back into favor. But we are also
opportunistic. If something lags the market, like the big money-center banks did
this past summer, we invest quickly to add value. We are always looking for
those breaks in the market.
Regional banks like First Union and KeyCorp also provided value opportunities
this year, and we focused much of our investment there. The upside with the
regional banks is that they don't have any foreign exposure like larger
institutions, and many of them are strong takeover candidates.
We fully expect that the growth in financial services will continue at a
healthy rate. It is a sector with a great deal of potential. Banks,
specifically, have a good deal more growth ahead. We've been pleased with our
performance and hope that it will improve with time. Our performance is a
reflection of our conservative, contrarian investment approach, and we believe
that approach may yield long-term benefits for our investors.
David N. Dreman
Lead Portfolio Manager
KEMPER GLOBAL BLUE CHIP PORTFOLIO
- ------------------------------------
The risks that we perceive in both the global economy and individual financial
markets have led us to remain flexible for most of 1998. As a result, our
investment action has concentrated on additions to the "secure streams of
income" theme -- that is, investments that we believe will produce reliable
streams of income in the future as supply of similar investments has diminished.
These investments include National Grid Group and Peco Energy. We are also
concentrating on sales of some of the fully valued holdings in our European-
oriented themes and the development of our new theme, "The Empowered Consumer."
"The Empowered Consumer" is focused on the rollout of the benefits of
technology to households through price arbitrage and more efficient ordering and
delivery systems. Examples from this theme include Comcast Corp, Motorola and
Tele-Comm Liberty Media.
Some of the fundamental drivers underlying our investment themes are changing.
While restructuring still has considerable potential outside the U.S.,
deflationary risks are becoming more evident. The furious pace of the recent
merger and acquisition activity is inspired by cost cutting and the elimination
of capacity, and, as a defense against deflation, we believe this activity will
not yield the same benefits as earlier restructuring. Driving this deflation, in
part, are new and not-so-new technologies. Techno-euphoria is, however, complex,
and investment opportunities in this area that are both sustainable and
affordable must be selected with care.
In our search for new themes, we are seeking to understand the wider
implications of the latticework of structural imbalances that today characterize
the global economy. We believe that financial markets are still exuberant, still
irrational. In the meantime, the portfolio remains positioned for change.
Diego Espinosa
Lead Portfolio Manager
KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO
- ------------------------------------
It has been a historic year in the international markets. In the year since
the portfolio's inception, on January 1, 1998, investors have seen the
formalization of the European Monetary Union, significant economic uncertainty
in Japan and Russia and considerable volatility in almost every market.
Despite these events, the focus of the portfolio remained on identifying
relative yield -- the universe of stocks offered 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.
Within the framework of that approach, we sought out regions that we believed
would show strength during the year as well as sectors that were best positioned
to benefit from some of the positive changes occurring in the region, including
Europe's consumer stocks and telecommunications. We reduced our holdings in
European banks, largely because financial stocks floundered as a result of
global currency concerns. Overall, the long-term picture for Europe and its
markets continues to be very positive.
Japan remained a region to avoid except for a few, highly selective buying
opportunities, and our caution was rewarded during periods of volatility during
the year.
Going forward, we expect to see the European market continue to be strong,
while recovery in Japan will be steady but slow. Russia will continue to be a
source of trouble and we will work to reduce the risk profile of the portfolio
by staying away from financial stocks with exposure to the Russian economy.
Sheridan Reilly
Lead Portfolio Manager
9
<PAGE> 11
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR PORTFOLIO
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTORS FUND
SERIES KEMPER
TOTAL RETURN
PORTFOLIO 15.14% 12.96% 14.20% 13.82% (Since 4/6/82)
.................................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER TOTAL RETURN PORTFOLIO
FROM 4/6/82 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES LEHMAN BROTHERS
KEMPER TOTAL RETURN RUSSELL 1000 GROWTH GOVERNMENT/CORPORATE
PORTFOLIO INDEX++ BOND INDEX++++++
--------------------- ------------------- --------------------
<S> <C> <C> <C>
4/6/82 10000.00 10000.00 10000.00
9754.00 9428.00 10004.00
10725.00 10574.00 11380.00
12407.00 12826.00 12324.00
13501.00 14038.00 12712.00
15508.00 15843.00 12918.00
14944.00 15289.00 13117.00
14586.00 14875.00 13309.00
13440.00 13679.00 13377.00
13049.00 13518.00 13150.00
13918.00 14560.00 14247.00
13875.00 14734.00 15309.00
15105.00 16214.00 15637.00
16170.00 17255.00 16925.00
15604.00 16424.00 17262.00
17821.00 19574.00 18570.00
20314.00 22626.00 20153.00
21526.00 24480.00 20419.00
19826.00 21490.00 20831.00
12/31/86 20522.00 22582.00 21470.00
24081.00 28021.00 21787.00
24651.00 29093.00 21376.00
25470.00 31058.00 20751.00
20639.00 23780.00 21962.00
21561.00 24516.00 22748.00
22325.00 25833.00 22973.00
22366.00 25723.00 23402.00
23115.00 26459.00 23627.00
24263.00 28297.00 23888.00
26275.00 31149.00 25808.00
28559.00 35023.00 26050.00
28695.00 35964.00 26990.00
28439.00 34632.00 26681.00
30867.00 38003.00 27642.00
28086.00 32329.00 27810.00
30153.00 35870.00 29226.00
34638.00 42306.00 30014.00
34474.00 41899.00 30467.00
37509.00 44828.00 32220.00
12/31/91 41576.00 50636.00 33939.00
40199.00 48136.00 33430.00
38911.00 47610.00 34784.00
39201.00 49704.00 36483.00
42279.00 53168.00 36512.00
43270.00 52723.00 38210.00
44046.00 51906.00 39357.00
47126.00 52673.00 40659.00
47401.00 54711.00 40540.00
44853.00 52300.00 39271.00
42403.00 51767.00 38782.00
43714.00 55749.00 38974.00
42901.00 56165.00 39118.00
45767.00 61514.00 41067.00
49381.00 67562.00 43731.00
51903.00 73694.00 44568.00
54041.00 77051.00 46645.00
55212.00 81188.00 45553.00
57035.00 86353.00 45768.00
59944.00 89464.00 46575.00
63100.00 94867.00 47999.00
62537.00 95377.00 47585.00
70866.00 113414.00 49316.00
74905.00 121938.00 51044.00
75694.00 123791.00 52682.00
82373.00 142548.00 53481.00
82984.00 149019.00 54880.00
77249.00 135482.00 57598.00
12/31/98 87156.00 171706.00 57673.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR PORTFOLIO
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTORS FUND
SERIES KEMPER
HIGH YIELD
PORTFOLIO 1.45% 8.19% 10.26% 12.73% (Since 4/6/82)
.................................................................................
</TABLE>
INVESTMENT BY THE PORTFOLIO IN LOWER-RATED BONDS PRESENTS GREATER RISK TO
PRINCIPAL INCOME THAN INVESTMENTS IN HIGHER-QUALITY SECURITIES.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER HIGH YIELD PORTFOLIO
FROM 4/6/82 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES KEMPER SALOMON BROTHERS LONG-TERM
HIGH YIELD PORTFOLIO HIGH YIELD BOND INDEX**
------------------------ --------------------------
<S> <C> <C>
4/6/82 10000.00 10000.00
9980.00 10366.00
11376.00 12335.00
12404.00 13315.00
13353.00 15517.00
13613.00 15624.00
13837.00 16108.00
14238.00 16324.00
14405.00 16427.00
14223.00 15809.00
15193.00 17368.00
16026.00 17871.00
16630.00 19051.00
18085.00 20146.00
18416.00 20721.00
19485.00 21920.00
20713.00 23747.00
21642.00 24772.00
22017.00 24916.00
12/31/86 22906.00 25449.00
24236.00 27187.00
24033.00 26967.00
23901.00 26392.00
24285.00 26614.00
26263.00 28561.00
27006.00 29630.00
27407.00 30314.00
28051.00 30905.00
28534.00 31698.00
29432.00 32852.00
28959.00 31774.00
27703.00 30569.00
26469.00 29007.00
27991.00 30436.00
24402.00 27591.00
23428.00 27945.00
29683.00 34174.00
31714.00 35843.00
34730.00 38043.00
12/31/91 35569.00 40012.00
39425.00 43167.00
40464.00 44895.00
41503.00 47003.00
41884.00 47685.00
44344.00 50905.00
46546.00 53608.00
47222.00 55120.00
50265.00 57044.00
49063.00 55134.00
48828.00 53906.00
49169.00 54531.00
49139.00 54886.00
51658.00 59317.00
54064.00 64543.00
55820.00 67111.00
57687.00 70992.00
59227.00 70547.00
60290.00 70519.00
63394.00 72767.00
65796.00 76573.00
65762.00 76696.00
69313.00 81796.00
72321.00 86465.00
73436.00 90157.00
76180.00 93759.00
76769.00 95952.00
71654.00 93422.00
12/31/98 74502.00 98241.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR PORTFOLIO
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTORS FUND
SERIES KEMPER
GROWTH PORTFOLIO 15.10% 16.74% 18.11% 15.14% (Since 12/9/83)
.................................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER GROWTH PORTFOLIO
FROM 12/9/83 THROUGH 12/31/98
<TABLE>
<CAPTION>
INVESTORS FUND SERIES RUSSELL 1000 GROWTH STANDARD & POOR'S 500
KEMPER GROWTH PORTFOLIO INDEX++ STOCK INDEX++
----------------------- ------------------- --------------------
<S> <C> <C> <C>
12/9/83 10000.00 10000.00 10000.00
10112.00 9482.00 9944.00
10211.00 9196.00 9760.00
10294.00 9088.00 9510.00
10889.00 9788.00 10432.00
11081.00 9905.00 10627.00
11940.00 10900.00 11603.00
12677.00 11600.00 12454.00
12074.00 11041.00 11944.00
13866.00 13159.00 13999.00
15911.00 15210.00 15974.00
16880.00 16457.00 16915.00
14837.00 14446.00 15735.00
15120.00 15181.00 16612.00
18580.00 18837.00 20159.00
19036.00 19558.00 21171.00
20151.00 20879.00 22568.00
15381.00 15986.00 17484.00
16113.00 16481.00 18477.00
16730.00 17366.00 19704.00
15662.00 17292.00 19771.00
15437.00 17787.00 20380.00
16332.00 19023.00 21824.00
17850.00 20940.00 23747.00
20209.00 23544.00 26287.00
19746.00 24177.00 26827.00
19350.00 23282.00 26020.00
21525.00 25548.00 27653.00
18264.00 21733.00 23857.00
12/31/87 19859.00 24114.00 25993.00
23769.00 28440.00 29762.00
23528.00 28167.00 29691.00
26213.00 30135.00 31275.00
31667.00 34040.00 33895.00
30612.00 32360.00 33040.00
28351.00 32006.00 33667.00
29485.00 33414.00 34729.00
32802.00 35742.00 36473.00
32839.00 35443.00 38065.00
34678.00 34894.00 38248.00
38303.00 35409.00 39233.00
37599.00 36780.00 40141.00
36971.00 35159.00 38622.00
34010.00 34800.00 38783.00
36067.00 37477.00 40676.00
12/31/92 36090.00 37757.00 40669.00
39114.00 41352.00 44624.00
42237.00 45419.00 48878.00
45997.00 49541.00 52759.00
47990.00 51797.00 55933.00
50508.00 54579.00 58935.00
53030.00 58051.00 61576.00
56913.00 60142.00 63480.00
58368.00 63774.00 68767.00
55388.00 64117.00 70615.00
64543.00 76243.00 82931.00
71853.00 81973.00 89142.00
70825.00 83218.00 91702.00
82274.00 95828.00 104484.00
81777.00 100178.00 107953.00
63809.00 91078.00 97239.00
12/31/98 81521.00 115429.00 118057.00
</TABLE>
(1)AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENT OVER THE PERIODS
SPECIFIED, ASSUMING REINVESTMENT OF ALL DIVIDENDS. AVERAGE ANNUAL TOTAL
RETURN REFLECTS ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS AGGREGATE
CHANGE. PERFORMANCE IS NET OF THE PORTFOLIO'S MANAGEMENT FEE AND OTHER
OPERATION EXPENSES BUT DOES NOT INCLUDE ANY DEDUCTION AT THE SEPARATE ACCOUNT
OR CONTRACT LEVEL FOR ANY INSURANCE OR SURRENDER CHARGES THAT MAY BE INCURRED
UNDER A CONTRACT. PLEASE SEE PROSPECTUS FOR MORE DETAILS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND
PRINCIPAL VALUES FLUCTUATE SO THAT ACCUMULATION UNITS, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
10
<PAGE> 12
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR 10-YEAR PORTFOLIO
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTORS FUND
SERIES KEMPER
GOVERNMENT
SECURITIES
PORTFOLIO 7.03% 6.72% 8.37% 7.84% (Since 9/3/87)
.................................................................................
</TABLE>
PORTFOLIO SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER GOVERNMENT
SECURITIES PORTFOLIO FROM 9/3/87 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES KEMPER SALOMON BROTHERS 30-YEAR
GOVERNMENT SECURITIES PORTFOLIO GNMA INDEX*
------------------------------- ------------------------
<S> <C> <C>
9/3/87 10000.00 10000.00
10030.00 10334.00
10216.00 10790.00
10265.00 10982.00
10364.00 11221.00
10354.00 11255.00
10423.00 11377.00
11221.00 12322.00
11296.00 12492.00
11715.00 13014.00
11532.00 13000.00
12037.00 13491.00
12113.00 13700.00
12/31/90 12858.00 14434.00
13087.00 14841.00
13221.00 15147.00
13993.00 15978.00
14822.00 16736.00
14419.00 16641.00
14986.00 17313.00
15675.00 17829.00
15699.00 18008.00
16142.00 18539.00
16425.00 18929.00
16636.00 18940.00
16713.00 19084.00
16306.00 18599.00
16187.00 18558.00
16225.00 18691.00
12/31/94 16255.00 18814.00
17119.00 19807.00
18158.00 20839.00
18494.00 21288.00
19340.00 22000.00
18955.00 21964.00
18949.00 22101.00
19336.00 22566.00
19836.00 23246.00
19847.00 23270.00
20539.00 24153.00
21140.00 24897.00
21613.00 25454.00
21949.00 25866.00
22333.00 26305.00
23014.00 26965.00
12/31/98 23132.00 27198.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTORS FUND SERIES
KEMPER INTERNATIONAL
PORTFOLIO 10.02% 8.82% 10.53% (Since 1/6/92)
................................................................................
</TABLE>
SPECIAL RISK CONSIDERATIONS ARE ASSOCIATED WITH INVESTMENTS IN NON-U.S.
COMPANIES, INCLUDING FLUCTUATING FOREIGN EXCHANGE RATES, FOREIGN GOVERNMENTAL
REGULATIONS AND DIFFERING DEGREES OF LIQUIDITY THAT MAY ADVERSELY AFFECT THE
PORTFOLIO.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER INTERNATIONAL PORTFOLIO
FROM 1/6/92 THROUGH 12/31/98
[LINE GRAPH]
<TABLE>
<CAPTION>
INVESTORS FUND SERIES KEMPER EUROPE, AUSTRALASIA, FAR EAST
INTERNATIONAL PORTFOLIO INDEX (EAFE INDEX)++
-------------------------- -----------------------------
<S> <C> <C>
1/6/92 10000.00 10000.00
10060.00 9005.00
10320.00 9196.00
9630.00 9335.00
9930.00 8974.00
10320.00 10050.00
10922.00 11061.00
12063.00 11794.00
13186.00 11896.00
12587.00 12312.00
12725.00 12941.00
13212.00 12954.00
12713.00 12822.00
12617.00 13061.00
13218.00 13155.00
14259.00 13704.00
14345.00 14259.00
15406.00 14671.00
15937.00 14903.00
15812.00 14884.00
12/31/96 16710.00 15121.00
16884.00 14884.00
18772.00 16816.00
19527.00 16697.00
12/31/97 18291.00 15390.00
20609.00 17654.00
21086.00 17841.00
17433.00 15305.00
12/31/98 20123.00 18467.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
SMALL CAP GROWTH PORTFOLIO 18.37% 24.20% (Since 5/2/94)
...............................................................................
</TABLE>
INVESTMENTS BY THE PORTFOLIO IN SMALL COMPANIES PRESENT GREATER RISK OF LOSS
THAN INVESTMENTS IN LARGER, MORE ESTABLISHED COMPANIES.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER SMALL CAP GROWTH
PORTFOLIO FROM 5/2/94 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES KEMPER
SMALL CAP GROWTH PORTFOLIO RUSSELL 2000 INDEX+++
--------------------------- ---------------------
<S> <C> <C>
5/2/94 10000.00 10000.00
9763.00 9660.00
10404.00 10332.00
10366.00 10141.00
11078.00 10609.00
11962.00 11603.00
13493.00 12749.00
12/31/95 13484.00 13026.00
14516.00 13690.00
15618.00 14375.00
16982.00 14424.00
12/31/96 17265.00 15174.00
16750.00 14390.00
19827.00 16722.00
23283.00 19211.00
12/31/97 23171.00 18568.00
26004.00 20435.00
26230.00 19482.00
21844.00 15557.00
12/31/98 27428.00 18095.00
</TABLE>
(1)AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENT OVER THE PERIODS
SPECIFIED, ASSUMING REINVESTMENT OF ALL DIVIDENDS. AVERAGE ANNUAL TOTAL
RETURN REFLECTS ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS AGGREGATE
CHANGE. PERFORMANCE IS NET OF THE PORTFOLIO'S MANAGEMENT FEE AND OTHER
OPERATION EXPENSES BUT DOES NOT INCLUDE ANY DEDUCTION AT THE SEPARATE ACCOUNT
OR CONTRACT LEVEL FOR ANY INSURANCE OR SURRENDER CHARGES THAT MAY BE INCURRED
UNDER A CONTRACT. PLEASE SEE PROSPECTUS FOR MORE DETAILS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND
PRINCIPAL VALUES FLUCTUATE SO THAT ACCUMULATION UNITS, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
11
<PAGE> 13
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
INVESTMENT GRADE BOND PORTFOLIO 7.93% 7.70% (Since 5/1/96)
...............................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER INVESTMENT GRADE BOND
PORTFOLIO FROM 5/1/96 THROUGH 12/31/98
<TABLE>
<CAPTION>
[LINE GRAPH]
LEHMAN BROTHERS
INVESTORS FUND SERIES KEMPER GOVERNMENT/CORPORATE
INVESTMENT GRADE BOND PORTFOLIO BOND INDEX++++++
------------------------------- --------------------
<S> <C> <C>
5/1/96 10000.00 10000.00
10036.00 10133.00
10161.00 10312.00
12/31/96 10330.00 10627.00
10305.00 10536.00
10633.00 10919.00
10968.00 11302.00
12/31/97 11264.00 11664.00
11433.00 11841.00
11685.00 12151.00
12131.00 12753.00
12/31/98 12157.00 12770.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
CONTRARIAN VALUE PORTFOLIO 19.26% 25.28% (Since 5/1/96)
...............................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER CONTRARIAN VALUE
PORTFOLIO FROM 5/1/96 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES KEMPER STANDARD & POORS
CONTRARIAN VALUE PORTFOLIO 500 STOCK INDEX+
--------------------------- --------------------------
<S> <C> <C>
5/1/96 10000.00 10000.00
10107.00 10038.00
10689.00 10349.00
12/31/96 11653.00 11210.00
11963.00 11512.00
13444.00 13519.00
14635.00 14532.00
12/31/97 15194.00 14949.00
17078.00 17033.00
16880.00 17598.00
15686.00 15852.00
12/31/98 18121.00 19246.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
SMALL CAP VALUE PORTFOLIO (11.25)% 3.65% (Since 5/1/96)
..............................................................................
</TABLE>
INVESTMENTS BY THE PORTFOLIO IN SMALL COMPANIES PRESENT GREATER RISK OF LOSS
THAN INVESTMENTS IN LARGER, MORE ESTABLISHED COMPANIES.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER SMALL CAP VALUE
PORTFOLIO FROM 5/1/96 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES KEMPER
SMALL CAP VALUE PORTFOLIO RUSSELL 2000 INDEX+++
--------------------------- --------------------
<S> <C> <C>
5/1/96 10000.00 10000.00
9469.00 9589.00
9706.00 9622.00
12/31/96 10376.00 10122.00
10161.00 9599.00
11838.00 11155.00
13163.00 12815.00
12/31/97 12631.00 12386.00
13821.00 13632.00
12920.00 12996.00
10017.00 10378.00
12/31/98 11210.00 12071.00
</TABLE>
(1) AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENT OVER THE PERIODS
SPECIFIED, ASSUMING REINVESTMENT OF ALL DIVIDENDS. AVERAGE ANNUAL TOTAL
RETURN REFLECTS ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS AGGREGATE
CHANGE. PERFORMANCE IS NET OF THE PORTFOLIO'S MANAGEMENT FEE AND OTHER
OPERATION EXPENSES BUT DOES NOT INCLUDE ANY DEDUCTION AT THE SEPARATE
ACCOUNT OR CONTRACT LEVEL FOR ANY INSURANCE OR SURRENDER CHARGES THAT MAY
BE INCURRED UNDER A CONTRACT. PLEASE SEE PROSPECTUS FOR MORE DETAILS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND
PRINCIPAL VALUES FLUCTUATE SO THAT ACCUMULATION UNITS, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
12
<PAGE> 14
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
VALUE+GROWTH PORTFOLIO 20.17% 22.74% (Since 5/1/96)
..............................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER VALUE+GROWTH
PORTFOLIO FROM 5/1/96 THROUGH 12/31/98
<TABLE>
<CAPTION>
[LINE GRAPH]
INVESTORS FUND SERIES KEMPER
VALUE+GROWTH PORTFOLIO RUSSELL 1000 INDEX+
------------------------- -------------------
<S> <C> <C>
5/1/96 10000 10000
9789 10252
10330 10587
12/31/96 11058 11431
10927 11608
12553 13559
14157 14743
12/31/97 13874 15186
15717 17216
15764 17647
13500 15827
12/31/98 16673 19290
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
HORIZON 20+ PORTFOLIO 13.01% 18.44% (Since 5/1/96)
...............................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER HORIZON 20+
PORTFOLIO FROM 5/1/96 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES LEHMAN BROTHERS
KEMPER HORIZON 20+ GOVERNMENT/CORPORATE STANDARD & POOR'S
PORTFOLIO BOND INDEX++++++ 500 STOCK INDEX++
--------------------- -------------------- --------------------
<S> <C> <C> <C>
5/1/96 10000.00 10000.00 10000.00
9812.00 10133.00 10038.00
10400.00 10312.00 10349.00
12/31/96 11179.00 10627.00 11210.00
11007.00 10536.00 11512.00
12396.00 10919.00 13519.00
13695.00 11302.00 14532.00
12/31/97 13468.00 11664.00 14949.00
14961.00 11841.00 17033.00
15099.00 12151.00 17598.00
13371.00 12753.00 15852.00
12/31/98 15224.00 12770.00 19246.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
HORIZON 10+ PORTFOLIO 11.30% 14.87% (Since 5/1/96)
..............................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER HORIZON 10+
PORTFOLIO FROM 5/1/96 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES LEHMAN BROTHERS
KEMPER HORIZON 10 GOVERNMENT/CORPORATE STANDARD & POOR'S
PORTFOLIO BOND INDEX++++++ 500 STOCK INDEX++
--------------------- -------------------- --------------------
<S> <C> <C> <C>
5/1/96 10000.00 10000.00 10000.00
9881.00 10133.00 10038.00
10294.00 10312.00 10349.00
12/31/96 10893.00 10627.00 11210.00
10800.00 10536.00 11512.00
11886.00 10919.00 13519.00
12864.00 11302.00 14532.00
12/31/97 12719.00 11664.00 14949.00
13799.00 11841.00 17033.00
13865.00 12151.00 17598.00
12787.00 12753.00 15852.00
12/31/98 14160.00 12770.00 19246.00
</TABLE>
(1) AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENT OVER THE PERIODS
SPECIFIED, ASSUMING REINVESTMENT OF ALL DIVIDENDS. AVERAGE ANNUAL TOTAL
RETURN REFLECTS ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS AGGREGATE
CHANGE. PERFORMANCE IS NET OF THE PORTFOLIO'S MANAGEMENT FEE AND OTHER
OPERATION EXPENSES BUT DOES NOT INCLUDE ANY DEDUCTION AT THE SEPARATE
ACCOUNT OR CONTRACT LEVEL FOR ANY INSURANCE OR SURRENDER CHARGES THAT MAY BE
INCURRED UNDER A CONTRACT. PLEASE SEE PROSPECTUS FOR MORE DETAILS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND
PRINCIPAL VALUES FLUCTUATE SO THAT ACCUMULATION UNITS, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
13
<PAGE> 15
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
HORIZON 5 PORTFOLIO 10.00% 12.07% (Since 5/1/96)
..............................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER HORIZON 5
PORTFOLIO FROM 5/1/96 THROUGH 12/31/98
<TABLE>
<CAPTION>
[LINE GRAPH]
INVESTORS FUND SERIES LEHMAN BROTHERS
KEMPER HORIZON 5 GOVERNMENT/CORPORATE STANDARD & POOR'S
PORTFOLIO BOND INDEX++++++ 500 STOCK INDEX++
--------------------- -------------------- --------------------
<S> <C> <C> <C>
5/1/96 10000.00 10000.00 10000.00
9923.00 10133.00 10038.00
10258.00 10312.00 10349.00
12/31/96 10767.00 10627.00 11210.00
10707.00 10536.00 11512.00
11468.00 10919.00 13519.00
12130.00 11302.00 14532.00
12/31/97 12135.00 11664.00 14949.00
12833.00 11841.00 17033.00
12908.00 12151.00 17598.00
12363.00 12753.00 15852.00
12/31/98 13318.00 12770.00 19246.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
BLUE CHIP PORTFOLIO 13.84% 15.38% (Since 5/1/97)
..............................................................................
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER BLUE CHIP PORTFOLIO
FROM 5/1/97 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES KEMPER
BLUE CHIP PORTFOLIO RUSSELL 1000 INDEX+
------------------------ -------------------
<S> <C> <C>
5/1/97 10000.00 10000.00
10255.00 10414.00
11050.00 11324.00
12/31/97 11113.00 11664.00
12244.00 13224.00
12210.00 13554.00
10698.00 12157.00
12/31/98 12652.00 14816.00
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(1)
FOR THE PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
1-YEAR PORTFOLIO
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTORS FUND SERIES KEMPER
GLOBAL INCOME PORTFOLIO 10.98% 8.26% (Since 5/1/97)
..............................................................................
</TABLE>
SPECIAL RISK CONSIDERATIONS ARE ASSOCIATED WITH INVESTMENTS IN NON-U.S.
COMPANIES, INCLUDING FLUCTUATING FOREIGN EXCHANGE RATES, FOREIGN GOVERNMENTAL
REGULATIONS AND DIFFERING DEGREES OF LIQUIDITY THAT MAY ADVERSELY AFFECT THE
PORTFOLIO.
AS A NON-DIVERSIFIED INVESTMENT COMPANY, THE PORTFOLIO MAY INVEST MORE THAN 5%
OF ITS ASSETS IN THE SECURITIES OF A PARTICULAR FOREIGN ISSUER. THESE SPECIAL
RISK CONSIDERATIONS ARE DISCUSSED IN THE PROSPECTUS.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER GLOBAL INCOME
PORTFOLIO FROM 5/1/97 THROUGH 12/31/98
<TABLE>
<CAPTION>
[LINE GRAPH]
INVESTORS FUND SERIES KEMPER SALOMON BROTHERS WORLD
GLOBAL INCOME PORTFOLIO GOVERNMENT BOND INDEX***
-------------------------- ------------------------
<S> <C> <C>
5/1/97 10000.00 10000.00
10024.00 10119.00
10241.00 10248.00
12/31/97 10251.00 10269.00
10371.00 10350.00
10530.00 10556.00
11198.00 11435.00
12/31/98 11377.00 11841.00
</TABLE>
(1)AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENT OVER THE PERIODS SPECIFIC,
ASSUMING REINVESTMENT OF ALL DIVIDENDS. AVERAGE ANNUAL TOTAL RETURN REFLECTS
ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS AGGREGATE CHANGE. PERFORMANCE
IS NET OF THE PORTFOLIO'S MANAGEMENT FEE AND OTHER OPERATION EXPENSES BUT
DOES NOT INCLUDE ANY DEDUCTION AT THE SEPARATE ACCOUNT OR CONTRACT LEVEL FOR
ANY INSURANCE OR SURRENDER CHARGES THAT MAY BE INCURRED UNDER A CONTRACT.
PLEASE SEE PROSPECTUS FOR MORE DETAILS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND
PRINCIPAL VALUES FLUCTUATE SO THAT ACCUMULATION UNITS, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
14
<PAGE> 16
PERFORMANCE UPDATE
TOTAL RETURN(1)
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTORS FUND SERIES
KEMPER-DREMAN
HIGH RETURN EQUITY PORTFOLIO 2.80% (Since 5/4/98)
................................................................................
</TABLE>
THE PORTFOLIO MAY CONCENTRATE INVESTMENTS IN SPECIFIC SECTORS, WHICH CREATES
SPECIAL RISK CONSIDERATIONS.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER-DREMAN HIGH RETURN
EQUITY PORTFOLIO FROM 5/4/98 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES
KEMPER-DREMAN HIGH RETURN STANDARD & POOR'S
EQUITY PORTFOLIO 500 STOCK INDEX++
----------------------------- ---------------------------
<S> <C> <C>
5/4/98 10035.00 10406.00
9916.00 10296.00
8492.00 8808.00
9/30/98 9326.00 9373.00
10115.00 10134.00
10484.00 10748.00
12/31/98 10577.00 11367.00
</TABLE>
TOTAL RETURN(1)
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTORS FUND SERIES
KEMPER-DREMAN FINANCIAL
SERVICES PORTFOLIO (2.20)% (Since 5/4/98)
................................................................................
</TABLE>
THE PORTFOLIO MAY CONCENTRATE INVESTMENTS IN SPECIFIC SECTORS, WHICH CREATES
SPECIAL RISK CONSIDERATIONS.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER-DREMAN FINANCIAL
SERVICES PORTFOLIO FROM 5/4/98 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES
KEMPER-DREMAN FINANCIAL STANDARD & POOR'S FINANCIAL
SERVICES PORTFOLIO SERVICES INDEX #
----------------------------- ---------------------------
<S> <C> <C>
5/4/98 10246.00 10419.00
10256.00 10421.00
8090.00 8019.00
9/30/98 8381.00 8181.00
9359.00 9172.00
9980.00 9797.00
12/31/98 10081.00 9998.00
</TABLE>
TOTAL RETURN(1)
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- -----------------------------------------------------------------------------------
<S> <C> <C>
INVESTORS FUND SERIES
KEMPER GLOBAL BLUE
CHIP PORTFOLIO (2.10)% (Since 5/5/98)
...................................................................................
</TABLE>
SPECIAL RISK CONSIDERATIONS ARE ASSOCIATED WITH INVESTMENTS IN NON-U.S.
COMPANIES, INCLUDING FLUCTUATING FOREIGN EXCHANGE RATES, FOREIGN GOVERNMENTAL
REGULATIONS AND DIFFERING DEGREES OF LIQUIDITY THAT MAY ADVERSELY AFFECT THE
PORTFOLIO.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER GLOBAL BLUE CHIP
PORTFOLIO FROM 5/5/98 THROUGH 12/31/98
<TABLE> [LINE GRAPH]
<CAPTION>
INVESTORS FUND SERIES KEMPER
GLOBAL BLUE CHIP PORTFOLIO MSCI WORLD INDEX ##
--------------------------- -------------------
<S> <C> <C>
5/5/98 10281.00 10239.00
10127.00 10224.00
9060.00 8862.00
9/30/98 9354.00 9020.00
9655.00 9837.00
9924.00 10424.00
12/31/98 10186.00 10935.00
</TABLE>
(1)AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENT OVER THE PERIODS
SPECIFIED, ASSUMING REINVESTMENT OF ALL DIVIDENDS. AVERAGE ANNUAL TOTAL
RETURN REFLECTS ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS AGGREGATE
CHANGE. PERFORMANCE IS NET OF THE PORTFOLIO'S MANAGEMENT FEE AND OTHER
OPERATION EXPENSES BUT DOES NOT INCLUDE ANY DEDUCTION AT THE SEPARATE ACCOUNT
OR CONTRACT LEVEL FOR ANY INSURANCE OR SURRENDER CHARGES THAT MAY BE INCURRED
UNDER A CONTRACT. PLEASE SEE PROSPECTUS FOR MORE DETAILS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND
PRINCIPAL VALUES FLUCTUATE SO THAT ACCUMULATION UNITS, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
15
<PAGE> 17
PERFORMANCE UPDATE
TOTAL RETURN(1)
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE OF
PORTFOLIO
- -----------------------------------------------------------------------------------
<S> <C> <C>
INVESTORS FUND SERIES
KEMPER INTERNATIONAL
GROWTH AND INCOME
PORTFOLIO (8.80)% (Since 5/5/98)
...................................................................................
</TABLE>
SPECIAL RISK CONSIDERATIONS ARE ASSOCIATED WITH INVESTMENTS IN NON-U.S.
COMPANIES, INCLUDING FLUCTUATING FOREIGN EXCHANGE RATES, FOREIGN GOVERNMENTAL
REGULATIONS AND DIFFERING DEGREES OF LIQUIDITY THAT MAY ADVERSELY AFFECT THE
PORTFOLIO.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
INVESTORS FUND SERIES KEMPER INTERNATIONAL GROWTH AND
INCOME PORTFOLIO FROM 5/5/98 THROUGH 12/31/98
[LINE GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTORS FUND SERIES KEMPER
INTERNATIONAL GROWTH AND
INCOME PORTFOLIO MSCI EAFE + CANADA INDEX ###
------------------------------- ----------------------------
<S> <C> <C>
5/5/98 10070.00 10055.00
10073.00 10123.00
8661.00 8833.00
9/30/98 8364.00 8583.00
8762.00 9479.00
8961.00 9962.00
12/31/98 9205.00 10346.00
</TABLE>
(1)AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO INVESTMENT OVER THE PERIODS
SPECIFIED, ASSUMING REINVESTMENT OF ALL DIVIDENDS. AVERAGE ANNUAL TOTAL
RETURN REFLECTS ANNUALIZED CHANGE WHILE TOTAL RETURN REFLECTS AGGREGATE
CHANGE. PERFORMANCE IS NET OF THE PORTFOLIO'S MANAGEMENT FEE AND OTHER
OPERATION EXPENSES BUT DOES NOT INCLUDE ANY DEDUCTION AT THE SEPARATE ACCOUNT
OR CONTRACT LEVEL FOR ANY INSURANCE OR SURRENDER CHARGES THAT MAY BE INCURRED
UNDER A CONTRACT. PLEASE SEE PROSPECTUS FOR MORE DETAILS.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE PERFORMANCE. RETURNS AND PRINCIPAL
VALUES FLUCTUATE SO THAT ACCUMULATION UNITS, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN ORIGINAL COST.
+ THE RUSSELL 1000 INDEX IS AN UNMANAGED CAPITALIZATION WEIGHTED PRICE ONLY
INDEX COMPRISED OF THE LARGEST CAPITALIZED U.S. COMPANIES WHOSE COMMON
STOCKS ARE TRADED IN THE UNITED STATES. THIS LARGE CAPITALIZATION MARKET
ORIENTED INDEX IS HIGHLY CORRELATED WITH THE S&P 500 STOCK INDEX.
++ THE RUSSELL 1000 GROWTH INDEX IS AN UNMANAGED INDEX COMPRISED OF COMMON
STOCK OF LARGER U.S. COMPANIES WITH GREATER THAN AVERAGE GROWTH
ORIENTATION AND REPRESENTS THE UNIVERSE OF STOCKS FROM WHICH
"EARNINGS/GROWTH" MONEY MANAGERS TYPICALLY SELECT.
+++ THE RUSSELL 2000 INDEX IS A CAPITALIZATION WEIGHTED PRICE ONLY INDEX
WHICH IS COMPRISED OF 2000 OF THE SMALLEST STOCKS (ON THE BASIS OF
CAPITALIZATION) IN THE RUSSELL 3000 INDEX. THE LARGEST COMPANY IN THE
INDEX HAS AN APPROXIMATE MARKET CAP OF $591 MILLION.
++ THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET.
++++ THE EAFE INDEX (MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA,
FAR EAST INDEX) IS AN UNMANAGED INDEX GENERALLY ACCEPTED AS A BENCHMARK
FOR MAJOR OVERSEAS MARKETS.
++++++ THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX IS AN UNMANAGED INDEX
COMPRISED OF INTERMEDIATE AND LONG-TERM GOVERNMENT AND INVESTMENT GRADE
CORPORATE DEBT SECURITIES.
* THE SALOMON BROTHERS 30-YEAR GNMA INDEX IS UNMANAGED, IS ON A TOTAL
RETURN BASIS WITH ALL DIVIDENDS REINVESTED AND IS COMPRISED OF GNMA
30-YEAR PASS THROUGHS OF SINGLE FAMILY AND GRADUATED PAYMENT MORTGAGES.
IN ORDER FOR A GNMA COUPON TO BE INCLUDED IN THE INDEX, IT MUST HAVE AT
LEAST $200 MILLION OF OUTSTANDING COUPON PRODUCT.
