<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MARCH 31, 2000
[LOGO]
Seeks long-term growth of capital.
KEMPER VALUE FUND
"... The companies we add to and keep in the portfolio are those that are
gaining efficiencies by using the Internet and technology to advance their
businesses -- not the companies that are unwilling to embrace technology. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
9
INDUSTRY SECTORS
10
INDIVIDUAL HOLDINGS
11
PORTFOLIO OF INVESTMENTS
14
FINANCIAL STATEMENTS
17
FINANCIAL HIGHLIGHTS
19
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
TERMS TO KNOW
KEMPER VALUE FUND TOTAL RETURNS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2000 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<S> <C>
Kemper Value Fund Class A 10.35
Kemper Value Fund Class B 9.85
Kemper Value Fund Class C 9.88
Lipper Multi-Cap Value Funds Category Average* 7.88
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE PERFORMANCE.
INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE, SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. KEMPER VALUE FUND CLASS
A, B AND C SHARES WERE INITIALLY OFFERED ON APRIL 16, 1998.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
3/31/00 9/30/99
.........................................................
<S> <C> <C> <C> <C>
KEMPER VALUE FUND CLASS A $24.19 $22.89
.........................................................
KEMPER VALUE FUND CLASS B $24.06 $22.72
.........................................................
KEMPER VALUE FUND CLASS C $24.10 $22.75
.........................................................
</TABLE>
KEMPER VALUE FUND RANKINGS
AS OF 3/31/00*
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER GROWTH FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
....................................................................................
<S> <C> <C> <C> <C> <C>
1-YEAR #202 of 480 funds #220 of 480 funds #219 of 480 funds
....................................................................................
</TABLE>
*LIPPER ANALYTICAL SERVICES, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES IN
NET ASSET VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF
SALES CHARGES; IF THEY HAD BEEN INCLUDED, RESULTS MAY HAVE BEEN LESS FAVORABLE.
DIVIDEND REVIEW
DURING THE SIX-MONTH PERIOD ENDED MARCH 31, 2000, KEMPER VALUE FUND PAID THE
FOLLOWING DIVIDENDS PER SHARE:
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
VALUE FUND VALUE FUND VALUE FUND
CLASS A CLASS B CLASS C
..........................................................
<S> <C> <C> <C> <C> <C>
INCOME
DIVIDEND $0.16 -- --
..........................................................
CAPITAL GAIN
DISTRIBUTION $0.85 $0.85 $0.85
..........................................................
</TABLE>
YOUR FUND'S STYLE
MORNINGSTAR EQUITY STYLE BOX
<TABLE>
<S> <C>
[MORNINGSTAR EQUITY STYLE SOURCE: Morningstar, Inc., Chicago, IL. (312)
BOX] 696-6000. The Morningstar Equity Style Box
placement is based on two variables: a fund's
market capitalization relative to the movements
of the market and a fund's valuation, which is
calculated by comparing the stocks in the fund's
portfolio with the most relevant of the three
market-cap groups.
THE STYLE BOX REPRESENTS A SNAPSHOT OF A FUND'S
PORTFOLIO ON A SINGLE DAY. IT IS NOT AN EXACT
ASSESSMENT OF RISK AND DOES NOT REPRESENT FUTURE
PERFORMANCE. THE BOX REPRESENTS FUND'S PORTFOLIO
CHANGES FROM DAY TO DAY. A LONGER-TERM VIEW IS
REPRESENTED BY THE FUND'S MORNINGSTAR CATEGORY,
WHICH IS BASED ON ITS ACTUAL INVESTMENT STYLE AS
MEASURED BY ITS UNDERLYING PORTFOLIO HOLDINGS
OVER THE PAST THREE YEARS. CATEGORY PLACEMENTS OF
NEW FUNDS ARE ESTIMATED. PLEASE CONSULT THE
PROSPECTUS FOR A DESCRIPTION OF INVESTMENT
POLICIES.
</TABLE>
GROWTH STOCK Growth stocks are those that are expected to experience rapid
growth resulting from strong sales, dominant market positions and talented
management teams. Because these stocks are in demand, they're generally more
expensive than value stocks.
NARROW MARKET A narrow market is a securities market in which most of the gains
are earned by only a small group of companies. In 1998 and most of 1999, a
narrow market existed in which only the largest growth-style stocks enjoyed
robust gains.
SECTOR A sector comprises stocks usually found in related industries. Financial,
economic, business and other developments may affect stocks within a market
sector similarly.
TROUGH VALUATION Most securities go through cycles in which their prices rise,
fall and then rise again. A trough valuation is at the low point of that cycle,
after which the stock's price is expected to begin rising again.
TROUGH FUNDAMENTALS A stock's future performance can be estimated by considering
a company's fundamentals -- its assets, earnings, sales, products and management
team. When some or all of these fundamentals are less than favorable but appear
to be on the verge of improving, they are considered to be trough fundamentals.
Like stock prices, a company's fundamental qualities typically travel through
cycles.
VALUE STOCK Value stocks are considered to be bargain stocks because they are
perceived as undervalued and attractively priced relative to a measure of their
true worth, such as earnings potential, book value, cash flow or dividend yield.
<PAGE> 3
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $290 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.
ECONOMIC OVERVIEW
DEAR KEMPER FUNDS SHAREHOLDER,
As spring moves along towards summer, there isn't much to complain about. For
all the yammering about the "new" economy, the old economy is doing pretty well.
Consumers may hanker for a new GPS handset or a Palm Pilot, but they lust after
a suburban mansion with a garage big enough to hold their luxury car and SUV --
and state and local governments are laying old-fashioned asphalt almost as fast
as businesses are building the information superhighway. Satisfying both old and
new desires got the economy off to a fast start in the new century -- GDP growth
rose at an annual rate of more than 5 percent in the first quarter. Even with a
modest slowdown possible in the second half, growth for the year 2000 is likely
to be close to 5 percent.
So everyone is happy, right? Well, almost everyone. Consumers seldom have felt
so confident; businesspeople seldom have behaved so expansively. But there's
still one grump: Federal Reserve Board Chairman Alan Greenspan, who's become
increasingly worried that rapid growth will bring on inflation.
Despite Greenspan's attempt to slow spending by raising interest rates,
consumers are still splurging, and they show no signs of stopping. We know this
because shoppers are buying the big-ticket items they usually purchase early in
a cycle -- items such as personal computers, mobile phones, jewelry, fancy
kitchen appliances, exercise equipment and big boats.
Why are consumers still buying despite Greenspan's attempts to slow their
splurging? There are three answers: deflation, wealth and easy credit.
Falling prices have made big-ticket items almost irresistible. Since 1997,
prices of kitchen appliances have fallen 4.5 percent, TVs and VCRs 16 percent
and sporting equipment 6.5 percent. Even auto showrooms no longer produce
sticker shock, and drivers have responded with gusto, buying a record 16.9
million cars and light trucks in 1999. 2000 is likely to be the first year in
which automotive sales top 17 million.
