<PAGE> 1
Kemper Blue Chip Fund
Semiannual Report to Shareholders
For the Period Ended
April 30, 1995
Seeking growth of capital and of income
IJKLM(LOGO)
<PAGE> 2
DEAR SHAREHOLDER:
We are pleased to provide you with an overview of the performance of your fund
for the six-month period ended April 30, 1995. In addition, following the
economic overview is a question and answer interview with your fund's Portfolio
Manager.
- - ----------------------------
PERFORMANCE REVIEW
Total Return Performance*
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1995
(UNADJUSTED FOR ANY SALES CHARGE)
<TABLE>
<S> <C>
Kemper Blue Chip Fund A 8.08%
Kemper Blue Chip Fund B 7.68%
Kemper Blue Chip Fund C 7.87%
Lipper Growth & Income Funds
Category Average 7.63%
</TABLE>
Returns are historical and do not represent future performance. Returns and net
asset value fluctuate. Shares are redeemable at current net asset value, which
may be more or less than original cost.
When comparing Kemper Blue Chip Fund A to all other Growth & Income funds in its
Lipper** category for the following time periods ended April 30, 1995, this fund
ranked:
<TABLE>
<S> <C>
1-YEAR 5-YEAR
271 of 368 143 of 186
</TABLE>
- - ---------------------------------------
GENERAL ECONOMIC OVERVIEW
Comfortable with the pace of economic growth and the level of interest rates,
investors enjoyed generally positive performance in both the fixed-income and
stock markets in the first five months of 1995. But as we enter the summer
months, we are seeing a decided weakening in the economy and heightened
uncertainty.
What effect has the recent economic growth had on price inflation? Have higher
interest rates slowed the economy so much that a recession is now a true
threat--and will the Federal Reserve Board now reverse itself and start to ease
rates? Of course, these are the questions that only time will answer. At Kemper,
we believe that economic growth in the second quarter will be flat or possibly
even negative. Such a scenario is more severe than the press-heralded "soft
landing" and could conceivably set the scene for lower interest rates. At this
point--before the release of second quarter data--we believe we have seen only
signs of a slowdown, not a recession. We think that the Fed is not likely to
alter direction quickly.
Against this backdrop, we believe that the opportunities for investors will be
concentrated in high quality investments. Companies can no longer count on the
economy to provide an above average earnings boost. Rather, stocks that have
proven themselves with a pattern of consistent earnings are likely to attract
investor support. Specifically, industries that produce more consistent
earnings, such as consumer nondurables, technology and selected capital goods
can be expected to do well. Picking the right sectors to invest in will be the
key challenge for equity investors during the next few quarters.
We look for the fixed-income markets to continue their strong performance as
they tend to do well during periods of slow growth and low inflation.
Leading international economies are lagging the U.S. economy. Japan and Germany,
whose economies typically follow U.S. growth, are not as robust as in past
cycles. This phenomenon makes international investing very complex currently.
Moreover, conditions in emerging market countries underline the importance of
careful research and experience in understanding how these markets work.
We are calm about what has been described as a dollar crisis. While it's true
that the dollar has depreciated against the Japanese yen and many European
currencies, we note that the dollar has appreciated in value against the
currency of Canada and Mexico, two of our largest trading partners.
Political leadership also has some bearing on the progress of the economy and
the state of the financial markets. In the months preceding a presidential
election year, it has not been uncommon for incumbents to attempt to stimulate
growth. Given our Republican Congress and Democratic President, however, we do
not consider this a foregone conclusion as we move closer to 1996.
1
<PAGE> 3
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including an interview with your fund's portfolio
manager. Thank you for your continued support. We appreciate the opportunity to
serve your investment needs.
Sincerely,
/s/Stephen B. Timbers
- - ---------------------
Stephen B. Timbers
Chief Investment and Executive Officer
June 13, 1995
<TABLE>
<S> <C>
Stephen Timbers is Chief Executive Officer and
is also Chief Investment Officer of Kemper
Financial Services, Inc. (KFS). KFS and its
[PHOTO] affiliates manage approximately $60 billion in
assets, including $42 billion in retail mutual
funds. Timbers is a graduate of Yale
University and holds an M.B.A. from Harvard
University.
</TABLE>
* Total return measures net investment income and capital gain or loss from
portfolio investments, assuming reinvestment of all dividends. During the
period noted, securities prices fluctuated. For additional information, see
the Prospectus and Statement of Additional Information and the Financial
Highlights at the end of this report.
**Lipper Analytical Services, Inc. performance and rankings are based upon
changes in net asset value with all dividends reinvested and do not include
the effect of sales charges and, if they had, results may have been less
favorable. Performance and rankings are historical and do not reflect future
performance.