** THE SALOMON BROTHERS LONG-TERM HIGH YIELD BOND INDEX IS ON A TOTAL RETURN
BASIS WITH ALL DIVIDENDS REINVESTED AND IS COMPRISED OF HIGH YIELD BONDS
WITH A PAR VALUE OF $50 MILLION OR HIGHER AND A REMAINING MATURITY OF TEN
YEARS OR LONGER RATED BB+ OR LOWER BY STANDARD & POOR'S CORPORATION OR
BA1 OR LOWER BY MOODY'S INVESTORS SERVICE, INC. THIS INDEX IS UNMANAGED.
*** THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX IS AN UNMANAGED INDEX ON
A U.S. DOLLAR TOTAL RETURN BASIS WITH ALL DIVIDENDS REINVESTED AND IS
COMPRISED OF GOVERNMENT BONDS FROM 14 COUNTRIES. THE MAXIMUM MATURITY IS
ONE YEAR. SOURCE: LIPPER ANALYTICAL SERVICES, INC.
# THE STANDARD & POOR'S FINANCIAL SERVICES INDEX IS A CAPITALIZATION
WEIGHTED PRICE ONLY INDEX REPRESENTING 9 FINANCIAL GROUPS AND 53
FINANCIAL COMPANIES.
## THE MSCI WORLD INDEX IS AN UNMANAGED INDEX GENERALLY ACCEPTED AS A
BENCHMARK FOR WORLD EQUITY MARKETS.
### MSCI EAFE & CANADA INDEX IS GENERALLY REPRESENTATIVE OF CANADIAN, EUROPE,
ASIAN AND FAR EAST INTERNATIONAL MARKETS.
16
<PAGE> 18
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
INVESTORS FUND SERIES
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of the Kemper Money Market, Kemper
Total Return, Kemper High Yield, Kemper Growth, Kemper Government Securities,
Kemper International, Kemper Small Cap Growth, Kemper Investment Grade Bond,
Kemper Contrarian Value, Kemper Small Cap Value, Kemper Value+Growth, Kemper
Horizon 20+, Kemper Horizon 10+, Kemper Horizon 5, Kemper Blue Chip, Kemper
Global Income, Kemper-Dreman High Return Equity, Kemper-Dreman Financial
Services, Kemper Global Blue Chip and Kemper International Growth and Income
Portfolios, comprising the Investors Fund Series as of December 31, 1998, and
the related statements of operations and changes in net assets and the financial
highlights for the periods indicated therein. These financial statements and
financial highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios of the Investors Fund Series at December 31, 1998, the results
of their operations, the changes in their net assets and the financial
highlights for the periods indicated therein in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 18, 1999
17
<PAGE> 19
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
(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: $146,341, $731,664,
$455,315, $502,013,
$120,823, $184,270, $168,082, $50,298, $226,250
and $106,341, respectively) $146,341 854,112 433,848
- ---------------------------------------------------------------------------------------------------------------------
Cash 5,936 455 320
- ---------------------------------------------------------------------------------------------------------------------
Receivable for:
Investments sold -- 6,283 4,580
- ---------------------------------------------------------------------------------------------------------------------
Portfolio shares sold 76 16 23
- ---------------------------------------------------------------------------------------------------------------------
Interest and dividends 186 6,847 8,503
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 152,539 867,713 447,274
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Cash overdraft -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased -- 658 4,659
- ---------------------------------------------------------------------------------------------------------------------
Portfolio shares redeemed 228 1,180 219
- ---------------------------------------------------------------------------------------------------------------------
Dividends 302 -- --
- ---------------------------------------------------------------------------------------------------------------------
Management fee 57 388 225
- ---------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 11 26 24
- ---------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 11 38 22
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 609 2,290 5,149
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS $151,930 865,423 442,125
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Paid-in capital $151,930 670,940 441,049
- ---------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments
and foreign currency transactions -- 44,788 (17,611)
- ---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on
investments and assets and liabilities in foreign
currencies -- 122,448 (21,467)
- ---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- 27,247 40,154
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $151,930 865,423 442,125
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Shares outstanding 151,930 316,471 360,218
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets / shares outstanding) $ 1.000 2.735 1.227
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 20
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>
626,687 122,166 213,519 210,485 50,853 258,650 101,923
- --------------------------------------------------------------------------------------------
1,538 1,761 -- 682 833 748 18
- --------------------------------------------------------------------------------------------
1,037 1 -- 8,356 -- 6,579 16
- --------------------------------------------------------------------------------------------
59 531 19 3 34 177 65
- --------------------------------------------------------------------------------------------
307 1,036 486 31 466 408 133
- --------------------------------------------------------------------------------------------
629,628 125,495 214,024 219,557 52,186 266,562 102,155
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
-- -- 122 -- -- -- --
- --------------------------------------------------------------------------------------------
-- 2,019 9 10,816 -- 2,033 76
- --------------------------------------------------------------------------------------------
710 175 440 284 -- 579 --
- --------------------------------------------------------------------------------------------
-- -- -- -- -- -- --
- --------------------------------------------------------------------------------------------
319 56 137 104 25 160 60
- --------------------------------------------------------------------------------------------
9 22 108 10 -- -- --
- --------------------------------------------------------------------------------------------
39 12 9 8 6 15 10
- --------------------------------------------------------------------------------------------
1,077 2,284 825 11,222 31 2,787 146
- --------------------------------------------------------------------------------------------
628,551 123,211 213,199 208,335 52,155 263,775 102,009
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
508,552 118,934 158,540 168,298 49,793 212,127 109,162
- --------------------------------------------------------------------------------------------
(6,909) (3,796) 23,638 (2,417) 228 14,790 (3,354)
- --------------------------------------------------------------------------------------------
124,674 1,343 29,265 42,403 555 32,400 (4,418)
- --------------------------------------------------------------------------------------------
2,234 6,730 1,756 51 1,579 4,458 619
- --------------------------------------------------------------------------------------------
628,551 123,211 213,199 208,335 52,155 263,775 102,009
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
212,587 101,983 125,411 105,693 44,781 150,119 95,758
- --------------------------------------------------------------------------------------------
2.957 1.208 1.700 1.971 1.165 1.757 1.065
- --------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 21
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
(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: $132,611, $34,723,
$52,810, $30,637,
$69,026, $4,836, $57,132, $15,292, $3,601
and $3,262, respectively) $151,811 38,094 57,059
- ------------------------------------------------------------------------------------------------------------------
Cash 519 45 --
- ------------------------------------------------------------------------------------------------------------------
Receivable for:
Investments sold -- 1 --
- ------------------------------------------------------------------------------------------------------------------
Portfolio shares sold 61 -- 23
- ------------------------------------------------------------------------------------------------------------------
Interest and dividends 99 138 402
- ------------------------------------------------------------------------------------------------------------------
Reimbursement from Adviser -- -- --
- ------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward currency contracts -- -- --
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 152,490 38,278 57,484
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Cash overdraft -- -- 38
- ------------------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased -- -- --
- ------------------------------------------------------------------------------------------------------------------
Portfolio shares redeemed 80 -- 19
- ------------------------------------------------------------------------------------------------------------------
Closed forward foreign currency contracts -- -- --
- ------------------------------------------------------------------------------------------------------------------
Management fee 88 13 16
- ------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 1 -- --
- ------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward currency
contracts -- -- --
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 169 13 73
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS $152,321 38,265 57,411
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Paid-in capital $129,163 34,307 52,099
- ------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on
investments and foreign currency transactions 3,078 114 (130)
- ------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and
assets and liabilities in foreign currencies 19,200 3,371 4,249
- ------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 880 473 1,193
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $152,321 38,265 57,411
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Shares outstanding 91,158 25,394 41,184
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(net assets / shares outstanding) $ 1.671 1.507 1.394
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE> 22
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>
32,356 78,332 4,935 59,334 15,597 3,748 3,317
- -----------------------------------------------------------------------------------------
127 20 -- 481 226 1 1
- -----------------------------------------------------------------------------------------
-- 150 -- -- -- -- --
- -----------------------------------------------------------------------------------------
7 211 -- 259 10 -- 2
- -----------------------------------------------------------------------------------------
318 66 95 123 20 9 3
- -----------------------------------------------------------------------------------------
-- -- -- -- -- 10 25
- -----------------------------------------------------------------------------------------
-- -- 8 -- -- -- --
- -----------------------------------------------------------------------------------------
32,808 78,779 5,038 60,134 15,853 3,768 3,348
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
-- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------
-- 321 -- 744 309 175 345
- -----------------------------------------------------------------------------------------
55 74 -- 1 -- 9 --
- -----------------------------------------------------------------------------------------
-- -- 3 -- -- -- --
- -----------------------------------------------------------------------------------------
12 56 3 72 14 -- --
- -----------------------------------------------------------------------------------------
-- 14 5 23 14 -- --
- -----------------------------------------------------------------------------------------
-- -- 4 -- -- -- --
- -----------------------------------------------------------------------------------------
67 465 15 840 337 184 345
- -----------------------------------------------------------------------------------------
32,741 78,314 5,023 59,294 15,516 3,584 3,003
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
30,262 71,761 4,645 55,994 15,138 3,480 3,049
- -----------------------------------------------------------------------------------------
(233) (3,118) 93 239 3 (51) (110)
- -----------------------------------------------------------------------------------------
1,719 9,306 103 2,597 305 147 53
- -----------------------------------------------------------------------------------------
993 365 182 464 70 8 11
- -----------------------------------------------------------------------------------------
32,741 78,314 5,023 59,294 15,516 3,584 3,003
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
25,088 62,168 4,530 57,650 15,868 3,661 3,294
- -----------------------------------------------------------------------------------------
1.305 1.260 1.109 1.028 .978 .979 .912
- -----------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 23
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended December 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
MONEY TOTAL HIGH
MARKET RETURN YIELD
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Interest $6,694 25,508 43,078
- ----------------------------------------------------------------------------------------------------------
Dividends(a) -- 6,749 422
- ----------------------------------------------------------------------------------------------------------
Total investment income 6,694 32,257 43,500
- ----------------------------------------------------------------------------------------------------------
Expenses:
Management fee 600 4,521 2,606
- ----------------------------------------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 27 84 82
- ----------------------------------------------------------------------------------------------------------
Professional fees 11 78 39
- ----------------------------------------------------------------------------------------------------------
Trustees' fees and other 7 215 104
- ----------------------------------------------------------------------------------------------------------
Total expenses 645 4,898 2,831
- ----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 6,049 27,359 40,669
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments and
foreign currency transactions -- 45,478 1,608
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) from futures transactions -- -- 1
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) -- 45,478 1,609
- ----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on
investments and assets and liabilities in foreign
currencies -- 43,475 (33,856)
- ----------------------------------------------------------------------------------------------------------
Net gain (loss) on investments -- 88,953 (32,247)
- ----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $6,049 116,312 8,422
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Less foreign taxes withheld of $36, $455, $9 and $2, for the Kemper Growth,
Kemper International, Kemper Contrarian Value and Kemper Small Cap Value
Portfolios, respectively.
See accompanying Notes to Financial Statements.
22
<PAGE> 24
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> <C>
871 7,109 646 856 1,907 1,597 707
- --------------------------------------------------------------------------------------------
4,703 -- 3,350 277 -- 4,547 1,117
- --------------------------------------------------------------------------------------------
5,574 7,109 3,996 1,133 1,907 6,144 1,824
- --------------------------------------------------------------------------------------------
3,600 564 1,613 1,060 184 1,641 702
- --------------------------------------------------------------------------------------------
97 68 269 42 16 26 20
- --------------------------------------------------------------------------------------------
59 9 10 9 3 15 7
- --------------------------------------------------------------------------------------------
143 32 75 38 3 29 19
- --------------------------------------------------------------------------------------------
3,899 673 1,967 1,149 206 1,711 748
- --------------------------------------------------------------------------------------------
1,675 6,436 2,029 (16) 1,701 4,433 1,076
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
(4,560) 1,678 24,326 (1,589) 286 15,335 (2,746)
- --------------------------------------------------------------------------------------------
-- (137) -- -- -- -- 199
- --------------------------------------------------------------------------------------------
(4,560) 1,541 24,326 (1,589) 286 15,335 (2,547)
- --------------------------------------------------------------------------------------------
85,608 (1,055) (6,982) 31,648 402 17,408 (10,477)
- --------------------------------------------------------------------------------------------
81,048 486 17,344 30,059 688 32,743 (13,024)
- --------------------------------------------------------------------------------------------
82,723 6,922 19,373 30,043 2,389 37,176 (11,948)
- --------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 25
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended December 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
VALUE+GROWTH HORIZON 20+ HORIZON 10+
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Interest $ 394 441 1,055
- ------------------------------------------------------------------------------------------------------------
Dividends(a) 1,349 259 271
- ------------------------------------------------------------------------------------------------------------
Total investment income 1,743 700 1,326
- ------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 825 164 223
- ------------------------------------------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 25 16 14
- ------------------------------------------------------------------------------------------------------------
Professional fees 7 3 2
- ------------------------------------------------------------------------------------------------------------
Amortization of organization expenses -- -- --
- ------------------------------------------------------------------------------------------------------------
Trustees' fees and other 8 5 3
- ------------------------------------------------------------------------------------------------------------
Total expenses before expense waiver 865 188 242
- ------------------------------------------------------------------------------------------------------------
Less expenses waived and absorbed by investment manager -- -- --
- ------------------------------------------------------------------------------------------------------------
Total expenses absorbed by the Portfolio 865 188 242
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 878 512 1,084
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments and
foreign currency transactions 3,842 284 53
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from futures transactions (560) (111) (35)
- ------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 3,282 173 18
- ------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on investments and
assets and liabilities in foreign currencies 14,977 2,240 3,090
- ------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 18,259 2,413 3,108
- ------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $19,137 2,925 4,192
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Less foreign taxes withheld of $4 and $2 in the Kemper Value+Growth and
Kemper-Dreman High Return Equity Portfolios, respectively.
(b) For the period from May 4, 1998 (commencement of operations) to December 31,
1998.
(c) For the period from May 5, 1998 (commencement of operations) to December 31,
1998.
See accompanying Notes to Financial Statements.
24
<PAGE> 26
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(B) PORTFOLIO(B) PORTFOLIO(C) PORTFOLIO(C)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
935 297 222 223 17 12 8
- ----------------------------------------------------------------------------------------------------
113 618 -- 384 107 16 13
- ----------------------------------------------------------------------------------------------------
1,048 915 222 607 124 28 21
- ----------------------------------------------------------------------------------------------------
137 306 31 125 41 12 9
- ----------------------------------------------------------------------------------------------------
13 37 9 44 35 116 162
- ----------------------------------------------------------------------------------------------------
1 6 1 9 8 7 7
- ----------------------------------------------------------------------------------------------------
-- -- -- 3 3 3 3
- ----------------------------------------------------------------------------------------------------
3 8 3 17 7 2 3
- ----------------------------------------------------------------------------------------------------
154 357 44 198 94 140 184
- ----------------------------------------------------------------------------------------------------
-- -- -- (55) (40) (122) (174)
- ----------------------------------------------------------------------------------------------------
154 357 44 143 54 18 10
- ----------------------------------------------------------------------------------------------------
894 558 178 464 70 10 11
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
70 (2,984) 128 7 3 (53) (110)
- ----------------------------------------------------------------------------------------------------
(58) -- -- 232 -- -- --
- ----------------------------------------------------------------------------------------------------
12 (2,984) 128 239 3 (53) (110)
- ----------------------------------------------------------------------------------------------------
1,250 8,770 127 2,597 305 147 53
- ----------------------------------------------------------------------------------------------------
1,262 5,786 255 2,836 308 94 (57)
- ----------------------------------------------------------------------------------------------------
2,156 6,344 433 3,300 378 104 (46)
- ----------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 27
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
MONEY MARKET
PORTFOLIO
------------------------
1998 1997
- -------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Net investment income $ 6,049 5,126
- -------------------------------------------------------------------------------------
Net realized gain (loss) -- --
- -------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -- --
- -------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,049 5,126
- -------------------------------------------------------------------------------------
Equalization credits (charges) -- --
- -------------------------------------------------------------------------------------
Distribution from net investment income (6,049) (5,126)
- -------------------------------------------------------------------------------------
Distribution from net realized gain -- --
- -------------------------------------------------------------------------------------
Total dividends to shareholders (6,049) (5,126)
- -------------------------------------------------------------------------------------
Net increase from capital share transactions 51,787 29,542
- -------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 51,787 29,542
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------
Beginning of year 100,143 70,601
- -------------------------------------------------------------------------------------
END OF YEAR $151,930 100,143
- -------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF YEAR $ -- --
- -------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
INTERNATIONAL
PORTFOLIO
------------------------
1998 1997
- -------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Net investment income (loss) $ 2,029 1,330
- -------------------------------------------------------------------------------------
Net realized gain (loss) 24,326 8,474
- -------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) (6,982) 6,353
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 19,373 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 3,629 29,920
- -------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 13,153 36,571
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Beginning of year 200,046 163,475
- -------------------------------------------------------------------------------------
END OF YEAR $213,199 200,046
- -------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF YEAR $ 1,756 3,281
- -------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE> 28
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>
27,359 24,613 40,669 30,537 1,675 2,204 6,436 5,950
- ---------------------------------------------------------------------------------------
45,478 112,479 1,609 2,226 (4,560) 91,317 1,541 (181)
- ---------------------------------------------------------------------------------------
43,475 (3,457) (33,856) 3,576 85,608 6,100 (1,055) 1,376
- ---------------------------------------------------------------------------------------
116,312 133,635 8,422 36,339 82,723 99,621 6,922 7,145
- ---------------------------------------------------------------------------------------
-- (285) -- 633 -- 1,028 -- 17
- ---------------------------------------------------------------------------------------
(24,932) (21,303) (29,505) (25,931) (1,863) (2,753) (5,813) (6,694)
- ---------------------------------------------------------------------------------------
(110,813) (87,579) -- -- (93,144) (111,508) -- --
- ---------------------------------------------------------------------------------------
(135,745) (108,882) (29,505) (25,931) (95,007) (114,261) (5,813) (6,694)
- ---------------------------------------------------------------------------------------
97,860 65,426 71,544 91,308 77,819 89,145 35,420 1,900
- ---------------------------------------------------------------------------------------
78,427 89,894 50,461 102,349 65,535 75,533 36,529 2,368
- ---------------------------------------------------------------------------------------
=======================================================================================
786,996 697,102 391,664 289,315 563,016 487,483 86,682 84,314
- ---------------------------------------------------------------------------------------
865,423 786,996 442,125 391,664 628,551 563,016 123,211 86,682
- ---------------------------------------------------------------------------------------
27,247 24,294 40,154 24,028 2,234 5,320 6,730 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>
(16) 197 1,701 474 4,433 1,918 1,076 484
- --------------------------------------------------------------------------------
(1,589) 25,239 286 141 15,335 4,262 (2,547) 759
- --------------------------------------------------------------------------------
31,648 2,506 402 152 17,408 13,595 (10,477) 5,315
- --------------------------------------------------------------------------------
30,043 27,942 2,389 767 37,176 19,775 (11,948) 6,558
- --------------------------------------------------------------------------------
-- 100 -- 713 -- 2,045 -- 505
- --------------------------------------------------------------------------------
-- (445) (587) (41) (1,327) (389) -- (234)
- --------------------------------------------------------------------------------
(25,813) (8,458) (199) -- (5,308) -- (2,220) --
- --------------------------------------------------------------------------------
(25,813) (8,903) (786) (41) (6,635) (389) (2,220) (234)
- --------------------------------------------------------------------------------
66,690 49,139 35,048 12,067 70,854 119,644 40,069 55,972
- --------------------------------------------------------------------------------
70,920 68,278 36,651 13,506 101,395 141,075 25,901 62,801
- --------------------------------------------------------------------------------
=======================================================================================
137,415 69,137 15,504 1,998 162,380 21,305 76,108 13,307
- --------------------------------------------------------------------------------
208,335 137,415 52,155 15,504 263,775 162,380 102,009 76,108
- --------------------------------------------------------------------------------
51 644 1,579 1,207 4,458 4,042 619 927
- --------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 29
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
VALUE+GROWTH
PORTFOLIO
----------------------
1998 1997
- -----------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
===================================================================================
<S> <C> <C>
Net investment income $ 878 327
- -----------------------------------------------------------------------------------
Net realized gain (loss) 3,282 2,051
- -----------------------------------------------------------------------------------
Change in unrealized appreciation 14,977 3,585
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations 19,137 5,963
- -----------------------------------------------------------------------------------
Equalization credits -- 233
- -----------------------------------------------------------------------------------
Distribution from net investment income -- (165)
- -----------------------------------------------------------------------------------
Distribution from net realized gain (2,504) --
- -----------------------------------------------------------------------------------
Total dividends to shareholders (2,504) (165)
- -----------------------------------------------------------------------------------
Net increase from capital share transactions 66,594 52,867
- -----------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 83,227 58,898
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
NET ASSETS
===================================================================================
Beginning of period 69,094 10,196
- -----------------------------------------------------------------------------------
END OF PERIOD $152,321 69,094
- -----------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD $ 880 524
- -----------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER
GLOBAL INCOME
PORTFOLIO
--------------------
1998 1997(A)
- ---------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
===================================================================================
<S> <C> <C>
Net investment income $ 178 59
- ---------------------------------------------------------------------------------
Net realized gain (loss) 128 19
- ---------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) 127 (24)
- ---------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 433 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 2,554 1,976
- ---------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 2,878 2,045
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
NET ASSETS
===================================================================================
Beginning of period 2,145 100
- ---------------------------------------------------------------------------------
END OF PERIOD $ 5,023 2,145
- ---------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF PERIOD $ 182 71
- ---------------------------------------------------------------------------------
</TABLE>
(a) For the period from May 1, 1997 (commencement of operations) to December 31,
1997.
(b) For the period from May 4, 1998 (commencement of operations) to December 31,
1998.
(c) For the period from May 5, 1998 (commencement of operations) to December 31,
1998.
See accompanying Notes to Financial Statements.
28
<PAGE> 30
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
HORIZON 20+ HORIZON 10+ HORIZON 5 BLUE CHIP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ------------------- ----------------
1998 1997 1998 1997 1998 1997 1998 1997(A)
==========================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
512 148 1,084 355 894 266 558 93
- ------------------------------------------------------------------------------
173 578 18 519 12 214 (2,984) (134)
- ------------------------------------------------------------------------------
2,240 885 3,090 840 1,250 375 8,770 536
- ------------------------------------------------------------------------------
2,925 1,611 4,192 1,714 2,156 855 6,344 495
- ------------------------------------------------------------------------------
-- 138 -- 358 -- 376 -- 181
- ------------------------------------------------------------------------------
(159) (57) (223) (76) (154) (43) (286) --
- ------------------------------------------------------------------------------
(637) -- (670) -- (460) -- -- --
- ------------------------------------------------------------------------------
(796) (57) (893) (76) (614) (43) (286) --
- ------------------------------------------------------------------------------
19,477 11,208 31,559 14,830 16,941 10,536 53,835 17,645
- ------------------------------------------------------------------------------
21,606 12,900 34,858 16,826 18,483 11,724 59,893 18,321
==============================================================================
16,659 3,759 22,553 5,727 14,258 2,534 18,421 100
- ------------------------------------------------------------------------------
38,265 16,659 57,411 22,553 32,741 14,258 78,314 18,421
- ------------------------------------------------------------------------------
473 279 1,193 737 993 655 365 274
- ------------------------------------------------------------------------------
</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
--------------------- --------------------- --------------------- ---------------------
1998(B) 1998(B) 1998(C) 1998(C)
=============================================================================================
<S> <C> <C> <C>
464 70 10 11
- -------------------------------------------------------------------------------------------------
239 3 (53) (110)
- -------------------------------------------------------------------------------------------------
2,597 305 147 53
- -------------------------------------------------------------------------------------------------
3,300 378 104 (46)
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
-- -- -- --
- -------------------------------------------------------------------------------------------------
55,993 15,137 3,479 3,048
- -------------------------------------------------------------------------------------------------
59,293 15,515 3,583 3,002
=================================================================================================
1 1 1 1
- -------------------------------------------------------------------------------------------------
59,294 15,516 3,584 3,003
- -------------------------------------------------------------------------------------------------
464 70 8 11
- -------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Investors Fund Series (the fund) is an open-end,
management investment company organized as a
business trust under the laws of Massachusetts. The
fund offers twenty portfolios.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES SECURITY VALUATION. Investments are stated at
value. The securities of the 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 the Nasdaq
Stock Market (Nasdaq), for which there have been
sales, are valued at the most recent sale price
reported. 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 is
used. Forward foreign currency exchange contracts
are valued at the prevailing forward exchange rates
of the underlying currencies on that day. Futures
contracts are valued at the most recent settlement
price.
Portfolio debt securities 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.
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-based values, 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.
All other securities are valued at their fair
market value as determined in good faith by the
Valuation Committee of the Board of Trustees.
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 rates 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.
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. 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
30
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS
fluctuations. No interest accrues to the portfolio
until payment takes place. At the time the
portfolio enters into this type of transaction, it
is required to segregate cash or other liquid
assets equal to the value of the securities
purchased. At December 31, 1998, the Kemper
Government Securities Portfolio had $2,018,000 of
purchase commitments outstanding (2% 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 regular trading on the Exchange for all
portfolios and at 11:00 a.m. (Central time) 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 portfolios
holding foreign securities does not take place
contemporaneously with the determination of the
foreign securities' prices.
FEDERAL INCOME TAXES. Each portfolio's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated investment companies, and to distribute
all of its taxable income to its shareholders.
Accordingly, each portfolio paid no federal income
taxes and no federal income tax provision was
required.
At December 31, 1998, Kemper High Yield, Kemper
Growth, Kemper Government Securities, Kemper Small
Cap Growth, Kemper Small Cap Value, Kemper Blue
Chip, Kemper Global Blue Chip, and Kemper
International Growth and Income Portfolios, had a
tax basis net capital loss carryforward of
approximately $16,910,000, $4,544,000, $3,167,000,
$1,588,000, $1,867,000, $3,062,000, $34,000 and
$72,000, respectively, which may be applied against
any realized net taxable gains of each succeeding
year until fully utilized or it will expire during
the period 1999 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.
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 (except the Kemper Money Market,
Kemper-Dreman High Return Equity, Kemper-Dreman
Financial Services, Kemper Global Blue Chip and
Kemper International Growth and Income 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
portion of the proceeds from sales and the cost of
redemptions of fund shares to undistributed
31
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS
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 equalization
accounting will result in simpler financial
statements. The cumulative effect of the
discontinuance of equalization accounting was to
increase (decrease) paid-in capital and (increase)
decrease undistributed net investment income
previously reported through December 31, 1997 for
the following portfolios by the amounts shown (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 investment
management fee based on 1/12 of the 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 Contrarian 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 $1 billion for the Kemper Global Blue
Chip Portfolio. For the year ended December 31,
1998, the fund incurred aggregate management fees
of $18,910,000, after a fee waiver 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 agreed to
temporarily 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 $390,000 for the period ended
December 31, 1998.
32
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS
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.
ZURICH/B.A.T MERGER. On September 7, 1998, Zurich
Insurance Company (Zurich), majority owner of
Scudder Kemper, entered into an agreement with
B.A.T Industries p.l.c. (B.A.T) pursuant to which
the financial services businesses of B.A.T were
combined with Zurich's businesses to form a new
global insurance and financial services company
known as Zurich Financial Services. Upon
consummation of the transaction, each portfolio's
investment management agreement with Scudder Kemper
was deemed to have been assigned and, therefore,
terminated. The Board of Trustees of the fund has
approved new investment management agreements with
Scudder Kemper, which are substantially identical
to the former investment management agreements,
except for the dates of execution and termination.
Shareholders approved the new investment management
agreements through a proxy solicitation that
concluded in mid-December.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation (SFAC), 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.
However, the portfolios incurred no accounting fees
for the period ended December 31, 1998, after a fee
waiver by Scudder Kemper.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the fund are also officers or directors of
Scudder Kemper. During the year ended December 31,
1998, the fund made no direct payments to its
officers and incurred trustees' fees of $292,000 to
independent trustees.
33
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended December 31, 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 $742,689 $704,048
Kemper High Yield 599,607 492,483
Kemper Growth 630,591 631,862
Kemper Government Securities 173,410 147,444
Kemper International 208,710 194,986
Kemper Small Cap Growth 461,833 416,036
Kemper Investment Grade Bond 62,782 27,670
Kemper Contrarian Value 173,594 107,430
Kemper Small Cap Value 85,120 33,877
Kemper Value+Growth 163,909 105,850
Kemper Horizon 20+ 33,870 15,975
Kemper Horizon 10+ 44,041 14,354
Kemper Horizon 5 25,857 9,822
Kemper Blue Chip 87,013 40,396
Kemper Global Income 15,005 12,386
Kemper-Dreman High Return Equity(a) 44,127 632
Kemper-Dreman Financial Services(a) 15,133 713
Kemper Global Blue Chip(b) 3,877 671
Kemper International Growth and Income(b) 3,733 823
</TABLE>
(a) For the period from May 4, 1998 to December 31,
1998.
(b) For the period from May 5, 1998 to December 31,
1998.
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following tables summarize the activity in
capital shares of each portfolio (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
KEMPER MONEY MARKET PORTFOLIO
Shares sold 232,701 $ 232,701 279,361 $ 279,361
------------------------------------------------------------------------------
Shares issued in reinvestment
of
dividends 5,991 5,991 5,015 5,015
------------------------------------------------------------------------------
238,692 238,692 284,376 284,376
------------------------------------------------------------------------------
Shares redeemed (186,905) (186,905) (254,834) (254,834)
------------------------------------------------------------------------------
Net increase from capital
share transactions 51,787 $ 51,787 29,542 $ 29,542
------------------------------------------------------------------------------
KEMPER TOTAL RETURN PORTFOLIO
Shares sold 26,829 $ 107,163 20,361 $ 52,952
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 52,164 135,745 46,559 108,883
------------------------------------------------------------------------------
78,993 242,908 66,920 161,835
------------------------------------------------------------------------------
Shares redeemed (41,381) (145,048) (35,664) (96,409)
------------------------------------------------------------------------------
Net increase from capital
share transactions 37,612 $ 97,860 31,256 $ 65,426
------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
KEMPER HIGH YIELD PORTFOLIO
Shares sold 160,376 $ 196,674 153,373 $ 184,650
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 23,375 29,505 22,228 25,931
------------------------------------------------------------------------------
183,751 226,179 175,601 210,581
------------------------------------------------------------------------------
Shares redeemed (125,724) (154,635) (99,314) (119,273)
------------------------------------------------------------------------------
Net increase from capital
share transactions 58,027 $ 71,544 76,287 $ 91,308
------------------------------------------------------------------------------
KEMPER GROWTH PORTFOLIO
Shares sold 23,253 $ 65,879 17,325 $ 49,729
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 31,338 95,007 49,988 114,261
------------------------------------------------------------------------------
54,591 160,886 67,313 163,990
------------------------------------------------------------------------------
Shares redeemed (29,621) (83,067) (24,302) (74,845)
------------------------------------------------------------------------------
Net increase from capital
share transactions 24,970 $ 77,819 43,011 $ 89,145
------------------------------------------------------------------------------
KEMPER GOVERNMENT SECURITIES PORTFOLIO
Shares sold 61,860 $ 71,335 17,121 $ 16,263
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 5,053 5,813 5,997 6,694
------------------------------------------------------------------------------
66,913 77,148 23,118 22,957
------------------------------------------------------------------------------
Shares redeemed (36,729) (41,728) (21,158) (21,057)
------------------------------------------------------------------------------
Net increase from capital
share transactions 30,184 $ 35,420 1,960 $ 1,900
------------------------------------------------------------------------------
KEMPER INTERNATIONAL PORTFOLIO
Shares sold 25,667 $ 36,727 36,340 $ 58,360
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 1,492 9,901 6,447 9,607
------------------------------------------------------------------------------
27,159 46,628 42,787 67,967
------------------------------------------------------------------------------
Shares redeemed (25,617) (42,999) (23,422) (38,047)
------------------------------------------------------------------------------
Net increase from capital
share transactions 1,542 $ 3,629 19,365 $ 29,920
------------------------------------------------------------------------------
KEMPER SMALL CAP GROWTH PORTFOLIO
Shares sold 31,582 $ 57,595 34,187 $ 62,047
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 13,797 25,813 6,358 8,904
------------------------------------------------------------------------------
45,379 83,408 40,545 70,951
------------------------------------------------------------------------------
Shares redeemed (9,476) (16,718) (11,990) (21,812)
------------------------------------------------------------------------------
Net increase from capital
share transactions 35,903 $ 66,690 28,555 $ 49,139
------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
KEMPER INVESTMENT GRADE BOND PORTFOLIO
Shares sold 36,790 $ 41,663 13,271 $ 13,473
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 715 785 40 41
------------------------------------------------------------------------------
37,505 42,448 13,311 13,514
------------------------------------------------------------------------------
Shares redeemed (6,587) (7,400) (1,377) (1,447)
------------------------------------------------------------------------------
Net increase from capital
share transactions 30,918 $ 35,048 11,934 $ 12,067
------------------------------------------------------------------------------
KEMPER CONTRARIAN VALUE PORTFOLIO
Shares sold 60,234 $ 98,369 100,098 $ 135,103
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 3,981 6,635 324 389
------------------------------------------------------------------------------
64,215 105,004 100,422 135,492
------------------------------------------------------------------------------
Shares redeemed (21,099) (34,150) (11,573) (15,848)
------------------------------------------------------------------------------
Net increase from capital
share transactions 43,116 $ 70,854 88,849 $ 119,644
------------------------------------------------------------------------------
KEMPER SMALL CAP VALUE PORTFOLIO
Shares sold 41,702 $ 48,651 55,160 $ 63,180
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 1,664 2,220 239 234
------------------------------------------------------------------------------
43,366 50,871 55,399 63,414
------------------------------------------------------------------------------
Shares redeemed (9,611) (10,802) (6,460) (7,442)
------------------------------------------------------------------------------
Net increase from capital
share transactions 33,755 $ 40,069 48,939 $ 55,972
------------------------------------------------------------------------------
KEMPER VALUE+GROWTH PORTFOLIO
Shares sold 48,725 $ 74,841 42,473 $ 56,712
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 1,557 2,504 161 165
------------------------------------------------------------------------------
50,282 77,345 42,634 56,877
------------------------------------------------------------------------------
Shares redeemed (7,607) (10,751) (3,047) (4,010)
------------------------------------------------------------------------------
Net increase from capital
share transactions 42,675 $ 66,594 39,587 $ 52,867
------------------------------------------------------------------------------
KEMPER HORIZON 20+ PORTFOLIO
Shares sold 14,868 $ 21,619 9,642 $ 12,277
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 532 796 51 56
------------------------------------------------------------------------------
15,400 22,415 9,693 12,333
------------------------------------------------------------------------------
Shares redeemed (2,099) (2,938) (858) (1,125)
------------------------------------------------------------------------------
Net increase from capital
share transactions 13,301 $ 19,477 8,835 $ 11,208
------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
KEMPER HORIZON 10+ PORTFOLIO
Shares sold 26,145 $ 34,705 13,389 $ 16,073
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 651 893 70 75
------------------------------------------------------------------------------
26,796 35,598 13,459 16,148
------------------------------------------------------------------------------
Shares redeemed (3,114) (4,039) (1,099) (1,318)
------------------------------------------------------------------------------
Net increase from capital
share transactions 23,682 $ 31,559 12,360 $ 14,830
------------------------------------------------------------------------------
KEMPER HORIZON 5 PORTFOLIO
Shares sold 14,986 $ 18,592 10,209 $ 11,525
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 486 614 40 43
------------------------------------------------------------------------------
15,472 19,206 10,249 11,568
------------------------------------------------------------------------------
Shares redeemed (2,036) (2,265) (910) (1,032)
------------------------------------------------------------------------------
Net increase from capital
share transactions 13,436 $ 16,941 9,339 $ 10,536
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MAY 1 TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
KEMPER BLUE CHIP PORTFOLIO
Shares sold 47,016 $55,283 17,303 $18,608
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 232 286 -- --
------------------------------------------------------------------------------
47,248 55,569 17,303 18,108
------------------------------------------------------------------------------
Shares redeemed (1,595) (1,734) (888) (963)
------------------------------------------------------------------------------
Net increase from capital
share transactions 45,653 $53,835 16,415 $17,645
------------------------------------------------------------------------------
KEMPER GLOBAL INCOME PORTFOLIO
Shares sold 4,043 $ 4,254 2,953 $ 2,947
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 107 109 -- --
------------------------------------------------------------------------------
4,150 4,363 2,953 2,947
------------------------------------------------------------------------------
Shares redeemed (1,705) (1,809) (968) (971)
------------------------------------------------------------------------------
Net increase from capital
share transactions 2,445 $ 2,554 1,985 $ 1,976
------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MAY 4 TO
DECEMBER 31, 1998
----------------------
SHARES AMOUNT
<S> <C> <C>
KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO
Shares sold 57,811 $56,148
---------------------------------------------------------------------------
Shares redeemed (161) (155)
---------------------------------------------------------------------------
Net increase from capital share transactions 57,650 $55,993
---------------------------------------------------------------------------
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
Shares sold 16,660 $15,821
---------------------------------------------------------------------------
Shares redeemed (793) (684)
---------------------------------------------------------------------------
Net increase from capital share transactions 15,867 $15,137
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MAY 5 TO
DECEMBER 31, 1998
--------------------
SHARES AMOUNT
<S> <C> <C>
KEMPER GLOBAL BLUE CHIP PORTFOLIO
Shares sold 3,745 $3,561
---------------------------------------------------------------------------
Shares redeemed (85) (82)
---------------------------------------------------------------------------
Net increase from capital share transactions 3,660 $3,479
---------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO
Shares sold 3,322 $3,073
---------------------------------------------------------------------------
Shares redeemed (29) (25)
---------------------------------------------------------------------------
Net increase from capital share transactions 3,293 $3,048
---------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6 FINANCIAL FUTURES
CONTRACTS The 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
December 31, 1998, the market value of assets
pledged by the portfolios to cover margin
requirements for open futures positions was
$105,000 and $126,000 for the Kemper-Dreman High
Return Equity and Kemper Government Securities
Portfolios, respectively. The portfolios also held
liquid securities in excess of the face amount of
the open futures contracts. At December 31, 1998,
the portfolios had the following futures contracts
open, which expire in March, 1999:
<TABLE>
<CAPTION>
FACE GAIN (LOSS)
PORTFOLIO TYPE AMOUNT POSITION AT 12/31/98
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper-Dreman High
Return Equity S&P 500 $9,296,000 Long $396,000
--------------------------------------------------------------------------------
Kemper Government U.S. Treasury Note 2,483,000 Short 15,000
Securities U.S. Treasury Bond 778,000 Long (12,000)
--------------------------------------------------------------------------------
$ 3,000
--------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 December 31,
1998, the portfolio had the following forward
foreign currency contracts outstanding with
settlement dates in February and March 1999.