Some of that spending has been made possible by stock market gains: Wall
Street has handed out windfalls to almost anyone holding equities in the past
few years. But consumers who don't own stocks are also spending, thanks to a
decade of debt. Young, poor or new to America? In the 1990s, it didn't matter;
lenders still loved you. While high-income families have been borrowing less,
those lower on the income scale have been borrowing more.
But it's not just consumers that Greenspan is concerned about; businesses are
splurging as well. During 1999, businesses increased spending on computers and
peripherals by 35 percent and spending on communications equipment by 25 percent
(both after adjusting for price declines). Far from slowing down this year, we
expect investment in these two categories to accelerate -- to 40 percent growth
for computers and 30 percent growth for communications equipment.
And just like consumers, businesses are borrowing to buy. You may think that
with booming sales, entrepreneurs are cash-rich. But while 1999 saw economy-wide
earnings jump 10 percent and profits of Standard and Poor's (S&P) 500 companies
leap nearly 14 percent, internal cash covered less than 84 percent of capital
spending. With the exception of 1998, that's the lowest on record. Last year
alone, corporate debt shot up by more than 11 percent to $560 billion. New
economy companies are no exception; they have more debt than most people
realize, issuing more than half of all convertible bonds.
All this debt could cause problems. Although we've increased our 2001
inflation outlook to nearly 3 percent -- an entire percentage point higher than
our prediction three months ago -- we're not particularly worried about
inflation. It's the heavy borrowing we're concerned about. Debt continues to
exceed income growth, and when Greenspan succeeds in slowing the economy with
higher interest rates (which he will succeed in doing), all of the debt American
consumers and businesses are taking on could be tricky to handle. Private
financial obligations must be paid with personal income and corporate profits.
When the economy slows, personal income stagnates and corporate profits often
fall -- which makes it harder to pay off those debts. Consumers and businesses
may have to sell their assets to pay off the debt, and they may risk going into
default.
That being the case, a gradual economic slowdown may be in everyone's best
interest. But "gradual" is the key. Both the old and new economy have a lot
riding on the Fed's ability to rein in growth softly and smoothly, because
abrupt slowdowns encourage consumers and businesses to sell assets -- and
perhaps risk bankruptcy -- to pay off debt, as described above.
3
<PAGE> 4
ECONOMIC OVERVIEW
ECONOMIC GUIDEPOSTS
ECONOMIC ACTIVITY IS A KEY INFLUENCE ON INVESTMENT PERFORMANCE AND
SHAREHOLDER DECISION-MAKING. PERIODS OF RECESSION OR BOOM, INFLATION OR
DEFLATION, CREDIT EXPANSION OR CREDIT CRUNCH HAVE A SIGNIFICANT IMPACT ON
MUTUAL FUND PERFORMANCE.
THE FOLLOWING ARE SOME SIGNIFICANT ECONOMIC GUIDEPOSTS AND THEIR
INVESTMENT RATIONALE THAT MAY HELP YOUR INVESTMENT DECISION-MAKING. THE
10-YEAR TREASURY RATE AND THE PRIME RATE ARE PREVAILING INTEREST RATES.
THE OTHER DATA REPORT YEAR-TO-YEAR PERCENTAGE CHANGES.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (3/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.00 6.10 5.20 5.60
Prime rate (2) 9.00 8.25 7.75 8.50
Inflation rate (3)* 3.70 2.60 1.80 1.40
The U.S. dollar (4) 1.10 -0.90 -0.50 4.10
Capital goods orders (5)* 10.10 4.70 5.50 11.50
Industrial production (5)* 5.10 3.50 3.10 5.30
Employment growth (6) 2.30 2.20 2.30 2.60
</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 2/29/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
A gradual slowdown seems to be what the Fed is seeking, but for all of
Greenspan's semi-tough talk, some indicators suggest that monetary policy has
actually been lax. Broad money and credit creation have vastly exceeded economic
activity since 1995, and no central bank can allow that to continue indefinitely
without creating inflation. If we begin to see higher core inflation, the Fed
will have to deal with all that money it's created in a less gradualist
manner -- and that could get tricky. Financial turmoil accompanied each of the
Fed's last two efforts to slow the economy down. In 1994, there was a bond
market meltdown that resulted in a Mexican debt crisis. After a more timid Fed
tightening in 1997, crises in Asia were followed by problems with Russian debt,
Brazilian debt and a large American hedge fund. We don't think this is a
coincidence: The global debt market is so vast and interconnected that it's
highly vulnerable to a rise in the cost of its basic raw material -- short-term
funds.
Let's hope, then, that the Fed can slow the economy without upsetting the
financial applecart, because that could affect everyone. After all, the old
economy and the new economy are wedded in many ways. Much of the money that
flows to IPOs is available because mature industries have borrowed to carry out
mergers and share buybacks. Old economy companies are the biggest customers of
new economy products. And e-commerce sites are all about moving traditional
goods over old-fashioned highways. Despite a lot of talk about old and new,
we're all in this economy together.
Sincerely,
Scudder Kemper Investments Economics Group
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 THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF MAY 8, 2000, AND MAY NOT ACTUALLY COME TO PASS. THIS
INFORMATION IS SUBJECT TO CHANGE. NO PART OF THIS MATERIAL IS INTENDED AS AN
INVESTMENT RECOMMENDATION.
TO OBTAIN A KEMPER FUNDS PROSPECTUS, DOWNLOAD ONE FROM WWW.KEMPER.COM, TALK TO
YOUR FINANCIAL REPRESENTATIVE OR CALL SHAREHOLDER SERVICES AT (800) 621-1048.
THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING MANAGEMENT FEES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
4
<PAGE> 5
PERFORMANCE UPDATE
[ROMAN PHOTO]
LOIS R. ROMAN, LEAD PORTFOLIO MANAGER, JOINED SCUDDER KEMPER INVESTMENTS, INC.
IN 1999. SHE HAS MORE THAN 10 YEARS OF INVESTMENT EXPERIENCE. SHE IS ASSISTED BY
JONATHAN LEE, WHO JOINED THE ORGANIZATION IN 1999. HE HAS MORE THAN 10 YEARS OF
INVESTMENT MANAGEMENT EXPERIENCE. THEY ARE SUPPORTED BY INVESTMENT PROFESSIONALS
INCLUDING ECONOMISTS, RESEARCH ANALYSTS, TRADERS AND OTHER SPECIALISTS
THROUGHOUT THE UNITED STATES AND ABROAD.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
DURING THE FUND'S SEMIANNUAL PERIOD -- OCTOBER 1, 1999, THROUGH MARCH 31, 2000
-- MARKET RETURNS WERE DOMINATED BY THE PHENOMENAL PERFORMANCE OF THE LARGEST
GROWTH STOCKS -- SPECIFICALLY TECHNOLOGY STOCKS. LEAD PORTFOLIO MANAGER LOIS
ROMAN REPORTS HOW SHE MANAGED FOR VALUE, LEADING THE FUND TO GAIN GROUND AND
OUTPERFORM ITS BENCHMARK IN A NARROW MARKET ENVIRONMENT.