2
<PAGE> 4
Q&A
AN INTERVIEW
WITH PORTFOLIO
MANAGER
TRACY McCORMICK CHESTER
Tracy McCormick Chester joined Kemper Financial Services,
Inc. (KFS) in 1994 and is now Vice President and
[PHOTO] Portfolio Manager of Kemper Blue Chip Fund. Ms. McCormick
Chester received both her B.A. and M.B.A. degrees from
Michigan State University.
Q: HOW WOULD YOU CHARACTERIZE THE RECENT ENVIRONMENT FOR BLUE CHIP STOCKS?
A: It was a positive environment, and one that enabled us to continue some of
the portfolio restructuring I started in September. We've had no trouble moving
out of the stocks we wanted to, yet we initiated positions in other companies
at reasonable prices.
We believe that investors think of Kemper Blue Chip Fund as an investment that
won't disturb their sleep at night. Toward that end, we've doubled the average
market capitalization of our holdings to $20 billion. Although lesser known,
smaller companies can contribute to performance, they also lead to greater
volatility -- something our heightened investment in high quality, well
managed companies should help reduce.
Q: IN OCTOBER, THE DATE OF YOUR LAST REPORT TO SHAREHOLDERS, THE ECONOMY WAS
STILL EXPANDING BUT THE STOCK MARKET WAS LACKLUSTER. AS OF THIS WRITING IN
EARLY MAY, THE ECONOMY IS BELIEVED TO BE IN THE PROCESS OF SLOWING DOWN AND
THE STOCK MARKET IS REACHING NEW HIGHS. HAVE THESE EVENTS CAUSED YOU TO MAKE
ANY ADJUSTMENTS TO THE PORTFOLIO?
A: As you can see by comparing the fund's list of top 10 holdings at the end of
April and the end of October 1994, we have reduced our technology bias. While
the prolonged technology rally was a significant contributor to recent
performance, we believe that expectations of technology stocks -- and
valuations -- are too high to justify our continued high level of investment
across the board. In the case of Motorola, we were glad to take our profits and
move on.
We've reduced our holdings of stocks that were reliant upon strong cyclical
growth. Conrail is a rail stock that we've eliminated, along with the steel
company Nucor. At the same time, we recently bought a few life insurance
companies (American General) that we consider an alternative to holding cash.
Insurers offer reasonable yields and acceptable earnings growth.
Although this is not necessarily related to the economic cycle, we've also
pared back our international stocks. One advantage of investing in
multinational companies is that the fund has the opportunity to benefit from
the exposure to global markets without incurring all of the risks of those
markets. Half of the earnings growth of some of our pharmaceutical (Merck and
Pfizer) and food (Sara Lee and Campbell Soup) holdings comes from their
activities overseas. In fact, when you look at some of the fund's big winners
(Emerson Electric, McDonald's and AMP), global exposure is the one theme they
have in common.
Q: LET'S TALK ABOUT THE HITS AND MISSES OF THE LAST SIX MONTHS.
A: As I mentioned, we had very good performance from our technology stocks.
However, just to show you that technology can work both ways, our best- and
worst-performing individual stocks were both in the technology sector.
At the top of our list, in terms of performance, was Adobe Systems Inc. This
was an under-appreciated company whose recent acquisition activity had caused
some investor confusion. We believed that it would outperform analyst
expectations for at least two reasons: Hewlett Packard Co. sales of laser
printers, which included Adobe's proprietary Postscript page description
language, were going through the roof; and an increasing number of
installations of Adobe's new Acrobat technology were being reported. We bought
the stock at around $32 per share between October and January and took profits
in March and April
3
<PAGE> 5
when the stock had climbed to $58 per share. That's an example of how primary
research into a stock can identify opportunities.
Compuware, which is a stock we had bought at $35 per share in March, was on its
way to losing almost 29% of its value by the time we trimmed it from the
portfolio. Management of this company had a credibility problem, which was
followed by a disappointing earnings release.
Other stocks that performed well were pharmaceuticals, interest-sensitive
issues and a limited number of energy stocks.
Q: SOME INVESTMENT MANAGERS EVALUATE THEMSELVES IN TERMS OF WHAT THEY AVOIDED
A: That's right and we make a deliberate effort to try and avoid potholes. For
example, we managed to avoid the collapse of health care maintenance
organization (HMO) stocks by shifting into pharmaceutical stocks. We had very
little of the specialty retailers when their stocks declined on declining
sales.
Q: WHAT ABOUT GOING FORWARD? WHAT'S YOUR FORECAST FOR THE NEXT SEVERAL MONTHS?
A: Again, one of the fund's advantages is that our concentration is in high
quality companies whose strong management teams and balance sheets have
weathered many economic cycles. We seek to invest in stable companies whose
earnings tend to be predictable. Hewlett-Packard and Coca Cola are just two
examples.
Having said that, there are some industries and individual stocks we like just
because of where they are in the economic cycle. In addition to the insurance
stocks, we like defense and aerospace companies (Loral and Boeing) and
telephone service (Southwestern Bell and MCI).
A weak dollar doesn't go far overseas so we're expecting a stay-at-home summer,
which should benefit Walt Disney Co., Hilton Hotels and McDonald's.