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY AMOUNT IN GAIN (LOSS) AT
TO BE DELIVERED U.S. DOLLARS 12/31/98
-------------------------------------------------------------------------------
<C> <S> <C> <C>
460,000 Canadian Dollars $299,000 $(1,000)
-------------------------------------------------------------------------------
450,000 New Zealand Dollars 245,000 8,000
-------------------------------------------------------------------------------
200,000 Swiss Francs 150,000 (3,000)
-------------------------------------------------------------------------------
NET UNREALIZED GAIN $ 4,000
-------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 41
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER MONEY MARKET PORTFOLIO
YEAR ENDED DECEMBER 31,
---------------------------------------------
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------
Net investment income .05 .05 .05 .06 .04
- --------------------------------------------------------------------------------------------------
Less dividends declared .05 .05 .05 .06 .04
- --------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------
TOTAL RETURN 5.15% 5.25 5.03 5.66 3.96
- --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------------------------
Expenses .54% .55 .60 .55 .53
- --------------------------------------------------------------------------------------------------
Net investment income 5.02% 5.14 4.90 5.52 3.95
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $151,930 100,143 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
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 2.822 2.815 2.579 2.112 2.586
- -----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .086 .090 .084 .084 .069
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .317 .377 .322 .453 (.313)
- -----------------------------------------------------------------------------------------------------
Total from investment operations .403 .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 year $ 2.735 2.822 2.815 2.579 2.112
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN 15.14% 19.96 16.76 25.97 (9.50)
- --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------------------------
Expenses .60% .60 .59 .60 .61
- -----------------------------------------------------------------------------------------------------
Net investment income 3.33% 3.32 3.21 3.52 3.13
- -----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $865,423 786,996 697,102 659,894 586,594
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 81% 122 90 118 128
- -----------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 42
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER HIGH YIELD PORTFOLIO
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.296 1.281 1.259 1.185 1.338
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .106 .116 .120 .125 .116
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (.085) .019 .042 .069 (.149)
- -----------------------------------------------------------------------------------------------
Total from investment operations .021 .135 .162 .194 (.033)
- -----------------------------------------------------------------------------------------------
Less distribution from net investment
income .090 .120 .140 .120 .120
- -----------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.227 1.296 1.281 1.259 1.185
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 1.45% 11.61 14.06 17.40 (2.25)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses .65% .65 .65 .65 .65
- -----------------------------------------------------------------------------------------------
Net investment income 9.36% 9.20 9.70 10.27 9.49
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $442,125 391,664 289,315 257,377 219,415
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 74% 90 98 90 98
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
KEMPER GROWTH PORTFOLIO
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 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) .459 .448 .589 .793 (.138)
- -----------------------------------------------------------------------------------------------
Total from investment operations .466 .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 year $ 2.957 3.001 3.371 3.262 2.665
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 15.10% 21.34 21.63 32.97 (4.02)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses .66% .65 .64 .64 .66
- -----------------------------------------------------------------------------------------------
Net investment income .28% .42 .94 1.15 .69
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $628,551 563,016 487,483 414,533 321,708
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 109% 170 175 88 106
- -----------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 43
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER GOVERNMENT SECURITIES PORTFOLIO
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.207 1.207 1.269 1.142 1.267
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .062 .084 .085 .084 .067
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .019 .016 (.057) .123 (.102)
- -----------------------------------------------------------------------------------------------
Total from investment operations .081 .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 year $ 1.208 1.207 1.207 1.269 1.142
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 7.03% 8.96 2.56 18.98 (2.74)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses .65% .64 .66 .65 .63
- -----------------------------------------------------------------------------------------------
Net investment income 6.27% 7.12 7.09 7.08 5.69
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $123,211 86,682 84,314 95,185 95,782
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 142% 179 325 275 606
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
KEMPER INTERNATIONAL PORTFOLIO
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.615 1.564 1.371 1.244 1.306
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .017 .011 .011 .018 .009
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .148 .130 .212 .139 (.056)
- -----------------------------------------------------------------------------------------------
Total from investment operations .165 .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 year $ 1.700 1.615 1.564 1.371 1.244
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 10.02% 9.46 16.49 12.83 (3.59)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses .93% .91 .96 .92 .93
- -----------------------------------------------------------------------------------------------
Net investment income .96% .71 .89 1.39 .74
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $213,199 200,046 163,475 134,481 122,710
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 90% 79 87 126 107
- -----------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 44
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER SMALL CAP GROWTH PORTFOLIO
YEAR ENDED DECEMBER 31, MAY 2 TO
------------------------------------ DECEMBER 31,
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 -- .004 .002 .005 .008
- ---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .342 .488 .369 .307 .031
- ---------------------------------------------------------------------------------------------------------
Total from investment operations .342 .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 $ 1.971 1.969 1.677 1.346 1.039
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 18.37% 34.20 28.04 30.07 3.95
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------
Expenses .70% .71 .75 .87 1.25
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) (.01)% .20 .15 .42 .91
- ---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $208,335 137,415 69,137 35,373 12,909
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 276% 330 156 81 58
- ---------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 45
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER
INVESTMENT GRADE CONTRARIAN VALUE
BOND PORTFOLIO PORTFOLIO
-------------------------------- ---------------------------------
YEAR ENDED MAY 1 YEAR ENDED MAY 1
DEC. 31, TO DEC. 31, TO
-------------------- 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 .032 .066 .031 .026 .031 .015
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .055 .026 .005 .263 .323 .159
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations .087 .092 .036 .289 .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 $ 1.165 1.118 1.036 1.757 1.518 1.174
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 7.93% 9.04 3.57 19.26 30.38 17.36
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION (ANNUALIZED)
- ----------------------------------------------------------------------------------------------------------------------
Expenses .67% .80 .87 .78 .80 .90
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 5.50% 6.23 4.93 2.02 2.38 2.42
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION (ANNUALIZED)
- ----------------------------------------------------------------------------------------------------------------------
Expenses .67% .80 .87 .78 .80 .92
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 5.50% 6.23 4.93 2.02 2.38 2.40
- ----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $52,155 15,504 1,998 263,775 162,380 21,305
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 130% 311 75 57 46 57
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE> 46
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
SMALL CAP VALUE+ HORIZON 20+
VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
--------------------------- --------------------------- --------------------------
YEAR ENDED MAY 1 YEAR ENDED MAY 1 YEAR ENDED MAY 1
DEC. 31, TO DEC. 31, TO DEC. 31, TO
---------------- DEC. 31, ---------------- 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
- ------------------------------------------------------------------------------------------
.009 .012 .013 .008 .012 .008 .019 .020 .012
- ------------------------------------------------------------------------------------------
(.141) .206 .006 .278 .277 .138 .160 .214 .142
- ------------------------------------------------------------------------------------------
(.132) .218 .019 .286 .289 .146 .179 .234 .154
- ------------------------------------------------------------------------------------------
-- .010 -- -- .010 -- .010 .010 --
- ------------------------------------------------------------------------------------------
.030 -- -- .040 -- -- .040 -- --
- ------------------------------------------------------------------------------------------
.030 .010 -- .040 .010 -- .050 .010 --
- ------------------------------------------------------------------------------------------
1.065 1.227 1.019 1.671 1.425 1.146 1.507 1.378 1.154
- ------------------------------------------------------------------------------------------
(11.25) 21.73 1.86 20.17 25.47 14.60 13.01 20.48 15.37
- ------------------------------------------------------------------------------------------
.80 .84 .90 .78 .84 .90 .67 .93 .81
- ------------------------------------------------------------------------------------------
1.15 1.18 2.25 .80 .95 .97 1.84 1.58 1.71
- ------------------------------------------------------------------------------------------
.80 .84 .92 .78 .84 1.01 .67 .93 1.13
- ------------------------------------------------------------------------------------------
1.15 1.18 2.23 .80 .95 .86 1.84 1.58 1.39
- ------------------------------------------------------------------------------------------
102,009 76,108 13,307 152,321 69,094 10,196 38,265 16,659 3,759
- ------------------------------------------------------------------------------------------
43 22 61 102 50 25 55 75 60
- ------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 47
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER
HORIZON 10+ HORIZON 5
PORTFOLIO PORTFOLIO
--------------------------------- ---------------------------------
YEAR ENDED MAY 1 YEAR ENDED MAY 1
DEC. 31, TO DEC. 31, TO
-------------------- 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) .020 .034 .018 .028 .043 .023
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .125 .151 .096 .093 .095 .073
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .145 .185 .114 .121 .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 $ 1.394 1.289 1.114 1.305 1.224 1.096
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 11.30% 16.77 11.37 10.00 12.70 9.59
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION (ANNUALIZED)
- ------------------------------------------------------------------------------------------------------------------------------
Expenses .64% .83 .78 .66 .97 .83
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 2.84% 2.77 2.69 3.85 3.63 3.60
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION (ANNUALIZED)
- ------------------------------------------------------------------------------------------------------------------------------
Expenses .64% .83 1.01 .66 .97 1.01
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.84% 2.77 2.46 3.85 3.63 3.42
- ------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $ 57,411 22,553 5,727 32,741 14,258 2,534
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 35% 67 76 42 89 13
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations
46
<PAGE> 48
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
------------------- ------------------- -------------- ------------- --------- -------------
YEAR MAY 1 YEAR MAY 1 MAY 4 MAY 4 MAY 5 MAY 5
ENDED TO ENDED TO TO TO TO TO
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1998 1997 1998 1997 1998(A) 1998(A) 1998(A) 1998(A)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
1.115 1.000 1.029 1.000 1.000 1.000 1.000 1.000
- ----------------------------------------------------------------------------------------------------------
.010 .017 .024 .036 .008 .004 .003 .003
- ----------------------------------------------------------------------------------------------------------
.145 .098 .086 (.007) .020 (.026) (.024) (.091)
- ----------------------------------------------------------------------------------------------------------
.155 .115 .110 .029 .028 (.022) (.021) (.088)
- ----------------------------------------------------------------------------------------------------------
.010 -- .020 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------
-- -- .010 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------
.010 -- .030 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------
1.260 1.115 1.109 1.029 1.028 .978 .979 .912
- ----------------------------------------------------------------------------------------------------------
13.84 11.54 10.98 2.87 2.80 (2.20) (2.10) (8.80)
- ----------------------------------------------------------------------------------------------------------
.76 .95 1.08 1.10 .87 .99 1.56 1.13
- ----------------------------------------------------------------------------------------------------------
1.18 2.07 4.32 5.36 2.77 1.29 .91 1.13
- ----------------------------------------------------------------------------------------------------------
.76 .95 1.08 1.10 1.20 1.73 12.32 19.55
- ----------------------------------------------------------------------------------------------------------
1.18 2.07 4.32 5.36 2.44 .55 (9.85) (17.29)
- ----------------------------------------------------------------------------------------------------------
78,314 5,023 5,023 2,145 59,294 15,516 3,584 3,003
- ----------------------------------------------------------------------------------------------------------
102 78 330 290 5 6 67 100
- ----------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 49
FINANCIAL HIGHLIGHTS
TAX INFORMATION
Kemper Total Return, Kemper Growth, Kemper International, Kemper Small Cap
Growth, Kemper Contrarian Value, Kemper Small Cap Value, Kemper Value+Growth,
Kemper Horizon 20+, Kemper Horizon 10+, and Kemper Horizon 5 Portfolios, paid
distributions of $.24, $.15, $.06, $.09, $.01, $.01, $.01, $.01, $.01 and $.01
per share, respectively, from net long-term capital gains during the year ended
December 31, 1998.
Pursuant to Section 852 of the Internal Revenue Code, the Kemper Total Return,
Kemper International, Kemper Investment Grade Bond, Kemper Contrarian Value,
Kemper Value+Growth, Kemper Horizon 20+, Kemper Horizon 10+, Kemper Horizon 5,
Kemper Global Income, and Kemper-Dreman High Return Equity Portfolios designate
$42,461,000, $24,343,000, $27,000, $3,434,000, $3,283,000, $174,000, $22,000,
$13,000, $2,000 and $377,000, respectively, as capital gain dividends for the
year ended December 31, 1998.
For corporate shareholders of Kemper Total Return, Kemper Growth, Kemper Small
Cap Growth, Kemper Contrarian Value, Kemper Small Cap Value, Kemper
Value+Growth, Kemper Horizon 20+, Kemper Horizon 10+, Kemper Horizon 5, and
Kemper Blue Chip Portfolios, 10%, 7%, 2%, 28%, 25%, 26%, 13%, 12%, 7% and 61%,
respectively, of the income dividends paid during the year ended December 31,
1998 qualified for the dividends received deduction.
The Kemper International Portfolio paid foreign taxes of $455,000 and earned
$3,806,000 of foreign source income during the year ended December 31, 1998.
Pursuant to Section 853 of the Internal Revenue Code, the Fund designates
$268,000 as foreign taxes paid and $2,676,000 as income earned from foreign
sources for the year ended December 31, 1998.
48
<PAGE> 50
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER MONEY MARKET PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
CORPORATE OBLIGATIONS VALUE
- ---------------------------------------------------------
- ---------------------------------------------------------
BANKING--6.8%
- ---------------------------------------------------------
<S> <C>
Nordebanken, N.A.
5.33%, 2/17/99 $ 4,966
UBS Finance, Inc.
5.32%, 1/5/99 4,997
-----------------------------------------------------
9,963
- ----------------------------------------------------------
BUSINESS LOANS--12.3%
- ----------------------------------------------------------
International Securitization Corp.
5.36%, 1/20/99 4,986
Monte Rosa Capital Corp.
5.32%, 1/26/99 4,982
Preferred Receivable Funding
5.26%, 2/25/99 2,976
Sheffield Receivables Corp.
5.28%, 1/29/99 4,980
-----------------------------------------------------
17,924
- ----------------------------------------------------------
CAPITAL AND EQUIPMENT LENDING--4.8%
- ----------------------------------------------------------
Ace Overseas Corp.
5.24%, 1/14/99 4,991
(a) Sigma Finance, Inc.
4.88%, 4/27/99 2,000
-----------------------------------------------------
6,991
- ----------------------------------------------------------
CAPTIVE BUSINESS LENDING--5.5%
- ----------------------------------------------------------
(a) FINOVA Capital Corp.
5.29%, 3/11/99 3,000
Fountain Square Commercial Funding
5.42%, 1/4/99 4,997
-----------------------------------------------------
7,997
- ----------------------------------------------------------
CONSUMER LENDING--2.0%
- ----------------------------------------------------------
(a) Countrywide Home Loan
5.20%, 1/26/99 3,000
-----------------------------------------------------
<CAPTION>
VALUE
<S> <C>
FINANCIAL SERVICES--6.8%
(a) Bear Stearns Cos., Inc.
5.52%, 1/19/99 $ 2,000
(a) CS First Boston
4.86%, 1/4/99 3,000
(a) Lehman Brothers Holdings, Inc.
5.03%, 1/20/99 2,000
(a) Merrill Lynch & Co., Inc.
5.54%, 1/21/99 3,000
-----------------------------------------------------
10,000
-----------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--38.2%
(AVERAGE MATURITY: 27 DAYS) 55,875
-----------------------------------------------------
- ----------------------------------------------------------
CERTIFICATES OF DEPOSIT AND BANK NOTES
- ----------------------------------------------------------
(a) Comerica Bank
5.45%, 1/25/99 2,499
(a) First Union National Bank
5.42%, 2/16/99 3,000
(a) Huntington National Bank
5.61%, 1/5/99 2,999
(a) J.P. Morgan & Co., Inc.
5.48%, 1/7/99 2,999
(a) Northern Trust Corp.
5.45%, 1/8/99 2,999
(a) Svenska Handelsbanken
5.34%, 2/18/99 3,000
(a) Toronto-Dominion Bank
5.41%, 1/13/99 2,998
-----------------------------------------------------
TOTAL CERTIFICATES
OF DEPOSIT AND BANK NOTES--14.0%
(AVERAGE MATURITY: 22 DAYS) 20,494
-----------------------------------------------------
- ----------------------------------------------------------
SHORT-TERM NOTES--47.8%
- ----------------------------------------------------------
Federal Home Loan Bank
4.70%-5.09%, 1/4/99
(AVERAGE MATURITY: 4 DAYS) 69,972
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(AVERAGE MATURITY: 26 DAYS) $146,341
-----------------------------------------------------
</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 December
31, 1998. The dates shown represent the demand date or next interest rate
change date.
See accompanying Notes to Financial Statements.
49
<PAGE> 51
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER TOTAL RETURN PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
<S> <C> <C>
U.S. TREASURY BONDS
11.875%, 2003 $ 16,585 $ 21,630
10.75%, 2003 4,265 5,235
10.75%, 2005 16,495 22,003
10.375%, 2009 4,865 6,214
9.125%, 2009 4,870 5,836
12.75%, 2010 9,200 13,363
13.875%, 2011 16,180 25,046
12.00%, 2013 15,710 23,990
13.25%, 2014 11,700 19,371
8.75%, 2020 4,000 5,692
6.00%, 2026 1,030 1,124
6.625%, 2027 1,900 2,247
-----------------------------------------------------
151,751
U.S. TREASURY NOTES
8.75%, 2000 12,500 13,285
7.75%, 2000 6,000 6,190
6.375%, 2000 1,000 1,017
7.875%, 2001 7,000 7,548
7.75%, 2001 9,000 9,555
6.625%, 2002 3,340 3,535
6.25%, 2003 1,800 1,903
5.50%, 2003 8,000 8,240
5.25%, 2003 750 769
7.25%, 2004 1,750 1,961
5.875%, 2004 175 185
7.50%, 2005 7,005 8,020
6.625%, 2007 275 309
5.625%, 2008 200 213
-----------------------------------------------------
62,730
PROVINCE OF QUEBEC, CANADA
8.625%, 2005 1,500 1,725
-----------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--25.3%
(Cost: $211,836) 216,206
-----------------------------------------------------
COMMON STOCKS
BASIC INDUSTRIES--.3%
PPG Industries, Inc. 45,000shs. 2,621
-----------------------------------------------------
CAPITAL GOODS--3.9%
Emerson Electric Co. 100,000 6,050
General Electric Co. 180,000 18,371
Sundstrand Corp. 45,000 2,334
Xerox Corp. 58,900 6,950
-----------------------------------------------------
33,705
NUMBER
OF SHARES VALUE
GOVERNMENT OBLIGATIONS OF SHARES VALUE
CONSUMER CYCLICALS--8.0%
Black & Decker Corp. 80,000 $ 4,485
(b) Consolidated Stores Corp. 117,500 2,372
(b) Federated Department Stores 90,000 3,921
Home Depot 80,000 4,895
Infinity Broadcasting 101,900 2,790
(b) Liberty Media Group 165,000 7,600
May Department Stores Co. 72,000 4,347
R. R. Donnelley & Sons Co. 100,000 4,381
(b) SPX Corp. 35,000 2,345
Sears, Roebuck & Co. 160,000 6,800
Time Warner, Inc. 180,000 11,171
Tribune Co. 40,000 2,640
(b) Univision Communications,
Inc. 190,000 6,876
Wal-Mart Stores, Inc. 40,000 3,257
-----------------------------------------------------
67,880
CONSUMER DURABLES--1.9%
Federal-Mogul Corp. 69,100 4,111
Leggett & Platt, Inc. 240,000 5,280
Stanley Works 230,000 6,383
-----------------------------------------------------
15,774
CONSUMER STAPLES--5.8%
Albertson's, Inc. 100,000 6,369
Coca-Cola Co. 45,000 3,009
ConAgra, Inc. 210,000 6,615
Dial Corp. 250,000 7,219
H.J. Heinz Co. 60,000 3,398
McCormick & Co., Inc. 200,000 6,763
Newell Co. 125,000 5,156
PepsiCo, Inc. 155,000 6,345
Procter and Gamble Co. 55,000 5,022
-----------------------------------------------------
49,896
ENERGY--4.4%
Anadarko Petroleum Corp. 125,000 3,859
Atlantic Richfield Co. 40,000 2,610
(b) Conoco, Inc. 155,000 3,236
Enron Corp. 45,000 2,568
Exxon Corp. 83,200 6,084
Mobil Corp. 70,000 6,099
Royal Dutch Petroleum 100,000 4,788
Texaco, Inc. 80,000 4,230
Unocal Corp. 140,000 4,086
-----------------------------------------------------
37,560
FINANCE--10.9%
AFLAC, Inc. 110,600 4,866
Allstate Corp. 80,000 3,090
American Express Co. 30,000 3,067
American General Corp. 50,000 3,900
American International
Group, Inc. 62,500 6,039
AmSouth Bancorporation 75,000 3,422
BankBoston Corp. 130,000 5,062
Bank One Corp. 80,000 4,085
</TABLE>
50
<PAGE> 52
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------
FINANCE--CONTINUED
- -------------------------------------------------------
CIGNA Corp. 100,000 $ 7,731
Chase Manhattan Corp. 75,000 5,105
Chevron Corp. 80,000 6,635
Citigroup, Inc. 130,000 6,435
Federal Home Loan Mortgage
Corp. 40,000 2,578
Federal National Mortgage
Association 40,000 2,960
Household International 199,662 7,912
Jefferson-Pilot Corp. 107,900 8,093
MGIC Investment Corp. 110,000 4,379
PNC Bank Corp. 90,000 4,871
Wells Fargo & Co. 80,000 3,195
-----------------------------------------------------
93,425
- ----------------------------------------------------------
HEALTH CARE--9.0%
- ----------------------------------------------------------
Abbott Laboratories 200,000 9,800
American Home Products Corp. 80,000 4,505
Baxter International, Inc. 65,000 4,180
Bristol-Myers Squibb Co. 54,000 7,226
Glaxo Wellcome, PLC 155,000 10,773
Eli Lilly & Co. 85,000 7,554
Novartis 65,000 6,386
Perkin-Elmer Corp. 65,000 6,342
Pfizer, Inc. 30,000 3,763
Schering-Plough PLC 60,000 3,315
SmithKline Beecham
Group PLC 90,000 6,255
Sofamor-Danek Group, Inc. 55,000 6,696
-----------------------------------------------------
76,795
- ----------------------------------------------------------
TECHNOLOGY--10.7%
- ----------------------------------------------------------
AMP, Inc. 120,000 6,248
Applied Materials 80,000 3,415
Ascend Communications, Inc. 75,000 4,931
(b) Cisco Systems 67,500 6,265
Compaq Computer Corp. 130,000 5,452
(b) EMC Corp. 45,000 3,825
Hewlett-Packard Co. 105,000 7,173
Intel Corp. 45,000 5,335
International Business
Machines Corp. 60,000 11,085
Intuit 40,000 2,900
Motorola 130,000 7,938
(b) Oracle Corp. 145,000 6,253
(b) Seagate Technology, Inc. 140,000 4,235
(b) Solectron Corp. 50,000 4,647
(b) Sun Microsystems 65,000 5,566
Texas Instruments, Inc. 25,000 2,139
(b) Xilinx, Inc. 55,000 3,582
-----------------------------------------------------
90,989
- ----------------------------------------------------------
TRANSPORTATION--1.0%
- ----------------------------------------------------------
CSX Corp. 70,000 2,905
Canadian Pacific, Ltd. 150,000 2,831
Norfolk Southern Corp. 100,000 3,169
-----------------------------------------------------
8,905
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------
UTILITIES--8.3%
- ----------------------------------------------------------
AT&T Corp. 140,000 $ 10,535
Ameritech Corp. 120,000 7,605
Bell Atlantic Corp. 110,000 6,249
BellSouth Corp. 150,000 7,481
Cincinnati Bell, Inc. 290,000 10,966
Frontier Corp. 200,000 6,800
MCI WorldCom, Inc. 100,000 7,175
SBC Communications, Inc. 100,000 5,363
US West, Inc. 135,000 8,724
-----------------------------------------------------
70,898
-----------------------------------------------------
TOTAL COMMON STOCKS--64.2%
(Cost: $427,909) 548,448
-----------------------------------------------------
CORPORATE OBLIGATIONS
- ----------------------------------------------------------
BASIC INDUSTRIES--1.2%
- ----------------------------------------------------------
Euramax International, PLC,
11.25%, 2006 $ 2,850 2,850
Gaylord Container Corp.,
9.875%, 2008 2,500 1,875
Kevco, 10.375%, 2007 545 491
MMI Products, Inc.,
11.25%, 2007 400 432
Plainwell, Inc., 11.00%,
2008 1,020 796
Renco Steel Holdings,
10.875%, 2005 2,500 2,150
Stone Container Corp.,
12.58%, 2016 1,000 1,060
Stone Container Finance
Corp., 11.50%, 2006 500 523
-----------------------------------------------------
10,177
- ----------------------------------------------------------
CAPITAL GOODS--.4%
- ----------------------------------------------------------
General Electric Co.
8.75%, 2007 1,100 1,332
8.625%, 2008 400 488
Neenah Corp., 11.125%, 2007 1,000 1,028
Nortek, Inc., 9.875%, 2004 90 93
Raytheon Co., 6.75%, 2007 650 688
-----------------------------------------------------
3,629
- ----------------------------------------------------------
CONSUMER CYCLICALS--4.0%
- ----------------------------------------------------------
AFC Enterprises, Inc.,
10.25%, 2007 700 732
AMF Group
(a) 12.25%, 2006 542 310
10.875%, 2006 2,100 1,691
American Cellular Corp.,
10.50%, 2008 1,120 1,095
American Radio Systems,
9.00%, 2006 810 886
Big Flower Press, Inc.,
8.875%, 2007 2,500 2,500
CSC Holdings, Inc.,
9.25%, 2005 1,820 1,947
Chancellor Media Corp.,
9.00%, 2008 1,240 1,314
Cinemark USA, Inc.,
9.625%, 2008 1,360 1,421
</TABLE>
51
<PAGE> 53
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------
CONSUMER CYCLICALS--CONTINUED
- -------------------------------------------------------
Comcast Cable
Communications, Inc.,
8.50%, 2027 $ 325 $ 401
Comcast Corp., 9.375%, 2005 1,500 1,598
Dayton Hudson Corp.,
7.50%, 2006 600 663
Delco Remy International,
10.625%, 2006 860 915
(a) Diamond Cable
Communications, PLC
11.75%, 2005 260 215
10.75%, 2007 740 525
Dillard's, Inc., 6.17%, 2001 1,500 1,504
Kinder-Care Learning
Centers,
9.50%, 2009 500 498
MCI WorldCom, Inc.
7.75%, 2007 225 254
7.75%, 2027 825 975
News American Holdings,
Inc.,
9.25%, 2013 405 505
Pathmark Stores, Inc.,
9.625%, 2003 935 907
Primedia, Inc., 8.50%, 2006 750 744
Rogers Cantel Mobile, Inc.,
8.80%, 2007 2,100 2,116
Royal Caribbean Cruises,
Ltd.,
8.25%, 2005 1,250 1,328
Sinclair Broadcasting Group,
Inc., 8.75%, 2007 850 859
Tele-Communications, Inc.,
9.80%, 2012 1,100 1,466
(a) TeleWest Communications,
PLC, 11.00%, 2007 4,020 3,352
Time Warner, Inc.
9.125%, 2013 425 538
9.15%, 2023 450 594
United Artist Theatre Co.,
9.75%, 2008 1,605 1,533
United Rental, 9.25%, 2009 650 652
-----------------------------------------------------
34,038
- -------------------------------------------------------
CONSUMER DURABLES--.3%
- -------------------------------------------------------
Del Webb Corp.,
9.75%, 2008 2,450 2,413
-----------------------------------------------------
- -------------------------------------------------------
CONSUMER STAPLES--.3%
- -------------------------------------------------------
Riverwood International,
10.25%, 2006 2,650 2,597
-----------------------------------------------------
- -------------------------------------------------------
ENERGY--.5%
- -------------------------------------------------------
Benton Oil & Gas Co.
11.625%, 2003 420 273
9.375%, 2007 100 60
Clark Refining, 8.875%, 2007 320 285
GTE North, Inc., 6.90%, 2008 1,350 1,476
Gulf Canada Resources, Ltd.,
9.25%, 2004 1,500 1,501
Gulfmark Offshore, Inc.,
8.75%, 2008 1,120 1,019
-----------------------------------------------------
4,614
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------
FINANCE--1.7%
- -------------------------------------------------------
AB Spintab, 7.50%, 2049 $ 800 $ 804
ABN-AMRO Bank,
8.25%, 2009 1,250 1,361
Abbey National, PLC,
6.69%, 2005 775 817
Cole National Group,
9.875%, 2006 2,640 2,732
Crestar Financial Corp.,
8.25%, 2002 600 647
Den Danske Bank,
6.375%, 2008 1,250 1,263
Empress River Casino
Finance,
10.75%, 2002 2,000 2,133
FINOVA Capital Corp.,
6.50%, 2002 550 556
Ford Motor Credit Corp.,
7.75%, 2005 600 664
NationsBank Corp.,
9.50%, 2004 600 702
Repsol International
Finance,
7.00%, 2005 1,000 1,068
Scotland International
Finance Co., 8.80%, 2004 250 281
Svenska Handelsbanken,
7.125%, 2049 300 295
Wells Fargo & Co.,
6.875%, 2006 750 795
-----------------------------------------------------
14,118
- -------------------------------------------------------
HEALTH CARE--.3%
- -------------------------------------------------------
Magellan Health Services,
9.00%, 2008 2,500 2,200
(a) Mariner Post-Acute Network,
Inc., 10.50%, 2007 1,500 645
-----------------------------------------------------
2,845
- -------------------------------------------------------
TECHNOLOGY--.1%
- -------------------------------------------------------
PSINet, Inc.
10.00%, 2005 810 806
11.50%, 2008 410 427
-----------------------------------------------------
1,233
- -------------------------------------------------------
TRANSPORTATION--.6%
- -------------------------------------------------------
Continental Airlines, Inc.
7.75%, 2014 474 493
6.90%, 2018 400 396
Hayes Wheels International,
Inc.,
11.00%, 2006 1,500 1,665
TFM, S.A. de C.V.,
10.25%, 2007 2,500 2,150
-----------------------------------------------------
4,704
- -------------------------------------------------------
UTILITIES--1.1%
- -------------------------------------------------------
(a) Call-Net Enterprises, Inc.,
13.25%, 2004 500 486
Commonwealth Edison
7.375%, 2004 850 908
7.00%, 2005 250 266
Esprit Telecom Group, PLC,
11.50%, 2007 630 671
</TABLE>
52
<PAGE> 54
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------
UTILITIES--CONTINUED
- -------------------------------------------------------
(a) International CableTel,
Inc.,
11.50%, 2006 $ 2,270 $ 1,844
(a) McLeod, Inc., 10.50%, 2007 2,800 2,142
NTL, Inc.
(a) 12.375%, 2008 150 94
11.50%, 2008 95 103
(a) Nextel Communications,
9.95%, 2008 3,575 2,127
Yorkshire Power,
6.496%, 2008 450 449
-----------------------------------------------------
9,090
-----------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--10.5%
(Cost: $91,919) 89,458
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $731,664) $854,112
-----------------------------------------------------
</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 $731,664,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $141,136,000, the
gross unrealized depreciation was $18,688,000 and the net unrealized
appreciation on investments was $122,448,000.
See accompanying Notes to Financial Statements.
53
<PAGE> 55
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HIGH YIELD PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
CORPORATE OBLIGATIONS AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------
AEROSPACE--.8%
- ------------------------------------------------------------
BE Aerospace, Inc.,
9.50%, 2008 $ 770 $ 808
DeCrane Aircraft Holdings, Inc.,
12.00%, 2008 1,140 1,140
L-3 Communication Corp.,
10.375%, 2007 450 494
Transdigm, Inc.,
10.375%, 2008 1,200 1,194
----------------------------------------------------
3,636
- ------------------------------------------------------------
BROADCASTING, CABLESYSTEMS AND PUBLISHING--16.2%
- ------------------------------------------------------------
American Banknote Corp.,
11.25%, with warrants,
2007 1,200 804
(b) American Lawyer,
12.25%, 2008 220 136
American Radio Systems,
9.00%, 2006 880 962
(a)(b) Australis Holdings,
15.00%, with warrants,
2002 3,660 91
Australis Media, Ltd.,
14.00%, 2000 154 118
Avalon Cable
9.375%, 2008 200 204
(b) 11.875%, 2008 1,870 1,047
Big Flower Press, Inc.,
8.875%, 2007 2,390 2,390
CSC Holdings, Inc.
9.25%, 2005 860 920
7.875%, 2007 270 284
7.25%, 2008 500 505
8.125%, 2009 1,010 1,086
9.875%, 2013 1,145 1,278
10.50%, 2016 1,640 1,943
(b) Capstar Broadcasting,
12.75%, 2009 2,570 2,133
Century Communications Corp.
9.50%, 2005 300 338
8.375%, 2007 550 595
Chancellor Media Corp.
8.125%, 2007 1,180 1,168
8.00%, 2008 1,900 1,938
9.00%, 2008 480 509
Charter Communications,
(b) 14.00%, 2007 2,120 1,897
Charter Communications, L.P.,
11.25%, 2006 700 786
Comcast Corp.,
9.125%, 2006 2,630 2,807
(b) Comcast UK Cable
Partners, Ltd.,
11.20%, 2007 3,130 2,637
(b) DIVA Systems Corp.,
12.625%, with warrants,
2008 2,080 868
(b) Diamond Cable
Communications, PLC,
13.25%, 2004 1,990 1,915
EZ Communications,
9.75%, 2005 590 646
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------
BROADCASTING, CABLESYSTEMS AND PUBLISHING--CONTINUED
- ------------------------------------------------------------
Falcon Holding Group, L.P.
8.375%, 2010 $ 5,410 $ 5,545
(b) 9.285%, 2010 1,060 726
Frontiervision
11.00%, 2006 860 955
(b) 11.875%, 2007 1,110 927
Interep National Radio Sales, Inc.,
10.00%, 2008 1,060 1,092
Intermedia Capital Partners,
11.25%, 2006 1,300 1,430
Mediacom LLC,
8.50%, 2008 1,350 1,380
NTL
11.50%, 2008 4,610 4,996
(b) 12.375%, 2008 1,230 772
(b) PX Escrow Corp.,
9.625%, 2006 2,680 1,474
Price Communications Corp.,
9.125%, 2006 2,780 2,808
(b) Radio Unica Corp.,
11.75%, 2006 1,500 810
Rogers Communications,
8.875%, 2007 630 652
SFX Entertainment, Inc.,
9.125%, 2008 5,885 5,835
Salem Communications Corp.,
9.50%, 2007 770 801
Sinclair Broadcasting Group, Inc.
8.75%, 2007 940 949
9.00%, 2007 350 357
Star Choice,
13.00%, with warrants,
2005 750 783
TeleWest Communications, PLC
9.625%, 2006 710 738
(b) 11.00%, 2007 2,895 2,414
11.25%, 2008 1,650 1,856
(b) Transwestern Holdings,
11.875%, 2008 420 278
Transwestern Publishing,
9.625%, 2007 750 784
(b) 21st Century Telecom Group, Inc.,
12.25%, with warrants,
2008 1,000 426
(b) UIH Australia Pacific, Inc.,
14.00%, with warrants,
2006 750 365
(b) United International Holdings,
10.75%, 2008 2,400 1,296
----------------------------------------------------
70,454
- ------------------------------------------------------------
BUSINESS SERVICES--2.2%
- ------------------------------------------------------------
Allied Waste Industries,
7.625%, 2006 730 739
CEX Holdings, Inc.,
9.625%, 2008 460 414
Corporate Express, Inc.,
4.50%, 2000 2,660 2,288
DIMAC Corp.,
12.50%, 2008 1,540 1,540
Intertek Finance,
10.25%, 2006 940 865
</TABLE>
54
<PAGE> 56
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------
BUSINESS SERVICES--CONTINUED
- ------------------------------------------------------------
Outdoor Systems, Inc.
9.375%, 2006 $ 2,395 $ 2,587
8.875%, 2007 1,130 1,203
----------------------------------------------------
9,636
- ------------------------------------------------------------
CHEMICALS AND AGRICULTURE--3.8%
- ------------------------------------------------------------
Atlantis Group, Inc.,
11.00%, 2003 1,735 1,765
Hines Horticulture,
11.75%, 2005 996 1,066
Huntsman Corp.,
9.50%, 2007 1,700 1,696
Huntsman Package,
11.75%, 2004 2,450 2,597
NL Industries, Inc.,
11.75%, 2003 3,780 4,068
Terra Industries, Inc.
10.75%, 2003 2,060 2,081
10.50%, 2005 870 892
Texas Petrochemicals,
11.125%, 2006 1,410 1,389
UCC Investors Holdings, Inc.,
10.50%, 2002 840 926
----------------------------------------------------
16,480
- ------------------------------------------------------------
COMMUNICATIONS--20.1%
- ------------------------------------------------------------
Allegiance Telecom, Inc.