Q HOW DID KEMPER VALUE FUND PERFORM FOR THE SIX MONTHS ENDED MARCH 31, 2000?
A We're pleased to report that we outperformed our value benchmark for the
six-month period. The fund's Class A shares gained 10.35 percent (unadjusted for
any sales charge). By comparison, the six-month average return of the Russell
1000 Value index was 5.94 percent. We attribute our outperformance to the fund's
underweighting in financials vs. our benchmark and to our stock selection in
general.
However, value stocks continued to underperform the overall market as measured
by the 17.50 percent return of the Standard & Poor's 500 stock index. Near the
end of the period, though, we witnessed a shift to value-style stocks from
technology stocks. We don't think we've seen a permanent move, but we are
enthusiastic and hope that investors who have favored large growth and
technology stocks at the expense of everything else may be taking a closer look
at the inflated valuations of those investments.
Q WHAT ARE YOUR THOUGHTS ON THE TECHNOLOGY-DRIVEN MARKET? DO YOU THINK WE'VE
ENTERED A "NEW ECONOMY" IN WHICH TRADITIONAL VALUE STOCKS MAY CONTINUE TO
STRUGGLE?
A There have certainly been plenty of debates over "new-economy" stocks
versus "old-economy" stocks. I don't really buy into that media phenomenon. I'm
not sure I believe the market is so cut and dried. We hope that March was the
beginning of a longer-term shift into more reasonably valued companies from the
high-flying technology market. The current market disparity has become so great
that it's completely unsustainable in our opinion.
Many old-economy stocks are still strong, viable companies with good
fundamentals that should begin to perform better on their own merits. These are
the types of companies that we have in our portfolio and are those that we
expect would benefit further if investors trim their technology exposure and
look for other investment opportunities.
We have reviewed our portfolio and have questioned whether it has what it
takes to offer strong performance over time. We believe the answer is yes.
The companies we add to and keep in the portfolio are those that are gaining
efficiencies by using the Internet and technology to advance their
businesses -- not the companies that are unwilling to embrace technology.
One of our holdings that is a great example is Federated Department Stores.
Doom-and-gloom forecasts have suggested that shopping malls will disappear as
shopping on the Internet becomes commonplace. Although we don't anticipate that
happening, we want to own retailers that, like Federated, have a strategy
5
<PAGE> 6
PERFORMANCE UPDATE
for selling their goods on the Internet or that can make a strong case for how
they will maintain a relationship with their consumers as Internet retailing
grows.
A couple years ago, Federated acquired Fingerhut, a successful, national
catalog retailer. This strategic acquisition enabled Federated to set up a
strong order-fulfillment business -- an area with which companies across all
industries are having a lot of trouble. Today you can shop on-line at the
company's Burdines, Bloomingdale's and Macy's stores. Another bonus is that
merchandise returns can be either handled through the mail or taken to the
nearest store location -- a true benefit that this old-economy retailer has over
a strictly Web-based retailer. So, this is an example of a traditional retailer
competing quite successfully in the new Internet-based economy.
Q WITH MARKET VALUATIONS SO EXTREME, HOW IS THE FUND ABLE TO PARTICIPATE IN
THE GAINS BEING MADE IN TECHNOLOGY AND OTHER SECTORS THAT ARE HIGHLY VALUED?
A We have stuck to our knitting of being a large-cap value fund and won't
sway from that charter. This of course precludes us from owning the
highest-flying growth stocks. However, given the hugely disparate market, we are
now relying a bit more on the fundamental analysis conducted by our research
staff. This has given us more latitude in our stock selection process, as
explained below.
1. We rely heavily on a proprietary quantitative model developed at Scudder
Kemper. We define our investment universe as the 1,000 securities in the
Russell 1000 index -- a group of 1,000 large-cap stocks that is not
available for direct investment. Essentially, this is the pond where we
fish for our holdings.
Our model looks at five measures of a stock's value and ranks the stocks
in the Russell 1000 based on these criteria. Each stock is then placed in
one of 10 groups (deciles). The cheapest 40 percent of those stocks -- the
four most attractive deciles -- are issues we may consider adding to our
portfolio. The most expensive 20 percent are those we would consider
selling. Everything else is typically held if it is already in the
portfolio and the positive investment thesis remains intact.
Today if a stock falls into this hold category, we may consider adding it
to the portfolio if the analyst feels strongly about its fundamentals and
longer-term growth potential. Previously, we wouldn't have considered these
stocks as buy candidates. Our latitude stops there. We still won't add a
holding that initially lands in the sell category, which would mean the
valuation is just too high for this value-style fund.
2. Every month, our quantitative model comes up with 400+ buyable stocks. But
we don't invest blindly. Our internal research analysts provide us with
qualitative assessments of those stocks. We discuss each company's
management strategy with our analysts, who provide their outlook for the
internal business model of the companies. Our analysts sift through those
names to figure out which ones are likely to offer the strongest upside
potential and which ones we should avoid because they may simply get
cheaper over time.
3. Last, we try to assess the risk factors associated with the companies that
we consider to be candidates for purchase. First, we look at the companies
on a macroeconomic level: Will the direction of interest rates affect their
performance? How may these stocks perform if there is a downturn or uptick
in the economy? Additionally, do they complement the other holdings in the
portfolio? Would their addition tilt the portfolio in an area that might
increase overall portfolio risk?
By relying more heavily on fundamental analysis, we have had the opportunity
to invest in some stocks that seem pricey based on our rigid valuation screen
but that actually may still have a good deal of growth ahead of them.
Specifically, this has helped us invest in technology, communications and health
care stocks that we might not have otherwise had the opportunity to add.
Q CAN YOU PROVIDE AN EXAMPLE OF HOW THE PORTFOLIO BENEFITED BY RELYING MORE
ON QUALITATIVE ANALYSIS?
A Sure. Micron Technology is a good example. Our adjusted investment process
enabled us to buy this semiconductor stock before it nearly doubled in price.
Micron had originally landed in the hold zone of our model, but our analyst felt
it was a stock that we should consider adding. Before, we would have been
precluded from buying
6
<PAGE> 7
PERFORMANCE UPDATE
Micron, but our enhanced process made the investment possible, and its
performance has added value to the portfolio.
The quantitative screen will always play an important role in our investment
process. However, given the awkward market we're in, the qualitative assessment
of our analysts offers more opportunities to find stocks with a great deal of
upside potential such as Micron.
Q HOW MUCH OF THE PORTFOLIO DOES TECHNOLOGY REPRESENT?
A At the end of the period, technology represented about 8 percent of the
portfolio. Our technology holdings are generally not those tech names found in
large growth funds. We own more of the hardware companies such as
Hewlett-Packard (HP), Motorola and IBM. These stocks may be more boring than
some of the highfliers, but they are much less expensive and have been doing
very well.
Hewlett-Packard, for example, has appreciated greatly over the past few
months. We own it for its solid brands, good positioning and strong management.