Finally, we believe that the retailers are close to their bottom so we've
started to accumulate May Department Stores Co. at what we believe is a fair
price.
KEMPER BLUE CHIP FUND'S 10 LARGEST HOLDINGS*
<TABLE>
<CAPTION>
ON APRIL 30, 1995 ON OCTOBER 31, 1994
- - -----------------------------------------------------------
<S> <C>
General Electric General Electric
Philip Morris Wal-Mart
Wal-Mart Emerson Electric
Walt Disney Home Depot
Abbott Laboratories Philip Morris
Intel Silicon Graphics
Pepsico Enron
Emerson Electric Mobil
Mobil Microsoft
SmithKline Beecham Intel
</TABLE>
*Portfolio holdings and composition are subject to change.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS April 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount
or Number
of Shares Value
----------- ---------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
- - --------------------------------------------------------
U.S. Treasury Notes
10.375%, 1995 $ 5,000 $ 5,009
9.375%, 1996 10,000 10,289
- - --------------------------------------------------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS-10.0%
(Cost: $16,064) 15,298
- - --------------------------------------------------------
COMMON STOCKS
BROADCASTING AND PUBLISHING-
1.9%
- - --------------------------------------------------------
Harcourt General 31,000shs. 1,267
- - --------------------------------------------------------
Readers Digest Association,
Inc. 39,000 1,536
- - --------------------------------------------------------
Reed International PLC 5,850 75
- - --------------------------------------------------------
Singapore Press Holdings 1,800 31
- - --------------------------------------------------------
2,909
CHEMICALS-3.2%
- - --------------------------------------------------------
Air Products and Chemicals 28,600 1,441
- - --------------------------------------------------------
Monsanto Company 24,500 2,040
- - --------------------------------------------------------
Pall Corporation 58,000 1,356
- - --------------------------------------------------------
4,837
COMMUNICATIONS AND MEDIA-3.3%
- - --------------------------------------------------------
American Telephone & Telegraph
Company 49,000 2,487
- - --------------------------------------------------------
MCI Communications Corp. 22,000 478
- - --------------------------------------------------------
Southwestern Bell Corp. 47,000 2,074
- - --------------------------------------------------------
(a)Technology Resources
Industries 6,010 15
- - --------------------------------------------------------
(a)Telewest Communications 3,600 9
- - --------------------------------------------------------
Wolters Kluwer N.V. 450 37
- - --------------------------------------------------------
5,100
COMPUTER SOFTWARE AND
ELECTRONIC COMPONENTS-10.6%
- - --------------------------------------------------------
Adobe Systems Inc. 26,000 1,514
- - --------------------------------------------------------
(a)Cisco Systems, Inc. 10,000 399
- - --------------------------------------------------------
(a)Compuware Corp. 40,000 1,050
- - --------------------------------------------------------
First Data Corporation 26,000 1,462
- - --------------------------------------------------------
General Motors Corporation,
"E" 30,000 1,298
- - --------------------------------------------------------
(a)Informix Corp. 30,000 1,181
- - --------------------------------------------------------
Intel Corporation 32,000 3,276
- - --------------------------------------------------------
Loral Corp. 15,000 705
- - --------------------------------------------------------
(a)Microsoft Corporation 25,000 2,044
- - --------------------------------------------------------
(a)Novell 60,000 1,305
- - --------------------------------------------------------
(a)Silicon Graphics, Inc. 50,000 1,875
- - --------------------------------------------------------
16,109
<CAPTION>
Number
of Shares Value
----------- ---------
<S> <C> <C>
CONSTRUCTION
- - --------------------------------------------------------
Road Builder Holdings 9,850 $ 18
- - --------------------------------------------------------
Wai Kee Holdings,
with warrants expiring 1996 53,000 5
- - --------------------------------------------------------
23
CONSUMER PRODUCTS AND
SERVICES-16.6%
- - --------------------------------------------------------
Anheuser-Busch Co., Inc. 22,000 1,279
- - --------------------------------------------------------
Campbell Soup Company 28,000 1,435
- - --------------------------------------------------------
Coca-Cola Enterprises 45,000 2,616
- - --------------------------------------------------------
Colgate-Palmolive Company 25,000 1,756
- - --------------------------------------------------------
ConAgra Inc. 50,000 1,662
- - --------------------------------------------------------
(a)CUC International Inc. 40,000 1,630
- - --------------------------------------------------------
Gillette Company 18,000 1,476
- - --------------------------------------------------------
Greencore Group PLC 4,950 35
- - --------------------------------------------------------
L'Oreal 85 22
- - --------------------------------------------------------
Nestle S.A. 52 51
- - --------------------------------------------------------