(b) 11.75%, 2008 1,370 668
12.875%, 2008 1,780 1,775
American Cellular Corp.,
10.50%, 2008 1,900 1,857
Birch Telecom,
14.00%, 2008 660 607
(b) Call-Net Enterprises, Inc.
13.25%, 2004 1,020 991
9.27%, 2007 1,050 677
8.94%, 2008 1,360 782
Centennial Cellular Corp.,
10.75%, 2008 670 673
Comcast Cellular Holdings, Inc.,
9.50%, 2007 1,870 1,991
(b) Communications Cellular,
14.125%, with warrants,
2005 2,400 1,900
(b) Crown Castle International Corp.,
10.625%, 2007 2,500 1,725
Dobson Communication Corp.,
11.75%, 2007 3,000 3,000
Econophone, Inc.
13.50%, with warrants, 2007 635 696
(b) 11.00%, 2008 680 340
Esprit Telecom
11.50%, 2007 1,625 1,731
10.875%, 2008 800 828
(b) Focal Communications Corp.,
12.125%, 2008 350 185
GCI General Communication,
9.75%, 2007 1,070 1,049
(b) ICG Holdings,
13.50%, 2005 5,530 4,618
(b) IPC Information Systems,
10.875%, 2008 3,140 1,884
Impsat, S.A.,
12.375%, 2008 1,805 1,444
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
COMMUNICATIONS--CONTINUED
- ------------------------------------------------------------
Intermedia Communications of
Florida, Inc.
(b) 12.50%, 2006 $ 830 $ 649
8.875%, with warrants,
2007 1,570 1,564
(b) 11.25%, 2007 2,700 1,836
(b) KMC Telecom Holdings, Inc.,
12.50%, with warrants,
2008 1,950 942
Level 3 Communication,
9.125%, 2008 1,710 1,691
Long Distance International,
12.25%, with warrants, 2008 1,300 1,082
MGC Communications,
13.00%, with warrants,
2004 1,290 891
McLeod, Inc.
9.25%, 2007 1,040 1,071
(b) 10.50%, 2007 2,080 1,591
9.50%, 2008 1,400 1,484
Metromedia Fiber Network Inc.,
10.00%, 2008 1,600 1,648
Metronet Communications
(b) 10.75%, 2007 630 409
12.00%, with warrants,
2007 550 622
(b) 9.95%, 2008 2,540 1,556
10.625%, 2008 1,410 1,495
(b) Millicom International
Cellular, S.A.,
13.50%, 2006 2,860 2,009
Netia Holdings
10.25%, 2007 225 192
(b) 11.25%, 2007 795 449
(b) Nextel Communications
9.75%, 2004 2,540 2,464
9.75%, 2007 940 569
10.65%, 2007 2,225 1,424
9.95%, 2008 2,760 1,642
Nextlink Communications
12.50%, 2006 950 1,016
(b) 9.45%, 2008 920 520
10.75%, 2008 3,000 3,068
(b) PTC International Finance, B.V.,
10.75%, 2007 1,810 1,249
(b) Pinnacle Holdings,
10.00%, 2008 1,800 1,048
Primus Telecommunications Group,
11.75%, with warrants,
2004 1,360 1,420
9.875%, 2008 160 151
PSINet, Inc.
10.00%, 2005 1,160 1,154
11.50%, 2008 1,670 1,741
RCN Corp.
10.00%, 2007 1,080 1,031
(b) 11.00%, 2008 900 473
Rogers Cantel
9.375%, 2008 1,120 1,182
9.75%, 2016 2,000 2,140
(b) SBA Communication,
12.00%, 2008 2,310 1,340
Satelites Mexicanos, S.A. de C.V.,
10.125%, 2004 770 616
(b) Spectrasite Holdings, Inc.,
12.00%, 2008 2,290 1,168
Teligent, Inc.
11.50%, 2007 800 744
(b) 11.50%, 2008 1,000 495
</TABLE>
55
<PAGE> 57
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS--CONTINUED
- ------------------------------------------------------------
(b) Triton Communications,
11.00%, 2008 $ 2,380 $ 1,113
USA Mobile Communications,
Inc. II,
14.00%, 2004 1,190 1,214
US Xchange, LLC.,
15.00%, 2008 1,140 1,197
Versatel Telecom,
13.25%, with warrants,
2008 1,430 1,425
Viatel, Inc.
11.25%, 2008 880 880
(b) 12.50%, 2008 1,880 1,090
Western Wireless Corp.,
10.50%, 2007 1,200 1,260
Winstar Communication,
15.00%, 2007 440 409
Winstar Equipment,
12.50%, 2004 190 193
Winstar Equipment II Corp.,
12.50%, 2004 1,180 1,198
----------------------------------------------------
87,236
- ------------------------------------------------------------
CONSTRUCTION MATERIALS--3.7%
- ------------------------------------------------------------
Airxcel,
11.00%, 2007 1,350 1,357
American Standard, Inc.
9.25%, 2016 1,189 1,207
10.875%, 2099 100 101
Building Materials
Corporation of America,
8.00%, 2008 910 913
Congoleum Corp.,
8.625%, 2008 1,560 1,537
Desa International,
9.875%, 2007 2,950 2,212
(b) Falcon Building Products, Inc.,
10.50%, 2007 140 83
Kevco,
10.375%, 2007 1,765 1,588
Nortek, Inc.
9.875%, 2004 960 994
9.125%, 2007 1,300 1,336
Terex Corp.,
8.875%, 2008 3,740 3,703
(b) Waxman Industries, Inc.,
12.75%, with warrants,
2004 400 208
Werner Holdings,
10.00%, 2007 850 842
----------------------------------------------------
16,081
- ------------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--11.0%
- ------------------------------------------------------------
AMF Bowling World
10.875%, 2006 2,620 2,109
(b) 12.25%, 2006 2,070 1,185
Avondale Mills,
10.25%, 2006 1,670 1,754
Cinemark USA, Inc.
8.50%, 2008 1,300 1,300
9.625%, 2008 1,480 1,547
Coinmach Corp.,
11.75%, 2005 4,890 5,379
Doskocil Manufacturing Co.,
10.125%, 2007 1,010 949
<CAPTION>
PRINCIPAL VALUE
AMOUNT
- ------------------------------------------------------------
CONSUMER PRODUCTS AND
SERVICES--CONTINUED
- ------------------------------------------------------------
Dyersburg Corp.,
9.75%, 2007 $ 1,260 $ 1,128
Grupo Azucarero Mexico, S.A.
de C.V.,
11.50%, 2005 630 227
HMH Properties,
7.875%, 2008 2,960 2,871
Hedstrom Corp.,
10.00%, 2007 1,280 1,088
Herff Jones, Inc.,
11.00%, 2005 900 968
Imax Corp.,
7.875%, 2005 760 762
Imperial Home Decor Group, Inc.,
11.00%, 2008 1,590 1,415
Kinder-Care Learning Centers,
9.50%, 2009 2,550 2,537
La Petite Academy, Inc.,
10.00%, 2008 1,990 1,970
Mastellone Hermonos,
11.75%, 2008 1,440 1,152
NBTY Inc.,
8.625%, 2007 570 556
Nine West Group,
9.00%, 2007 400 380
Perkins Family Restaurant,
L.P.
10.125%, 2007 660 700
Pillowtex Corp.,
9.00%, 2007 500 515
Premier Parks, Inc.,
12.00%, 2003 780 844
Protection One,
8.125%, 2009 360 361
Purina Mills, Inc.,
9.00%, 2010 2,650 2,637
Regal Cinemas,
9.50%, 2008 2,360 2,431
8.875%, 2010 600 594
(b) Restaurant Co.,
11.25%, 2008 1,420 758
Sealy Mattress
9.875%, 2007 382 369
(b) 10.875%, 2007 770 462
Six Flags Theme Park,
12.25%, 2005 3,500 3,885
(b) Spin Cycle,
12.75%, 2005 1,520 699
United Artists Theatre Co.,
9.75%, 2008 3,320 3,171
United Rentals, Inc.,
9.25%, 2009 1,210 1,213
----------------------------------------------------
47,916
- ------------------------------------------------------------
DRUGS AND HEALTH CARE--2.9%
- ------------------------------------------------------------
Abbey Healthcare Group, Inc.,
9.50%, 2002 1,550 1,511
(b) ALARIS Medical Systems, Inc.,
11.125%, 2008 1,150 627
Dade International, Inc.,
11.125%, 2006 1,730 1,912
Magellan Health Services,
9.00%, 2008 2,890 2,543
</TABLE>
56
<PAGE> 58
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------
<S> <C> <C>
DRUGS AND HEALTH CARE--CONTINUED
- -------------------------------------------------------------
(b) Mariner Post-Acute
Network, Inc.,
10.50%, 2007 $ 4,340 $ 1,866
Mediq, Inc.,
11.00%, 2008 980 941
Paracelsus Healthcare,
10.00%, 2006 970 873
Vencor,
9.875%, 2005 3,070 2,487
----------------------------------------------------
12,760
- ------------------------------------------------------------
ENERGY AND RELATED SERVICES--4.1%
- ------------------------------------------------------------
Bellweather Exploration Co.,
10.875%, 2007 1,290 1,251
Benton Oil & Gas Co.
11.625%, 2003 1,275 829
9.375%, 2007 290 174
Chesapeake Energy Corp.,
9.125%, 2006 100 77
Continental Resources, Inc.,
10.25%, 2008 1,660 1,378
Forcenergy Gas Exploration
9.50%, 2006 1,040 801
8.50%, 2007 420 311
GulfMark Offshore, Inc.,
8.75%, 2008 770 701
HS Resources,
9.25%, 2008 310 296
Mariner Energy,
10.50%, 2006 2,060 1,751
Ocean Energy
10.375%, 2005 850 884
9.75%, 2006 620 647
Pacalta Resources, Ltd.,
10.75%, 2004 2,740 2,192
Parker Drilling Corp.,
9.75%, 2006 1,360 1,217
Pen Holdings, Inc.,
9.875%, 2008 1,205 1,205
Prestolite Electric,
9.625%, 2008 795 779
RAM Energy,
11.50%, 2008 600 390
R & B Falcon Corp.,
9.50%, 2008 680 680
Rutherford-Moran Oil Corp.,
10.75%, 2004 520 572
Seven Seas Petroleum, Inc.,
12.50%, 2005 640 320
Stone Energy Corp.,
8.75%, 2007 1,290 1,266
----------------------------------------------------
17,721
- ------------------------------------------------------------
FINANCIAL SERVICES, HOME BUILDING AND REAL ESTATE--2.2%
- ------------------------------------------------------------
Beazer Homes,
8.875%, 2008 2,110 2,026
Del Webb Corp.
9.75%, 2008 1,300 1,280
9.375%, 2009 650 627
Forecast Group, L.P.,
11.375%, 2000 1,025 1,005
Fortress Group,
13.75%, 2003 880 915
<CAPTION>
- ------------------------------------------------------------
FINANCIAL SERVICES, HOME BUILDING AND REAL ESTATE--CONT.
- ------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
Hovnanian Enterprises
11.25%, 2002 $ 438 $ 445
9.75%, 2005 260 247
Investcorp,
9.50%, 2007 1,670 1,505
Ryland Group, Inc.,
8.25%, 2008 1,310 1,271
----------------------------------------------------
9,321
- ------------------------------------------------------------
HOTEL AND GAMING--1.9%
- ------------------------------------------------------------
Eldorado Resorts,
10.50%, 2006 2,010 2,090
Empress River Casino,
10.75%, 2002 1,640 1,749
Hard Rock Hotel,
9.25%, 2005 225 225
Harvey's Casino Resorts,
10.625%, 2006 960 1,094
Players International,
10.875%, 2005 880 946
Rio Hotel & Casino, Inc.,
9.50%, 2007 610 678
Station Casinos, Inc.
10.125%, 2006 700 735
9.75%, 2007 680 707
----------------------------------------------------
8,224
- ------------------------------------------------------------
MANUFACTURING, METALS AND MINING--8.4%
- ------------------------------------------------------------
Accuride,
9.25%, 2008 1,080 1,080
Aftermarket Technology,
12.00%, 2004 985 1,034
AK Steel Holdings Corp.,
10.75%, 2004 1,790 1,862
Bar Technologies,
13.50%, with warrants,
2001 1,060 1,172
Day International Group, Inc.,
11.125%, 2005 1,480 1,587
Delco Remy International,
10.625%, 2006 1,380 1,468
E-P Acquisition, Inc.,
9.375%, 2008 1,410 1,339
Earle M. Jorgensen Co.,
9.50%, 2005 440 405
Euramax International, PLC,
11.25%, 2006 1,800 1,800
Foamex, L.P.
13.50%, with warrants,
2005 1,240 1,458
9.875%, 2007 485 524
Golden Northwest Aluminum,
12.00%, 2006 1,720 1,733
GS Technologies
12.00%, 2004 380 258
12.25%, 2005 620 415
(b) Grove Holdings LLC,
11.625%, 2009 340 143
Grove Investors, PIK,
14.50%, 2010 699 559
Grove Worldwide LLC,
9.25%, 2008 320 288
Hayes Wheels International, Inc.,
11.00%, 2006 1,750 1,942
</TABLE>
57
<PAGE> 59
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
<S> <C> <C>
MANUFACTURING, METALS AND MINING--CONTINUED
- ------------------------------------------------------------
JPS Automotive Products Corp.,
11.125%, 2001 $ 1,500 $ 1,575
Jackson Products, Inc.,
9.50%, 2005 790 790
Knoll, Inc.,
10.875%, 2006 1,456 1,602
MMI Products, Inc.,
11.25%, 2007 1,225 1,323
Metal Management, Inc.,
10.00%, 2008 970 582
Metal USA,
8.625%, 2008 1,430 1,344
Motors and Gears, Inc.,
10.75%, 2006 640 656
Neenah Corp.,
11.125%, 2007 2,090 2,148
Renco Metals,
11.50%, 2003 1,005 1,035
Renco Steel Holdings,
10.875%, 2005 2,330 2,004
Scovill Fasteners,
11.25%, 2007 800 696
Spinnaker Industries,
10.75%, 2006 1,450 1,160
Venture Holdings,
9.50%, 2005 950 945
Wells Aluminum Corp.,
10.125%, 2005 1,400 1,302
----------------------------------------------------
36,229
- ------------------------------------------------------------
PAPER, FOREST PRODUCTS AND CONTAINERS--8.5%
- ------------------------------------------------------------
AEP Industries, Inc.,
9.875%, 2007 550 555
BPC Holding Corp.,
12.50%, 2006 750 780
Berry Plastics Corp.,
12.25%, 2004 1,330 1,386
BWAY Corp.,
10.25%, 2007 870 905
Doman Industry
8.75%, 2004 470 367
9.25%, 2007 650 481
Fonda Group,
9.50%, 2007 840 697
Gaylord Container Corp.
9.75%, 2007 890 761
9.875%, 2008 3,460 2,595
Graham Packaging Co.
8.75%, 2008 580 583
(b) 10.75%, 2009 580 412
IMPAC Group, Inc.,
10.125%, 2008 4,630 4,653
Millar Western Forest
Products Ltd.,
9.875%, 2008 2,590 1,942
Norampac,
9.50%, 2008 2,020 2,050
Pindo Deli Finance Mauritius, Ltd.,
10.75%, 2007 60 32
Plainwell, Inc.,
11.00%, 2008 4,405 3,436
Printpack, Inc.
9.875%, 2004 530 527
10.625%, 2006 1,440 1,411
<CAPTION>
- ------------------------------------------------------------
PAPER, FOREST PRODUCTS AND CONTAINERS--CONTINUED
- ------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
Riverwood International
10.25%, 2006 $ 660 $ 647
10.625%, 2007 230 228
10.875%, 2008 7,130 6,453
(b) SF Holdings Group, Inc.,
12.75%, 2008 1,000 320
Stone Container Corp.
12.25%, 2002 1,550 1,558
11.50%, 2006 1,745 1,826
Tjiwi Kimia Finance
Mauritius, Ltd.,
10.00%, 2004 70 37
U.S. Can Corp.,
10.125%, 2006 2,120 2,229
----------------------------------------------------
36,871
- ------------------------------------------------------------
RETAILING--7.6%
- ------------------------------------------------------------
AFC Enterprises, Inc.,
10.25%, 2007 2,370 2,477
Advantica Restaurant Co.,
11.25%, 2008 3,135 3,170
Agrilink Foods,
11.875%, 2008 550 561
Ameriking,
10.75%, 2006 1,020 1,063
Carrols Corp.,
9.50%, 2008 1,390 1,400
Cole National Group
9.875%, 2006 450 466
8.625%, 2007 910 896
(a) Color Tile, Inc.,
10.75%, 2001 1,470 15
Finlay Enterprises, Inc.,
9.00%, 2008 500 435
Finlay Fine Jewelry Corp.,
8.375%, 2008 980 902
Galey & Lord,
9.125%, 2008 2,430 2,078
Guitar Center Management,
11.00%, 2006 880 924
Iron Age Holdings, Corp.
9.875%, 2008 1,000 850
(b) 12.125%, 2009 570 257
J. Crew Group
10.375%, 2007 2,165 1,873
(b) 13.125%, 2008 3,010 1,355
Jafra Cosmetics International, Inc.,
11.75%, 2008 1,620 1,474
NE Restaurant Co., Inc.,
10.75%, 2008 100 101
National Vision Association Ltd.,
12.75%, 2005 2,180 2,311
Pamida Holdings,
11.75%, 2003 1,140 1,100
Pathmark Stores,
9.625%, 2003 760 737
Petro Stopping Centers,
10.50%, 2007 2,520 2,627
Phillips-Van Heusen Corp.,
9.50%, 2008 1,380 1,380
Port Royal Holdings,
10.25%, 2007 710 728
Riddel Sports, Inc.,
10.50%, 2007 425 402
</TABLE>
58
<PAGE> 60
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
<S> <C> <C>
RETAILING--CONTINUED
- ------------------------------------------------------------
Specialty Retailers
8.50%, 2005 $ 950 $ 817
9.00%, 2007 1,200 948
TravelCenters of America, Inc.,
10.25%, 2007 1,640 1,624
----------------------------------------------------
32,971
- ------------------------------------------------------------
TECHNOLOGY--1.3%
- ------------------------------------------------------------
Axiohm Transaction Solutions, Inc.,
9.75%, 2007 960 893
Communication and Power
Industry, Inc.,
12.00%, 2005 585 607
MTS Systems Corp.,
9.375%, 2005 2,510 2,447
Viasystems, Inc.,
9.75%, 2007 1,700 1,590
----------------------------------------------------
5,537
- ------------------------------------------------------------
TRANSPORTATION--.7%
- ------------------------------------------------------------
Canadian Airlines Corp.,
10.00%, 2005 600 514
TFM, S.A. de C.V.,
10.25%, 2007 1,540 1,324
Trans World Airlines, Inc.,
11.375%, 2006 960 672
(b) Transtar Holdings, L.P.,
13.375%, 2003 631 574
----------------------------------------------------
3,084
----------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--95.4%
(Cost: $435,977) 414,157
----------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
COMMON AND PREFERRED STOCKS--1.8%
- ------------------------------------------------------------
Benedek Communications Corp.,
warrants 5,000shs. $ 10
Clark USA, Inc., PIK,
preferred 2,890 248
Crown American Realty Trust,
preferred 25,070 1,225
(a) Capital Pacific Holdings 3,634 4
Dobson Communication,
PIK, preferred 808 695
(a) Eagle-Picher Holdings, Inc.,
preferred 170 859
(a) EchoStar Communications
Corp. 7,387 357
(a) Empire Gas Corp., warrants 2,070 1
(a) Gaylord Container Corp. 122,950 753
Global Crossing, PIK,
preferred 2,000 194
(a) Intelcom Group, Inc. 4,851 58
Nextel, PIK, preferred 1,597 1,453
(a) SF Holdings Group, Inc. 3,110 6
(a) SF Holdings Group, Inc.,
PIK, preferred 30 142
Sinclair Capital, preferred 13,000 1,385
21st Century Telecom Group,
Inc., preferred 207 142
Viatel, Inc., preferred 1,416 177
----------------------------------------------------
TOTAL COMMON AND
PREFERRED STOCKS--1.8%
(Cost: $7,356) 7,709
----------------------------------------------------
MONEY MARKET INSTRUMENT--2.8%
Yield--5.11% to 5.91%
Due--January 1999
(Cost: $11,982) $12,000 11,982
----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $455,315) $433,848
----------------------------------------------------
</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 $455,315,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $8,366,000, the
gross unrealized depreciation was $29,833,000 and the net unrealized
depreciation on investments was $21,467,000.
See accompanying Notes to Financial Statements.
59
<PAGE> 61
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GROWTH PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
COMPUTER SYSTEMS AND SOFTWARE--13.3
- -------------------------------------------------------
(a) Cadence Design System, Inc. 471,000 $ 14,012
Compaq Computer Corp. 95,600 4,009
Computer Associates
International, Inc. 103,900 4,429
(a) Gartner Group 161,300 3,428
(a) Microsoft Corp. 155,000 21,496
(a) Oracle Corp. 95,000 4,097
(a) Parametric Technology Corp. 355,700 5,825
(a) PeopleSoft, Inc. 171,400 3,246
(a) Sterling Commerce, Inc. 37,000 1,665
(a) Sun Microsystems 165,400 14,162
Xerox Corp. 61,000 7,198
--------------------------------------------------
83,567
- -------------------------------------------------------
CONSUMER CYCLICALS--12.1%
- -------------------------------------------------------
(a) Consolidated Stores Corp. 235,000 4,744
Dayton Hudson Corp. 187,000 10,145
Federal-Mogul Corp. 128,300 7,634
(a) Federated Department Stores 210,000 9,148
Home Depot 157,000 9,606
Magna International, Inc.
"A" 72,200 4,476
May Department Stores Co. 151,200 9,129
Rite Aid Corp. 90,000 4,461
Tyco International Ltd. 30 2
Wal-Mart Stores, Inc. 205,000 16,695
--------------------------------------------------
76,040
- -------------------------------------------------------
CONSUMER STAPLES--12.4%
- -------------------------------------------------------
Albertson's, Inc. 50,000 3,184
Avon Products 109,800 4,859
Coca-Cola Co. 202,000 13,509
Colgate-Palmolive Co. 68,800 6,390
Emerson Electric Co. 67,000 4,054
General Electric Co. 190,000 19,392
Gillette Co. 145,800 7,044
H.J. Heinz Co. 107,000 6,059
Philip Morris Cos. 55,000 2,942
Procter & Gamble Co. 82,000 7,488
Wm. Wrigley Jr. Co. 25,100 2,248
--------------------------------------------------
77,169
- -------------------------------------------------------
FINANCE--15.2%
- -------------------------------------------------------
American Express Co. 47,700 4,877
BankAmerica Corp. 202,076 12,150
Chase Manhattan Corp. 85,000 5,785
CIGNA Corp. 58,000 4,484
Citigroup, Inc. 287,200 14,216
Federal Home Loan Mortgage
Corp. 50,800 3,273
Hartford Financial Services 159,000 8,725
Household International 296,300 11,741
MBIA, Inc. 90,000 5,901
MGIC Investment Corp. 177,900 7,083
Merrill Lynch & Co., Inc. 45,400 3,031
<CAPTION>
- -------------------------------------------------------
FINANCE--CONTINUED
- -------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ------------------------------------------------------
Morgan Stanley, Dean Witter,
& Co. 109,400 $ 7,767
UNUM Life Insurance Company
of America 105,000 6,129
- -------------------------------------------------------
95,162
- -------------------------------------------------------
HEALTH CARE--20.4%
- -------------------------------------------------------
Abbott Laboratories 65,000 3,185
American Home Products Corp. 247,600 13,943
(a) Arterial Vascular
Engineering 60,000 3,150
Baxter International 68,000 4,373
Becton, Dickinson & Co. 138,000 5,891
Bristol-Myers Squibb Co. 82,200 10,999
Eli Lilly & Co. 146,800 13,047
(a) HEALTHSOUTH Corp. 249,800 3,856
Medtronic, Inc. 103,600 7,692
Pfizer, Inc. 165,500 20,760
Schering-Plough PLC 330,000 18,233
SmithKline Beecham Group PLC 70,000 4,865
Warner-Lambert Co. 240,700 18,098
--------------------------------------------------
128,092
- -------------------------------------------------------
SEMICONDUCTORS AND NETWORKING--12.6%
- -------------------------------------------------------
(a) Applied Materials, Inc. 153,800 6,566
(a) Ascend Communications, Inc. 158,300 10,408
(a) Cisco Systems 197,650 18,344
(a) Dell Computer Corp. 21,400 1,566
Intel Corp. 123,000 14,583
Linear Technology Corp. 35,000 3,135
(a) Seagate Technology, Inc. 162,000 4,901
(a) Solectron Corp. 38,000 3,532
Texas Instruments 38,000 3,251
(a) 3Com Corp. 165,000 7,394
(a) Xilinx Inc. 80,000 5,210
--------------------------------------------------
78,890
- -------------------------------------------------------
TELECOMMUNICATIONS--12.1%
- -------------------------------------------------------
(a) AirTouch Communications,
Inc. 49,000 3,534
(a) Chancellor Media Corp. 176,300 8,440
(a) Clear Channel
Communications, Inc. 69,100 3,766
Comcast Corp. "A" 60,000 3,521
Frontier Corp. 133,900 4,553
(a) Infinity Broadcasting Corp. 253,700 6,945
Interpublic Group of
Companies, Inc. 63,400 5,056
(a) MCI WorldCom, Inc. 250,900 18,002
Nokia Corp. 39,000 4,697
(a) Tele-Comm Liberty Media
Group "A" 155,000 7,140
</TABLE>
60
<PAGE> 62
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS--CONTINUED
- ------------------------------------------------------------
(a) Tele-Communications, Inc.
"A" 145,000 $ 8,020
Time Warner, Inc. 36,200 2,247
-----------------------------------------------------
75,921
- ------------------------------------------------------------
TRANSPORTATION--.9%
- ------------------------------------------------------------
(a) US Airways Group, Inc. 112,600 5,855
-----------------------------------------------------
TOTAL COMMON STOCKS--99.0%
(Cost: $496,022) 620,696
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--1.0%
Yield--4.68%
Due--January 1999
(Cost: $5,991) $ 6,000 5,991
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $502,013) $626,687
-----------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO KEMPER GROWTH PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $502,013,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $147,233,000, the
gross unrealized depreciation was $22,559,000 and the net unrealized
appreciation on investments was $124,674,000.
See accompanying Notes to Financial Statements.
61
<PAGE> 63
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GOVERNMENT SECURITIES PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GOVERNMENT
NATIONAL MORTGAGE
ASSOCIATION--52.6%
(Cost: $63,421)
Pass-through Certificates 6.50% 2024-2028 $10,858 $ 10,965
7.00 2011-2028 18,348 18,786
7.50 2022-2028 16,515 17,029
8.00 2016-2025 13,903 14,482
8.50 2016-2027 1,208 1,284
9.00 2016-2027 828 888
9.50 2013-2022 404 435
10.00 2016 350 385
------------------------------------------------------------------------------
64,254
- ------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY
SECURITIES--13.4%
(Cost: $16,696)
Notes 8.75 2000 5,000 5,314
7.875 2001 1,000 1,078
7.00 2006 200 228
5.25 2003 300 308
Bonds 8.75 2008 930 1,084
9.125 2009 484 580
12.00 2013 1,500 2,290
9.125 2018 555 802
6.75 2026 3,900 4,672
------------------------------------------------------------------------------
16,356
- ------------------------------------------------------------------------------------------------------------------------
FEDERAL HOME
LOAN MORTGAGE
CORPORATION--12.0%
(Cost: $14,035)
Pass-through Certificates 6.50 2029 2,000 2,014
7.00 2023-2028 12,478 12,716
------------------------------------------------------------------------------
14,730
- ------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION--7.7%
(Cost: $9,410)
Pass-through Certificates 6.50 2025-2028 8,517 8,580
7.50 2025 354 363
8.00 2024 425 440
------------------------------------------------------------------------------
9,383
- ------------------------------------------------------------------------------------------------------------------------
CANADIAN PROVINCIAL
OBLIGATIONS--.9%
(Cost: $1,094)
Province of Ontario 7.625 2004 500 550
Province of Quebec 8.625 2005 500 575
------------------------------------------------------------------------------
1,125
------------------------------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--86.6%
(Cost: $104,656) 105,848
------------------------------------------------------------------------------
</TABLE>
62
<PAGE> 64
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
TYPE RATE MATURITY AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
(A) CORPORATE
OBLIGATIONS--10.1%
(Cost: $12,183) American Express Master Trust 7.60% 2002 $ 2,500 $ 2,633
Chase Credit Co. 5.55 2003 2,500 2,506
Equitable Life 6.95 2005 500 524
Ford Motor Credit 8.00 2002 500 536
Green Tree Financial Corp. 7.00 2027 2,500 2,519
Olympic Automobile Receivable 7.00 2004 2,500 2,560
Sears Roebuck Acceptance Corp. 6.75 2005 500 525
Southwestern Bell Telephone 6.625 2005 500 530
------------------------------------------------------------------------------
12,333
- ------------------------------------------------------------------------------------------------------------------------
MONEY MARKET
INSTRUMENTS--3.3%
Yield--5.08%
Due--January 1999
(Cost: $3,984) 4,000 3,985
------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $120,823) $122,166
------------------------------------------------------------------------------
</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 $120,823,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $1,855,000, the
gross unrealized depreciation was $512,000 and the net unrealized appreciation
on investments was $1,343,000.
See accompanying Notes to Financial Statements.
63
<PAGE> 65
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER INTERNATIONAL PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
COMMON STOCKS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
EUROPE
- ----------------------------------------------------------
UNITED KINGDOM--23.4%
- ----------------------------------------------------------
BBA Group, PLC
MANUFACTURER OF AUTOMOTIVE
COMPONENTS AND INDUSTRIAL
MATERIALS 239,363 $ 1,485
British Airways, PLC
PROVIDER OF PASSENGER AND
CARGO AIRLINE SERVICES 215,300 1,482
British Petroleum, PLC
MAJOR INTEGRATED WORLD OIL
COMPANY 230,000 3,427
British Telecom, PLC
TELECOMMUNICATION SERVICES 569,013 8,620
Compass Group, PLC
INTERNATIONAL CATERING
GROUP 273,200 3,121
Glaxo Wellcome, PLC
PHARMACEUTICAL COMPANY 224,200 7,725
Hays, PLC
BUSINESS SERVICES 144,600 1,275
National Westminster Bank
BANK 70,578 1,367
Norwich Union, PLC
MULTI-LINE INSURANCE
COMPANY 201,000 1,464
(a) Orange, PLC
OPERATOR OF DIGITAL MOBILE
TELEPHONE NETWORK 186,200 2,137
Reed International, PLC
PUBLISHER OF SCIENTIFIC,
PROFESSIONAL AND BUSINESS
TO BUSINESS MATERIALS 210,441 1,673
Rentokil Initial, PLC
ENVIRONMENTAL SERVICES
COMPANY 960,000 7,264
Select Appointments Holdings
RECRUITMENT SERVICES FOR
TEMPORARY AND PERMANENT
STAFF 160,000 1,650
Unilever, PLC
MANUFACTURER OF BRANDED
AND PACKAGED CONSUMER
GOODS, FOOD, DETERGENTS
AND PERSONAL CARE PRODUCTS 445,382 5,014
Vodafone Group, PLC
TELECOMMUNICATION SERVICES 139,826 2,274
-----------------------------------------------------
49,978
NETHERLANDS--13.0%
- ----------------------------------------------------------
Aalberts Industries
CAPITAL GOODS AND
COMPONENTS 79,205 2,045
Aegon Insurance Group, N.V.
INSURANCE COMPANY 105 13
Content Beheer
RECRUITMENT SERVICES FOR
TEMPORARY STAFF 62,000 1,059
Getronics, N.V.
PROVIDER OF COMPUTER
INSTALLATION AND
MAINTENANCE SERVICES 92,588 4,584
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
NETHERLANDS--CONTINUED
- ----------------------------------------------------------
ING Groep, N.V.
INSURANCE AND FINANCIAL
SERVICES 50,151 $ 3,057
Koninklijke Ahold, N.V.
INTERNATIONAL FOOD
RETAILER 176,832 6,533
Koninklijke Numico, N.V.
NUTRITIONAL FOOD
MANUFACTURER 78,007 3,717
Laurus, N.V.
INTERNATIONAL FOOD
RETAILER 28,050 708
Nedcon Groep, N.V.
MANUFACTURER OF RACKING
SYSTEMS 47,707 884
Unique International N.V.
OPERATOR OF RETAIL
CLOTHING STORES,
EMPLOYMENT AGENCIES,
TECHNICAL TRADE SCHOOLS
AND ENGINEERING SERVICES 89,316 2,045
Vedior N.V. CVA
TEMPORARY EMPLOYMENT
SERVICES 155,101 3,055
-----------------------------------------------------
27,700
GERMANY--10.2%
- ----------------------------------------------------------
Allianz A.G.
MULTI-LINE INSURANCE
COMPANY 9,500 3,483
Bayerische Vereinsbank A.G.
COMMERCIAL BANK 51,100 4,001
Gehe A.G.
PHARMACEUTICALS
DISTRIBUTOR 56,000 3,864
Mannesmann A.G.
DIVERSIFIED CONSTRUCTION
AND TECHNOLOGY COMPANY 31,700 3,633
VEBA A.G.
ELECTRIC UTILITY,
DISTRIBUTOR OF OIL AND
CHEMICALS 32,400 1,938
VIAG, A.G.
PROVIDER OF ELECTRICAL
POWER AND NATURAL GAS
SERVICES, ALUMINUM
PRODUCTS, CHEMICALS,
CERAMIC AND GLASS 8,300 4,865
-----------------------------------------------------
21,784
FRANCE--9.0%
- ----------------------------------------------------------
AXA S.A.
INSURANCE GROUP PROVIDING
INSURANCE, FINANCE AND
REAL ESTATE SERVICES 20,903 3,028
Alcatel Alsthom
MANUFACTURER OF
TRANSPORTATION,
TELECOMMUNICATION AND
ENERGY EQUIPMENT 7,979 976
Carrefour
HYPERMARKET OPERATOR AND
FOOD RETAILER 36 27
</TABLE>
64
<PAGE> 66
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
- -----------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
FRANCE--CONTINUED
- -----------------------------------------------------------
Compagnie Francaise d'Etudes
de Construction Technip
DESIGNS AND CONSTRUCTS
INDUSTRIAL FACILITIES 3,286 $ 309
Groupe Danone
PRODUCER OF PACKAGED FOODS
AND BEVERAGES 20,063 5,742
Sanofi S.A.
RESEARCHER AND
MANUFACTURER OF HEATH CARE
PRODUCTS AND BEAUTY AIDS 12,950 2,131
Societe Lyonnaise des Eaux,
S.A.
WATER UTILITY 12,900 2,649
Television Francaise
TELEVISION BROADCASTING 24,880 4,428
-----------------------------------------------------
19,290
ITALY--8.5%
---------------------------------------------------------
AEM, SpA
ELECTRIC AND GAS UTILITY 1,450,000 3,477
Assicurazioni Generali, SpA
LIFE AND PROPERTY
INSURANCE COMPANY 53,250 2,222
Istituto Bancario San Paolo
di Torino
COMMERCIAL BANK 195,937 3,460
Telecom Italia, SpA
TELECOMMUNICATIONS,
ELECTRONICS AND NETWORK
CONSTRUCTION 801,000 6,830
Telecom Italia Mobile, SpA
CELLULAR TELECOMMUNICATION
SERVICE 300,000 2,214
-----------------------------------------------------
18,203
SPAIN--4.8%
- ----------------------------------------------------------
Argentaria S.A.
BANK 126,000 3,258
Compania Telefonica Nacional
de Espana S.A.
TELECOMMUNICATION SERVICES 91,788 4,075
Empresa Nacional de
Electricidad S.A.
ELECTRIC UTILITY 112,293 2,971
Telefonica S.A.
TELECOMMUNICATION SERVICES 91,788 82
-----------------------------------------------------
10,386
SWITZERLAND--3.2%
- ----------------------------------------------------------
Nestle S.A.
FOOD MANUFACTURER 1,000 2,179
Novartis A.G.
PHARMACEUTICAL COMPANY 2,337 4,598
-----------------------------------------------------
6,777
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
SWEDEN--2.9%
- -----------------------------------------------------------
Astra A.B.
PHARMACEUTICAL COMPANY 100,000 $ 2,044
Gambro, A.B.
HEALTHCARE SERVICES AND
MEDICAL-TECHNOLOGY
PROVIDER 147,900 1,607
(a) Industri-Matematik
International Corp.
SERVICE SOFTWARE
APPLICATIONS 56,100 280
Securitas A.B.
INSTALLS SECURITY SYSTEMS
AND PROVIDER OF GUARD
SERVICES 288,800 2,252
-----------------------------------------------------
6,183
IRELAND--2.1%
- ----------------------------------------------------------
Bank of Ireland, PLC
BANK 199,792 4,442
-----------------------------------------------------
PORTUGAL--.7%
---------------------------------------------------------
Electricidade de Portugal,
S.A.
ELECTRIC UTILITY 63,810 1,405
-----------------------------------------------------
TOTAL EUROPEAN
COUNTRIES--77.8% 166,148
-----------------------------------------------------
PACIFIC REGION
- -----------------------------------------------------------
JAPAN--7.9%
- ----------------------------------------------------------
Bellsystem 24, Inc.
CALL CENTER OPERATOR 10,000 2,231
Fuji Photo Film Co., Ltd.
LEADING FILM AND CAMERA
MANUFACTURER 55,000 2,046
Fujitsu Support and Service,
Inc.