The stock, though, gained after HP split into two publicly traded companies: one
that focuses on its test and measurement businesses and one that concentrates on
its computing and imaging businesses. Since Hewlett-Packard still controls part
of the new business, HP's stock is benefiting.
Q WHAT OTHER AREAS OF THE PORTFOLIO CONTRIBUTED TO PERFORMANCE?
A Corning was a significant contributor to the portfolio. In addition to its
more traditional product line, Corning provides critical services (such as
bandwidth) that make hook ups to the Internet possible. We've held the stock in
the fund for several years, and its valuation has risen tremendously with its
success. Although we may be slow to sell these types of stocks where the thesis
is intact but the market has pushed the valuation into very high levels,
eventually we would look to redeploy these assets into cheap and less well
understood holdings with more upside potential.
We added Disney last year after it had declined in price. Its fundamentals
were deteriorating and hitting trough levels. The consensus on Wall Street was
that the company was terrible. We didn't agree and felt that Disney had a great
franchise with many potential catalysts for improvement, so we added the stock.
Since then, the company has begun to rebound. It experienced a huge turnaround
in its ABC television network with the broadcast of Who Wants to Be a
Millionaire?. Disney also had great success with some of its movies such as
Fantasia 2000. A new chief financial officer has also realigned the company's
focus on returns.
Q HOW WAS THE FUND AFFECTED BY FINANCIAL STOCKS WHICH SEEM TO HAVE STRUGGLED
THIS YEAR?
A Our financial stocks actually helped performance. We were underweighted
relative to our benchmark, but the stocks we held performed very well. We owned
the few stocks that outperformed in the financial sector. Chase Manhattan and
Citigroup outperformed as they continued to benefit from a strong initial public
offering market. They also have good management and business strategies in
place. These companies were also less sensitive to the higher interest-rate
environment than most of the smaller financial institutions that struggled.
Our outlook for the sector is uncertain. We expect it will continue to
struggle with the higher-interest-rate environment, so we plan to maintain our
underweighting. We'll focus our holdings on those that we believe to be less
sensitive to interest-rate moves -- larger diversified financial companies and
insurance providers.
Q WHAT AREAS HURT PERFORMANCE?
A During most of the period, our energy holdings hurt performance. This
turned around somewhat as the sector rallied in March. We had begun building our
position in integrated oil companies and oil service companies over the last
year in anticipation of higher oil prices and based on our expectation that
consolidation within the industry would provide improved fundamentals. We are
maintaining our energy exposure in the belief that although the commodity price
of oil is falling, the expected average price is not yet reflected in the oil
stocks. Stocks don't always move on today's commodity price. They should move on
some expected average price, and oil's expected average price is still higher
than what is considered in the stock. We think that the companies have a lot
more room to streamline and to make capital allocations that make more sense.
This should be positive for the fund's holdings.
Q WERE THERE ANY SURPRISES DURING THE PERIOD?
A Yes, we had been enthusiastic about our railroad stocks, but they
disappointed us, causing us to sell most of our position. When we built our
railroad position last year, the stocks fit our model. They were
7
<PAGE> 8
PERFORMANCE UPDATE
trading at trough valuations with reduced margins as a result of consolidation
in the industry. The railroad stocks seemed like a great investment. Not only
was the industry poised for recovery, but also, these companies were getting
smarter at allocating capital and fixing their operations. And the plans that
the management teams outlined made sense to us.
However, before too long, we saw that the newly merged companies were unable
or unwilling to execute their operating plans. When hurricane season hit last
fall, the railroads were unable to move freight around as needed. As it became
apparent that these stocks had violated our thesis, we eliminated nearly our
entire position.
Part of being a good investor is getting the story straight. Not only do you
have to get the fundamentals and the numbers correct, but you also have to make
sure that the management team executes its plans as promised. To be successful
as a value investor, it's not good enough to just be invested in value-style
stocks, you need to be in the correct ones. And if the thesis is violated, you
need to determine that quickly and move out and into an opportunistically better
area in value.
We were disappointed in these stocks, but our quick action helped us cut our
losses early, and the fund was not dramatically affected.
Q HOW ARE YOU POSITIONING KEMPER VALUE FUND GOING FORWARD?
A We will maintain our investment selection process to look for undervalued
securities with strong fundamentals through the use of our quantitative model
and the qualitative inputs of our analysts. When value turns around, we believe
our process will enable us to benefit by holding strong companies with good
fundamentals. In the short run, we believe our value portfolio will continue to
hold up better than other more growth-oriented portfolios if there is a market
downturn.
8
<PAGE> 9
INDUSTRY SECTORS
A SIX-MONTH COMPARISON
DATA SHOWS THE PERCENTAGE OF COMMON STOCKS IN THE PORTFOLIO THAT EACH SECTOR OF
KEMPER VALUE FUND REPRESENTED ON MARCH 31, 2000.
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER VALUE FUND ON 3/31/00 KEMPER VALUE FUND ON 9/30/99
---------------------------- ----------------------------
<S> <C> <C>
Finance 24.9 19.1
Communications services 17.4 15.8
Energy 15.9 12.6
Capital goods 15.3 19.4
Consumer non-durables 9.4 9
Technology 8.1 11.7
Health 5.8 4.3
Utilities 2.7 4.1
Transportation 0.5 4
Basic materials 0 0
</TABLE>
A COMPARISON WITH THE RUSSELL 1000 VALUE INDEX*
DATA SHOWS THE PERCENTAGE OF COMMON STOCKS IN THE PORTFOLIO THAT EACH SECTOR OF
KEMPER VALUE FUND REPRESENTED ON MARCH 31, 2000, COMPARED WITH THE INDUSTRY
SECTORS THAT MAKE UP THE FUND'S BENCHMARK, THE RUSSELL 1000 VALUE INDEX.
[BAR GRAPH]
<TABLE>
<CAPTION>
RUSSELL 1000 VALUE INDEX ON
KEMPER VALUE FUND ON 3/31/00 3/31/00
---------------------------- ---------------------------
<S> <C> <C>
Finance 24.9 28.7
Communications services 17.4 13.7
Energy 15.9 10.4
Capital goods 15.3 5.6
Consumer non-durables 9.4 16.4
Technology 8.1 8.1
Health 5.8 3.6
Utilities 2.7 6.9
Transportation 0.5 1.4
Basic materials 0 5.2
</TABLE>
9
<PAGE> 10
INDIVIDUAL HOLDINGS
KEMPER VALUE FUND'S 10 LARGEST HOLDINGS*
Representing 35.4 percent of the fund's portfolio on March 31, 2000
<TABLE>
<CAPTION>
HOLDINGS DESCRIPTION PERCENT
<S> <C> <C> <C>
--------------------------------------------------------------------------------------
1. EXXON MOBIL Engaged in the exploration, 5.3%
production, manufacture,
transportation and sale of crude
oil, natural gas and petroleum
products.
--------------------------------------------------------------------------------------
2. BELL ATLANTIC International telecommunications 4.9%
company that operates in four
segments: Domestic Telecom, Global
Wireless, Directory and Other
Businesses.