Newell Company 38,000 898
- - --------------------------------------------------------
PepsiCo Inc. 78,000 3,247
- - --------------------------------------------------------
Philip Morris Companies, Inc. 65,000 4,404
- - --------------------------------------------------------
Proctor & Gamble Company 30,000 2,096
- - --------------------------------------------------------
Sara Lee Corporation 96,000 2,676
- - --------------------------------------------------------
Unilever N.V. 292 39
- - --------------------------------------------------------
25,322
DRUGS AND HEALTH CARE-12.1%
- - --------------------------------------------------------
Abbott Laboratories 86,000 3,386
- - --------------------------------------------------------
(a)Amgen, Inc. 20,000 1,454
- - --------------------------------------------------------
Astra AB 2,250 66
- - --------------------------------------------------------
(a)Boston Scientific 27,000 736
- - --------------------------------------------------------
Columbia/HCA Healthcare 31,000 1,302
- - --------------------------------------------------------
Eli Lilly & Company 20,000 1,495
- - --------------------------------------------------------
Gambro AB 2,880 37
- - --------------------------------------------------------
Glaxo Wellcome PLC 4,815 57
- - --------------------------------------------------------
Johnson & Johnson, Inc. 35,000 2,275
- - --------------------------------------------------------
Merck & Company, Inc. 59,000 2,530
- - --------------------------------------------------------
Pfizer Inc. 25,000 2,166
- - --------------------------------------------------------
Roche Holding AG 22 133
- - --------------------------------------------------------
SmithKline Beecham PLC 70,000 2,721
- - --------------------------------------------------------
18,358
ELECTRONICS AND ELECTRICAL
EQUIPMENT-8.3%
- - --------------------------------------------------------
AMP Inc. 40,000 1,710
- - --------------------------------------------------------
Dixons Group, PLC 10,000 39
- - --------------------------------------------------------
</TABLE>
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS April 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
----------- ---------
<S> <C> <C>
Emerson Electric Company 45,000 $ 3,026
- - --------------------------------------------------------
General Electric Company 90,000 5,040
- - --------------------------------------------------------
GMH Hughes Electronics 30,000 1,174
- - --------------------------------------------------------
Hewlett Packard Company 20,000 1,322
- - --------------------------------------------------------
Sharp Corporation 2,000 33
- - --------------------------------------------------------
Tokyo Electron Ltd. 7,000 218
- - --------------------------------------------------------
12,562
ENERGY AND RELATED
SERVICES-3.3%
- - --------------------------------------------------------
British Petroleum Company 8,972 65
- - --------------------------------------------------------
Enron Corporation 40,000 1,360
- - --------------------------------------------------------
Manweb PLC 4,050 44
- - --------------------------------------------------------
Mobil Corporation 30,000 2,846
- - --------------------------------------------------------
Noble Affiliates Inc. 23,000 621
- - --------------------------------------------------------
Repsol S.A. 2,250 72
- - --------------------------------------------------------
5,008
ENTERTAINMENT AND GAMING-3.6%
- - --------------------------------------------------------
Genting Berhad 2,700 25
- - --------------------------------------------------------
Hilton Hotels Corp. 10,000 764
- - --------------------------------------------------------
PolyGram N.V. 945 53
- - --------------------------------------------------------
(a)Promus Companies, Inc. 20,000 770
- - --------------------------------------------------------
Walt Disney Company 69,000 3,821
- - --------------------------------------------------------
5,433
FINANCIAL SERVICES AND REAL
ESTATE-8.0%
- - --------------------------------------------------------
Aalberts Industries N.V. 720 39
- - --------------------------------------------------------
ABN Amro Bank 940 36
- - --------------------------------------------------------
(a)Allied Irish Bank PLC 7,650 35
- - --------------------------------------------------------
American General Corp. 32,000 1,056
- - --------------------------------------------------------
American International Group
Inc. 19,000 2,028
- - --------------------------------------------------------
Boatmen's Bancshares Inc. 30,000 997
- - --------------------------------------------------------
DBS Land Ltd. 7,200 20
- - --------------------------------------------------------
Dean Witter Discover Inc. 32,000 1,356
- - --------------------------------------------------------
First Union Corp. 10,000 452
- - --------------------------------------------------------
First USA Inc. 19,000 808
- - --------------------------------------------------------
General Reinsurance
Corporation 10,000 1,274
- - --------------------------------------------------------
Hagemeyer N.V. 450 39
- - --------------------------------------------------------
Keppel Corporation Limited 9,000 73