PROVIDER OF INFORMATION
SERVICES AND SUPPORT FOR
COMPUTER NETWORK SYSTEMS 19,000 1,371
Murata Manufacturing Co.,
Ltd.
LEADING MAKER OF CERAMIC
CAPACITORS AND FILTERS 74,000 3,073
Nidec Corp.
MANUFACTURER OF
SMALL-SCALE MOTORS FOR
HARD DISC DRIVES 21,800 2,670
Nikko Securities Co., Ltd.
LEADING SECURITIES BROKER
AND DEALER 551,000 1,537
Sony Corp.
CONSUMER ELECTRONIC
PRODUCTS MANUFACTURER 28,200 2,055
Uni-Charm Co., Ltd.
LEADING MANUFACTURER OF
SANITARY NAPKINS AND PAPER
DIAPERS 38,300 1,798
-----------------------------------------------------
TOTAL PACIFIC REGION--7.9% 16,781
-----------------------------------------------------
</TABLE>
65
<PAGE> 67
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
COMMONWEALTH COUNTRIES OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CANADA--5.0%
- ----------------------------------------------------------
BCE, Inc.
TELECOMMUNICATION SERVICES 56,000 $ 2,115
(a) Boardwalk Equities, Inc.
REAL ESTATE MANAGEMENT
COMPANY 85,000 938
Canadian National Railway
RAILROAD OPERATOR 34,700 1,807
(a) Husky Injection Molding
Systems, Ltd.
SUPPLIER OF INJECTION
MOLDING EQUIPMENT AND
SERVICES FOR THE PLASTICS
INDUSTRY 290,000 2,764
Petro-Canada
OIL EXPLORATION AND
REFINING 282,700 3,004
-----------------------------------------------------
10,628
- ----------------------------------------------------------
AUSTRALIA--4.5%
- ----------------------------------------------------------
AAPT Limited
TELECOMMUNICATION SERVICES 880,000 2,265
(a) Cable & Wireless Optus Ltd.
PROVIDER OF COMMUNICATIONS
AND TELECOMMUNICATION
SERVICES 1,450,000 3,048
Leighton Holdings
CONSTRUCTION SERVICES AND
CONSULTING 481,600 2,066
St. George Bank Ltd.
COMMERCIAL BANK 344,450 2,176
-----------------------------------------------------
9,555
- ----------------------------------------------------------
NEW ZEALAND--.4%
- ----------------------------------------------------------
Restaurant Brands
FAST FOODS CHAIN 1,490,000 846
-----------------------------------------------------
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
SOUTH AFRICA--.9%
- ----------------------------------------------------------
(a) Sanlam Limited
INSURANCE COMPANY AND
FINANCIAL SERVICES 2,000 $ 1,986
-----------------------------------------------------
TOTAL COMMONWEALTH
COUNTRIES--10.8% 23,015
-----------------------------------------------------
LATIN AMERICA
- ----------------------------------------------------------
MEXICO--1.2%
- ----------------------------------------------------------
Fomento Economico Mexicano
de C.V.
PRODUCER OF BEER AND SOFT
DRINKS 490,000 1,328
Kimberly Clark de Mexico
S.A. de C.V.
PRODUCER OF CONSUMER PAPER
PRODUCTS 392,700 1,249
-----------------------------------------------------
TOTAL LATIN AMERICA--1.2% 2,577
-----------------------------------------------------
TOTAL COMMON STOCKS--97.7%
-----------------------------------------------------
(Cost: $179,272) 208,521
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--2.3%
-----------------------------------------------------
Yield--3.38%
Due--January 1999
(Cost: $4,998) $ 5,000 4,998
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
-----------------------------------------------------
(Cost: $184,270) $213,519
-----------------------------------------------------
</TABLE>
At December 31, 1998, the Kemper International Portfolio had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- ---------------------------------------------------------------------------------
<S> <C> <C>
Communications $ 38,087 17.9
- ---------------------------------------------------------------------------------
Finance 36,432 17.1
- ---------------------------------------------------------------------------------
Consumer Cyclicals 29,925 14.0
- ---------------------------------------------------------------------------------
Consumer Staples 29,064 13.6
- ---------------------------------------------------------------------------------
Health Care 21,969 10.3
- ---------------------------------------------------------------------------------
Basic Industries 17,815 8.3
- ---------------------------------------------------------------------------------
Utilities 12,441 5.8
- ---------------------------------------------------------------------------------
Technology 10,607 5.0
- ---------------------------------------------------------------------------------
Energy 6,431 3.0
- ---------------------------------------------------------------------------------
Transportation 3,289 1.5
- ---------------------------------------------------------------------------------
Capital Goods 2,461 1.2
- ---------------------------------------------------------------------------------
TOTAL COMMON STOCKS 208,521 97.7
- ---------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS 4,998 2.3
- ---------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO $213,519 100.0
- ---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER INTERNATIONAL PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $184,270,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $41,551,000, the
gross unrealized depreciation was $12,302,000 and the net unrealized
appreciation on investments was $29,249,000.
See accompanying Notes to Financial Statements.
66
<PAGE> 68
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER SMALL CAP GROWTH PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
COMMON STOCKS OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------
BASIC INDUSTRIES--4.8%
- ----------------------------------------------------------
(a) Casella Waste Systems,
Inc. 94,300 $ 3,501
Spartech Corp. 155,000 3,410
(a) Superior Services, Inc. 165,000 3,310
--------------------------------------------------
10,221
CAPITAL GOODS--4.6%
- ----------------------------------------------------------
(a) American Tower Corp. 140,000 4,139
Applied Power, Inc. 65,000 2,454
(a) Hayes Lemmerz
International, Inc. 102,500 3,094
--------------------------------------------------
9,687
CONSUMER CYCLICALS--17.9%
- ----------------------------------------------------------
(a) Bright Horizons Family
Solutions, Inc. 160,357 4,330
(a) CSK Auto Corp. 155,000 4,137
(a) Cinar Films, Inc. 232,500 5,900
(a) Consolidated Graphics,
Inc. 34,000 2,297
(a) Heftel Broadcasting Corp. 65,000 3,201
(a) Men's Wearhouse 75,000 2,381
Pittway Corp. 151,000 4,992
(a) Vail Resorts, Inc. 140,000 3,080
(a) Westwood One 100,000 3,050
(a) Young Broadcasting Corp. 105,000 4,397
--------------------------------------------------
37,765
CONSUMER DURABLES--1.1%
- ----------------------------------------------------------
U.S. Industries 125,000 2,328
CONSUMER STAPLES--2.3%
- ----------------------------------------------------------
(a) Duane Reade, Inc. 125,000 4,812
ENERGY--1.2%
- ----------------------------------------------------------
(a) Newfield Exploration Co. 120,000 2,505
FINANCE--8.0%
- ----------------------------------------------------------
(a) Data Broadcasting Corp. 130,000 2,324
(a) Financial Federal Corp. 103,800 2,569
Legg Mason 90,000 2,841
Protective Life Insurance
Co. 80,000 3,185
Sterling Bancshares, Inc. 140,000 2,082
(a) Trammell Crow Co. 134,900 3,777
--------------------------------------------------
16,778
<CAPTION>
NUMBER
COMMON STOCKS OF SHARES VALUE
- ----------------------------------------------------------
HEALTH CARE--14.3%
- ----------------------------------------------------------
Alpharma, Inc. 80,000 $ 2,825
(a) CONMED Corp. 85,000 2,805
(a) Hanger Orthopedic Group 145,800 3,280
(a) IDEXX Laboratories 120,000 3,229
(a) Incyte Pharmaceuticals,
Inc. 75,000 2,803
(a) Medquist, Inc. 80,000 3,160
(a) PathoGenesis Corp. 40,000 2,320
(a) Province Healthcare Co. 85,600 3,071
(a) Serologicals Corp. 65,000 1,950
(a) Techne Corp. 100,000 2,112
(a) Xomed Surgical 82,500 2,640
--------------------------------------------------
30,195
SERVICES--14.8%
- ----------------------------------------------------------
(a) Apollo Group 120,000 4,065
(a) Boron, Lepore &
Associates, Inc. 75,000 2,587
(a) Education Management
Corp. 100,600 2,377
(a) ITT Educational Services 118,700 4,036
(a) Lamar Advertising Co. 100,000 3,725
(a) Outdoor Systems, Inc. 281,062 8,432
Stewart Enterprises, Inc. 135,000 3,004
(a) Sylvan Learning Systems,
Inc. 100,000 3,050
--------------------------------------------------
31,276
TECHNOLOGY--23.4%
- ----------------------------------------------------------
(a) Applied Micro Circuits
Corp. 70,000 2,378
(a) Broadcast.com, Inc. 25,000 1,913
(a) Business Objects, S.A. 100,000 3,250
(a) Cambridge Technology
Partners 135,000 2,987
(a) Cognos, Inc. 100,000 2,500
(a) DII Group, Inc. 100,000 2,331
(a) Digital River 60,000 2,130
(a) Exodus Communications,
Inc. 40,000 2,570
(a) Gilat Satellite Networks,
Ltd. 55,000 3,032
(a) Inktomi Corp. 25,000 3,234
(a) Insight Enterprises, Inc. 60,000 3,053
(a) Iona Technologies 85,000 3,230
(a) Jabil Circuit 35,000 2,612
(a) Kulicke & Soffa
Industries 165,000 2,929
(a) Mercury Interactive Corp. 45,000 2,846
(a) New Era of Networks, Inc. 50,000 2,200
(a) Read-Rite Corp. 150,000 2,217
(a) Verity, Inc. 135,000 3,578
--------------------------------------------------
48,990
</TABLE>
67
<PAGE> 69
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------
TRANSPORTATION--1.0%
- ----------------------------------------------------------
(a) Wisconsin Central
Transportation Corp. 120,000 $ 2,063
- ----------------------------------------------------------
UTILITIES--1.4%
- ----------------------------------------------------------
(a) Barrett Resources Corp. 120,000 2,880
--------------------------------------------------
TOTAL COMMON STOCKS--94.8%
(Cost: $157,096) 199,500
--------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--4.88% to 5.10%
Due--January 1999
Ford Motor Credit $ 5,000 4,992
Other 6,000 5,993
--------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--5.2%
(Cost: $10,986) 10,985
--------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $168,082) $210,485
--------------------------------------------------
</TABLE>
- ----------------------------------------------------------
NOTES TO KEMPER SMALL CAP GROWTH PORTFOLIO OF INVESTMENTS
- ----------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $168,082,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $44,123,000, the
gross unrealized depreciation was $1,720,000 and the net unrealized appreciation
on investments was $42,403,000.
See accompanying Notes to Financial Statements.
68
<PAGE> 70
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER INVESTMENT GRADE BOND PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
GOVERNMENT OBLIGATIONS AMOUNT VALUE
- -----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES
- -----------------------------------------------------------
4.625%, 2000 $12,000 $12,007
5.25%, 2003 650 666
5.50%, 2003 75 77
7.875%, 2004 2,100 2,433
7.50%, 2005 530 607
4.75%, 2008 2,780 2,801
5.625%, 2008 1,180 1,259
---------------------------------------------------
19,850
- -----------------------------------------------------------
U.S. TREASURY BONDS
- -----------------------------------------------------------
10.75%, 2003 2,450 3,023
6.125%, 2027 880 985
6.375%, 2027 350 402
5.25%, 2028 500 512
5.50%, 2028 300 314
---------------------------------------------------
5,236
- -----------------------------------------------------------
MORTGAGE BACKED SECURITIES
- -----------------------------------------------------------
FNMA, 5.75%, 2008 1,000 1,035
FNMA, 6.00%, 2008 4,750 5,010
FNMA, 7.00%, 2028 946 965
--------------------------------------------------
7,010
- -----------------------------------------------------------
GOVERNMENT AGENCY
- -----------------------------------------------------------
Tennessee Valley Authority,
6.25%, 2017 100 105
CANADIAN PROVINCIAL OBLIGATION
Province of Quebec,
8.625%, 2005 500 575
--------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--64.5%
(Cost: $32,556) 32,776
--------------------------------------------------
CORPORATE OBLIGATIONS
- -----------------------------------------------------------
AEROSPACE--1.1%
- -----------------------------------------------------------
Lockheed Martin Corp.
6.75%, 2003 400 415
7.25%, 2006 150 162
--------------------------------------------------
577
BANKS--4.5%
- -----------------------------------------------------------
ABN-Amro Holding, N.V.,
8.25%, 2009 100 109
Abbey National, PLC,
6.69%, 2005 25 26
Capital One Bank,
8.125%, 2000 100 102
Crestar Financial Corp.,
8.25%, 2002 100 108
Den Danske Bank,
6.375%, 2008 350 354
Kansallis Osake Bank,
10.00%, 2002 100 112
NationsBank Corp.,
9.50%, 2004 200 234
<CAPTION>
BANKS--CONTINUED
- -----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
Northern Trust Co.,
6.25%, 2008 $ 500 $ 521
Riggs National Corp.,
8.50%, 2006 100 101
Scotland International,
8.80%, 2004 50 56
Svenska Handelsbanken,
7.125%, 2049 50 49
Wells Fargo & Co.,
6.875%, 2006 500 530
---------------------------------------------------
2,302
- -----------------------------------------------------------
COMMUNICATIONS, MEDIA AND ELECTRONICS--5.4%
- -----------------------------------------------------------
Cable & Wireless
Communication,
6.75%, 2008 400 405
Comcast Cable,
8.50%, 2027 100 124
GTE Corp.,
6.90%, 2008 100 109
MCI WorldCom, Inc.
7.75%, 2007 50 57
7.75%, 2027 100 118
News American Holdings, Inc.
9.25%, 2013 75 94
8.15%, 2036 300 339
Tele-Communications, Inc.,
9.80%, 2012 350 467
Time Warner, Inc.
9.125%, 2013 350 443
6.875%, 2018 300 313
9.15%, 2023 200 264
---------------------------------------------------
2,733
- -----------------------------------------------------------
CONSUMER PRODUCTS, SERVICES AND RETAIL--5.3%
- -----------------------------------------------------------
Dayton Hudson Corp.,
7.50%, 2006 100 111
Dillard's, Inc.,
6.17%, 2001 500 501
Federated Department Stores,
6.125%, 2001 500 504
May Department Stores Co.,
6.875%, 2005 50 53
Phillip Morris Cos.,
7.20%, 2007 150 163
Raytheon Co.
6.75%, 2007 150 159
6.15%, 2008 500 508
Royal Caribbean Cruises, Ltd.,
8.25%, 2005 120 127
Safeway,
6.05%, 2003 250 253
Sears Roebuck Acceptance
Corp.,
7.00%, 2007 150 161
Sony Corp.,
6.125%, 2003 150 153
---------------------------------------------------
2,693
- -----------------------------------------------------------
</TABLE>
69
<PAGE> 71
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
ENERGY AND CHEMICAL--.8%
- -----------------------------------------------------------
Occidental Petroleum Corp.,
7.375%, 2008 $ 400 $ 410
FINANCIAL SERVICES--2.9%
- -----------------------------------------------------------
Associates Corp.,
6.625%, 2001 200 206
FINOVA Capital Corp.,
6.50%, 2002 100 101
General Electric Capital Corp.
8.75%, 2007 50 61
8.625%, 2008 50 61
Household Finance Corp.,
6.50%, 2008 1,000 1,045
---------------------------------------------------
1,474
- -----------------------------------------------------------
TRANSPORTATION--1.1%
- -----------------------------------------------------------
Continental Airlines, Inc.
6.90%, 2018 50 49
7.75%, 2014 47 49
Delta Air Lines, Inc.,
9.75%, 2021 300 368
Ford Motor Credit,
7.75%, 2005 100 111
---------------------------------------------------
577
- -----------------------------------------------------------
UTILITIES--4.6%
- -----------------------------------------------------------
BellSouth Telecommunications,
6.375%, 2028 500 520
<CAPTION>
UTILITIES--CONTINUED
- -----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
Centerior Energy,
7.67%, 2004 $ 100 $ 105
Cincinnati Bell, Inc.,
6.30%, 2028 300 305
Commonwealth Edison
7.375%, 2004 50 53
7.00%, 2005 100 106
El Paso Electric Co.,
8.90%, 2006 350 394
Sprint Capital Corp.,
6.875%, 2028 800 832
---------------------------------------------------
2,315
---------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--25.7%
- -----------------------------------------------------------
(Cost: $12,746) 13,081
---------------------------------------------------
MONEY MARKET INSTRUMENTS--9.8%
- -----------------------------------------------------------
Yield--5.01%
Due--January 1999
Federal Home Loan Bank
(Cost: $4,996) $ 5,000 4,996
--------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
- -----------------------------------------------------------
(Cost: $50,298) $50,853
---------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTE TO KEMPER INVESTMENT GRADE BOND PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
Based on the cost of investments of $50,298,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $665,000, the gross
unrealized depreciation was $110,000 and the net unrealized appreciation on
investments was $555,000.
See accompanying Notes to Financial Statements.
70
<PAGE> 72
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER CONTRARIAN VALUE PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
COMMON STOCKS OF SHARES VALUE
<S> <C> <C>
BANKING--17.3%
Banc One Corp. 95,320 $ 4,867
BankAmerica Corp. 98,006 5,893
Bankers Trust New York Corp. 55,000 4,699
Chase Manhattan Corp. 58,000 3,948
First Union Corp. 90,800 5,522
J.P. Morgan & Co. 18,000 1,891
KeyCorp 120,000 3,840
PNC Bank Corp. 108,900 5,894
Wachovia Corp. 20,000 1,749
Washington Mutual, Inc. 94,304 3,601
Wells Fargo & Co. 73,200 2,923
-----------------------------------------------------
44,827
- ----------------------------------------------------------
BASIC INDUSTRIES--12.8%
- ----------------------------------------------------------
Dow Chemical Co. 41,500 3,774
E.I. du Pont de Nemours & Co. 93,000 4,935
Eastman Chemical Co. 50,000 2,238
Georgia-Pacific Corp. 40,000 2,343
Georgia-Pacific Timber Group 136,200 3,243
Halliburton Co. 40,000 1,185
Louisiana-Pacific Corp. 225,000 4,120
Nucor Corp. 50,000 2,163
Praxair, Inc. 125,000 4,406
Sonoco Products Co. 106,000 3,140
Union Camp Corp. 21,500 1,451
-----------------------------------------------------
32,998
- ----------------------------------------------------------
CAPITAL GOODS--13.2%
- ----------------------------------------------------------
AMP, Inc. 167,000 8,694
Crown Cork & Seal Co. 43,500 1,340
Diebold 105,000 3,747
General Electric Co. 37,000 3,776
Minnesota Mining &
Manufacturing 96,800 6,885
Pitney Bowes, Inc. 68,000 4,492
Xerox Corp. 45,000 5,310
-----------------------------------------------------
34,244
- ----------------------------------------------------------
CONSUMER CYCLICALS--3.6%
- ----------------------------------------------------------
May Department Stores Co. 60,000 3,622
Sears, Roebuck & Co. 75,000 3,188
V.F. Corp. 55,000 2,578
-----------------------------------------------------
9,388
- ----------------------------------------------------------
CONSUMER DURABLES--1.8%
- ----------------------------------------------------------
Ford Motor Co. 44,500 2,612
Superior Industries
International 69,000 1,919
-----------------------------------------------------
4,531
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
CONSUMER STAPLES--7.9%
- ----------------------------------------------------------
International Flavors &
Fragrances 28,000 $ 1,237
Kimberly-Clark Corp. 60,000 3,270
McDonald's Corp. 33,000 2,529
Phillip Morris Cos. 193,600 10,358
Wendy's International 133,000 2,901
-----------------------------------------------------
20,295
- ----------------------------------------------------------
ENERGY--9.6%
- ----------------------------------------------------------
AMOCO Corp. 58,900 3,556
Atlantic Richfield Co. 85,000 5,546
Chevron Corp. 23,500 1,949
Exxon Corp. 60,000 4,388
Lubrizol Corp. 155,000 3,982
Royal Dutch Petroleum Co. 45,000 2,154
Schlumberger, Ltd. 25,000 1,153
Texaco, Inc. 40,000 2,115
-----------------------------------------------------
24,843
- ----------------------------------------------------------
FINANCIAL SERVICES--12.6%
- ----------------------------------------------------------
Allstate Corp. 65,000 2,511
Associates First Capital
Corp. 81,148 3,439
BRE Properties, Inc. 60,000 1,485
Federal Home Loan Mortgage
Corp. 164,600 10,606
Federal National Mortgage
Association 113,600 8,406
Golden West Financial Corp. 25,000 2,292
Meditrust 39,652 600
National City Corp. 20,000 1,450
Post Properties 45,000 1,730
-----------------------------------------------------
32,519
- ----------------------------------------------------------
HEALTH CARE--6.7%
- ----------------------------------------------------------
American Home Products Corp. 80,000 4,505
Baxter International 60,000 3,859
Bristol-Myers Squibb Co. 30,000 4,014
C.R. Bard 99,500 4,925
-----------------------------------------------------
17,303
- ----------------------------------------------------------
TECHNOLOGY--3.2%
- ----------------------------------------------------------
Hewlett-Packard Co. 70,000 4,782
Raytheon Co. 61,500 3,275
Tektronix, Inc. 9,900 298
-----------------------------------------------------
8,355
- ----------------------------------------------------------
UTILITIES--1.0%
- ----------------------------------------------------------
GTE Corp. 40,000 2,698
-----------------------------------------------------
</TABLE>
71
<PAGE> 73
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
-----------------------------------------------------
TOTAL COMMON STOCKS--89.7%
- ----------------------------------------------------------
(Cost: $199,601) $232,001
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
- ----------------------------------------------------------
Yield--4.50% to 5.59%
Due -- January and March 1999
Countrywide Home Loan $ 8,000 7,987
Federal Home Loan Mortgage
Corp. 11,700 11,688
Other 7,000 6,974
-----------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--10.3%
- ----------------------------------------------------------
(Cost: $26,649) 26,649
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
- ----------------------------------------------------------
(Cost: $226,250) $258,650
-----------------------------------------------------
</TABLE>
- ----------------------------------------------------------
NOTE TO KEMPER CONTRARIAN VALUE PORTFOLIO OF INVESTMENTS
- ----------------------------------------------------------
Based on the cost of investments of $226,250,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $40,254,000, the
gross unrealized depreciation was $7,854,000 and the net unrealized appreciation
on investments was $32,400,000.
See accompanying Notes to Financial Statements.
72
<PAGE> 74
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER SMALL CAP VALUE PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS--4.3%
- ---------------------------------------------------------
Albany International Corp. 53,358 $ 1,010
(a) Alliant Techsystems, Inc. 10,400 857
Apogee Enterprises, Inc. 84,100 946
Kaydon Corp. 4,400 176
(a) Lydall, Inc. 37,200 442
Robbins & Myers, Inc. 20,400 451
Southdown, Inc. 8,200 485
-----------------------------------------------------
4,367
- ---------------------------------------------------------
CONSUMER DISCRETIONARY--13.6%
- ---------------------------------------------------------
(a) AMC Entertainment, Inc. 41,500 874
Applebee's International 40,900 844
Brown Group, Inc. 27,700 487
(a) Brylane, Inc. 34,100 793
(a) Budget Group, Inc. 29,300 465
(a) CDI Corp. 8,100 164
(a) Carmike Cinemas, Inc. 17,500 356
Columbia Sportswear Co. 53,600 905
(a) Dollar Thrifty Automotive
Group, Inc. 80,300 1,034
Harman International
Industries 21,600 824
Herbalife International, Inc.
Class "A" 9,266 132
Class "B" 23,333 267
(a) Lone Star Steakhouse & Saloon 23,200 213
(a) Modis Professional Services,
Inc. 57,500 834
(a) Pacific Sun Wear of
California, Inc. 34,600 567
Springs Industries, Inc. 18,200 754
(a) Superior Services, Inc. 16,900 339
(a) Swisher International Group,
Inc. 50,500 455
True North Communications,
Inc. 17,000 457
(a) Valassis Communications, Inc. 30,800 1,590
Wolverine World Wide 17,500 232
(a) Young Broadcasting Corp. 30,900 1,294
-----------------------------------------------------
13,880
- ---------------------------------------------------------
CONSUMER STAPLES--2.8%
- ---------------------------------------------------------
(a) Fresh Del Monte Produce, Inc. 55,000 1,193
(a) Performance Food Group 18,000 506
Richfood Holdings 53,000 1,100
-----------------------------------------------------
2,799
- ---------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
ENERGY--4.5%
- ---------------------------------------------------------
(a) Basin Exploration, Inc. 35,000 $ 440
Cross Timbers Oil Co. 69,000 518
Giant Industries 18,500 173
KCS Energy, Inc. 43,200 132
New England Electric System 9,200 443
Newpark Resources 65,100 443
(a) Nuevo Energy Co. 33,700 388
(a) Seitel, Inc. 44,500 553
(a) Tesoro Petroleum Corp. 59,500 721
USEC, Inc. 51,500 715
(a) Veritas DGC, Inc. 6,800 88
-----------------------------------------------------
4,614
- ---------------------------------------------------------
FINANCIAL SERVICES--21.6%
- ---------------------------------------------------------
(a) Acceptance Insurance Cos. 33,700 682
Apartment Investment & Mgmt.
Co. 28,126 1,046
Associated Banc Corp. 26,045 890
Chartwell Re Corp. 24,000 570
Commercial Federal Corp. 34,250 794
Compass Bancshares 16,550 630
(a) Contifinancial Corp. 39,600 282
Cullen Frost Bankers 13,000 713
Fremont General Corp. 44,000 1,089
HCC Insurance Holdings 24,300 428
HUBCO, Inc. 24,157 728
(a) Headlands Mortgage Co. 40,000 838
Health Care Property
Investors, Inc. 27,700 852
Imperial Credit Mortgage
Holdings 57,500 539
LandAmerica Financial
Group, Inc. 10,000 558
Nationwide Health Properties 47,500 1,024
North Fork Bancorp 33,600 804
Omega Healthcare Investors 33,800 1,020
PMI Group 17,700 874
Pacific Bank, N.A. 7,500 327
Peoples Heritage Financial
Group 49,100 982
Philips International Realty
Corp. 31,700 487
Prentiss Properties Trust 46,500 1,038
Redwood Trust 26,000 364
Reliance Group Holdings, Inc. 58,300 751
Resource Bancshares Mortgage
Group 73,715 1,221
Sovereign Bancorp 19,955 284
UST Corp. 8,500 200
(a) UniCapital Corp. 34,500 254
W.R. Berkley Corp. 28,000 954
Webster Financial Corp. 29,300 804
-----------------------------------------------------
22,027
- ---------------------------------------------------------
</TABLE>
73
<PAGE> 75
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
HEALTH CARE--3.8%
- ---------------------------------------------------------
(a) CONMED Corp. 48,500 $ 1,601
(a) Genesis Health Ventures 87,000 761
(a) Hologic, Inc. 46,300 561
(a) Sola International 52,200 900
-----------------------------------------------------
3,823
- ---------------------------------------------------------
MATERIALS AND PROCESSING--11.9%
- ---------------------------------------------------------
AK Steel Holding Corp. 28,700 674
AMCOL International 75,650 747
Ball Corp. 13,500 618
(a) Buckeye Technologies, Inc. 50,500 754
Carpenter Technology Corp. 26,200 889
Elcor Corp. 42,550 1,375
Flowserve Corp. 43,826 726
Furon Co. 56,100 957
Intermet Corp. 67,400 880
(a) Lone Star Industries, Inc. 9,000 331
(a) Lone Star Technologies, Inc. 41,500 420
Mississippi Chemical Corp. 74,300 1,040
Quanex Corp. 34,600 781
(a) Shaw Group 35,800 286
Trinity Industries, Inc. 26,500 1,020
(a) Wyman-Gordon Co. 60,000 615
-----------------------------------------------------
12,113
- ---------------------------------------------------------
PRODUCER DURABLES--5.8%
- ---------------------------------------------------------
Belden, Inc. 45,700 968
Blount, Inc. 42,000 1,047
Briggs & Stratton Corp. 22,800 1,137
Del Webb Corp. 26,200 722
General Cable Corp. 34,800 713
Stewart & Stevenson Services 51,100 498
Watts Industries, Inc. 51,000 848
-----------------------------------------------------
5,933
- ---------------------------------------------------------
TECHNOLOGY--9.0%
- ---------------------------------------------------------
(a) Benchmark Electronics 32,100 1,176
(a) Burr Brown Corp. 29,925 701
CTS Corp. 6,800 296
(a) Etec Systems 28,800 1,152
(a) HMT Technology Corp. 106,700 1,367
(a) Hutchinson Technology 47,600 1,696
(a) Inter-tel, Inc. 33,600 785
(a) MasTec, Inc. 48,500 1,019
(a) Tech-Sym Corp. 14,500 323
(a) Xylan Corp. 39,100 687
-----------------------------------------------------
9,202
- ---------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
TRANSPORTATION--10.2%
- ---------------------------------------------------------
Airborne Freight Corp. 53,300 $ 1,922
(a) America West Holdings Corp. 53,500 910
Borg-Warner Automotive, Inc. 16,300 910
(a) Breed Technologies, Inc. 20,000 164
(a) Coltec Industries, Inc. 55,300 1,078
(a) Eagle USA Freight 65,900 1,615
Fleetwood Enterprises 30,000 1,043
Myers Industries 22,220 636
Teekay Shipping Corp. 44,100 830
Royal Nelloyd Group, ADR 57,700 390
(a) Wisconsin Central
Transportation Corp. 54,400 935
-----------------------------------------------------
10,433
- ---------------------------------------------------------
UTILITIES--4.3%
- ---------------------------------------------------------
Atmos Energy Corp. 17,300 558
(a) El Paso Electric 124,600 1,090
(a) Jones Intercable, Inc. 49,800 1,774
TNP Enterprises, Inc. 24,500 930
-----------------------------------------------------
4,352
-----------------------------------------------------
TOTAL COMMON STOCKS--91.8%
- ---------------------------------------------------------
(Cost: $97,961) 93,543
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--4.70% to 5.51%
Due--January 1999
Federal Home Loan Mortgage $ 4,388 4,386
Other 4,000 3,994
-----------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--8.2%
(Cost: $8,380) 8,380
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $106,341) $101,923
-----------------------------------------------------
</TABLE>
- ---------------------------------------------------------
NOTES TO KEMPER SMALL CAP VALUE PORTFOLIO OF INVESTMENTS
- ---------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $106,341,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $11,989,000, the
gross unrealized depreciation was $16,407,000 and the net unrealized
depreciation on investments was $4,418,000.
See accompanying Notes to Financial Statements.