--------------------------------------------------------------------------------------
3. CITIGROUP Diversified holding company whose 4.2%
businesses provide a range of
financial services, including
banking, insurance and investment
services, to consumer and corporate
customers around the world.
--------------------------------------------------------------------------------------
4. DOW CHEMICAL A leader in the production of 4.2%
plastics, chemicals, hydrocarbons
and herbicides and pesticides among
other materials used to process
chemicals, treat water and refine
petroleum.
--------------------------------------------------------------------------------------
5. AT&T Provides voice, data and video 4.2%
telecommunications services,
including cellular telephone and
Internet services, to businesses,
consumers and government agencies.
AT&T Corporation also provides
cable TV services to customers
throughout the U.S.
--------------------------------------------------------------------------------------
6. CIGNA A multiline insurance and financial 2.7%
services company whose primary
segment is health care. Cigna also
sells group life, accident and
disability coverage;
property/casualty insurance; and
retirement plans.
--------------------------------------------------------------------------------------
7. BOEING Develops and produces jet 2.6%
transports, military aircraft, and
space and missile systems through
two industry segments: Commercial
Aircraft and defense and Space.
--------------------------------------------------------------------------------------
8. CHASE MANHATTAN Bank holding company whose 2.6%
subsidiaries provide banking and
financial services worldwide.
--------------------------------------------------------------------------------------
9. AMERICAN HOME PRODUCTS Manufactures and markets health 2.5%
care products, including
pharmaceuticals, consumer health
care products and medical supplies.
--------------------------------------------------------------------------------------
10. IBM Provides customer solutions through 2.2%
the use of advanced information
technology. These solutions include
technologies, systems, products,
services, software and financing.
--------------------------------------------------------------------------------------
</TABLE>
*The fund's holdings are subject to change and should not be considered a
recommendation to buy individual securities.
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
KEMPER VALUE FUND
Portfolio of Investments at March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENTS--0.9% AMOUNT ($) VALUE ($)
<S> <C> <C> <C> <C> <C>
State Street Bank and Trust Company, 6.05%,
to be repurchased at $3,646,838 on 4/3/2000
(Cost $3,645,000)** 3,645,000 $ 3,645,000
---------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS--99.1% SHARES
<S> <C> <C> <C> <C> <C>
CONSUMER DISCRETIONARY--2.9%
DEPARTMENT & CHAIN STORES
Federated Department Stores, Inc. 171,800 7,172,650
Target Corp. 65,000 4,858,750
---------------------------------------------------------------------------
12,031,400
------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--4.7%
ALCOHOL & TOBACCO--1.0%
Anheuser-Busch Companies, Inc. 66,600 4,145,850
---------------------------------------------------------------------------
FOOD & BEVERAGE--3.7%
Hershey Foods Corp. 140,700 6,859,125
PepsiCo, Inc. 246,500 8,519,656
---------------------------------------------------------------------------
15,378,781
------------------------------------------------------------------------------------------------------------------------
HEALTH--5.8%
MEDICAL SUPPLY & SPECIALTY--0.9%
Becton, Dickinson & Co. 148,200 3,899,513
---------------------------------------------------------------------------
PHARMACEUTICALS--4.9%
American Home Products Corp. 189,900 10,183,388
Bristol-Myers Squibb Co. 57,900 3,343,725
Pharmacia & Upjohn, Inc. 112,900 6,689,325
---------------------------------------------------------------------------
20,216,438
------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS--12.6%
TELEPHONE/COMMUNICATIONS
AT&T Corp. 310,550 17,468,438
Bell Atlantic Corp. 334,300 20,434,088
BellSouth Corp. 121,900 5,729,300
SBC Communications, Inc. 211,000 8,862,000
---------------------------------------------------------------------------
52,493,826
------------------------------------------------------------------------------------------------------------------------
FINANCIAL--24.7%
BANKS--8.7%
Bank One Corp. 62,800 2,158,750
Bank of America Corp. 125,052 6,557,414
Chase Manhattan Corp. 122,900 10,715,344
First Union Corp. 137,200 5,110,700
FleetBoston Financial Corp. 111,600 4,073,400
J.P. Morgan & Co., Inc. 25,500 3,359,625
PNC Bank Corp. 98,500 4,438,656
---------------------------------------------------------------------------
36,413,889
INSURANCE--9.7%
AFLAC, Inc. 135,900 6,191,944
Allstate Corp. 182,500 4,345,781
Cigna Corp. 149,700 11,339,775
Hartford Financial Services Group, Inc. 101,700 5,364,675
St. Paul Companies, Inc. 203,200 6,934,200
Travelers Property Casualty Corp. "A" 145,700 6,010,125
---------------------------------------------------------------------------
40,186,500
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C>
CONSUMER FINANCE--4.7%
American Express Co. 13,500 $ 2,010,656
Citigroup, Inc. 296,100 17,562,431
---------------------------------------------------------------------------
19,573,087
OTHER FINANCIAL
COMPANIES--1.0%
Federal National Mortgage Association 70,700 3,990,131
---------------------------------------------------------------------------
REAL ESTATE--0.6%
Post Properties Inc. (REIT) 64,900 2,616,281
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
MEDIA--4.6%
BROADCASTING & ENTERTAINMENT--2.0%
Walt Disney Co. 201,000 8,316,375
---------------------------------------------------------------------------
CABLE TELEVISION--1.1%
AT&T Corp.--Liberty Media Group "A" 78,768 4,667,004
---------------------------------------------------------------------------
PRINT MEDIA--1.5%
Knight-Ridder, Inc. 120,700 6,148,156
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
SERVICE INDUSTRIES--1.7%
INVESTMENT
Merrill Lynch & Co., Inc. 69,100 7,255,500
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
DURABLES--7.5%
AEROSPACE--6.5%
Boeing Co. 284,100 10,778,044
Lockheed Martin Corp. 351,464 7,183,046
Rockwell International Corp. 86,360 3,610,928
United Technologies Corp. 84,700 5,351,981
---------------------------------------------------------------------------
26,923,999
AUTOMOBILES--1.0%
Ford Motor Co. 91,500 4,203,281
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--7.7%
CHEMICALS--4.7%
Dow Chemical Co. 153,800 17,533,200
Sigma-Aldrich Corp. 83,100 2,233,313
---------------------------------------------------------------------------
19,766,513
DIVERSIFIED MANUFACTURING--1.0%
Textron, Inc. 66,000 4,017,750
---------------------------------------------------------------------------
INDUSTRIAL SPECIALTY--0.8%
Corning, Inc. 17,100 3,317,400
---------------------------------------------------------------------------
MACHINERY/COMPONENTS/ CONTROLS--1.2%
Parker-Hannifin Corp. 118,750 4,905,859
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--8.0%
DIVERSE ELECTRONIC PRODUCTS--2.0%
Motorola 57,500 8,186,563
---------------------------------------------------------------------------
ELECTRONIC DATA PROCESSING--5.3%
Apple Computer, Inc. 27,300 3,707,681
Compaq Computer Corp. 138,700 3,692,888
Hewlett-Packard Co. 41,500 5,501,344
International Business Machines Corp. 77,000 9,086,000
---------------------------------------------------------------------------
21,987,913
SEMICONDUCTORS--0.7%
Micron Technology, Inc. 25,900 3,263,400
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C> <C> <C>
ENERGY--15.7%
OIL & GAS PRODUCTION--11.5%
Coastal Corp. 124,700 $ 5,736,200
Conoco, Inc. "A" 283,600 6,983,650
Exxon Mobil Corp. 284,692 22,152,596
Royal Dutch Petroleum Co. (New York shares) 124,900 7,189,556
Texaco, Inc. 111,900 6,000,635
---------------------------------------------------------------------------
48,062,637
OIL COMPANIES--1.9%
Chevron Corp. 87,200 8,060,550
---------------------------------------------------------------------------
OILFIELD SERVICES/ EQUIPMENT--2.3%
Baker Hughes, Inc. 134,700 4,074,675
Schlumberger Ltd. 69,800 5,339,700
---------------------------------------------------------------------------
9,414,375
------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.5%
RAILROADS
Union Pacific Corp. 52,800 2,065,800
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
UTILITIES--2.7%
ELECTRIC UTILITIES
Allegheny Energy, Inc. 186,000 5,126,625
Peco Energy Co. 34,900 1,286,938
Unicom Corp. 134,100 4,894,650
---------------------------------------------------------------------------
11,308,213
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $378,862,130) 412,816,984
---------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $382,507,130)(a) 416,461,984
---------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Non-income producing security.
** Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
(a) The cost for federal income tax purposes was $382,957,051. At March 31,
2000, net unrealized appreciation for all securities based on tax cost was
$33,504,933. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost
of $55,881,172 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$22,376,239.
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
As of March 31, 2000 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $382,507,130) $416,461,984
----------------------------------------------------------------------------
Cash 225,380
----------------------------------------------------------------------------
Dividends receivable 654,539
----------------------------------------------------------------------------
Interest receivable 1,929
----------------------------------------------------------------------------
Receivable for Fund shares sold 1,215,751
----------------------------------------------------------------------------
Due from Adviser 92,464
----------------------------------------------------------------------------
TOTAL ASSETS 418,652,047
----------------------------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed 1,000,603
----------------------------------------------------------------------------
Accrued management fee 548,779
----------------------------------------------------------------------------
Other accrued expenses and payables 1,211,228
----------------------------------------------------------------------------
TOTAL LIABILITIES 2,760,610
----------------------------------------------------------------------------
NET ASSETS, AT VALUE $415,891,437
----------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
Undistributed net investment income 345,058
----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments 33,954,854
----------------------------------------------------------------------------
Accumulated net realized gain (loss) 43,793,998
----------------------------------------------------------------------------
Paid-in capital 337,797,527
----------------------------------------------------------------------------
NET ASSETS, AT VALUE $415,891,437
----------------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($40,594,752 / 1,678,321 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $24.19
----------------------------------------------------------------------------
Maximum offering price per share (100 / 94.25 of $24.19) $25.67
----------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($28,256,425 /
1,174,220 outstanding shares of beneficial interest, $.01
par value, unlimited number of shares authorized) $24.06
----------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($6,744,959 /
279,849 outstanding shares of beneficial interest, $.01
par value, unlimited number of shares authorized) $24.10
----------------------------------------------------------------------------
CLASS S SHARES
Net asset value, offering and redemption price per share
($340,295,301 / 14,109,366 outstanding shares of
beneficial interest, $.01 par value, unlimited number of
shares authorized) $24.12
----------------------------------------------------------------------------
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended March 31, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $12,684) $ 4,165,688
----------------------------------------------------------------------------
Interest 198,827
----------------------------------------------------------------------------
Total income 4,364,515
----------------------------------------------------------------------------
Expenses:
Management fee 1,574,757
----------------------------------------------------------------------------
Services to shareholders 1,828,095
----------------------------------------------------------------------------
Custodian and accounting fees 99,926
----------------------------------------------------------------------------
Distribution services fees 128,429
----------------------------------------------------------------------------
Administrative services fees 93,785
----------------------------------------------------------------------------
Auditing 20,496
----------------------------------------------------------------------------
Legal 4,392
----------------------------------------------------------------------------
Trustees' fees and expenses 26,169
----------------------------------------------------------------------------
Reports to shareholders 227,835
----------------------------------------------------------------------------
Registration fees 96,455
----------------------------------------------------------------------------
Other 11,400
----------------------------------------------------------------------------
Total expenses, before reductions 4,111,739
----------------------------------------------------------------------------
Expenses reductions (99,534)
----------------------------------------------------------------------------
Total expenses, after reductions 4,012,205
----------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 352,310
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments 53,864,016
----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period on:
Investments (12,450,725)
----------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENT TRANSACTIONS 41,413,291
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 41,765,601
----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30,
(UNAUDITED) 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ 352,310 3,111,169
-------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions 53,864,016 6,166,998
-------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period (12,450,725) 62,680,573
-------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 41,765,601 71,958,740
-------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income -- Class S Shares (2,662,961) (4,164,869)
-------------------------------------------------------------------------------------------------------
Net investment income -- Class A (267,260) (237,416)
-------------------------------------------------------------------------------------------------------
Net investment income -- Class B -- (48,553)
-------------------------------------------------------------------------------------------------------
Net investment income -- Class C -- (11,523)
-------------------------------------------------------------------------------------------------------
Net realized gain -- Class S Shares (13,800,495) (19,711,211)
-------------------------------------------------------------------------------------------------------
Net realized gain -- Class A (1,426,862) (1,241,379)
-------------------------------------------------------------------------------------------------------
Net realized gain -- Class B (1,060,430) (1,035,831)
-------------------------------------------------------------------------------------------------------
Net realized gain -- Class C (209,392) (226,181)
-------------------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 61,756,013 321,600,172
-------------------------------------------------------------------------------------------------------
Reinvestment of distributions 18,828,251 25,914,793
-------------------------------------------------------------------------------------------------------
Cost of shares redeemed (170,790,721) (426,810,318)
-------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE
TRANSACTIONS (90,206,457) (79,295,353)
-------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (67,868,256) (34,013,576)
-------------------------------------------------------------------------------------------------------
Net assets at beginning of period 483,759,693 517,773,269
-------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including undistributed net
investment income (loss) of $345,058 and $2,922,969,
respectively) $ 415,891,437 483,759,693
-------------------------------------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
the period (a) and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
CLASS A
YEARS ENDED SEPTEMBER 30,
-------------------------------------------
2000(B) 1999 1998(C)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $22.89 $21.19 $ 25.42
-----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (a) .06 .15 .07
-----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 2.25 2.62 (4.30)
-----------------------------------------------------------------------------------------------------------
Total from investment operations 2.31 2.77 (4.23)
-----------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (.16) (.17) --
-----------------------------------------------------------------------------------------------------------
Net realized gains on investment transactions (.85) (.90) --
-----------------------------------------------------------------------------------------------------------
Total distributions (1.01) (1.07) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.19 $22.89 $ 21.19
-----------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (D) 10.35(E)** 13.04(E) (16.64)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) 41 42 28
-----------------------------------------------------------------------------------------------------------
Ratio of operating expenses before expense reductions (%) 1.63* 1.57 1.34
-----------------------------------------------------------------------------------------------------------
Ratio of operating expenses after expense reductions (%) 1.43* 1.41 1.34*
-----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) .53* .61 .86*
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 51* 91 47
-----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
YEARS ENDED SEPTEMBER 30,