- - --------------------------------------------------------
Lloyds Bank PLC 3,825 39
- - --------------------------------------------------------
Providian Corp. 59,000 2,013
- - --------------------------------------------------------
Sanyo Shinpan Finance Company 1,000 82
- - --------------------------------------------------------
Sumitomo Bank Ltd. 4,000 87
- - --------------------------------------------------------
Sumitomo Corporation 5,000 50
- - --------------------------------------------------------
Tabcorp Holdings Ltd. 14,265 33
- - --------------------------------------------------------
<CAPTION>
Number
of Shares Value
----------- ---------
<S> <C> <C>
Tomkins PLC 10,000 $ 38
- - --------------------------------------------------------
Torchmark Corp. 40,000 1,560
- - --------------------------------------------------------
Veba, A.G. 315 118
- - --------------------------------------------------------
12,233
MANUFACTURING AND DISTRIBUTION-3.2%
- - --------------------------------------------------------
Amada Co. Ltd. 4,000 43
- - --------------------------------------------------------
Atlas Copco AB 4,680 64
- - --------------------------------------------------------
Boeing Co. 38,000 2,090
- - --------------------------------------------------------
Goodyear Tire & Rubber Co. 30,000 1,140
- - --------------------------------------------------------
Kyocera Corporation 1,200 93
- - --------------------------------------------------------
Omron Corp. 6,000 118
- - --------------------------------------------------------
WMX Technologies 45,000 1,226
- - --------------------------------------------------------
4,774
PAPER AND FOREST PRODUCTS-1.0%
- - --------------------------------------------------------
Alco Standard Corporation 10,000 709
- - --------------------------------------------------------
Scott Paper Company 9,000 802
- - --------------------------------------------------------
1,511
RESTAURANTS-1.7%
- - --------------------------------------------------------
McDonald's Corporation 72,000 2,520
- - --------------------------------------------------------
RETAILING-6.9%
- - --------------------------------------------------------
Carrefour S.A. 169 85
- - --------------------------------------------------------
Home Depot, Inc. 60,000 2,505
- - --------------------------------------------------------
Keiyo Company Ltd. 3,000 35
- - --------------------------------------------------------
Koninklijke Ahold 990 34
- - --------------------------------------------------------
Marui Co. Ltd. 4,000 61
- - --------------------------------------------------------
May Department Stores Co. 25,000 906
- - --------------------------------------------------------
Office Depot Inc. 50,000 1,137
- - --------------------------------------------------------
Tandy Corporation 32,000 1,584
- - --------------------------------------------------------
Tesco PLC 7,650 34
- - --------------------------------------------------------
Wal-Mart Stores, Inc. 175,000 4,156
- - --------------------------------------------------------
10,537
TELECOMMUNICATIONS-.2%
- - --------------------------------------------------------
DDI Corporation 5 44
- - --------------------------------------------------------
LM Ericsson "B" 2,115 140
- - --------------------------------------------------------
Oy Nokia AB 2,580 105
- - --------------------------------------------------------
Vodafone Group PLC 26,486 83
- - --------------------------------------------------------
372
TRANSPORTATION
- - --------------------------------------------------------
TNT Ltd. Holdings 19,710 28
- - --------------------------------------------------------
TOTAL COMMON STOCKS-83.9%
(Cost: $111,343) 127,636
========================================================
</TABLE>
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS April 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
----------- ---------
<S> <C> <C>
CONVERTIBLE PREFERRED
STOCKS-1.0%
Banc One Corp.
(Cost: $1,397) 26 $ 1,397
- - --------------------------------------------------------
CONVERTIBLE CORPORATE
OBLIGATIONS-1.6%
Thermo Electron, 5.00%, 2001
(Cost: $2,014) $ 2,000 2,475
- - --------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield-6.01% and 6.06%
Due-May 1995
- - --------------------------------------------------------
General Motors Acceptance
Corp. 3,400 3,399
- - --------------------------------------------------------
Renaissance Energy Co. 2,200 2,198
- - --------------------------------------------------------
<CAPTION>
Value
---------
<S> <C>
TOTAL MONEY MARKET INSTRUMENTS-3.7%
(Cost: $5,597) $ 5,597
- - --------------------------------------------------------
TOTAL INVESTMENTS-100.2%
(Cost: $136,415) 152,403
- - --------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS-(.2)% (221)
- - --------------------------------------------------------
NET ASSETS-100% $ 152,182
========================================================
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $136,415,000 for federal income tax purposes
at April 30, 1995, the aggregate gross unrealized appreciation was $18,669,000,
the aggregate gross unrealized depreciation was $2,681,000 and the net
unrealized appreciation of investments was $15,988,000.