74
<PAGE> 76
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER VALUE+GROWTH PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF
COMMON STOCK SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------
BASIC INDUSTRIES--7.1%
- ----------------------------------------------------------
ABM Industries, Inc. 12,500 $ 433
AK Steel Holding Corp. 12,000 282
AMP, Inc. 13,694 713
Allied Signal, Inc. 10,000 443
Bandag, Inc. 15,100 603
(a) Bethlehem Steel Corp. 18,200 152
Carlisle Companies, Inc. 11,300 583
Centex Construction Products 9,500 386
Dexter Corp. 6,600 207
Georgia-Pacific Corp. 12,400 295
Harsco Corp. 5,300 161
H.B. Fuller Co. 16,000 770
Honeywell, Inc. 3,400 256
IMC Global, Inc. 15,200 325
Inland Steel Industries 5,700 96
(a) Interim Services 7,800 182
(a) Jacobs Engineering 14,100 575
Lubrizol Corp. 20,000 514
M.A. Hanna Co. 60,200 741
Manitowoc Company, Inc. 10,000 444
Millennium Chemicals, Inc. 10,100 201
(a) Mueller Industries, Inc. 15,400 313
Nucor Corp. 7,000 303
OM Group, Inc. 9,200 336
Olin Corp. 19,200 544
Trinity Industries, Inc. 14,900 574
US Steel Group 17,200 396
-----------------------------------------------------
10,828
- ----------------------------------------------------------
CAPITAL GOODS--5.7%
- ----------------------------------------------------------
Barnes Group, Inc. 21,200 623
B.F. Goodrich Co. 6,600 237
Borg Warner Automotive, Inc. 3,300 184
Case Corp. 17,900 390
Cummins Engine, Inc. 15,200 540
Fluor Corp. 10,700 455
Kaydon Corp. 7,400 296
Kennametal, Inc. 20,700 440
LaFarge Corp. 13,200 535
Lone Star Industries, Inc. 7,000 258
Modine Manufacturing Co. 46,800 1,696
NACCO Industries, Inc. 5,800 534
Pentair, Inc. 5,800 231
(a) Solectron Corp. 9,200 855
Teleflex, Inc. 8,500 388
Timken Co. 18,700 353
USG Corp. 11,300 576
-----------------------------------------------------
8,591
- ----------------------------------------------------------
CONSUMER CYCLICALS--17.2%
- ----------------------------------------------------------
(a) American Eagle Outfitters 11,600 773
American Greetings Corp. 21,000 862
Banta Corp. 11,500 315
(a) Bed, Bath, & Beyond, Inc. 5,000 171
Burlington Coat Factory 25,600 418
(a) CMG Information Services 10,600 1,129
Carnival Corp. 28,800 1,382
(a) Costco Companies, Inc. 2,200 159
<CAPTION>
CONSUMER CYCLICALS--CONTINUED
- ----------------------------------------------------------
NUMBER OF
COMMON STOCK SHARES VALUE
- ----------------------------------------------------------
(a) DeVry, Inc. 16,200 $ 496
Dillard Department Stores 32,000 908
Family Dollar Stores, Inc. 30,000 660
(a) Federated Department Stores,
Inc. 12,400 540
Fingerhut Companies, Inc. 19,400 299
(a) Furniture Brand
International 5,300 144
GAP, Inc. 9,750 548
Gaylord Entertainment Co. 22,600 681
Great Atlantic & Pacific Tea
Co. 49,700 1,472
Harman International
Industries, Inc. 17,500 667
Home Depot 17,000 1,040
(a) ITT Educational Services,
Inc. 6,200 211
John Wiley & Sons, Inc. 11,800 570
Kellwood Co. 24,500 612
Kelly Services, Inc. 13,000 413
(a) Kohl's Corp. 11,700 719
Lancaster Colony Corp. 5,700 183
Liz Claiborne, Inc. 6,300 199
Lowe's Companies, Inc. 9,000 461
(a) Neiman Marcus 5,100 127
(a) O'Reilly Automotive, Inc. 10,700 506
Paychex, Inc. 7,400 381
(a) Premier Parks, Inc. 20,300 614
Regis Corp. 23,100 924
(a) Safeway, Inc. 8,200 500
(a) Saks Holdings 12,300 388
(a) Scotts Co. 3,900 150
(a) ShopKo Stores 4,000 133
Springs Industries, Inc. 14,100 584
Standard Registar 18,100 560
(a) Staples, Inc. 8,700 380
TJX Companies, Inc. 12,800 371
(a) Tommy Hilfiger Corp. 16,700 1,002
(a) Toys "R" US, Inc. 16,800 283
Walgreen Co. 5,400 316
Wallace Computer Service 19,000 501
Wal-Mart Stores, Inc. 12,000 977
(a) Westpoint Stevens, Inc. 9,400 297
(a) Williams-Sonoma 15,000 605
(a) Zale Corp. 13,900 448
-----------------------------------------------------
26,079
- ----------------------------------------------------------
CONSUMER DURABLES----3.0%
- ----------------------------------------------------------
Cooper Tire & Rubber Co. 4,700 96
D.R. Horton, Inc. 13,300 306
Ford Motor Co. 7,000 411
Harley-Davidson, Inc. 13,200 625
Hillenbrand Industries, Inc. 4,400 250
Hughes Supply, Inc. 17,700 518
(a) Knoll, Inc. 9,400 278
(a) Mohawk Industries, Inc. 25,800 1,085
Navistar International Corp. 7,500 214
Paccar, Inc. 12,000 493
Pulte Corp. 10,500 292
-----------------------------------------------------
4,568
</TABLE>
75
<PAGE> 77
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES--4.5%
- ----------------------------------------------------------
Block Drug Co., Inc. 9,270 $ 402
CKE Restaurants, Inc. 15,950 470
CVS Corp. 7,400 407
Cracker Barrel Old Country
Store, Inc. 11,600 270
Dole Food Co. 23,000 690
Gannett Co., Inc. 4,400 291
(a) Just For Feet, Inc. 7,000 122
(a) NBTY, Inc. 19,700 140
Newell Co. 15,000 619
Service Corporation
International 6,900 263
Tootsie Roll Industries 5,700 223
UST, Inc. 36,500 1,273
Universal Corp. 48,500 1,704
-----------------------------------------------------
6,874
- ----------------------------------------------------------
ENERGY--3.4%
- ----------------------------------------------------------
Ashland, Inc. 13,100 634
Devon Energy Corp. 22,300 684
Helmerich & Payne, Inc. 22,800 442
K.N. Energy, Inc. 8,300 302
KeySpan Energy Corp. 4,900 152
Oneok, Inc. 16,700 603
Praxair, Inc. 10,000 352
Sunoco, Inc. 23,600 851
Ultramar Diamond Shamrock
Corp. 11,200 272
Valero Energy Corp. 9,200 195
Western Resources, Inc. 17,900 595
-----------------------------------------------------
5,082
- ----------------------------------------------------------
FINANCE--17.8%
- ----------------------------------------------------------
A.G. Edwards, Inc. 10,900 406
Allmerica Financial Corp. 8,400 486
Ambac Financial Group, Inc. 13,500 813
American Financial Group,
Inc. 12,900 566
American National Insurance
Co. 14,600 1,208
(a) Amerin Corp. 7,000 165
Amerus Life Holdings, Inc. 12,200 273
C.I.T. Group Holdings 13,600 433
CMAC Investment Corp. 11,800 542
CNA Financial Corp. 4,900 197
Capital One Finance 4,400 506
Chubb Corp. 9,400 610
Commerce Group, Inc. 13,700 485
Conseco, Inc. 5,700 174
Delphi Financial Group 13,056 685
Doral Financial Corp. 38,100 843
Downey Financial Corp. 17,000 432
Enhance Financial Services
Group, Inc. 13,700 411
Everest Reinsurance
Holdings, Inc. 3,800 148
FBL Financial Group, Inc. 11,300 274
Federal National Mortgage
Association 15,200 1,125
Fidelity National Financial,
Inc. 15,070 460
Financial Security Assurance 8,700 472
First American Financial
Corp. 3,800 122
<CAPTION>
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
Fremont General Corp. 19,000 $ 470
Golden West Financial Corp. 3,000 275
GreenPoint Financial Corp. 6,500 228
Harleysville Group, Inc. 11,500 297
Hartford Financial Services
Group, Inc. 30,000 1,646
LandAmerica Financial Group 16,400 915
Liberty Corp. 12,500 616
Liberty Financial Cos. 20,400 551
Loews Corp. 5,300 521
MBIA, Inc. 8,400 551
(a) Markel Corp. 8,000 1,448
Mercury General Corp. 6,000 263
NAC Reinsurance Corp. 8,600 404
Ohio Casualty Corp. 15,100 621
Orion Capital Corp. 14,100 561
Providian Financial Corp. 6,900 518
ReliaStar Financial Corp. 3,000 138
SEI Investments Co. 6,800 676
Safeco Corp. 14,000 601
St. Paul Companies, Inc. 14,000 486
Selective Insurance Group,
Inc. 8,300 167
Sotheby's Holding 15,000 480
TCF Financial Corp. 5,500 133
TIG Holdings, Inc. 8,100 126
Torchmark Corp. 14,500 512
Transamerica Corp. 7,300 843
Transatlantic Holdings, Inc. 7,900 597
UNUM Life Insurance Company
of America 6,000 350
Waddell & Reed Financial,
Inc. 3,551 83
Washington Federal, Inc. 4,900 131
-----------------------------------------------------
27,044
- ----------------------------------------------------------
HEALTH CARE--11.1%
- ----------------------------------------------------------
(a) ALZA Corp. 16,300 852
Aetna, Inc. 2,800 220
(a) Amgen, Inc. 5,700 596
Ballard Medical Products 5,700 139
(a) Becton Dickinson & Co. 7,800 333
(a) Biogen, Inc. 4,900 407
Biomet, Inc. 10,800 435
Cardinal Health, Inc. 14,250 1,081
(a) Crescendo Pharmaceutical
Corp. 1,050 14
Dentsply International, Inc. 12,900 332
(a) Express Scripts, Inc. 6,400 430
(a) Forest Laboratories 7,200 383
(a) ICOS Corp. 16,400 488
McKesson Corp. 9,000 712
(a) Medimmune, Inc. 9,400 935
Merck & Co. 4,500 665
(a) MiniMed, Inc. 8,800 922
Mylan Laboratories, Inc. 10,400 328
Patterson Dental Co. 11,400 496
Pfizer, Inc. 7,400 928
(a) Quintiles Transnational,
Inc. 16,900 902
(a) Safeskin Corp. 9,200 222
Schering-Plough PLC 25,600 1,414
(a) Sepracor, Inc. 8,700 762
(a) Serological Corp. 11,800 354
(a) Sierra Health Services 16,600 350
(a) Universal Health Service 5,000 259
</TABLE>
76
<PAGE> 78
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
HEALTH CARE--CONTINUED
- ----------------------------------------------------------
(a) Visx, Inc. 8,800 $ 769
Warner-Lambert Co. 5,700 429
(a) Watson Pharmaceuticals 7,300 459
(a) WellPoint Health Networks,
Inc. 1,700 148
-----------------------------------------------------
16,764
- ----------------------------------------------------------
TECHNOLOGY--21.4%
- ----------------------------------------------------------
(a) Affiliated Computer Services 45,300 2,039
(a) Alliant Techsystems, Inc. 6,600 544
(a) America Online, Inc. 6,800 984
(a) American Power Conversion,
Inc. 5,300 257
(a) Ascend Communications, Inc. 12,100 796
Automatic Data Processing,
Inc. 4,900 393
(a) BMC Software 13,500 602
(a) Bisys, Inc. 26,900 1,389
(a) Centennial Cellular Corp. 12,200 500
(a) Cisco Systems 20,175 1,872
(a) Citrix Systems 13,700 1,330
Computer Sciences Corp. 15,300 986
(a) Compuware Corp. 11,700 914
(a) Concord EFS, Inc. 17,700 750
Cordant Technologies, Inc. 6,700 251
Dallas Semiconductor 15,300 623
(a) Dell Computer Corp. 5,300 388
(a) EMC Corp. 4,900 416
(a) Gateway 2000, Inc. 10,100 517
Intel Corp. 6,900 818
(a) Intuit 8,800 638
Jack Henry & Associates,
Inc. 12,300 612
(a) Keane, Inc. 21,800 871
(a) Legato Systems 14,500 956
(a) Lexmark International Inc. 6,200 623
(a) Medquist, Inc. 13,600 537
(a) Microsoft Corp. 5,500 763
National Computer Systems,
Inc. 13,700 507
(a) Network Appliance, Inc. 8,800 396
Northrop Grumman Corp. 7,300 534
(a) Orbital Sciences Corp. 4,400 195
(a) PSINet, Inc. 33,700 703
(a) Qlogic Corp. 4,100 537
Raytheon Co. 9,000 479
Reynolds & Reynolds Co. 34,500 791
<CAPTION>
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
Scientific-Atlanta 9,100 $ 208
(a) Smart Modular Technologies,
Inc. 12,800 355
(a) Sun Microsystems 8,000 685
Sundstrand Corp. 12,800 664
Symbol Technologies, Inc. 12,100 774
(a) Tech Data Corp. 22,000 885
Thomas & Betts Corp. 8,400 364
Total System Services, Inc. 14,100 331
(a) UNOVA, Inc. 13,800 250
United Technologies, Inc. 3,200 348
(a) VERITAS Software Corp. 12,900 773
(a) Vishay Intertechnology 18,600 270
(a) Xilinx, Inc. 10,000 651
(a) Xircom, Inc. 11,700 398
-----------------------------------------------------
32,467
- ----------------------------------------------------------
TRANSPORTATION--4.1%
- ----------------------------------------------------------
(a) AMR Corp. 8,200 487
ASA Holdings, Inc. 30,500 149
Airborne Freight Corp. 14,000 505
(a) Alaska Air Group, Inc. 12,200 540
Alexander & Baldwin, Inc. 22,700 528
Arvin Industries, Inc. 20,200 842
CSX Corp. 21,500 892
Comair Holding, Inc. 7,800 263
Delta Air Lines Inc. 16,600 863
Superior Industries
International 14,000 389
Swift Transportation Co.,
Inc. 12,800 359
Werner Enterprise, Inc. 25,000 442
-----------------------------------------------------
6,259
- ----------------------------------------------------------
UTILITIES--.8%
- ----------------------------------------------------------
(a) AirTouch Communications 17,500 1,262
-----------------------------------------------------
TOTAL COMMON STOCKS--96.1%
(Cost: $126,618) 145,818
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--3.9%
Yield--4.50% to 5.48%
Due--January 1999
(Cost: $5,993) $ 6,000 5,993
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $132,611) $151,811
-----------------------------------------------------
</TABLE>
- ----------------------------------------------------------
NOTES TO KEMPER VALUE+GROWTH PORTFOLIO OF INVESTMENTS
- ----------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $132,611,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $22,275,000, the
gross unrealized depreciation was $3,075,000 and the net unrealized appreciation
of investments was $19,200,000.
See accompanying Notes to Financial Statements.
77
<PAGE> 79
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 20+ PORTFOLIO
Portfolio of Investments at December 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY SECURITIES--17.8%
Notes
7.50%, 1999 $ 100 $ 102
8.875%, 2000 250 264
8.50%, 2000 800 850
6.75%, 2000 799 820
5.50%, 2000 875 888
6.625%, 2001 1,900 1,991
6.50%, 2001 1,200 1,250
6.25%, 2002 280 293
7.875%, 2004 261 302
-----------------------------------------------------
6,760
- ----------------------------------------------------------
MORTGAGE BACKED SECURITIES--1.0%
- ----------------------------------------------------------
FNMA 6.01%, 2000 150 152
FHLMC 6.00%, 2006 41 41
FHLMC 6.50%, 2014 107 108
GNMA 7.00%, 2015 88 88
-----------------------------------------------------
389
- ----------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--18.8%
- ----------------------------------------------------------
(Cost: $7,059) 7,149
-----------------------------------------------------
COMMON STOCKS
BASIC INDUSTRIES--5.2%
- ----------------------------------------------------------
AK Steel Holding Corp. 910shs. 21
Alcan Aluminum Ltd. 2,800 76
AMCOL International Corp. 1,815 18
BASF, A.G. 5,100 195
Bayer, A.G. 5,300 221
(a) Bethlehem Steel Corp. 9,400 79
Burmah Castrol PLC 12,400 177
Cockerill Sambre, S.A. 31,800 149
Crown Cork & Seal Co., Inc. 500 15
Dow Chemical Co. 500 45
Eastman Chemical Co. 200 9
FPB Holding, A.G. 966 187
Fletcher Challenge Building 43,800 68
Nucor Corp. 1,200 52
Praxair, Inc. 700 25
Rohm & Haas Co. 2,000 60
Standard-Pacific Corp. 25,000 353
Toray Industries, Inc. 500 3
Trelleborg A.B. 12,200 99
UPM-Kymmene, OYJ 900 25
Valhi, Inc. 10,100 115
-----------------------------------------------------
1,992
- ----------------------------------------------------------
CAPITAL GOODS--7.4%
- ----------------------------------------------------------
Albany International Corp.,
"A" 102 2
(a) Alliant Techsystems 500 41
Ball Corp. 3,600 165
Blount International, Inc. 1,460 36
Canon, Inc. 900 19
Columbus McKinnon Corp. 3,800 68
(a) Cooper Cameron Corp. 2,500 61
Elcor Corp. 500 16
(a) FDX Corp. 500 44
Flowserve Corp. 986 16
General Binding Corp. 2,500 93
Hillenbrand Industries, Inc. 2,100 119
(a) Hologic, Inc. 1,100 13
HON Industries, Inc. 13,500 323
<CAPTION>
CAPITAL GOODS--continued
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
Lafarge Corp. 1,200 $ 49
(a) MSC Industrial Direct 2,800 63
Maeda Road Construction 7,000 47
Mannesmann, A.G. 3,210 404
Minnesota Mining &
Manufacturing Co. 800 57
(a) Mueller Industries, Inc. 8,700 177
Okuma Corp. 27,000 141
Penta-Ocean Construction 161,000 322
Pitney Bowes, Inc. 400 26
(a) RTI International Metals 4,400 62
Reliance Steel & Aluminum 1,700 47
(a) SLI, Inc. 4,300 119
Scana Corp. 3,700 119
(a) Shaw Group, Inc. 1,100 9
Sony Corp. 700 51
(a) Superior Services, Inc. 1,500 30
Swire Pacific, Ltd., "A" 12,000 54
Technip, S.A. 193 18
(a) Wyman-Gordon Co. 400 4
-----------------------------------------------------
2,815
- ----------------------------------------------------------
CONSUMER CYCLICALS--11.2%
- ----------------------------------------------------------
American Greetings Corp., "A" 2,400 99
(a) Ames Department Stores 3,700 100
(a) AutoZone, Inc. 1,800 59
(a) Avis Rent A Car, Inc. 800 19
(a) Best Buy Co., Inc. 1,500 92
Borg-Warner Automotive, Inc. 450 25
Brown Group, Inc. 1,360 24
Burlington Coat Factory 5,500 90
Cap Gemini S.A. 1,100 176
(a) Cellstar Corp. 19,900 136
(a) Chattem, Inc. 600 29
Coachmen Industries, Inc. 200 5
Comdisco 4,900 83
(a) Consolidated Graphics 700 47
Dillard's, Inc. 4,300 122
Douglas Holding, A.G. 200 12
(a) Education Management Corp. 1,000 24
(a) Electronic Arts, Inc. 1,000 56
Family Dollar Stores, Inc. 5,000 110
(a) Finish Line, Inc., "A" 3,700 30
(a) Friedman's, Inc., "A" 1,400 14
GenCorp., Inc. 3,500 87
(a) General Nutrition Cos. 2,000 33
(a) Genesco, Inc. 13,500 77
Hartmax Corp. 10,000 56
Home Depot 1,200 73
International Flavors &
Fragrances, Inc. 400 18
(a) Jones Apparel Group 5,000 110
Kingfisher, PLC 17,200 186
Longs Drug Stores 600 23
(a) Mail-Well, Inc. 6,900 79
May Department Stores Co. 600 36
Maytag Corp. 2,500 156
(a) Men's Wearhouse, Inc. 2,100 67
Meredith Corp. 400 15
(a) Mirage Resorts, Inc. 4,500 67
(a) MotivePower Industries, Inc. 1,000 32
(a) Neiman Marcus 2,000 50
Newell Co. 3,200 132
</TABLE>
78
<PAGE> 80
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--continued
Nike, Inc., "B" 1,550 $ 63
(a) Nine West Group, Inc. 5,500 86
(a) Pacific Sunwear of California 1,200 20
Penton Media, Inc. 100 2
(a) Personnel Group of America,
Inc. 7,000 123
Pillowtex Corp. 1,300 35
Rentokil Initial, PLC 12,205 92
Sears, Roebuck & Co. 1,900 81
(a) Sola International, Inc. 2,300 40
Stewart Enterprises, Inc. 1,800 40
(a) Sylvan Learning Systems, Inc. 7,550 230
(a) Tower Automotive, Inc. 600 15
(a) Veritas DGC, Inc. 10,800 140
(a) Viacom, "B" 2,000 148
Wal-Mart Stores, Inc. 3,000 244
(a) Wet Seal, "A" 7,200 217
(a) Whole Foods Market 1,000 48
-----------------------------------------------------
4,273
- ----------------------------------------------------------
CONSUMER DURABLES--1.1%
- ----------------------------------------------------------
(a) Ducommun, Inc. 5,200 72
(a) Fairchild Corp., "A" 8,000 126
Fiat, SpA 18,100 63
Ford Motor Co. 1,800 106
Honda Motor Co., Ltd. 1,100 36
-----------------------------------------------------
403
- ----------------------------------------------------------
CONSUMER STAPLES--6.1%
- ----------------------------------------------------------
Adolph Coors Co. 900 51
Booker, PLC 3,300 3
ConAgra 5,000 157
Farmer Brothers Co. 600 128
Imperial Tobacco Group, PLC 28,900 303
Koninklijke Ahold, N.V. 7,998 295
(a) Lone Star Steakhouse & Saloon 1,340 12
McDonald's Corp. 2,900 222
Michael Foods, Inc. 2,700 81
(a) Ocular Sciences, Inc. 200 5
Philip Morris Cos. 6,000 321
(a) Ryan's Family Steak Houses,
Inc. 19,200 238
Seaboard Corp. 100 42
SEITA 500 31
UST, Inc. 6,200 216
Universal Corp. 5,000 176
Wendy's International 1,800 39
-----------------------------------------------------
2,320
- ----------------------------------------------------------
ENERGY--2.4%
- ----------------------------------------------------------
Ashland, Inc. 900 44
Atlantic Richfield Co. 1,100 72
Atmos Energy Corp. 600 19
BG, PLC 11,700 75
Chevron Corp. 500 41
Cia Espanola de Petroleos,
S.A. 400 15
Elf Aquitaine 1,128 130
Ente Nazionale Idrocarburi,
SpA 20,900 137
Exxon Corp. 1,200 88
(a) Nabors Industries, Inc. 1,300 18
Repsol, S.A. 820 44
Royal Dutch Petroleum Co. 1,396 69
(a) Tesoro Petroleum Corp. 1,190 14
TransCanada Pipelines, Ltd. 1,000 15
(a) UTI Energy Corp. 19,700 143
-----------------------------------------------------
924
- ----------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
FINANCE--15.4%
- ----------------------------------------------------------
A.G. Edwards, Inc. 6,600 $ 246
AXA-UAP, S.A. 2,000 290
Aetna, Inc. 1,000 79
Ambac, Inc. 2,500 150
American General Corp. 1,000 78
Assicurazioni Generali, SpA 700 29
Associates First Capital
Corp. 942 40
BB&T Corp. 4,000 161
Bank One Corp. 1,094 56
BankAmerica Corp. 3,714 223
Bankque Nationale de Paris 2,200 181
Bear Stearns Cos. 1,600 60
Chase Manhattan Corp. 800 54
China Resources Enterprises,
Ltd. 35,000 54
Cincinnati Financial Corp. 4,300 157
Citigroup, Inc. 2,200 109
Commercial Federal Corp. 1,650 38
Compass Bancshares, Inc. 610 23
Dah Sing Financial 44,000 107
Del Webb Corp. 1,230 34
Dresdner Bank, A.G. 900 38
Executive Risk, Inc. 300 16
Federal Home Loan Mortgage
Corp. 1,500 97
Federal National Mortgage
Association 4,500 333
(a) Financial Federal Corp. 4,400 109
First Union Corp. 1,640 100
Fleet Financial Group, Inc. 600 27
Golden West Financial Corp. 400 37
HSBC Holdings, PLC 3,644 91
Hang Seng Bank, Ltd. 10,400 93
Hartford Financial Services 2,200 121
Hibernia Corp. 6,000 104
ING Groep, N.V. 2,820 172
Jefferson-Pilot Corp. 825 62
KeyCorp. 600 19
(a) Lasalle Partners, Inc. 1,200 35
MGIC Investment Corp. 1,600 64
Merrill Lynch & Co., Inc. 1,700 113
Mitsui Trust & Banking Co.,
Ltd. 154,000 176
Morgan Stanley, Dean
Witter & Co. 2,000 142
NAC Re Corp. 4,100 192
PNC Bank Corp. 800 43
Protective Life Insurance Co. 1,700 68
Raymond James Financial 15,600 330
Resource Bancshares Mortgage
Group, Inc. 1,890 31
SLM Holding Corp. 5,600 269
Safeco Corp. 2,000 86
Sakura Bank, Ltd. 66,000 151
St. George Bank, Ltd. 41,000 259
Stewart Information Services 700 41
Texas Regional Bancshares,
Inc. 1,650 41
Torchmark Corp. 2,100 74
(a) Waddell & Reed Financial 514 12
Washington Mutual, Inc. 2,184 83
Wells Fargo Co. 1,000 40
Wing Hang Bank, Ltd. 5,500 14
-----------------------------------------------------
5,852
- ----------------------------------------------------------
</TABLE>
79
<PAGE> 81
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
HEALTH CARE--7.6%
- ---------------------------------------------------------
Abbott Laboratories 3,000 $ 147
American Home Products Corp. 4,400 248
(a) American Oncology Resources 7,000 102
(a) Amgen, Inc. 300 31
(a) Arterial Vascular Engineering 4,800 252
Bergen Brunswig Corp. "A" 6,000 209
Bristol-Myers Squibb Co. 800 107
C.R. Bard, Inc. 1,300 64
(a) CONMED Corp. 1,270 42
(a) Genesis Health Ventures, Inc. 1,000 9
(a) Hanger Orthopedic Group, Inc. 8,900 200
Johnson & Johnson 1,200 101
McKesson Corp. 800 63
Merck & Co., Inc. 1,200 177
(a) NBTY, Inc. 8,600 61
Novartis, A.G. 21 41
Omnicare, Inc. 2,900 101
(a) Renal Care Group, Inc. 2,100 61
(a) Safeskin Corp. 1,800 43
Schering-Plough PLC 4,000 221
(a) Sofamor-Danek Group, Inc. 600 73
Suzuken Co., LTD 20,000 454
(a) Xomed Surgical 3,150 101
-----------------------------------------------------
2,908
- ----------------------------------------------------------
TECHNOLOGY--11.4%
- ----------------------------------------------------------
(a) ADC Telecommunications, Inc. 11,300 393
AMP, Inc. 1,570 82
AT&T Corp. 1,500 113
(a) Affiliated Computer Services,
Inc. 4,300 194
(a) AirTouch Communications, Inc. 1,500 108
Alcatel Sel AG 369 67
BellSouth Corp. 7,600 379
(a) CHS Electronics, Inc. 7,800 132
Computer Associates
International 3,000 128
Computer Sciences Corp. 2,800 180
(a) Comverse Technologies, Inc. 3,700 263
Deutsche Telekom 5,400 178
Fuji Photo Film Co., Ltd 1,000 37
GTE Corp. 1,200 81
Hewlett-Packard Co. 900 61
(a) HMT Technology Corp. 1,600 21
Hong Kong Telecommunications,
Ltd. 93,400 163
Intel Corp. 3,100 368
(a) Learning Co., Inc. 850 22
Linear Technology Corp. 3,000 269
Murata Manufacturing 200 8
(a) Orbital Sciences Corp. 2,600 115
Pittway Corp. 200 7
(a) Pomeroy Computer Resources 4,300 97
(a) Quantum Corp. 2,400 51
Raytheon Co., "B" 900 48
Reynolds and Reynolds Co. 6,300 145
SAP, A.G. 100 48
(a) Sun Microsystems 3,700 317
(a) Synopsys, Inc. 2,000 109
(a) Tech Data Corp. 2,000 81
Telecom Italia, SpA 2,700 23
(a) Thermo Ecotek Corp. 3,200 34
-----------------------------------------------------
4,322
- ----------------------------------------------------------
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
TRANSPORTATION--1.4%
- ----------------------------------------------------------
Air New Zealand, Ltd., "B" 118,500 $ 186
Roadway Express, Inc. 4,700 68
Sairgroup 300 75
Tranz Rail Holdings 52,000 119
Trinity Industries 570 22
(a) U.S. Xpress Enterprises, "A" 3,200 48
(a) Wisconsin Central
Transportation Corp. 1,200 21
-----------------------------------------------------
539
- ----------------------------------------------------------
UTILITIES--8.8%
- ----------------------------------------------------------
Aquarion Co. 1,900 78
Ameritech Corp. 1,300 82
Black Hills Corp. 2,600 69
CLP Holdings, Ltd. 8,000 40
(a) Calpine Corp. 7,000 177
(a) Casella Waste Systems, Inc. 2,400 89
Central Hudson Gas & Electric 900 40
Chugoku Electric Power 400 7
CINergy Corp. 3,600 124
Columbia Energy Group 450 26
(a) El Paso Electric Co. 10,500 92
Empire District Electric 7,100 176
FPL Group 1,200 74
FirstEnergy Corp. 2,200 72
Hong Kong Electric Holdings,
Ltd. 24,500 74
LG&E Energy Corp. 12,000 340
Northwestern Corp. 14,800 391
(a) Patterson Energy, Inc. 17,000 69
Scottish & South Energy 31,800 359
Scottish Power, PLC 2,300 24
Shikoku Electric Power 19,300 330
TNP Enterprises 700 27
Texas Utilities Co., Inc. 2,100 98
Tohoku Electric Power Co. 19,300 342
(a) United Utilities, PLC 7,100 99
WPS Resources Corp. 1,700 60
-----------------------------------------------------
3,359
-----------------------------------------------------
TOTAL COMMON STOCKS--78.0%
(Cost: $26,426) 29,707
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
(b) Repurchase agreement--
Investors Fiduciary Trust
Company, dated 12/31/98,
4.00% due 1/4/99 $ 240 240
Other
Yield--4.88%
Due--January 1999 1,000 998
-----------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--3.2%
(Cost: $1,238) 1,238
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $34,723) $38,094
-----------------------------------------------------
</TABLE>
80
<PAGE> 82
PORTFOLIO OF INVESTMENTS
NOTES TO KEMPER HORIZON 20+ PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. The collateral is monitored daily by the fund
so that its market value exceeds the carrying value of the repurchase
agreement.
Based on the cost of investments of $34,723,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $4,630,000, the
gross unrealized depreciation was $1,259,000 and the net unrealized appreciation
on investments was $3,371,000.
See accompanying Notes to Financial Statements.
81
<PAGE> 83
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 10+ PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY SECURITIES--36.0%
- ----------------------------------------------------------
Notes
8.875%, 2000 $ 1,178 $ 1,243
8.50%, 2000 1,970 2,081
6.75%, 2000 2,245 2,304
5.50%, 2000 1,700 1,728
8.00%, 2001 1,000 1,074
6.625%, 2001 2,650 2,777
6.50%, 2001 2,960 3,083
5.375%, 2001 1,200 1,218
6.25%, 2002 3,950 4,128
7.875%, 2004 750 869
-----------------------------------------------------
20,505
- ----------------------------------------------------------
MORTGAGE BACKED SECURITIES--1.9%
- ----------------------------------------------------------
FNMA
6.01%, 2000 500 508
FHLMC
6.00%, 2006 135 135
FHLMC
6.50%, 2014 230 232
GMNA
7.00%, 2015 221 221
-----------------------------------------------------
1,096
-----------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--37.9%
(Cost: $21,393) 21,601
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
BASIC INDUSTRIES--3.3%
- ----------------------------------------------------------
AK Steel Holding Corp. 1,350shs. 32
AMCOL International Corp. 2,625 26
BASF, A.G. 6,100 233
Bayer, A.G. 2,300 96
Burmah Castrol 2,200 31
Cockerill Sambre, S.A. 3,000 14
Crown Cork & Seal Co., Inc. 500 15
Dow Chemical Co. 600 55
Eastman Chemical Co. 200 9
Elcor Corp. 800 26
FPB Holding, A.G. 1,671 323
Fletcher Challenge Building 56,600 87
Henkel KGaA 600 54
Louisiana-Pacific Corp. 3,000 55
(a) MAXXAM, Inc. 7,500 430
Millennium Chemicals, Inc. 107 2
Nucor Corp. 1,400 61
Pioneer International, Ltd. 16,200 34
Praxair, Inc. 700 25
Technip, S.A. 350 33
UPM-Kymmene, OYJ 1,100 31
V.F. Corp. 600 28
Valhi, Inc. 13,800 157
-----------------------------------------------------
1,857
- ----------------------------------------------------------
CAPITAL GOODS--3.6%
- ----------------------------------------------------------
(a) Alliant Techsystems, Inc. 2,000 165
Albany International Corp.,
"A" 102 2
Ball Corp. 7,800 357
Blount International, Inc. 2,180 54
Canon, Inc. 1,700 36
(a) Cooper Cameron Corp. 1,500 37
Emerson Electric Co. 1,200 73
Flowserve Corp. 1,440 24
<CAPTION>
CAPITAL GOODS--CONTINUED
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
Gleason Corp. 4,500 $ 82
Hillenbrand Industries, Inc. 2,200 125
Hologic, Inc. 1,600 19
(a) MSC Industrial Direct Co.,
Inc. 1,200 27
Mannesmann, A.G. 850 97
Man, A.G. 200 59
Minnesota Mining &
Manufacturing Co. 800 57
Okuma Corp. 17,000 89
Pitney Bowes, Inc. 400 26
Scana Corp. 10,500 339
(a) Shaw Group, Inc. 1,600 13
Sony Corp. 800 58
(a) Superior Services, Inc. 1,100 22
Swire Pacific, Ltd., "A" 18,500 83
(a) Wyman-Gordon Co. 600 6
Xerox Corp. 1,600 189
-----------------------------------------------------
2,039
- ----------------------------------------------------------
CONSUMER CYCLICALS--8.3%
- ----------------------------------------------------------
American Greetings Corp., "A" 2,100 86
(a) Ames Department Stores, Inc. 2,800 76
(a) AutoZone, Inc. 2,300 76
(a) Best Buy Co., Inc. 600 37
Borg-Warner Automotive, Inc. 640 36
Brown Group, Inc. 2,000 35
Burlington Coat Factory
Warehouse Corp. 4,500 73
Carrefour 81 61
(a) Central Garden & Pet Co. 2,800 40
(a) Consolidated Graphics 1,550 105
Dillard's, Inc. 3,800 108
Douglas Holding, A.G. 200 12
(a) Education Management Corp. 1,600 38
Etablissements Economiques du
Casino Guichard-Perrachon,
S.A. 2,700 281
(a) Finish Line, Inc., "A" 4,400 35
(a) Friedman's, Inc., "A" 1,985 20
(a) Garden Ridge Corp. 5,900 53
(a) General Nutrition Cos. 2,000 32
(a) Genesco, Inc. 33,600 191
Hartmax Corp. 10,000 56
Home Depot 2,800 171
International Flavors &
Fragrances, Inc. 400 18
(a) Jones Apparel Group, Inc. 4,000 88
Kingfisher, PLC 17,800 193
Longs Drug Stores, Inc. 1,300 49
(a) Mail-Well, Inc. 3,600 41
May Department Stores Co. 300 18
Maytag Corp. 2,000 125
(a) Men's Wearhouse, Inc. 1,950 62
Meredith Corp. 400 15
(a) Mirage Resorts, Inc. 20,500 306
(a) Neiman Marcus 2,000 50
Newell Companies, Inc. 2,000 83
Nike, Inc., "B" 3,000 122
(a) Nine West Group, Inc. 4,000 62
(a) OfficeMax, Inc. 39,500 484
(a) Pacific Sunwear of California 600 10
</TABLE>
82
<PAGE> 84
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICAL--CONTINUED
- ---------------------------------------------------------
Penton Media, Inc. 200 $ 4
(a) Personnel Group of America,
Inc. 9,500 166
Rentokil Initial, PLC 15,248 115
Sears, Roebuck & Co. 2,200 94
Stewart Enterprises, Inc. 1,800 40
(a) Sylvan Learning Systems, Inc. 7,400 226
(a) Tower Automotive, Inc. 1,600 40
(a) Viacom, Inc., "B" 900 67
W.H. Smith Group, PLC 37,600 298
Wal-Mart Stores, Inc. 2,000 163
(a) Wet Seal, Inc., "A" 4,700 142
(a) Whole Foods Market, Inc. 1,000 48
-----------------------------------------------------
4,751
- ----------------------------------------------------------
CONSUMER DURABLES--1.6%
- ----------------------------------------------------------
BBA Group, PLC 6,044 37
Excel Industries, Inc. 2,300 40
(a) Fairchild Corp., "A" 9,700 153
Fiat, SpA 23,400 81
Ford Motor Co. 2,000 117
Honda Motor Co., Ltd. 1,300 43
Primex Technologies, Inc. 1,900 81
Pulte Corp. 900 25
Yamaha Motor Co., LTD 48,000 310
-----------------------------------------------------
887
- ----------------------------------------------------------
CONSUMER STAPLES--4.5%
- ----------------------------------------------------------
(a) American Italian Pasta Co. 900 24
Booker, PLC 3,400 4
ConAgra 6,000 189
Farmer Brothers Co. 300 64
Imperial Tobacco Group, PLC 31,000 325
Koninklijke Ahold, N.V. 4,400 163
(a) Lone Star Steakhouse & Saloon 1,950 18
McDonald's Corp. 2,400 184
Michael Foods, Inc. 14,600 438
(a) Ocular Sciences, Inc. 500 13
Philip Morris Cos. 6,400 342
(a) Ryan's Family Steak Houses,
Inc. 26,700 330
SEITA 800 50
UST, Inc. 6,000 209
Universal Corp. 5,500 193
Wendy's International 1,800 39
-----------------------------------------------------
2,585
- ----------------------------------------------------------
ENERGY--2.8%
- ----------------------------------------------------------
Ashland, Inc. 1,200 58
Atlantic Richfield Co. 1,100 72
Atmos Energy Corp. 900 29
BG, PLC 31,500 203
Chevron Corp. 400 33
Cia Espanola de Petroleos,
S.A. 2,900 108
Elf Aquitaine 1,439 166
Ente Nazionale Idrocarburi,
SpA 32,800 214
Exxon Corp. 900 66
(a) Pool Energy Services Co. 26,500 287
Repsol, S.A. 960 51
(a) Rowan Companies, Inc. 7,500 75
Royal Dutch Petroleum Co. 1,534 76
TransCanada Pipelines, Ltd. 1,100 16
<CAPTION>
ENERGY--CONTINUED
- -----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
(a) Tesoro Petroleum Corp. 1,760 $ 21
(a) UTI Energy Corp. 20,200 146
-----------------------------------------------------
1,621
FINANCE--9.7%
- ----------------------------------------------------------
AMBAC, Inc. 2,000 120
AXA-UAP, S.A. 1,100 159
American General Corp. 1,000 78
Assicurazioni Generali, SpA 700 29
Associates First Capital Corp. 1,048 44
Bank One Corp. 1,799 92
Banco Popular Espanol 941 71
BankAmerica Corp. 3,364 202
Bear Stearns Cos 1,400 52
Chase Manhattan Corp. 2,800 191
China Resources Enterprises,
Ltd. 64,000 100
Citigroup, Inc. 3,000 149
Commercial Federal Corp. 1,850 43
Compass Bancshares, Inc. 900 34
Dah Sing Financial Group 34,000 83
Del Webb Corp. 1,800 50
Executive Risk, Inc. 400 22
Federal Home Loan Mortgage
Corp. 5,900 380
Federal National Mortgage
Association 4,800 355
(a) Financial Federal Corp. 3,200 79
First Union Corp. 1,560 95
Fleet Financial Group, Inc. 400 18
HSBC Holdings, PLC 4,855 121
Hang Seng Bank, Ltd. 19,100 171
Hartford Financial Services 1,200 66
Hibernia Corp. 4,000 70
ING Groep, N.V. 3,287 200
(a) Imperial Credit Industries,
Inc. 1,490 12
Jefferson-Pilot Corp. 750 56
KeyCorp 400 13
(a) Lasalle Partners, Inc. 500 15
Lehman Brothers Holdings, Inc. 7,100 313
MGIC Investment Corp. 1,400 56
Man (ED&F) Group, PLC 5,800 34
Merrill Lynch & Co., Inc. 1,100 73
Mitsui Trust & Banking Co.,
Ltd. 130,000 148
Morgan Stanley, Dean Witter &
Co. 1,000 71
PNC Bank Corp. 900 49
Protective Life Insurance Co. 1,500 60
Raymond James Financial, Inc. 17,600 372
Resource Bancshares Mortgage
Group, Inc. 2,656 44
Rouse Co. 3,200 88
Safeco Corp. 1,700 73
Sakura Bank, Ltd. 103,000 236
St. George Bank, Ltd. 41,400 262
Stewart Information Services
Corp. 2,500 145
Texas Regional Bancshares,
Inc. 2,350 59
Torchmark Corp. 2,100 74
(a) Waddell & Reed Financial, Inc. 514 12
Washington Mutual, Inc. 2,184 83
</TABLE>
83
<PAGE> 85
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCE--CONTINUED
- ----------------------------------------------------------
Wells Fargo Co. 1,000 $ 40
Wing Hang Bank, Ltd. 31,500 78
-----------------------------------------------------
5,540
- ----------------------------------------------------------
HEALTH CARE--5.8%
- ----------------------------------------------------------
Abbott Laboratories 2,400 118
American Home Products Corp. 5,600 315
(a) American Oncology Resources,
Inc. 8,700 127
(a) Arterial Vascular Engineering,
Inc. 6,300 331
Bristol-Myers Squibb Co. 1,700 227
C.R. Bard, Inc. 1,000 49
Cardinal Health, Inc. 1,140 86
(a) CONMED Corp. 1,850 61
(a) First Health Group Corp. 2,900 48
(a) Genesis Health Ventures, Inc. 1,400 12
(a) Hanger Orthopedic Group, Inc. 8,700 196
McKesson Corp. 700 55
Merck & Co., Inc. 1,300 192
(a) NBTY, Inc. 11,200 80
Novartis, A.G. 31 61
Omnicare, Inc. 2,900 101
(a) Renal Care Group, Inc. 2,100 61
(a) Safeskin Corp. 1,800 43
Schering-Plough PLC 5,000 276
(a) Sofamor-Danek Group, Inc. 800 97
Stryker Corp. 3,500 193
Suzuken Co., LTD 21,400 486
(a) Universal Health Services,
Inc. 1,100 57
(a) Xomed Surgical Products, Inc. 1,500 48
-----------------------------------------------------
3,320
- ----------------------------------------------------------
TECHNOLOGY--9.4%
- ----------------------------------------------------------
(a) ADC Telecommunications, Inc. 12,400 431
AMP, Inc. 1,657 86
(a) Affiliated Computer Services 1,900 85
(a) AirTouch Communications, Inc. 2,000 144
Alltel Corp. 600 36
BCE, Inc. 4,600 174
BellSouth Corp. 8,000 399
(a) CHS Electronics, Inc. 15,500 263
Computer Associates
International, Inc. 2,000 85
Computer Sciences Corp. 2,940 189
(a) Compuware Corp. 700 55
(a) Comverse Technologies, Inc. 300 21
Deutsche Telekom, A.G. 2,600 85
Diebold, Inc. 1,600 57
(a) Fuji Photo Film Co., Ltd. 1,000 37
GTE Corp. 1,200 81
(a) HMT Technology Corp. 2,300 30
Hewlett-Packard Co. 800 55
Intel Corp. 3,300 391
(a) Keane, Inc. 2,200 88
(a) Learning Company, Inc. 1,200 31
Linear Technology Corp. 3,300 296
(a) Orbital Sciences Corp. 6,900 305
Pittway Corp. 400 13
(a) Pomeroy Computer Resources,
Inc. 8,500 191
(a) Quantum Corp. 4,600 98
<CAPTION>
TECHNOLOGY--CONTINUED
- -----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
Raytheon Co., "B" 900 $ 48
Reynolds and Reynolds Co. 6,500 149
SAP, A.G. 200 95
Scientific-Atlanta, Inc. 7,300 167
(a) Sun Microsystems 4,100 351
(a) Synopsys, Inc. 7,600 412
(a) Tech Data Corp. 2,300 93
Telecom Italia, SpA 18,600 159
Telecom Italia Mobile, SpA 11,420 84
(a) VLSI Technology, Inc. 5,000 55
-----------------------------------------------------
5,339
- -----------------------------------------------------------
TRANSPORTATION--2.8%
Air New Zealand, Ltd., "B" 138,400 217
(a) Atlantic Coast Airlines
Holdings 9,100 227
(a) FDX Corp. 500 44
(a) Greyhound Lines, Inc. 47,600 283
Jurong Shipyard, Ltd. 48,600 214
Qantas Airways, Ltd. 19,200 39
Roadway Express, Inc. 5,800 84
Tranz Rail Holdings 168,100 385
Trinity Industries, Inc. 830 32
USFreightways Corp. 2,300 67
(a) Wisconsin Central
Transportation Corp. 1,700 29
-----------------------------------------------------
1,621
- -----------------------------------------------------------
UTILITIES--6.9%
- -----------------------------------------------------------
Aquarion Co. 8,800 361
Ameritech Corp. 6,200 393
Black Hills Corp. 2,200 58
CLP Holdings, Ltd. 19,000 95
(a) Casella Waste Systems, Inc. 2,100 78
Central Hudson Gas & Electric
Co. 1,900 85
Chugoku Electric Power Co.,
Inc. 20,200 369
CINergy Corp. 600 21
Columbia Energy Group 750 43
FPL Group, Inc. 500 31
(a) Jones Intercable, Inc. 2,080 74
Kyushu Electric Power Co. 19,500 371
LG&E Energy Corp. 13,300 377
(a) MCI WorldCom, Inc. 5,500 395
Northwestern Corp. 16,400 434
Scottish & South Energy 33,900 383
Scottish Power, PLC 5,600 58
TNP Enterprises, Inc. 900 34
Texas Utilities Co., Inc. 4,000 187
(a) United Utilities, PLC 7,300 101
-----------------------------------------------------
3,948
-----------------------------------------------------
TOTAL COMMON STOCKS--58.7%
(Cost: $29,467) 33,508
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--3.4%
Yield--4.88%
Due--January 1999
(Cost: $1,950) $ 1,952 1,950
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $52,810) $57,059
-----------------------------------------------------
</TABLE>
84
<PAGE> 86
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
NOTES TO KEMPER HORIZON 10+ PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $52,810,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $5,605,000, the
gross unrealized depreciation was $1,356,000 and the net unrealized appreciation
on investments was $4,249,000.