-------------------------------------------
2000(B) 1999 1998(C)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $22.72 $21.11 $ 25.42
-----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (a) (.04) (.07) --
-----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 2.23 2.62 (4.31)
-----------------------------------------------------------------------------------------------------------
Total from investment operations 2.19 2.55 (4.31)
-----------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (.04) --
-----------------------------------------------------------------------------------------------------------
Net realized gains on investment transactions (.85) (.90) --
-----------------------------------------------------------------------------------------------------------
Total distributions (.85) (.94) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.06 $22.72 $ 21.11
-----------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (D) 9.85(E)** 12.02(E) (16.96)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) 28 29 18
-----------------------------------------------------------------------------------------------------------
Ratio of operating expenses after expense reductions (%) 2.66* 2.29 2.12*
-----------------------------------------------------------------------------------------------------------
Ratio of operating expenses before expense reductions (%) 2.35* 2.34 2.12
-----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.36)* (.27) .03*
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 51* 91 47
-----------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
YEARS ENDED SEPTEMBER 30,
-------------------------------------------
2000(B) 1999 1998(C)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $22.75 $21.13 $ 25.42
-----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (a) (.03) (.05) .01
-----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 2.23 2.61 (4.30)
-----------------------------------------------------------------------------------------------------------
Total from investment operations 2.20 2.56 (4.29)
-----------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income -- (.04) --
-----------------------------------------------------------------------------------------------------------
Net realized gains on investment transactions (.85) (.90) --
-----------------------------------------------------------------------------------------------------------
Total distributions (.85) (.94) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.10 $22.75 $ 21.13
-----------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (D) 9.88(E)** 12.06(E) (16.88)**
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) 7 5 3
-----------------------------------------------------------------------------------------------------------
Ratio of operating expenses before expense reductions (%) 2.58* 2.34 2.11
-----------------------------------------------------------------------------------------------------------
Ratio of operating expenses after expense reductions (%) 2.27* 2.26 2.11*
-----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.29)* (.22) .08*
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 51* 91 47
-----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) For the six months ended March 31, 2000 (unaudited).
(c) For the period April 16, 1998 (commencement of sales of Class A, B and C
shares) to September 30, 1998.
(d) Total return does not reflect the effect of any sales charges.
(e) Total return would have been lower had certain expenses not been reduced.
* Annualized
** Not annualized
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Value Fund (the "Fund") is a diversified series of
Value Equity Trust (the "Trust") which is
registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end
management investment company organized as a
Massachusetts business trust.
The Fund offers multiple classes of shares. Class A
shares are offered to investors subject to an
initial sales charge. Class B shares are offered
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 offered 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 within one
year of purchase. Class C shares do not convert
into another class. Class S Shares, generally not
available to new investors, are not subject to
initial or contingent deferred sales charges.
Certain detailed financial information for the
Class S shares is provided separately and is
available upon request.
Investment income, realized and unrealized gains
and losses, and certain fund-level expenses and
expense reductions, if any, are borne pro rata on
the basis of relative net assets by the holders of
all classes of shares except that each class bears
certain expenses unique to that class such as
distribution services, shareholder services,
administrative services and certain other class
specific expenses. Differences in class expenses
may result in payment of different per share
dividends by class. All shares of the Fund have
equal rights with respect to voting subject to
class specific arrangements.
The Fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Investments are stated at value
determined as of the close of regular trading on
the New York Stock Exchange. Securities 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, or if no sale occurred, at the
calculated mean between the most recent bid and
asked quotations on such market. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used.
Portfolio debt securities purchased with an
original maturity greater than sixty days are
valued by pricing agents approved by the officers
of the Trust, whose quotations reflect broker
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.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
Money market instruments purchased with an original
maturity of sixty days or less are valued at
amortized cost.
All other securities are valued at their fair value
as determined in good faith by the Valuation
Committee of the Board of Trustees.
FOREIGN CURRENCY TRANSLATIONS. 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
exchange rates at period end. 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.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses between trade and settlement dates on
securities transactions, the disposition of forward
foreign currency exchange contracts and foreign
currencies, and the difference between the amount
of net investment income accrued and the U.S.
dollar amount actually received. That portion of
both realized and unrealized gains and losses on
investments that results from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with net realized and
unrealized gains and losses on investment
securities.
REPURCHASE AGREEMENTS. The Fund may enter into
repurchase agreements with certain banks and
broker/dealers whereby the Fund, through its
custodian or sub-custodian bank, receives delivery
of the underlying securities, the amount of which
at the time of purchase and each subsequent
business day is required to be maintained at such a
level that the market value is equal to at least
the principal amount of the repurchase price plus
accrued interest.
FUTURES CONTRACTS. A futures contract is an
agreement between a buyer or seller and an
established futures exchange or its clearinghouse
in which the buyer or seller agrees to take or make
a delivery of a specific amount of a financial
instrument at a specified price on a specific date
(settlement date).
Upon entering into a futures contract, the Fund is
required to deposit with a financial intermediary
an amount ("initial margin") equal to a certain
percentage of the face value indicated in the
futures contract. Subsequent payments ("variation
margin") are made or received by the Fund dependent
upon the daily fluctuations in the value of the
underlying security and are recorded for financial
reporting purposes as unrealized gains or losses by
the Fund. When entering into a closing transaction,
the Fund will realize a gain or loss equal to the
difference between the value of the futures
contract to sell and the futures contract to buy.
Futures contracts are valued at the most recent
settlement price.
Certain risks may arise upon entering into futures
contracts, including the risk that an illiquid
secondary market will limit the Fund's ability to
close out a futures contract prior to the
settlement date and that a change in the value of a
futures contract may not correlate exactly with the
changes in the value of the securities or
currencies hedged. When utilizing futures contracts
to hedge, the Fund gives up the opportunity to
profit from favorable price movements in the hedged
positions during the term of the contract.
FEDERAL INCOME TAXES. The Fund's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
investment companies and to distribute all of its
taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no
federal income tax provision was required.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made annually.
Net realized gains from investment transactions, in
excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders
at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the Fund.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date. Interest income is recorded on the
accrual basis. Dividend income is recorded on the
ex-dividend date. Realized gains and losses from
investment transactions are recorded on an
identified cost basis.
All discounts are accreted for both tax and
financial reporting purposes.
--------------------------------------------------------------------------------
2 PURCHASES AND SALES
OF SECURITIES During the six months ended March 31, 2000,
purchases and sales of investment securities
(excluding short-term investments) aggregated
$112,461,341 and $215,122,361, respectively.