See accompanying Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
- - -------------------------------------------------------
Investments, at value
(Cost: $136,415) $ 152,403
- - -------------------------------------------------------
Receivable for:
Fund shares sold 179
- - -------------------------------------------------------
Investments sold 5,090
- - -------------------------------------------------------
Dividends and interest 442
- - -------------------------------------------------------
Total assets 158,114
=======================================================
LIABILITIES AND NET ASSETS
- - -------------------------------------------------------
Cash overdraft 291
- - -------------------------------------------------------
Payable for:
Fund shares redeemed 320
- - -------------------------------------------------------
Investments purchased 5,078
- - -------------------------------------------------------
Management fee 73
- - -------------------------------------------------------
Distribution services fee 4
- - -------------------------------------------------------
Administrative services fee 31
- - -------------------------------------------------------
Custodian and transfer agent
fees and related expenses 118
- - -------------------------------------------------------
Other 17
- - -------------------------------------------------------
Total liabilities 5,932
- - -------------------------------------------------------
Net assets $ 152,182
=======================================================
ANALYSIS OF NET ASSETS
- - -------------------------------------------------------
Excess of amounts received from issuance of
shares over amounts paid on redemptions of
shares on account of capital $ 133,708
- - -------------------------------------------------------
Undistributed net realized gain on sales
of investments 1,340
- - -------------------------------------------------------
Unrealized appreciation of investments 15,988
- - -------------------------------------------------------
Undistributed net investment income 1,146
- - -------------------------------------------------------
Net assets applicable to shares outstanding $ 152,182
=======================================================
THE PRICING OF SHARES
- - -------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per
share ($144,798,053 / 11,003,575 shares
outstanding) $13.16
- - -------------------------------------------------------
Maximum offering price per share (net
asset value, plus 6.10% of net asset value
or 5.75% of offering price) $13.96
=======================================================
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales
charge) per share ($6,821,664 / 519,596
shares outstanding) $13.13
=======================================================
CLASS C SHARES
Net asset value and redemption
price per share ($561,794 / 42,626 shares
outstanding) $13.18
=======================================================
</TABLE>
STATEMENT OF OPERATIONS
Six months ended April 30, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
- - -------------------------------------------------------
Dividends $ 1,195
- - -------------------------------------------------------
Interest 1,031
- - -------------------------------------------------------
Total investment income 2,226
- - -------------------------------------------------------
EXPENSES
- - -------------------------------------------------------
Management fee 433
- - -------------------------------------------------------
Administrative services fee 184
- - -------------------------------------------------------
Distribution services fee 20
- - -------------------------------------------------------
Custodian and transfer agent fees and
related expenses 307
- - -------------------------------------------------------
Professional fees 15
- - -------------------------------------------------------
Reports to shareholders 20
- - -------------------------------------------------------
Trustees' fees and other 6
- - -------------------------------------------------------
Total expenses 985
- - -------------------------------------------------------
Net investment income 1,241
- - -------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
- - -------------------------------------------------------
Net realized gain on sales of investments 1,422
- - -------------------------------------------------------
Net change in balance of unrealized
appreciation of investments 8,930
- - -------------------------------------------------------
Net gain on investments 10,352
- - -------------------------------------------------------
Net increase in net assets resulting from
operations $ 11,593
=======================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
Six months
ended Year ended
April 30, October 31,
1995 1994
---------- -----------
<S> <C> <C>
OPERATIONS
- - ----------------------------------------------------------
Net investment income $ 1,241 2,565
- - ----------------------------------------------------------
Net realized gain on sales of
investments 1,422 239
- - ----------------------------------------------------------
Net change in unrealized
appreciation 8,930 (9,930)
- - ----------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations 11,593 (7,126)
- - ----------------------------------------------------------
Net equalization charges (154) (296)
- - ----------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
- - ----------------------------------------------------------
Distribution from net
investment income (1,570) (2,582)
- - ----------------------------------------------------------
Distribution from net realized
gain on investments (244) (11,578)
- - ----------------------------------------------------------
Total dividends to shareholders (1,814) (14,160)
- - ----------------------------------------------------------
Net decrease from capital share
transactions (10,615) (21,573)
- - ----------------------------------------------------------
Total decrease in net assets (990) (43,155)
- - ----------------------------------------------------------
NET ASSETS
- - ----------------------------------------------------------
Beginning of period 153,172 196,327
- - ----------------------------------------------------------
End of period (including
undistributed net investment
income of $1,146 in 1995 and
$1,629 in 1994) $152,182 153,172
==========================================================
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
The Kemper Blue Chip Fund currently offers three classes of shares. Class A
shares are sold to investors subject to an initial sales charge. Class B shares
are sold without an initial sales charge but are subject to higher ongoing
expenses than Class A shares and a contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically convert to Class A shares six
years after issuance. Class C shares are sold without an initial or a contingent
deferred sales charge but are subject to higher ongoing expenses than Class A
shares and do not convert into another class. The Fund may offer, to a limited
group of investors, Class I shares (none sold at April 30, 1995) which are not
subject to initial or contingent deferred sales charges and have lower ongoing
expenses than other classes. Each share represents an identical interest in the
investments of the Fund and has the same rights.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at value. Portfolio securities that are traded on a
domestic securities exchange or securities listed on the NASDAQ National Market
are valued at the last sale price on the exchange or market where primarily
traded or listed or, if there is no recent sale, at the last current bid
quotation. Portfolio securities that are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges where primarily traded. Securities not
so traded or listed are valued at the last current bid quotation if market
quotations are available. Fixed income securities are valued by using market
quotations, or independent pricing services that use prices provided by market
makers or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics. Equity options are
valued at the last sale price unless the bid price is higher or the asked price
is lower, in which event such bid or asked price is used. Financial futures and
options thereon are valued at the settlement price established each day by the
board of trade or exchange on which they are traded. Forward foreign currency
contracts are valued at the forward rates prevailing on the day of valuation.