See accompanying Notes to Financial Statements.
85
<PAGE> 87
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 5 PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
U. S. TREASURY SECURITIES--54.8%
- ----------------------------------------------------------
Notes
8.875%, 2000 $ 1,470 $ 1,551
8.50%, 2000 1,750 1,869
6.75%, 2000 2,299 2,359
5.875%, 2000 340 344
5.50%, 2000 300 305
8.00%, 2001 573 615
6.625%, 2001 4,150 4,349
6.50%, 2001 1,580 1,646
5.375%, 2001 1,000 1,015
6.25%, 2002 2,800 2,927
7.875%, 2004 650 753
-----------------------------------------------------
17,733
- ----------------------------------------------------------
MORTGAGE BACKED SECURITIES--2.4%
- ----------------------------------------------------------
FNMA
6.01%, 2000 350 355
FHLMC
6.00%, 2006 86 86
FHLMC
6.50%, 2014 141 142
GMNA
7.00%, 2015 204 204
-----------------------------------------------------
787
-----------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--57.2%
- ----------------------------------------------------------
(Cost: $18,351) 18,520
-----------------------------------------------------
COMMON STOCKS
BASIC INDUSTRIES--1.8%
- ----------------------------------------------------------
AK Steel Holding Corp. 430shs. 10
AMCOL International Corp. 960 9
BASF, A.G. 2,600 99
(a) Bethlehem Steel Corp. 5,200 44
Burmah Castrol 1,800 26
Crown Cork & Seal Co., Inc. 200 6
Dow Chemical Co. 200 18
Eastman Chemical Co. 100 4
Elcor Corp. 200 6
FPB Holding, A.G. 595 115
Fletcher Challenge Building 25,700 40
(a) Genlyte Group, Inc. 1,200 23
Kyowa Hakko Kogyp 2,000 10
Louisiana-Pacific Corp. 1,300 24
Nucor Corp. 500 22
Praxair, Inc. 300 11
Taiheiyo Cement Corp. 6,000 15
Technip, S.A. 169 16
Toray Industries, Inc. 500 3
V.F. Corp. 200 9
Valhi, Inc. 3,700 42
Vulcan Materials Co. 200 26
-----------------------------------------------------
578
- ----------------------------------------------------------
CAPITAL GOODS--3.6%
- ----------------------------------------------------------
(a) Alliant Techsystems, Inc. 1,800 148
Ball Corp. 3,200 146
Blount International, Inc. 800 20
Canon, Inc. 400 9
Columbus McKinnon Corp. 4,500 81
CONECTIV, Inc. 1,100 27
<CAPTION>
CAPITAL GOODS--CONTINUED
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
(a) Cooper Cameron Corp. 500 $ 12
Emerson Electric Co. 500 30
Flowserve Corp. 519 9
(a) Hologic, Inc. 500 6
Hon Industries, Inc. 5,800 139
(a) MSC Industrial Direct Co.,
Inc. 400 9
Mannesmann, A.G. 420 48
Man, A.G. 100 29
Minnesota Mining &
Manufacturing Co. 300 21
Okuma Corp. 23,000 120
Pitney Bowes, Inc. 200 13
Premark International, Inc. 500 17
Reliance Steel & Aluminum
Co. 700 19
(a) SLI, Inc. 5,600 155
Scana Corp. 1,100 35
(a) Shaw Group, Inc. 600 5
Sony Corp. 400 29
(a) Superior Services, Inc. 300 6
(a) Wyman-Gordon Co. 200 2
Xerox Corp. 250 29
-----------------------------------------------------
1,164
- ----------------------------------------------------------
CONSUMER CYCLICALS--4.5%
- ----------------------------------------------------------
American Greetings Corp.,
"A" 800 33
(a) Ames Department Stores, Inc. 5,600 151
(a) AutoZone, Inc. 1,100 36
(a) Best Buy Co., Inc. 1,600 98
Borg-Warner Automotive, Inc. 240 13
Brown Group, Inc. 730 13
(a) Budget Group, Inc. 200 3
(a) Chattem, Inc. 1,900 91
Dillard's, Inc. 1,700 48
Douglas Holding, A.G. 100 6
(a) Education Management Corp. 1,000 24
(a) Electronic Arts, Inc. 1,100 62
(a) Finish Line, Inc., "A" 1,800 14
(a) Friedman's, Inc., "A" 740 8
(a) Garden Ridge Corp. 9,700 88
International Flavors &
Fragrances, Inc. 200 9
(a) Jones Apparel Group, Inc. 2,000 44
Kingfisher, PLC 7,800 85
Longs Drug Stores, Inc. 2,300 86
May Department Stores Co. 200 12
(a) Men's Wearhouse, Inc. 750 24
Meredith Corp. 200 8
(a) Mirage Resorts, Inc. 6,700 100
(a) Neiman Marcus 1,600 40
Newell Companies, Inc. 1,300 54
(a) Nine West Group, Inc. 2,000 31
(a) Pacific Sunwear of
California 450 7
Penton Media, Inc. 100 2
Rentokil Initial, PLC 3,200 24
Sears, Roebuck & Co. 1,000 42
(a) Sylvan Learning Systems,
Inc. 2,200 67
(a) Tower Automotive, Inc. 1,000 25
(a) Viacom, Inc., "B" 200 15
</TABLE>
86
<PAGE> 88
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--CONTINUED
- ----------------------------------------------------------
Wal-Mart Stores, Inc. 1,000 $ 81
(a) Wet Seal, Inc., "A" 1,000 30
-----------------------------------------------------
1,474
- ----------------------------------------------------------
CONSUMER DURABLES--1.0%
- ----------------------------------------------------------
Coachmen Industries, Inc. 1,000 26
(a) Ducommun, Inc. 900 12
(a) Fairchild Corp., "A" 3,600 57
Ford Motor Co. 900 53
Honda Motor Co., Ltd. 600 20
Primex Technologies, Inc. 3,400 144
-----------------------------------------------------
312
- ----------------------------------------------------------
CONSUMER STAPLES--3.2%
- ----------------------------------------------------------
(a) American Italian Pasta Co. 600 16
Booker, PLC 1,500 2
ConAgra 2,500 79
Farmer Brothers Co. 200 43
Imperial Tobacco Group, PLC 12,300 129
Koninklijke Ahold, N.V. 988 37
(a) Lone Star Steakhouse &
Saloon 705 6
McDonald's Corp. 1,100 84
Michael Foods, Inc. 1,000 30
(a) Ocular Sciences, Inc. 100 3
Philip Morris Cos. 2,500 134
(a) Ryan's Family Steak Houses,
Inc. 10,600 131
SEITA 2,400 150
Universal Corp. 2,900 102
UST, Inc. 2,000 70
Wendy's International 800 17
-----------------------------------------------------
1,033
- ----------------------------------------------------------
ENERGY--1.3%
- ----------------------------------------------------------
Atlantic Richfield Co. 500 33
Atmos Energy Corp. 320 10
BG, PLC 6,200 40
Chevron Corp. 300 25
Elf Aquitaine 763 88
Ente Nazionale Idrocarburi,
SpA 18,400 120
Exxon Corp. 500 37
Repsol, S.A. 390 21
Royal Dutch Petroleum Co. 636 32
(a) Tesoro Petroleum Corp. 650 8
-----------------------------------------------------
414
- ----------------------------------------------------------
FINANCE--8.2%
- ----------------------------------------------------------
A.G. Edwards, Inc. 4,300 160
AXA-UAP, S.A. 515 75
Allmerica Financial Corp. 1,100 64
American General Corp. 300 23
Associates First Capital
Corp. 470 20
Banc One Corp. 653 33
Banco Popular Espanol 170 13
BankAmerica Corp. 1,113 67
Banque Nationale de Paris,
S.A. 1,900 156
Bear Stearns Cos. 400 15
Chase Manhattan Corp. 1,300 88
China Resources Enterprises,
Ltd. 23,000 36
Citigroup, Inc. 1,300 64
Commercial Federal Corp. 700 16
<CAPTION>
FINANCE--CONTINUED
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
Compass Bancshares, Inc. 320 $ 12
Dah Sing Financial Group 12,000 29
Del Webb Corp. 650 18
Executive Risk, Inc. 200 11
Federal National Mortgage
Association 1,900 141
(a) Financial Federal Corp. 2,100 52
First Union Corp. 620 38
HSBC Holdings, PLC 814 20
Hang Seng Bank, Ltd. 12,800 114
Hartford Financial Services 600 33
Hibernia Corp. 1,500 26
ING Groep, N.V. 2,051 125
Jefferson-Pilot Corp. 375 28
KeyCorp 400 13
(a) Lasalle Partners, Inc. 300 9
MGIC Investment Corp. 500 20
Man (ED&F) Group, PLC 1,300 8
Merrill Lynch & Co., Inc. 1,900 127
Mitsui Trust & Banking Co.,
Ltd. 69,000 79
Morgan Stanley, Dean Witter
& Co. 500 35
NAC Re Corp. 200 9
PNC Bank Corp. 500 27
Progressive Corp. 400 68
Protective Life Insurance
Co. 600 24
Provident Financial Group 600 23
Raymond James Financial,
Inc. 6,800 144
Resource Bancshares Mortgage
Group, Inc. 945 16
Rouse Co. 1,400 38
SLM Holding Corp. 300 14
Safeco Corp. 1,000 43
St. George Bank, Ltd. 21,500 136
Stewart Information Services Corp. 2,200 128
Texas Regional Bancshares,
Inc. 1,650 41
Torchmark Corp. 700 25
20th Century Industries 1,200 28
(a) Waddell & Reed Financial,
Inc. 171 4
Wing Hang Bank, Ltd. 54,000 135
-----------------------------------------------------
2,671
- ----------------------------------------------------------
HEALTH CARE--4.3%
- ----------------------------------------------------------
Abbott Laboratories 1,200 59
American Home Products Corp. 2,000 113
(a) Amgen, Inc. 500 52
(a) Arterial Vascular Engineering, Inc. 500 26
(a) Bio-Rad Laboratories, Inc.,
"A" 1,000 21
Bristol-Myers Squibb Co. 300 40
C.R. Bard, Inc. 300 15
(a) CONMED Corp. 685 23
(a) First Health Group Corp. 1,000 17
(a) Genesis Health Ventures,
Inc. 500 4
(a) Hanger Orthopedic Group,
Inc. 4,600 104
(a) Lincare Holdings, Inc. 800 32
McKesson Corp. 500 40
Merck & Co., Inc. 500 74
(a) NBTY, Inc. 6,600 47
Novartis, A.G. 14 28
Omnicare, Inc. 1,700 59
(a) Renal Care Group, Inc. 1,200 35
(a) Safeskin Corp. 1,000 24
</TABLE>
87
<PAGE> 89
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
HEALTH CARE--CONTINUED
- ----------------------------------------------------------
Schering-Plough PLC 1,400 $ 77
Shinonogi 3,000 22
(a) Sofamor-Danek Group, Inc. 300 37
Stryker Corp. 400 22
Suzuken Co., LTD 8,500 193
(a) Trigon Healthcare, Inc. 1,000 37
(a) Universal Health Services,
Inc. 2,700 140
(a) Xomed Surgical Products,
Inc. 1,350 43
-----------------------------------------------------
1,384
- ----------------------------------------------------------
TECHNOLOGY--6.9%
- ----------------------------------------------------------
(a) ADC Telecommunications, Inc. 4,700 163
AMP Inc. 698 36
AT&T Corp. 900 68
(a) Affiliated Computer Services 3,800 171
Alltel Corp. 2,300 138
BellSouth Corp. 800 40
(a) CHS Electronics, Inc. 2,800 47
Computer Associates
International, Inc. 1,000 43
Computer Sciences Corp. 1,400 90
(a) Compuware Corp. 200 16
(a) Comverse Technologies, Inc. 200 14
Deutsche Telekom, A.G. 1,300 43
(a) Fuji Photo Film Co., Ltd. 2,000 74
GTE Corp. 600 40
(a) HMT Technology Corp. 800 10
Hewlett-Packard Co. 300 20
Intel Corp. 1,300 154
(a) Learning Company, Inc. 470 12
Linear Technology Corp. 1,600 143
Murata Manufacturing Co.,
Ltd. 700 29
(a) Orbital Sciences Corp. 1,300 58
Pittway Corp. 200 7
(a) Pomeroy Computer Resources,
Inc. 2,500 56
(a) Quantum Corp. 1,400 30
Raytheon Co., "B" 400 21
Reynolds & Reynolds Co. 3,100 71
SAP, A.G. 200 95
Scientific-Atlanta, Inc. 600 14
(a) Sun Microsystems 2,000 171
(a) Synopsys, Inc. 2,800 152
(a) Tech Data Corp. 1,500 60
Telecom Italia, SpA 13,000 111
(a) Veritas DGC, Inc. 2,900 38
-----------------------------------------------------
2,235
- ----------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
TRANSPORTATION--1.3%
- ----------------------------------------------------------
(a) AMR Corp. 600 $ 36
Air New Zealand, Ltd., "B" 39,500 62
(a) Atlantic Coast Airlines
Holdings 3,000 75
(a) FDX Corp. 200 18
(a) Greyhound Lines, Inc. 18,800 112
Jurong Shipyard, Ltd. 4,000 18
Roadway Express, Inc. 2,000 29
Tranz Rail Holdings 17,300 40
Trinity Industries, Inc. 290 11
(a) Wisconsin Central
Transportation Corp. 600 10
-----------------------------------------------------
411
- ----------------------------------------------------------
UTILITIES--3.6%
- ----------------------------------------------------------
Aquarion Co. 1,000 41
Black Hills Corp. 700 18
(a) Casella Waste Systems, Inc. 800 30
Central Hudson Gas &
Electric Co. 900 40
Chugoku Electric Power Co.,
Inc. 8,000 146
CINergy Corp. 700 24
Columbia Energy Group 150 9
DTE Energy Co. 300 13
FPL Group, Inc. 600 37
Kyushu Electric Power Co. 7,700 147
LG&E Energy Corp. 2,600 74
New England Electric System 1,600 77
Northwestern Corp. 3,100 82
OGE Energy Corp. 700 20
Scottish & South Energy 13,700 155
TNP Enterprises, Inc. 300 11
Texas Utilities Co., Inc. 1,000 47
(a) United Utilities, PLC 3,200 44
WPS Resources Corp. 700 25
Western Resources, Inc. 1,700 57
Yorkshire Water, PLC 7,100 65
-----------------------------------------------------
1,162
-----------------------------------------------------
TOTAL COMMON STOCKS--39.7%
(Cost: $11,288) 12,838
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--3.1%
Yield--4.88%
Due--January 1999
(Cost: $998) $ 1,000 998
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $30,637) $32,356
-----------------------------------------------------
</TABLE>
88
<PAGE> 90
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
NOTES TO KEMPER HORIZON 5 PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $30,637,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $2,167,000, the
gross unrealized depreciation was $448,000 and the net unrealized appreciation
on investments was $1,719,000.
See accompanying Notes to Financial Statements.
89
<PAGE> 91
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER BLUE CHIP PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS--7.2%
- ----------------------------------------------------------
AT&T Corp. 15,000 $ 1,129
Ameritech Corp. 13,000 824
Bell Atlantic Corp. 18,500 1,051
Frontier Corp. 21,600 734
(a) MCI WorldCom, Inc. 7,000 502
SBC Communications, Inc. 13,800 740
US West, Inc. 10,000 646
-----------------------------------------------------
5,626
- ----------------------------------------------------------
CONSUMER DISCRETIONARY--4.9%
- ----------------------------------------------------------
(a) Consolidated Stores Corp. 11,300 228
Home Depot 14,500 887
May Department Stores 18,000 1,087
(a) Mirage Resorts, Inc. 28,000 418
Newell Cos., Inc. 14,000 578
Wal-Mart Stores, Inc. 8,000 652
-----------------------------------------------------
3,850
- ----------------------------------------------------------
CONSUMER STAPLES--9.3%
- ----------------------------------------------------------
(a) Albertson's, Inc. 19,000 1,210
Coca-Cola Co. 9,000 602
ConAgra, Inc. 31,700 999
Dial Corp. 30,700 886
H.J. Heinz Co. 15,300 866
McCormick & Company, Inc. 28,000 947
PepsiCo, Inc. 20,000 819
Procter & Gamble Co. 10,000 913
-----------------------------------------------------
7,242
- ----------------------------------------------------------
DURABLES--1.3%
- ----------------------------------------------------------
Federal-Mogul Corp. 5,000 298
Stanley Works 15,900 441
Sundstrand Corp. 6,000 311
-----------------------------------------------------
1,050
- ----------------------------------------------------------
ENERGY--5.4%
- ----------------------------------------------------------
Chevron Corp. 10,800 896
Conoco Inc., "A" 16,300 340
Exxon Corp. 8,100 592
Mobil Corp. 8,900 775
Royal Dutch Petroleum Co. 16,000 766
Texaco, Inc. 8,500 449
Unocal Corp. 13,000 379
-----------------------------------------------------
4,197
- ----------------------------------------------------------
FINANCE--13.1%
- ----------------------------------------------------------
American Express Co. 5,100 521
American International Group,
Inc. 10,500 1,015
BankAmerica Corp. 12,316 741
BankBoston Corp. 14,000 545
CIGNA Corp. 9,400 727
Chase Manhattan Corp. 6,600 449
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
FINANCE--CONTINUED
- ----------------------------------------------------------
Citigroup, Inc. 13,500 $ 668
Compass Bancshares, Inc. 14,300 544
Federal National Mortgage
Association 6,000 444
First Security Corp. 24,000 561
First Tennessee National
Corp. 10,000 381
General Growth Properties,
Inc. 2,200 83
Household International 28,799 1,141
Jefferson-Pilot Corp. 10,350 776
Lincoln National Corp. 7,000 573
MGIC Investment Corp. 9,700 386
UNUM Life Insurance Company
of America 12,000 701
-----------------------------------------------------
10,256
- ----------------------------------------------------------
HEALTH CARE--13.2%
- ----------------------------------------------------------
Abbott Laboratories 20,000 980
American Home Products Corp. 13,800 777
Baxter International, Inc. 10,000 643
Becton, Dickinson & Co. 24,000 1,025
Bristol-Myers Squibb Co. 9,500 1,271
Eli Lilly & Co. 15,000 1,333
Glaxo Wellcome, PLC 8,000 556
Pfizer, Inc. 6,500 815
Schering-Plough PLC 16,000 884
SmithKline Beecham Group, PLC 14,000 973
(a) Sofamor-Danek Group, Inc. 9,000 1,096
-----------------------------------------------------
10,353
- ----------------------------------------------------------
MANUFACTURING--3.1%
- ----------------------------------------------------------
Corning, Inc. 12,000 540
Emerson Electric Co. 14,600 883
General Electric Co. 4,600 469
Textron, Inc. 7,100 539
-----------------------------------------------------
2,431
- ----------------------------------------------------------
MEDIA--6.1%
- ----------------------------------------------------------
CBS Corp. 27,600 904
(a) Infinity Broadcasting Corp. 13,900 381
(a) Jacor Communications, Inc.,
"A" 9,500 612
(a) Tele-Comm Liberty Media
Group, "A" 16,000 737
Time Warner, Inc. 13,400 832
Tribune Co. 5,000 330
(a) Univision Communication, Inc. 12,600 456
Young & Rubicam, Inc. 16,300 528
-----------------------------------------------------
4,780
- ----------------------------------------------------------
SERVICE INDUSTRIES--.6%
- ----------------------------------------------------------
R.R. Donnelley & Sons Co. 10,300 451
-----------------------------------------------------
</TABLE>
90
<PAGE> 92
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
FINANCE--CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--18.0%
- ---------------------------------------------------------
AMP, Inc. 15,723 $ 819
(a) Applied Materials, Inc. 11,000 470
(a) Cisco Systems, Inc. 9,725 903
Compaq Computer Corp. 24,400 1,023
Hewlett-Packard Co. 15,900 1,086
International Business
Machines Corp. 7,000 1,293
(a) Intuit 10,000 725
Motorola, Inc. 23,800 1,453
(a) Oracle Systems Corp. 30,000 1,294
Raytheon Co., "A" 19,243 995
(a) Seagate Technology, Inc. 23,000 696
(a) Sun Microsystems 9,800 839
Texas Instruments, Inc. 11,700 1,001
Xerox Corp. 6,300 743
(a) Xilinx, Inc. 12,000 782
-----------------------------------------------------
14,122
- ---------------------------------------------------------
TRANSPORTATION--2.7%
- ---------------------------------------------------------
CSX Corp. 15,000 623
Canadian National Railway 11,000 573
Norfolk Southern Corp. 30,000 951
-----------------------------------------------------
2,147
- -------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
UTILITIES--.8%
- ---------------------------------------------------------
Cincinnati Bell, Inc. 17,200 $ 650
-----------------------------------------------------
TOTAL COMMON STOCKS--85.7%
(Cost: $58,093) 67,155
-----------------------------------------------------
PREFERRED STOCKS
CVS Corp., convertible 5,000 495
Federal Mogul Corp. 2,000 130
Monsanto Co., convertible 8,200 402
Newell Cos. 3,000 159
-----------------------------------------------------
TOTAL PREFERRED STOCKS--1.5%
(Cost: $942) 1,186
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--4.88% and 5.00%
Due--January 1999
Federal Home Loan Bank $9,000 8,993
General Motors Acceptance
Corp. 1,000 998
-----------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--12.8%
(Cost: $9,991) 9,991
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $69,026) $78,332
-----------------------------------------------------
</TABLE>
- ---------------------------------------------------------
NOTES TO KEMPER BLUE CHIP PORTFOLIO OF INVESTMENTS
- ---------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $69,026,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $10,508,000, the
gross unrealized depreciation was $1,202,000 and the net unrealized appreciation
on investments was $9,306,000.
See accompanying Notes to Financial Statements.
91
<PAGE> 93
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GLOBAL INCOME PORTFOLIO
Portfolio of Investments at December 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
U.S. DOLLAR
CURRENCY ISSUER PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
U.S. DOLLAR--37.2% Asian Development Bank
6.25%, 2005 145 $ 152
Kingdom of Spain
5.88%, 2008 200 208
Province of British Columbia
7.13%, 2007 200 225
U.S. Treasury Bond
7.50%, 2024 175 227
U.S. Treasury Note
6.38%, 2000 331 337
5.75%, 2003 350 366
5.88%, 2005 300 320
---------------------------------------------------------------------------
1,835
- -------------------------------------------------------------------------------------------------------------------
EUROPEAN CURRENCY French Treasury
UNIT--16.5% 4.50%, 2002 115 140
7.50%, 2005 170 242
Kingdom of Spain
5.15%, 2009 170 211
Republic of Portugal
6.00%, 2004 170 220
---------------------------------------------------------------------------
813
- -------------------------------------------------------------------------------------------------------------------
ITALIAN LIRA--15.6% Italian Treasury
8.50%, 2004 845,000 627
5.00%, 2008 220,000 144
----------------------------------------------------------------------
771
- -------------------------------------------------------------------------------------------------------------------
CANADIAN DOLLAR--10.0% Government of Canada
4.50%, 2001 300 195
5.50%, 2009 440 301
---------------------------------------------------------------------------
496
- -------------------------------------------------------------------------------------------------------------------
NEW ZEALAND DOLLAR--4.8% Government of New Zealand
8.00%, 2004 250 147
7.00%, 2009 150 88
---------------------------------------------------------------------------
235
- -------------------------------------------------------------------------------------------------------------------
JAPANESE YEN--4.5% Asian Development Bank
5.00%, 2003 8,000 81
European Investment Bank
3.00%, 2006 15,000 143
---------------------------------------------------------------------------
224
- -------------------------------------------------------------------------------------------------------------------
SPANISH PESETA--4.1% Kingdom of Spain
4.50%, 2004 28,000 203
- -------------------------------------------------------------------------------------------------------------------
SWEDISH KRONA--2.9% Kingdom of Sweden
5.00%, 2004 1,100 143
---------------------------------------------------------------------------
</TABLE>
92
<PAGE> 94
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
U.S. DOLLAR
CURRENCY ISSUER PRINCIPAL VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GREEK DRACHMA--1.9% Republic of Greece
8.90%, 2003 25,000 $ 94
----------------------------------------------------------------------------
TOTAL BONDS--97.5%
(Cost: $4,715) 4,814
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
REPURCHASE Investors Fiduciary Trust Company, dated
(a) AGREEMENT--2.5% 12/31/98, 4.00%, due 1/4/99
(Cost: $121) 121 121
----------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $4,836) $4,935
----------------------------------------------------------------------------
</TABLE>
NOTES TO KEMPER GLOBAL INCOME PORTFOLIO OF INVESTMENTS
(a) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. The collateral is monitored daily by the
portfolio so that its market value exceeds the carrying value of the
repurchase agreement.
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 $4,836,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $108,000, the gross
unrealized depreciation was $9,000 and the net unrealized appreciation on
investments was $99,000.
See accompanying Notes to Financial Statements.
93
<PAGE> 95
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER-DREMAN HIGH RETURN
EQUITY PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF
COMMON STOCKS SHARES VALUE
- -------------------------------------------------------
BANKS--22.0%
- -------------------------------------------------------
<S> <C> <C>
Banc One Corp. 52,605 $ 2,686
Bank of New York Co., Inc. 7,600 306
BankAmerica Corp. 28,386 1,707
BankBoston Corp. 7,940 309
Bankers Trust New York Corp. 8,100 692
Citigroup, Inc. 20,837 1,032
Crestar Financial Corp. 5,200 374
First Union Corp. 17,071 1,038
Fleet Financial Group, Inc. 34,040 1,521
J.P. Morgan & Co., Inc. 1,800 189
KeyCorp 33,505 1,072
National Bank of Canada 5,600 91
PNC Bank Corp. 24,339 1,317
Republic New York Corp. 14,984 683
Summit Bancorp 1,300 57
--------------------------------------------------
13,074
- -------------------------------------------------------
BASIC MATERIALS--1.7%
- -------------------------------------------------------
Hanson PLC, ADR 8,900 347
Universal Corp. 19,450 683
--------------------------------------------------
1,030
- -------------------------------------------------------
CONSUMER DISCRETIONARY--3.0%
- -------------------------------------------------------
(a) Fruit of the Loom, Inc. "A" 38,445 531
Dayton Hudson Corp. 3,600 195
Dillard's, Inc. 1,400 40
(a) Toys "R" Us, Inc. 54,540 920
V.F. Corp. 1,400 66
--------------------------------------------------
1,752
- -------------------------------------------------------
CONSUMER FINANCE--1.5%
- -------------------------------------------------------
Associates First Capital
Corp. 2,940 125
Capital One Financial Corp. 6,410 737
--------------------------------------------------
862
- -------------------------------------------------------
CONSUMER STAPLES --17.3%
- -------------------------------------------------------
Imperial Tobacco Group ADR 11,100 234
Philip Morris Cos. 93,910 5,024
RJR Nabisco Holdings Corp. 81,210 2,411
UST, Inc. 74,510 2,598
--------------------------------------------------
10,267
- -------------------------------------------------------
ENERGY--13.6%
- -------------------------------------------------------
AMOCO Corp. 42,700 2,578
Atlantic Richfield Co. 37,438 2,443
(a) Conoco, Inc. "A" 4,200 88
Diamond Offshore Drilling,
Inc. 11,600 275
ENSCO International, Inc. 25,100 268
(a) Global Marine, Inc. 19,500 179
(a) Noble Drilling Corp. 20,200 261
Texaco, Inc. 26,705 1,412
Tidewater, Inc. 10,690 248
Transocean Offshore, Inc. 11,800 317
--------------------------------------------------
8,069
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
FINANCIAL SERVICES--10.2%
- -------------------------------------------------------
<S> <C> <C>
American General Corp. 1,000 $ 78
American International Group,
Inc. 3,500 338
Bear Stearns Cos. 3,300 123
Federal Home Loan Mortgage
Corp. 32,241 2,078
Federal National Mortgage
Association 33,073 2,447
Lehman Brothers Holdings,
Inc. 3,800 167
Merrill Lynch & Co., Inc. 3,600 240
Ohio Casualty Corp. 3,900 160
Safeco Corp. 2,500 107
St. Paul Companies, Inc. 7,700 268
Wells Fargo Co. 1,000 40
--------------------------------------------------
6,046
- -------------------------------------------------------
HEALTH CARE--4.4%
- -------------------------------------------------------
Columbia/HCA Healthcare Corp. 25,800 639
(a) Humana, Inc. 85,000 1,514
(a) Tenet Healthcare Corp. 18,005 473
--------------------------------------------------
2,626
- -------------------------------------------------------
UTILITIES--1.6%
- -------------------------------------------------------
Columbia Energy Group 16,590 958
--------------------------------------------------
- -------------------------------------------------------
OTHER--1.7%
- -------------------------------------------------------
Philips Electronics N.V. 7,617 516
Xerox Corp. 4,267 504
--------------------------------------------------
1,020
--------------------------------------------------
TOTAL COMMON STOCKS--77.0%
(Cost: $43,502) 45,704
--------------------------------------------------
(b) MONEY MARKET INSTRUMENTS
(c) Repurchase agreement--State
Street Bank and Trust
Company, dated 12/31/98,
4.85%, due 1/4/99 $ 1,951 1,951
--------------------------------------------------
Other
Yield--3.45% to 5.41%
Due--January 1999
American Honda Financial 999 999
Export Development Corp. 1,999 1,999
Goldman Sachs Group, L.P. 999 999
Sigma Finance 1,947 1,947
U.S. Treasury Bills 999 999
Windmill Funding Corp. 1,992 1,992
Misc. 2,744 2,744
--------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--23.0%
(Cost: $13,630) 13,630
--------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100%
(Cost: $57,132) $59,334
--------------------------------------------------
</TABLE>
94
<PAGE> 96
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
NOTES TO KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) The portfolio has entered into exchange traded S&P 500 index futures
contracts in order to take advantage of anticipated market conditions and
effectively invest in equities approximately $9,296,000 of money market
instruments. As a result, approximately 93% of the portfolio's net assets
are effectively invested in equities. (See Note 6 of the Notes to Financial
Statements.)
(c) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. The collateral is monitored daily by the
portfolio so that its market value exceeds the carrying value of the
repurchase agreement.
Based on the cost of investments of $57,132,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $3,554,000, the
gross unrealized depreciation was $1,352,000 and the net unrealized appreciation
on investments was $2,202,000.
See accompanying Notes to Financial Statements.
95
<PAGE> 97
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER-DREMAN FINANCIAL
SERVICES PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER OF
COMMON STOCKS SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
BANKS--54.6%
- ----------------------------------------------------------
BancWest Corp. 1,700 $ 81
Bank One Corp. 14,902 761
BankAmerica Corp. 16,373 984
BankBoston Corp. 3,000 117
Bankers Trust New York Co. 1,500 128
Chase Manhattan Corp. 8,900 606
Citigroup, Inc. 23,300 1,153
Colonial BancGroup, Inc. 3,600 43
Corus Bankshares, Inc. 1,500 48
First Union Corp. 11,700 711
Fleet Financial Group, Inc. 12,275 548
Golden West Financial Corp. 700 64
J.P. Morgan & Co., Inc. 2,100 221
KeyCorp 15,900 509
Mellon Bank Corp. 2,800 192
National Bank of Canada 7,700 125
North Fork Bancorporation, Inc. 700 17
PNC Bank Corp. 10,100 547
People's Heritage Financial
Group, Inc. 2,400 48
Popular, Inc. 2,800 95
Provident Financial Group 1,300 49
Republic New York Corp. 7,300 333
Summit Bancorp 3,500 153
SunTrust Banks, Inc. 3,500 268
Washington Federal, Inc. 1,300 35
Washington Mutual, Inc. 3,870 148
Wells Fargo Co. 13,400 535
-----------------------------------------------------
8,519
- ----------------------------------------------------------
CONSUMER FINANCE--5.2%
- ----------------------------------------------------------
American Express Co. 4,800 491
Associates First Capital Corp. 200 9
Household International 3,600 143
SLM Holding Corp. 3,500 168
-----------------------------------------------------
811
- ----------------------------------------------------------
CONSUMER STAPLES--.4%
- ----------------------------------------------------------
Universal Corp. 1,600 56
- ----------------------------------------------------------
INSURANCE--18.2%
- ----------------------------------------------------------
Allstate Corp. 9,205 355
American International Group,
Inc. 11,370 1,099
Chubb Corp. 2,400 156
Cigna Corp. 2,000 155
<CAPTION>
INSURANCE--CONTINUED
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
Jefferson-Pilot Corp. 1,000 $ 75
Lincoln National Corp. 1,300 106
Marsh & McLennan
Companies, Inc. 2,450 143
Ohio Casualty Corp. 4,800 197
Safeco Corp. 3,700 159
St. Paul Companies, Inc. 6,300 219
Torchmark Corp. 2,400 85
Transamerica Corp. 800 92
-----------------------------------------------------
2,841
- ----------------------------------------------------------
SERVICE INDUSTRIES--3.9%
- ----------------------------------------------------------
Bear Stearns Cos. 2,000 75
Lehman Brothers Holdings, Inc. 1,668 74
Merrill Lynch & Co., Inc. 4,800 320
Raymond James Financial, Inc. 1,205 25
T. Rowe Price & Associates,
Inc. 3,000 103
Waddell & Reed Financial, Inc. "A" 91 2
(a)Waddell & Reed
Financial, Inc. "B" 391 9
-----------------------------------------------------
608
- ----------------------------------------------------------
OTHER FINANCIAL SERVICES COMPANIES--12.1%
- ----------------------------------------------------------
Federal Home Loan Mortgage
Corp. 11,420 736
Federal National Mortgage
Association 15,640 1,157
-----------------------------------------------------
1,893
-----------------------------------------------------
TOTAL COMMON STOCKS--94.4%
(Cost: $14,423) 14,728
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
(b)Repurchase agreement--State
Street Bank and Trust Company,
dated 12/31/98, 4.85%, due
1/4/99 $ 619 619
Other
Yield--4.63%
Due--January 1999 250 250
-----------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--5.6%
(Cost: $869) $ 869
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $15,292) $15,597
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
(b) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. The collateral is monitored daily by the
portfolio so that its market value exceeds the carrying value of the
repurchase agreement.
Based on the cost of investments of $15,292,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $815,000, the gross
unrealized depreciation was $510,000 and the net unrealized appreciation on
investments was $305,000.
See accompanying Notes to Financial Statements.