Other securities and assets are valued at fair value as determined in good faith
by the Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Dividend income is recorded on the ex-dividend date,
and interest income is recorded on the accrual basis and includes amortization
of money market instrument premium and discount. Realized gains and losses from
investment transactions are reported on an identified cost basis. Realized and
unrealized gains and losses on financial futures, options and forward foreign
currency contracts are included in net realized and unrealized gain (loss) on
investments as appropriate.
FUND SHARE VALUATION
Fund shares are sold and redeemed on a continuous basis at net asset value (plus
an initial sales charge on most sales of Class A shares). Proceeds payable on
redemption of Class B shares will be reduced by the amount of any applicable
contingent deferred sales charge. On each day the New York Stock Exchange is
open for trading, the net asset value per share is determined as of the earlier
of 3:00 p.m. Chicago time or the close of the Exchange. The net asset value per
share is determined separately for each class by dividing the Fund's net assets
attributable to that class by the number of shares of the class outstanding.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS
The Fund has complied with the special provisions of the Internal Revenue Code
available to investment
companies for the six months ended April 30, 1995.
Net realized capital gains, if any, reduced by capital loss carryovers will be
distributed at least annually. Differences in dividends per share are due to
different class expenses. Dividends payable to its shareholders are recorded by
the Fund on the ex-dividend date.
Distributions are determined in accordance with income tax principles which may
treat certain transactions differently from generally accepted accounting
principles.
EQUALIZATION ACCOUNTING
A portion of proceeds from sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment income so that income per
share available for distribution is not affected by sales or redemptions of
shares.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Fund has a management agreement with Kemper Financial Services, Inc. (KFS)
and pays a management fee at an annual rate of .58% of the first $250 million of
average daily net assets declining gradually to .42% of average daily net assets
in excess of $12.5 billion. The Fund incurred a management fee of $433,000 for
the six months ended April 30, 1995.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
The Fund has an underwriting and distribution services agreement with Kemper
Distributors, Inc. (KDI). Before February 1, 1995, KFS was the Fund's principal
underwriter and distributor. As principal underwriter for the Fund, KDI (as
successor to KFS) retained commissions of $16,000 for the six months ended April
30, 1995 for sales of Class A shares, after allowing $118,000 as commissions to
firms of which $17,000
9
<PAGE> 11
was paid to firms affiliated with KDI. For distribution services, the Fund pays
KDI a fee of .75% of average daily net assets of the Class B and Class C shares.
Pursuant to the agreement, KDI enters into related selling group agreements with
various firms that provide distribution services to investors. KDI compensates
these firms at various rates for sales of Class B and Class C shares. During the
six months ended April 30, 1995, the Fund incurred a distribution services fee
for Class B and Class C shares of $20,000, and KDI paid $60,000 for commissions
and distribution fees to firms, including $13,000 to firms affiliated with KDI.
In addition, KDI received $16,000 of contingent deferred sales charges.
ADMINISTRATIVE SERVICES AGREEMENT
The Fund has an administrative services agreement with KDI. Before February 1,
1995, KFS was the Fund's administrator. For providing information and
administrative services to shareholders, the Fund pays KDI a fee at an annual
rate of up to .25% of average daily net assets. KDI in turn has various
agreements with financial services firms that provide these services and pays
these firms based on assets of Fund accounts the firms service. For the six
months ended April 30, 1995, the Fund incurred an administrative services fee of
$184,000 and KDI (as successor to KFS) paid $185,000 to firms, including $37,000
that was paid to firms affiliated with KDI.
CUSTODIAN AND TRANSFER AGENT AGREEMENT
The Fund has a custodian agreement and a transfer agent agreement with Investors
Fiduciary Trust Company (IFTC), which was 50% owned by KFS until January 31,
1995, when KFS completed the sale of IFTC to a third party. For the six months
ended April 30, 1995, the Fund incurred custodian and transfer agent fees of
$300,000 (excluding related expenses). Pursuant to a services agreement with
IFTC, Kemper Service Company (KSvC), an affiliate of KFS, is the shareholder
service agent of the Fund. For the six months ended April 30, 1995, IFTC
remitted shareholder service fees of $289,000 to KSvC.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the six months ended April 30, 1995, the Fund made no payments to its
officers and incurred trustees' fees of $5,000 to independent trustees.
4. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended April 30, 1995 (excluding short
term instruments) are as follows (in thousands):
<TABLE>
<S> <C>
Purchases $63,653
- - --------------------------------------------------------------------------------
Proceeds from sales 76,037
- - --------------------------------------------------------------------------------
</TABLE>
5. CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund (in
thousands):
<TABLE>
<CAPTION>
Six months
ended Year ended
April 30, October 31,
1995 1994
----------------- -----------------
Shares Amount Shares Amount
------ -------- ------ --------
<S> <C> <C> <C> <C>
Shares sold:
Class A 888 $ 11,012 3,132 $ 39,066
- - ----------------------------------------------------------
Class B 648 8,017 256 3,129
- - ----------------------------------------------------------
Class C 80 980 14 177
- - ----------------------------------------------------------
Shares issued in
reinvestment of
dividends:
Class A 145 1,718 1,077 13,488
- - ----------------------------------------------------------
Class B 2 28 -- --
- - ----------------------------------------------------------
Shares redeemed:
Class A (2,266) (27,865) (6,127) (76,485)
- - ----------------------------------------------------------
Class B (308) (3,902) (72) (888)
- - ----------------------------------------------------------
Class C (47) (603) (5) (60)
- - ----------------------------------------------------------
Conversion of
shares:
Class A 6 72 1 11
- - ----------------------------------------------------------
Class B (6) (72) (1) (11)
- - ----------------------------------------------------------
Net decrease from
capital share
transactions $(10,615) $(21,573)
==========================================================
</TABLE>
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------
Six months
ended
April 30, Year ended October 31,
1995 1994 1993 1992 1991
---------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $12.33 13.88 12.72 13.24 9.65
- - ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .10 .19 .18 .18 .11
- - ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .86 (.71) 1.13 .41 3.63
- - ---------------------------------------------------------------------------------------------------------------------
Total from investment operations .96 (.52) 1.31 .59 3.74
- - ---------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .13 .19 .15 .14 .15
- - ---------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments -- .84 -- .97 --
- - ---------------------------------------------------------------------------------------------------------------------
Total dividends .13 1.03 .15 1.11 .15
- - ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.16 12.33 13.88 12.72 13.24
=====================================================================================================================
TOTAL RETURN (%): 8.08 (3.82) 10.35 4.76 39.19
=====================================================================================================================
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.29 1.48 1.25 1.46 1.66
- - ---------------------------------------------------------------------------------------------------------------------
Net investment income 1.69 1.50 1.28 1.63 .88
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
-------------------------- --------------------------
Six months May 31, Six months May 31,
ended 1994 to ended 1994 to
April 30, October 31, April 30, October 31,
1995 1994 1995 1994
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $12.29 12.30 12.32 12.30
- - ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .05 .06 .07 .09
- - ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .86 (.01) .87 (.01)
- - ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .91 .05 .94 .08
- - ------------------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .07 .06 .08 .06
- - ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.13 12.29 13.18 12.32
========================================================================================================================
TOTAL RETURN (%): 7.68 .42 7.87 .67
========================================================================================================================
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.98 2.43 2.05 2.33
- - ------------------------------------------------------------------------------------------------------------------------
Net investment income 1.00 .33 .93 .43
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Six months
ended
April 30, Year ended October 31,
1995 1994 1993 1992 1991
---------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA FOR ALL CLASSES:
Net assets at end of period
(in thousands) $152,182 153,172 196,327 182,553 61,146
- - ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 92 131 222 178 162
=====================================================================================================================
</TABLE>
NOTE: Ratios have been determined on an annualized basis. Total return is not
annualized and does not reflect the effect of any sales charges.
11
<PAGE> 13
(LOGO)
KEMPER FINANCIAL SERVICES, INC.
120 SOUTH LASALLE STREET
CHICAGO, IL 60603
KEMPER BLUE CHIP FUND
<TABLE>
<CAPTION>
Trustees Officers
<S> <C>
STEPHEN B. TIMBERS JOHN E. PETERS
President and Trustee Vice President
DAVID W. BELIN TRACY M. CHESTER
Trustee Vice President
LEWIS A. BURNHAM PHILIP J. COLLORA
Trustee Vice President and
Secretary
DONALD L. DUNAWAY
Trustee C. BETH COTNER
Vice President
ROBERT B. HOFFMAN CHARLES F. CUSTER
Trustee Vice President and
Assistant Secretary
DONALD R. JONES JEROME L. DUFFY
Trustee Treasurer
DAVID B. MATHIS ELIZABETH C. WERTH
Trustee Assistant Secretary
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
<S> <C>
- - -----------------------------------------------------------
Legal Counsel Custodian and Transfer Agent
VEDDER, PRICE, KAUFMAN INVESTORS FIDUCIARY
& KAMMHOLZ TRUST COMPANY
222 North LaSalle Street 127 West 10th Street
Chicago, IL 60601 Kansas City, MO 64105
Shareholder Service Agent
KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
800-621-1048
Investment Manager
KEMPER FINANCIAL SERVICES, INC.
Principal Underwriter
KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street
Chicago, IL 60603
</TABLE>
(LOGO)
PRINTED ON RECYCLED PAPER.
This report is not to be distributed unless preceded 239690
KBCF-3 (6/95) Printed in the U.S.A.
or accompanied by a Kemper Equity Funds prospectus.