96
<PAGE> 98
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GLOBAL BLUE CHIP PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM--.7%
- ----------------------------------------------------------
United Kingdom Treasury Bond,
8.50%, 7/16/07 $ 13 $ 28
-----------------------------------------------------
- ----------------------------------------------------------
UNITED STATES--6.5%
- ----------------------------------------------------------
U.S. Treasury Bond,
6.375%, 8/15/27 210 242
-----------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--7.2%
(Cost: $272) 270
-----------------------------------------------------
- ----------------------------------------------------------
COMMON STOCKS
ARGENTINA--1.0%
- ----------------------------------------------------------
YPF, S.A. 1,400shs. 39
PETROLEUM COMPANY
-----------------------------------------------------
- ----------------------------------------------------------
AUSTRALIA--2.8%
- ----------------------------------------------------------
(a)Cable & Wireless Optus, Ltd. 1,837 39
PROVIDER OF COMMUNICATION
AND TELECOMMUNICATION
SERVICES
Foster's Brewing Group, Ltd. 12,700 34
LEADING BREWERY
Normandy Mining, Ltd. 13,200 12
MINING AND OIL ENTERPRISES
Woodside Petroleum Ltd. 4,400 20
MAJOR OIL AND GAS PRODUCER
-----------------------------------------------------
105
- ----------------------------------------------------------
BRAZIL--1.6%
- ----------------------------------------------------------
Aracruz Celulose, S.A. 1,600 13
PRODUCER OF EUCALYPTUS KRAFT
PULP
Companhia Vole de Rio Doce 1,600 20
MINING, RAIL TRANSPORTATION,
AND MINERAL SALES IN IRON
ORE, ALUMINUM, MANGANESE,
TITANIUM, GOLD AND COPPER
(a)Embratel Participacoes, S.A. 2,000 28
PROVIDER OF LONG-DISTANCE
TELECOMMUNICATION SERVICES
-----------------------------------------------------
61
- ----------------------------------------------------------
CANADA--5.5%
- ----------------------------------------------------------
Alberta Energy Co. 1,800 39
OIL AND GAS PRODUCER
BCE, Inc. 1,100 42
TELECOMMUNICATION SERVICES
Barrick Gold Corp. 1,700 33
GOLD EXPLORATION AND
PRODUCTION IN NORTH AND
SOUTH AMERICA
Canadian National Railway 1,100 57
RAILROAD OPERATOR
<CAPTION>
CANADA--CONTINUED
NUMBER
OF SHARES VALUE
SHARES VALUE
- ----------------------------------------------------------
Molson Cos., Ltd., "A" 2,500 $ 36
BREWERY
-----------------------------------------------------
207
- ----------------------------------------------------------
CHILE--.4%
- ----------------------------------------------------------
Sociedad Quimios y Minera de
Chile, S.A. 500 17
PRODUCER OF FERTILIZER,
IODINE AND INDUSTRIAL
CHEMICALS
-----------------------------------------------------
- ----------------------------------------------------------
DENMARK--1.0%
- ----------------------------------------------------------
Unidanmark, A.S., "A" 400 36
BANK HOLDING COMPANY
-----------------------------------------------------
- ----------------------------------------------------------
FRANCE--1.9%
- ----------------------------------------------------------
AXA-UAP, S.A. 392 57
INSURANCE GROUP PROVIDING
INSURANCE, FINANCE AND REAL
ESTATE SERVICES
Canal Plus 51 14
LEADING PAY TELEVISION
NETWORK
-----------------------------------------------------
71
- ----------------------------------------------------------
- ----------------------------------------------------------
GERMANY--12.0%
- ----------------------------------------------------------
Allianz, A.G. 150 55
MULTI-LINE INSURANCE COMPANY
BASF, A.G. 974 37
LEADING INTERNATIONAL
CHEMICAL PRODUCER
Bayerische Vereinsbank, A.G. 551 43
COMMERCIAL BANK
Deutsche Telekom, A.G. 2,191 72
TELECOMMUNICATION SERVICES
Gerresheimer Glas, A.G. 1,634 24
MANUFACTURER OF GLASS
CONTAINERS AND TUBING
Hoechst, A.G. 348 14
CHEMICAL PRODUCER
Muenchener Rueckversicherungs-
Gesellschaft, A.G. 115 56
INSURANCE COMPANY
RWE, A.G. 1,427 58
PRODUCER AND MARKETER OF
PETROLEUM AND CHEMICAL
PRODUCTS
Schering, A.G. 369 46
PHARMACEUTICAL AND CHEMICAL
PRODUCER
VIAG, A.G. 74 43
PROVIDER OF ELECTRICAL POWER
AND NATURAL GAS SERVICES,
ALUMINUM PRODUCTS,
CHEMICALS, CERAMICS AND
GLASS
-----------------------------------------------------
448
</TABLE>
97
<PAGE> 99
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
HONG KONG--.1%
- ----------------------------------------------------------
New World Development Co.,
Ltd. 1,000 $ 3
PROPERTY INVESTMENT AND
DEVELOPMENT, CONSTRUCTION
AND ENGINEERING, HOTELS AND
RESTAURANTS,
TELECOMMUNICATIONS
-----------------------------------------------------
- ----------------------------------------------------------
ITALY--.1%
- ----------------------------------------------------------
Finmeccanica, SpA 4,300 4
DESIGNER AND DEVELOPER OF
COMMERCIAL AIRCRAFT, SPACE
SYSTEMS AND AIR DEFENSE
SYSTEMS
-----------------------------------------------------
- ----------------------------------------------------------
JAPAN--4.2%
- ----------------------------------------------------------
Canon, Inc. 2,000 43
LEADING PRODUCER OF VISUAL
IMAGE AND INFORMATION
EQUIPMENT
Daiwa Securities Co., Ltd. 7,000 24
BROKERAGE AND OTHER
FINANCIAL SERVICES
Nichido Fire & Marine
Insurance Co., Ltd. 1,000 5
PROPERTY AND CASUALTY
INSURANCE COMPANY
Sharp Corp. 4,000 36
MANUFACTURER OF CONSUMER AND
INDUSTRIAL ELECTRONICS
Sumitomo Metal Mining Co.,
Ltd. 5,000 16
LEADING GOLD, NICKEL AND
COPPER MINING COMPANY
Yamanouchi Pharmaceutical Co.,
Ltd. 1,000 32
LEADING MANUFACTURER OF
ETHICAL DRUGS
-----------------------------------------------------
156
- ----------------------------------------------------------
NETHERLANDS--.7%
- ----------------------------------------------------------
AEGON, N.V. 210 26
INSURANCE COMPANY
-----------------------------------------------------
- ----------------------------------------------------------
PORTUGAL--.6%
- ----------------------------------------------------------
Electricidade de Portugal 1,100 24
ELECTRIC UTILITY
-----------------------------------------------------
- ----------------------------------------------------------
SWITZERLAND--5.1%
- ----------------------------------------------------------
Nestle, S.A. 32 70
FOOD MANUFACTURER
Novartis 29 57
PHARMACEUTICAL COMPANY
Swiss Reinsurance 12 31
LIFE, ACCIDENT AND HEALTH
INSURANCE COMPANY
(a) Swisscom, A.G. 84 35
OPERATOR OF
TELECOMMUNICATION NETWORKS
AND NETWORK APPLICATION
SERVICES
-----------------------------------------------------
193
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM--9.6%
- ----------------------------------------------------------
British Telecom, PLC 4,595 $ 70
TELECOMMUNICATION SERVICES
Enterprise Oil, PLC 3,337 16
OIL AND GAS EXPLORATION AND
PRODUCTION
(a) Flextech, PLC 2,610 26
BROADCASTER OF ENTERTAINMENT
PROGRAMS
General Electric Co., PLC 4,413 40
MANUFACTURER OF POWER,
COMMUNICATIONS AND DEFENSE
EQUIPMENT AND OTHER VARIOUS
ELECTRICAL COMPONENTS
National Grid Group, PLC 5,799 46
OWNER AND OPERATOR OF
ELECTRIC TRANSMISSION
SYSTEMS
Railtrack Group, PLC 1,659 43
OPERATOR OF RAILWAY
INFRASTRUCTURE
Reuters Holdings, PLC 1,718 18
INTERNATIONAL NEWS AGENCY
Rio Tinto, PLC 2,798 33
MINING AND FINANCE COMPANY
Shell Transport & Trading, PLC 6,159 38
PART OWNER OF ROYAL DUTCH
SHELL CO.
Unilever PLC 2,264 25
MANUFACTURER OF BRANDED AND
PACKAGED CONSUMER GOODS,
FOOD, DETERGENTS AND
PERSONAL CARE PRODUCTS
United Assurance Group, PLC 458 4
HOLDING COMPANY FOR
INSURANCE BUSINESSES AND
FINANCIAL SERVICE PROVIDERS
-----------------------------------------------------
359
- ----------------------------------------------------------
UNITED STATES--34.3%
- ----------------------------------------------------------
American Greetings Corp., "A" 800 33
DESIGNER OF GREETING CARDS
CINergy Corp. 1,300 45
HOLDING COMPANY OF
ELECTRICAL UTILITIES IN
OHIO, INDIANA AND KENTUCKY
CSX Corp. 1,300 54
RAILROAD, INTEGRATED
TRANSPORTATION SYSTEMS AND
SHIPPING CONTAINER COMPANY
Comcast Corp., "A" 900 53
CABLE TV, SOUND AND
TELECOMMUNICATION SYSTEMS
Duke Energy Corp. 900 58
ELECTRIC UTILITY IN THE
CAROLINAS
Enron Corp. 1,000 57
MAJOR NATURAL GAS PIPELINE
SYSTEM
Homestake Mining Co. 3,200 29
MAJOR INTERNATIONAL GOLD
PRODUCER
Immunex Corp. 100 13
BIOPHARMACEUTICAL COMPANY
</TABLE>
98
<PAGE> 100
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
UNITED STATES--CONTINUED
- ----------------------------------------------------------
International Business
Machines Corp. 300 $ 55
PRINCIPAL MANUFACTURER AND
SERVICER OF BUSINESS AND
COMPUTING MACHINES
Lockheed Martin Corp. 600 51
MANUFACTURER OF AIRCRAFT,
MISSILES AND SPACE EQUIPMENT
Motorola, Inc. 1,000 61
MANUFACTURER OF
SEMICONDUCTORS AND
COMMUNICATION PRODUCTS
Newmont Mining Corp. 2,200 40
INTERNATIONAL GOLD
EXPLORATION AND MINING
COMPANY
Northrop Grumman Corp. 800 59
MANUFACTURER OF AIRCRAFT,
AIRCRAFT ASSEMBLIES AND
ELECTRONIC SYSTEMS FOR
MILITARY AND COMMERCIAL USE
Oracle Systems Corp. 1,000 43
DATABASE MANAGEMENT SOFTWARE
PacifiCorp 2,300 48
ELECTRIC UTILITY
Peco Energy Co. 1,500 62
ELECTRIC AND GAS UTILITY
ProLogis Trust 1,200 25
OWNER AND OPERATOR OF BULK
DISTRIBUTION AND INDUSTRIAL
FACILITIES
(a) Sabre Group Holdings, Inc. 1,000 45
TRAVEL RESERVATION SYSTEM
PROVIDER
(a) Sterling Commerce, Inc. 700 32
PRODUCER OF ELECTRONIC DATA
INTERCHANGE PRODUCTS AND
SERVICES
(a) Stillwater Mining Co. 700 29
EXPLORATION AND DEVELOPMENT
OF MINES IN MONTANA
PRODUCING PLATINUM,
PALLADIUM AND ASSOCIATED
METALS
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
UNITED STATES--CONTINUED
- ----------------------------------------------------------
Sun Microsystems, Inc. 500 $ 43
PRODUCER OF HIGH-PERFORMANCE
WORKSTATIONS, SERVERS AND
NETWORKING SOFTWARE
(a) Tele-Comm Liberty Media Group,
"A" 1,506 69
OPERATOR OF CABLE TELEVISION
SYSTEMS
Tele-Communications, Inc. "A" 900 50
CABLE TV SYSTEMS AND
MICROWAVE SERVICES
UNUM Life Insurance Company of
America 1,300 76
PROVIDER OF DISABILITY,
HEALTH AND LIFE INSURANCE
AND GROUP PENSION PRODUCTS
US Airways Group, Inc. 300 16
MAJOR AIRLINE
USEC, Inc. 2,100 29
PROVIDER OF ENRICHED URANIUM
PRODUCTS AND SERVICES
Unicom Corp. 1,300 50
ELECTRIC UTILITY IN NORTHERN
ILLINOIS
Williams Cos., Inc. 1,900 59
GAS PIPELINE OPERATOR,
PETROLEUM PRODUCER
-----------------------------------------------------
1,284
-----------------------------------------------------
TOTAL COMMON STOCKS--80.9%
(Cost: $2,884) 3,033
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--11.9%
Yield--4.70%
Due--January 1999
Federal Home Loan Mortgage Corp.
(Cost: $445) $ 445 445
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $3,601) $3,748
-----------------------------------------------------
</TABLE>
99
<PAGE> 101
PORTFOLIO OF INVESTMENTS
At December 31, 1998, the Kemper Global Blue Chip Portfolio had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- ----------------------------------------------------------------------------------
<S> <C> <C>
Communications $ 497 13.3
- ----------------------------------------------------------------------------------
Capital Goods 473 12.6
- ----------------------------------------------------------------------------------
Finance 440 11.7
- ----------------------------------------------------------------------------------
Utilities 334 8.9
- ----------------------------------------------------------------------------------
Energy 297 7.9
- ----------------------------------------------------------------------------------
Technology 234 6.3
- ----------------------------------------------------------------------------------
Basic Industries 225 6.0
- ----------------------------------------------------------------------------------
Consumer Staples 198 5.3
- ----------------------------------------------------------------------------------
Transportation 170 4.5
- ----------------------------------------------------------------------------------
Health Care 102 2.7
- ----------------------------------------------------------------------------------
Consumer Cyclicals 63 1.7
- ----------------------------------------------------------------------------------
TOTAL COMMON STOCKS 3,033 80.9
- ----------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS AND OTHER OBLIGATIONS 715 19.1
- ----------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO $3,748 100.0
- ----------------------------------------------------------------------------------
</TABLE>
NOTE TO KEMPER GLOBAL BLUE CHIP PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $3,601,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $264,000, the gross
unrealized depreciation was $117,000 and the net unrealized appreciation on
investments was $147,000.
See accompanying notes to Financial Statements.
100
<PAGE> 102
INVESTORS FUND SERIES KEMPER INTERNATIONAL GROWTH AND
INCOME PORTFOLIO
Portfolio of Investments at December 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS--2.4%
MBL International Finance
3.00%, 11/30/02 $ 82 $ 79
(Cost: $79)
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
AUSTRALIA--2.4%
- ----------------------------------------------------------
Commonwealth Bank of
Australia 5,466shs. 78
BANK
-----------------------------------------------------
CANADA--4.0%
- ----------------------------------------------------------
BCE, Inc. 2,105 79
TELECOMMUNICATION SERVICES
Hudson's Bay Co. 4,200 53
OPERATOR OF RETAIL DEPARTMENT
-----------------------------------------------------
132
- ----------------------------------------------------------
FINLAND--4.1%
- ----------------------------------------------------------
Merita, Ltd., "B" 11,830 75
FINANCIAL SERVICES GROUP
Metsa-Serla Oy, "B" 7,460 61
MANUFACTURER OF PAPERS,
CORRUGATED AND PAPER BOARD,
SOFT AND HARDWOOD PULP
-----------------------------------------------------
136
- ----------------------------------------------------------
FRANCE--10.1%
- ----------------------------------------------------------
Accor, S.A. 344 74
CATERING, HOTELS, TRAVEL
SERVICES
Dexia France 504 78
MUNICIPAL AND LOCAL
DEVELOPMENT FINANCING
Scor, S.A. 1,219 81
PROPERTY, CASUALTY AND LIFE
REINSURANCE COMPANY
Societe Nationale Elf
Aquitaine 600 69
PETROLEUM COMPANY
Sommer-Allibert 1,262 34
MANUFACTURER OF PLASTIC
PRODUCTS FOR AUTOMOTIVE
INDUSTRY
-----------------------------------------------------
336
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
OF SHARES VALUE
<C> <S> <C> <C> <C>
GERMANY--11.8%
Bayer, A.G. 1,894 $ 79
LEADING CHEMICAL PRODUCER
Dyckerhoff, A.G. 215 60
PRODUCER OF CEMENT
Hochtief, A.G. 2,030 79
CONSTRUCTION SERVICES, READY-
MIXED CONCRETE AND
FINISHING PRODUCTS
Metro, A.G. 1,890 101
OPERATOR OF BUILDING,
CLOTHING AND FOOD STORES
AND SUPERMARKETS
RWE, A.G. 1,302 71
PRODUCER AND MARKETER OF
PETROLEUM AND CHEMICAL
PRODUCTS
-----------------------------------------------------
390
HONG KONG--2.1%
HSBC Holdings, Ltd. 2,800 70
BANK
-----------------------------------------------------
IRELAND--2.6%
Allied Irish Bank, PLC 4,860 87
BANK
-----------------------------------------------------
ITALY--7.4%
Ente Nazionale Idrocarburi,
SpA 12,800 84
EXPLORATION AND PRODUCTION OF
OIL, NATURAL GAS AND
CHEMICALS
La Rinascente SpA di
Risparmio 14,930 89
DEPARTMENT STORE CHAIN
Telecom Italia, SpA 11,730 74
TELECOMMUNICATIONS,
ELECTRONICS AND NETWORK
CONSTRUCTION
-----------------------------------------------------
247
JAPAN--7.5%
East Japan Railway Co. 8 45
RAILROAD OPERATOR
Nintendo Co., Ltd. 800 76
GAME EQUIPMENT MANUFACTURER
Nippon Meat Packers, Inc. 5,000 81
LEADING MEAT PROCESSOR
Nippon Telegraph & Telephone
Corp. 6 46
LEADING TELECOMMUNICATIONS
COMPANY
-----------------------------------------------------
248
</TABLE>
101
PORTFOLIO OF Investments
<PAGE> 103
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------
NETHERLANDS--5.1%
- ----------------------------------------------------------
Koninklijke KPN, N.V. 1,690 $ 85
PROVIDER OF
TELECOMMUNICATIONS SERVICES
Koninklijke Nedlloyd Groep,
N.V. 2,240 30
CONTAINER SHIPPING AND
TRANSPORTATION
Royal Dutch Petroleum Co. 1,100 55
OWNER OF 60% OF ROYAL
DUTCH/SHELL GROUP
-----------------------------------------------------
170
- ----------------------------------------------------------
NORWAY--1.7%
- ----------------------------------------------------------
Christiania Bank, O.G. 16,500 57
COMMERCIAL BANK
-----------------------------------------------------
SPAIN--5.0%
- ----------------------------------------------------------
Autopistas del Mare
Nostrum, S.A. 3,095 86
BUILDER AND OPERATOR OF TOLL
MOTORWAYS
Iberdrola, S.A. 4,345 81
ELECTRIC UTILITY
-----------------------------------------------------
167
- ----------------------------------------------------------
SWEDEN--2.3%
- ----------------------------------------------------------
AssiDoman, A.B. 1,782 28
FORESTRY GROUP
OM Gruppen, A.B. 700 9
OPERATOR OF EXCHANGES AND
CLEARING ORGANIZATIONS FOR
OPTIONS, FUTURES AND STOCK
LOANS
Svedala Industri, A.B. 2,611 38
MANUFACTURER OF MACHINERY FOR
CONSTRUCTION, MINERAL
PROCESSING AND MATERIALS
HANDLING
-----------------------------------------------------
75
- ----------------------------------------------------------
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
SWITZERLAND--6.4%
- ----------------------------------------------------------
Georg Fisher, A.G. 192 $ 65
MANUFACTURER OF AUTOMOTIVE
PRODUCTS AND PIPING SYSTEMS
Sika Finanz, A.G. 1,165 65
MANUFACTURER OF WATER
MANAGEMENT PRODUCTS AND
SYSTEMS
UBS, A.G. 271 83
PROVIDER OF BANKING AND
MANAGEMENT SERVICES
-----------------------------------------------------
213
- ----------------------------------------------------------
UNITED KINGDOM--11.2%
- ----------------------------------------------------------
British Telecom, PLC 1,421 22
TELECOMMUNICATION SERVICES
Dorling Kindersley Holdings,
PLC BOOK PUBLISHER 12,520 55
EMI Group, PLC 9,264 62
MUSIC RECORDING AND RETAILING
COMPANY
Laporte, PLC 6,239 49
PRODUCER OF SPECIALTY
CHEMICALS
Man (ED&F) Group, PLC 12,755 74
COMMODITIES TRADING COMPANY
Royal & Sun Alliance
Insurance Group, PLC 6,374 52
MULTI-LINE INSURANCE HOLDING
COMPANY
(a) Tomkins, PLC 11,834 56
MANUFACTURER OF FLUID
CONTROLS, INDUSTRIAL
PRODUCTS, GARDEN AND
LEISURE PRODUCTS
-----------------------------------------------------
370
-----------------------------------------------------
TOTAL COMMON STOCKS--83.7%
(Cost: $2,721) 2,776
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--13.9%
Yield--5.85%
Due--January 1999
Federal Home Loan Mortgage Corp.
(Cost: $462) $ 462 462
-----------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $3,262) $3,317
-----------------------------------------------------
</TABLE>
102
<PAGE> 104
PORTFOLIO OF INVESTMENTS
At December 31, 1998, the Kemper International Growth and Income Portfolio had
the following industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- ----------------------------------------------------------------------------------
<S> <C> <C>
Finance $ 743 22.4
- ----------------------------------------------------------------------------------
Consumer Cyclicals 536 16.2
- ----------------------------------------------------------------------------------
Capital Goods 518 15.6
- ----------------------------------------------------------------------------------
Communications 361 10.9
- ----------------------------------------------------------------------------------
Energy 208 6.3
- ----------------------------------------------------------------------------------
Transportation 161 4.9
- ----------------------------------------------------------------------------------
Basic Industries 88 2.6
- ----------------------------------------------------------------------------------
Utilities 81 2.4
- ----------------------------------------------------------------------------------
Consumer Staples 80 2.4
- ----------------------------------------------------------------------------------
TOTAL COMMON STOCKS 2,776 83.7
- ----------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS AND OTHER OBLIGATIONS 541 16.3
- ----------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO $3,317 100.0
- ----------------------------------------------------------------------------------
</TABLE>
NOTE TO KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO OF INVESTMENTS
Based on the cost of investments of $3,262,000 for federal income tax purposes
at December 31, 1998, the gross unrealized appreciation was $169,000, the gross
unrealized depreciation was $114,000 and the net unrealized appreciation on
investments was $55,000.
See accompanying Notes to Financial Statements.
103
<PAGE> 105
SHAREHOLDERS' MEETING
KEMPER MONEY MARKET PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Money Market Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
159,321,914 1,343,769 7,090,564
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,884,294 5,936,738 12,935,215
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,620,331 6,200,701 12,935,215
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
149,032,967 5,788,066 12,935,215
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,907,483 5,913,550 12,935,215
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
149,032,967 5,788,066 12,935,215
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
149,032,967 5,788,066 12,935,215
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
149,032,967 5,788,066 12,935,215
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
149,032,967 5,788,066 12,935,215
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,490,106 6,330,926 12,935,215
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,786,008 6,035,025 12,935,215
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,105,371 6,715,661 12,935,215
</TABLE>
Purchase of securities of related issuers
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
149,012,333 5,808,699 12,935,215
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
149,032,967 5,788,066 12,935,215
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,891,172 5,929,860 12,935,215
</TABLE>
Restricted and illiquid securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,491,524 6,329,508 12,935,215
</TABLE>
Investment in issuers with short histories
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
147,420,447 7,400,585 12,935,215
</TABLE>
Investment in other investment companies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
148,454,078 6,366,954 12,935,215
</TABLE>
Investment other than in accordance with objectives and policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
147,393,370 7,427,662 12,935,215
</TABLE>
104
<PAGE> 106
SHAREHOLDERS' MEETING
KEMPER TOTAL RETURN PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Total Return Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
300,446,013 4,106,817 14,325,058
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,631,466 17,163,568 26,082,854
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,931,551 16,863,483 26,082,854
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
276,205,787 16,589,246 26,082,854
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
274,975,362 17,819,671 26,082,854
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,676,954 17,118,080 26,082,854
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
276,146,867 16,648,167 26,082,854
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
276,403,807 16,391,226 26,082,854
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
276,096,567 16,698,466 26,082,854
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
276,100,895 16,694,138 26,082,854
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,534,622 17,260,411 26,082,854
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,040,195 17,754,838 26,082,854
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,871,040 16,923,994 26,082,854
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,451,895 17,343,139 26,082,854
</TABLE>
Investment in other investment companies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
275,878,866 16,916,168 26,082,854
</TABLE>
105
<PAGE> 107
SHAREHOLDERS' MEETING
KEMPER HIGH YIELD PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series High Yield Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
323,384,135 4,612,438 13,414,637
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,247,936 13,945,940 21,217,334
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,270,760 13,923,117 21,217,334
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,769,380 13,424,496 21,217,334
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
305,750,655 14,443,222 21,217,334
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,566,104 13,627,773 21,217,334
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,698,124 13,495,753 21,217,334
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,698,724 13,495,153 21,217,334
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,547,655 13,646,221 21,217,334
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,324,895 13,868,981 21,217,334
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
306,367,838 13,826,039 21,217,334
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
305,394,644 14,799,233 21,217,334
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
305,635,633 14,558,243 21,217,334
</TABLE>
Investment in other investment companies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
305,220,242 14,973,634 21,217,334
</TABLE>
106
<PAGE> 108
SHAREHOLDERS' MEETING
KEMPER GROWTH PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Growth Portfolio shareholders were asked to vote on two separate issues:
approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc., and to modify or eliminate certain policies
and to eliminate the shareholder approval requirements as to certain other
matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
201,821,390 2,658,436 10,905,502
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,572,872 12,695,276 17,117,179
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,604,680 12,663,468 17,117,179
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,776,481 12,491,667 17,117,179
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,273,741 12,994,407 17,117,179
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,772,078 12,496,070 17,117,179
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,830,993 12,437,155 17,117,179
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,812,589 12,455,559 17,117,179
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,618,378 12,649,769 17,117,179
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,620,107 12,648,041 17,117,179
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,442,459 12,825,688 17,117,179
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,124,152 13,143,996 17,117,179
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,687,287 12,580,860 17,117,179
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,471,935 12,796,213 17,117,179
</TABLE>
Investment in other investment companies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
185,250,997 13,017,151 17,117,179
</TABLE>
107
<PAGE> 109
SHAREHOLDERS' MEETING
KEMPER GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Government Securities Portfolio shareholders were asked to vote on two
separate issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
93,587,031 2,255,986 9,192,248
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,217,960 9,194,218 6,623,087
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,232,049 9,180,129 6,623,087
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,286,642 9,125,536 6,623,087
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,005,856 9,406,322 6,623,087
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,286,642 9,125,536 6,623,087
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,212,683 9,199,495 6,623,087
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,361,488 9,050,690 6,623,087
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,316,140 9,096,037 6,623,087
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,125,069 9,287,109 6,623,087
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,219,933 9,192,244 6,623,087
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
88,943,529 9,468,649 6,623,087
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,244,376 9,167,802 6,623,087
</TABLE>
Investment in other investment companies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
89,035,871 9,376,306 6,623,087
</TABLE>
108
<PAGE> 110
SHAREHOLDERS' MEETING
KEMPER INTERNATIONAL PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series International Portfolio shareholders were asked to vote on three separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., approval of the new Sub-Advisor
Agreement for the portfolio with Scudder Investments (U.K.) Limited, and to
modify or eliminate certain policies and to eliminate the shareholder approval
requirements as to certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
118,829,218 1,895,999 5,067,203
</TABLE>
2) Approval of the new Sub-Advisory Agreement for the portfolio with Scudder
Investments (U.K.) Limited. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
117,901,780 1,835,458 6,055,181
</TABLE>
3) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,675,619 5,560,523 7,556,278
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,739,687 5,496,455 7,556,278
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,830,349 5,405,793 7,556,278
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,543,557 5,692,585 7,556,278
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,844,438 5,391,703 7,556,278
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,857,915 5,378,226 7,556,278
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,860,366 5,375,776 7,556,278
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,840,763 5,395,379 7,556,278
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,774,604 5,461,538 7,556,278
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,801,578 5,434,563 7,556,278
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,252,068 5,984,073 7,556,278
</TABLE>
Pledging of assets
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,730,498 5,505,643 7,556,278
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,841,988 5,394,153 7,556,278
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,732,717 5,503,424 7,556,278
</TABLE>
Investment in other investment companies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
112,805,233 5,430,908 7,556,278
</TABLE>
109
<PAGE> 111
SHAREHOLDERS' MEETING
KEMPER SMALL CAP GROWTH PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Small Cap Growth Portfolio shareholders were asked to vote on two
separate issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
93,989,111 1,249,889 3,522,863
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,588,221 5,467,446 6,706,195
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,845,870 5,209,798 6,706,195
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,876,362 5,179,306 6,706,195
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,594,178 5,461,490 6,706,195
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,880,556 5,175,112 6,706,195
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,901,020 5,154,648 6,706,195
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,920,198 5,135,469 6,706,195
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,882,645 5,173,023 6,706,195
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,858,188 5,197,480 6,706,195
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,646,557 5,409,110 6,706,195
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,403,404 5,652,264 6,706,195
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,891,199 5,164,469 6,706,195
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
86,815,607 5,240,061 6,706,195
</TABLE>
110
<PAGE> 112
SHAREHOLDERS' MEETING
KEMPER INVESTMENT GRADE BOND PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Investment Grade Bond Portfolio shareholders were asked to vote on two
separate issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,788,494 1,342,414 1,558,798
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,541,224 1,870,198 2,278,284
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,541,224 1,870,198 2,278,284
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,541,224 1,870,198 2,278,284
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,571,858 1,839,564 2,278,284
</TABLE>
Purchase of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
30,541,224 1,870,198 2,278,284
</TABLE>
111
<PAGE> 113
SHAREHOLDERS' MEETING
KEMPER CONTRARIAN VALUE PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Contrarian Value Portfolio shareholders were asked to vote on two
separate issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
136,960,790 897,967 5,359,681
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,968,588 4,572,948 8,676,902
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,930,178 4,611,358 8,676,902
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,829,377 4,712,159 8,676,902
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,627,920 4,913,616 8,676,902
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,955,442 4,586,094 8,676,902
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,968,588 4,572,948 8,676,902
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,931,564 4,609,972 8,676,902
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,968,588 4,572,948 8,676,902
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,968,588 4,572,948 8,676,902
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,936,805 4,604,731 8,676,902
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,357,077 5,184,459 8,676,902
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
129,968,588 4,572,948 8,676,902
</TABLE>
112
<PAGE> 114
SHAREHOLDERS' MEETING
KEMPER SMALL CAP VALUE PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Small Cap Value Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
82,198,577 892,925 3,093,193
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,541,965 3,280,360 5,362,371
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,576,034 3,246,291 5,362,371
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,571,131 3,251,194 5,362,371
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,212,646 3,609,679 5,362,371
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,606,882 3,215,443 5,362,371
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,608,303 3,214,022 5,362,371
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,608,303 3,214,022 5,362,371
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,576,051 3,246,274 5,362,371
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,576,051 3,246,274 5,362,371
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,576,051 3,246,274 5,362,371
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,219,694 3,602,631 5,362,371
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
77,603,332 3,218,993 5,362,371
</TABLE>
113
<PAGE> 115
SHAREHOLDERS' MEETING
KEMPER VALUE+GROWTH PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Value+Growth Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
79,678,189 690,495 3,866,226
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,181,953 2,440,569 5,612,388
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,219,737 2,402,785 5,612,388
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,228,650 2,393,872 5,612,388
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,037,312 2,585,210 5,612,388
</TABLE>
Senior Securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,228,650 2,393,872 5,612,388
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,228,650 2,393,872 5,612,388
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,228,650 2,393,872 5,612,388
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,116,109 2,506,413 5,612,388
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,218,961 2,403,561 5,612,388
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,208,703 2,413,819 5,612,388
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,021,032 2,601,490 5,612,388
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
76,228,650 2,393,872 5,612,388
</TABLE>
114
<PAGE> 116
SHAREHOLDERS' MEETING
KEMPER HORIZON 20+ PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Horizon 20+ Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
21,380,075 497,521 1,041,658
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,608,152 993,200 1,317,903
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,857,926 743,425 1,317,903
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,866,906 734,446 1,317,903
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,683,727 917,624 1,317,903
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,866,906 734,446 1,317,903
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,866,906 734,446 1,317,903
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,866,906 734,446 1,317,903
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,857,926 743,425 1,317,903
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,857,926 743,425 1,317,903
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,866,906 734,446 1,317,903
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,703,155 898,196 1,317,903
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,840,297 761,054 1,317,903
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
20,833,116 768,235 1,317,903
</TABLE>
115
<PAGE> 117
SHAREHOLDERS' MEETING
KEMPER HORIZON 10+ PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Horizon 10+ Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
Purchase of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
32,647,826 199,393 1,572,933
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,429,571 802,238 2,188,342
</TABLE>
Senior Securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,564,649 667,160 2,188,342
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,408,506 823,303 2,188,342
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,576,548 655,261 2,188,342
</TABLE>
116
<PAGE> 118
SHAREHOLDERS' MEETING
KEMPER HORIZON 5 PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Horizon 5 Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,946,965 186,647 1,289,556
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,034,318 614,370 1,774,479
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,238,342 410,346 1,774,479
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,420,805 227,883 1,774,479
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,132,771 515,917 1,774,479
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,336,795 311,893 1,774,479
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
19,336,795 311,893 1,774,479
</TABLE>
117
<PAGE> 119
SHAREHOLDERS' MEETING
KEMPER BLUE CHIP PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Blue Chip Portfolio shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
46,442,533 139,305 2,215,880
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,187,216 1,812,581 2,797,922
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,187,216 1,812,581 2,797,922
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,187,216 1,812,581 2,797,922
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,101,108 1,898,689 2,797,922
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,187,216 1,812,581 2,797,922
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,164,224 1,835,573 2,797,922
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,106,067 1,893,729 2,797,922
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,187,216 1,812,581 2,797,922
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,164,224 1,835,573 2,797,922
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,164,224 1,835,573 2,797,922
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,101,540 1,898,256 2,797,922
</TABLE>
Pledging of assets
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,132,215 1,867,582 2,797,922
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,187,216 1,812,581 2,797,922
</TABLE>
Purchases of options and warrants
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
44,133,549 1,866,248 2,797,922
</TABLE>
118
<PAGE> 120
SHAREHOLDERS' MEETING
KEMPER GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Global Income Portfolio shareholders were asked to vote on three separate
issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., approval of the new Sub-Advisor
Agreement for the portfolio with Scudder Investments (U.K.) Limited, and to
modify or eliminate certain policies and to eliminate the shareholder approval
requirements as to certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,227,892 0 38,235
</TABLE>
2) Approval of the new Sub-Advisory Agreement for the portfolio with Scudder
Investments (U.K.) Limited. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,227,630 0 38,497
</TABLE>
3) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Investment policies
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Senior securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Pledging of assets
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
Purchases of options
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,045,903 131,716 88,508
</TABLE>
119
<PAGE> 121
SHAREHOLDERS' MEETING
KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Kemper-Dreman High Return Equity Portfolio shareholders were asked to
vote on three separate issues: approval of the new Investment Management
Agreement between the portfolio and Scudder Kemper Investments, Inc., approval
of the new Sub-Advisor Agreement for the portfolio with Dreman Value Management,
L.L.C., and to modify or eliminate certain policies and to eliminate the
shareholder approval requirements as to certain other matters. Following are the
results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
29,277,812 253,981 1,167,709
</TABLE>
2) Approval of the new Sub-Advisory Agreement for the portfolio with Dreman
Value Management, L.L.C. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
28,685,474 447,042 1,556,986
</TABLE>
3) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Borrowing
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Senior Securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Concentration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,216,337 920,808 2,562,358
</TABLE>
Pledging of assets
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,233,498 903,647 2,562,358
</TABLE>
Investment in mineral exploration
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
27,156,560 980,585 2,562,358
</TABLE>
120
<PAGE> 122
SHAREHOLDERS' MEETING
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Kemper-Dreman Financial Services Portfolio shareholders were asked to
vote on three separate issues: approval of the new Investment Management
Agreement between the portfolio and Scudder Kemper Investments, Inc., approval
of the new Sub-Advisor Agreement for the portfolio with Dreman Value Management,
L.L.C. and to modify or eliminate certain policies and to eliminate the
shareholder approval requirements as to certain other matters. Following are the
results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
10,078,093 126,726 462,663
</TABLE>
2) Approval of the new Sub-Advisory Agreement for the portfolio with Dreman
Value Management, L.L.C. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
10,034,869 126,726 505,887
</TABLE>
3) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
9,403,487 506,028 757,967
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
9,403,487 506,028 757,967
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
9,403,487 506,028 757,967
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
9,358,078 551,436 757,967
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
9,358,078 551,436 757,967
</TABLE>
121
<PAGE> 123
SHAREHOLDERS' MEETING
KEMPER GLOBAL BLUE CHIP PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series Global Blue Chip Portfolio shareholders were asked to vote on two
separate issues: approval of the new Investment Management Agreement between the
portfolio and Scudder Kemper Investments, Inc., and to modify or eliminate
certain policies and to eliminate the shareholder approval requirements as to
certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,179,920 3,373 0
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,157,961 3,373 21,959
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,157,961 3,373 21,959
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,157,961 3,373 21,959
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,157,961 3,373 21,959
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
2,157,961 3,373 21,959
</TABLE>
122
<PAGE> 124
SHAREHOLDERS' MEETING
KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------
SPECIAL SHAREHOLDERS' MEETING
On December 16, 1998, a special shareholders' meeting was held. Investors Fund
Series International Growth and Income Portfolio shareholders were asked to vote
on two separate issues: approval of the new Investment Management Agreement
between the portfolio and Scudder Kemper Investments, Inc., and to modify or
eliminate certain policies and to eliminate the shareholder approval
requirements as to certain other matters. Following are the results.
1) Approval of the new Investment Management Agreement between the portfolio and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
1,621,214 3,396 0
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
1,546,675 6,725 71,210
</TABLE>
Diversification
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
1,546,675 6,725 71,210
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
1,546,675 6,725 71,210
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
1,546,675 6,725 71,210
</TABLE>
Lending
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
1,546,675 6,725 71,210
</TABLE>
123
<PAGE> 125
NOTES
124
<PAGE> 126
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
[LOGO]
Printed on recycled paper.
ELITE-2 (2/99) IF 1065740
Printed in the U.S.A. [KEMPER ANNUITIES LOGO]