--------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. Under the Management
Agreement (the "Agreement") with Scudder Kemper
Investments, Inc. ("Scudder Kemper" or the
"Adviser"), the Adviser directs the investments of
the Fund in accordance with its investment
objectives, policies, and restrictions. The Adviser
determines the securities, instruments, and other
contracts relating to investments to be purchased,
sold or entered into by the Fund. In addition to
portfolio management services, the Adviser provides
certain administrative services in accordance with
the Agreement. The management fee payable under the
Agreement is equal to an annual rate of 0.70% of
the Fund's average daily net assets, computed and
accrued daily and payable monthly. For the six
months ended March 31, 2000, the fee pursuant to
the Agreement amounted to $1,574,757, of which
$548,779 is unpaid at March 31, 2000.
DISTRIBUTION SERVICE AGREEMENT. In accordance with
Rule 12b-1 under the Investment Company Act of
1940, Kemper Distributors, Inc. ("KDI"), a
subsidiary of the Adviser, receives a fee of 0.75%
of average daily net assets of Classes B and C.
Pursuant to the agreement, KDI enters into related
selling group agreements with various firms at
various rates for sales of Class B and C
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
shares. For the six months ended March 31, 2000,
the Distribution Fee was as follows:
<TABLE>
<CAPTION>
UNPAID AT
TOTAL FEES WAIVED MARCH 31,
DISTRIBUTION FEE AGGREGATED BY KDI 2000
---------------- ---------- ------------- ---------
<S> <C> <C> <C>
Class B $106,068 $ 7,228 $20,914
Class C 22,361 1,863 8,454
-------- ------- -------
$128,429 9,091 $29,368
======== ======= =======
</TABLE>
UNDERWRITING AGREEMENT AND CONTINGENT DEFERRED
SALES CHARGE. KDI is the principal underwriter for
Classes A, B and C. Underwriting commissions paid
in connection with the distribution of Class A
shares for the six months ended March 31, 2000
aggregated $46,381, of which $37,039 was paid to
other firms.
In addition, KDI receives any contingent deferred
sales charge (CDSC) from Class B share redemptions
occurring within six years of purchase and Class C
share redemptions occurring within one year of
purchase. There is no such charge upon redemption
of any share appreciation or reinvested dividends.
Contingent deferred sales charges are based on
declining rates ranging from 4% to 1% for Class B
and 1% for Class C, of the value of the shares
redeemed. For the six months ended March 31, 2000,
the CDSC for Classes B and C aggregated $69,102 and
$515, respectively.
ADMINISTRATIVE SERVICE FEES. KDI provides
information and administrative services to Classes
A, B and C shareholders at an annual rate of up to
0.25% of average daily net assets for each such
class. KDI in turn has various agreements with
financial services firms that provide these
services and pays these firms based upon the assets
of shareholder accounts the firms service. For the
six months ended March 31, 2000, the Administrative
Service Fee was as follows:
<TABLE>
<CAPTION>
UNPAID AT
TOTAL FEES WAIVED MARCH 31,
ADMINISTRATIVE SERVICE FEES AGGREGATED BY KDI 2000
--------------------------- ---------- ----------- ---------
<S> <C> <C> <C>
Class A $50,300 $39,888 $--
Class B 36,031 36,031 --
Class C 7,454 7,454 --
------- ------- --
$93,785 $83,373 $--
======= ======= ==
</TABLE>
SHAREHOLDER SERVICES FEES. Kemper Service Company
("KSC"), an affiliate of the Adviser, is the
transfer, dividend-paying and shareholder service
agent for the Fund's Classes A, B and C Shares. For
the six months ended March 31, 2000, the amount
charged to Classes A, B and C by KSC aggregated
$94,491, $54,220, and $18,718, respectively, of
which $45,144, $26,070, and $18,063, respectively
is unpaid at March 31, 2000. Scudder Service
Corporation ("SSC"), a subsidiary of the Adviser,
is the transfer, dividend-paying and shareholder
service agent for the Class S Shares. For the six
months ended March 31, 2000, the amount charged to
the Class S Shares by SSC for shareholder services
aggregated $377,836, of which $80,302 is unpaid at
March 31, 2000.
Scudder Trust Company ("STC"), a subsidiary of the
Adviser, provides recordkeeping and other services
in connection with certain retirement and employee
benefit plans invested in the Class S Shares of the
Fund. For the six months ended March 31, 2000, the
amount charged to the Class S Shares by STC
aggregated $669,904, of which $344,178 is unpaid at
March 31, 2000.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
FUND ACCOUNTING FEES. Scudder Fund Accounting
Corporation ("SFAC"), a subsidiary of the Adviser,
is responsible for determining the daily net asset
value per share and maintaining the portfolio and
general accounting records of the Fund. For the six
months ended March 31, 2000, the amount charged to
the Fund by SFAC aggregated $65,170, none of which
is unpaid at March 31, 2000.
TRUSTEES FEES. The Fund pays each of its Trustees
not affiliated with the Adviser an annual retainer
plus specified amounts for attended board and
committee meetings. For the six months ended March
31, 2000, the Trustees fees and expenses aggregated
$26,169.
--------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes shares of beneficial
interest and dollar activity in the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
2000 1999
-------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
SHARES SOLD
Class S 1,403,806 $ 32,400,366 5,568,655 $ 131,356,073
-------------------------------------------------------------------------------
Class A 815,105 18,956,357 4,906,004 115,981,063
-------------------------------------------------------------------------------
Class B 284,918 6,572,859 901,601 21,274,145
-------------------------------------------------------------------------------
Class C 165,606 3,826,431 2,262,454 52,988,891
-------------------------------------------------------------------------------
2,669,435 61,756,013 13,638,714 321,600,172
-------------------------------------------------------------------------------
SHARES ISSUED TO SHAREHOLDERS IN REINVESTMENT OF DISTRIBUTIONS
Class S 702,006 $ 16,026,800 1,010,122 $ 23,313,600
-------------------------------------------------------------------------------
Class A 71,089 1,625,091 59,448 1,372,649
-------------------------------------------------------------------------------
Class B 43,356 988,519 43,529 1,004,640
-------------------------------------------------------------------------------
Class C 8,224 187,841 9,689 223,904
-------------------------------------------------------------------------------
824,675 18,828,251 1,122,788 25,914,793
-------------------------------------------------------------------------------
SHARES REDEEMED
Class S (5,788,748) $(133,469,221) (10,886,073) $(258,426,354)
-------------------------------------------------------------------------------
Class A (1,053,199) (24,378,793) (4,451,976) (104,695,242)
-------------------------------------------------------------------------------
Class B (440,880) (10,103,670) (518,518) (12,396,396)
-------------------------------------------------------------------------------
Class C (123,210) (2,839,037) (2,181,822) (51,292,326)
-------------------------------------------------------------------------------
(7,406,037) (170,790,721) (18,038,389) (426,810,318)
-------------------------------------------------------------------------------
NET INCREASE (DECREASE)
Class S (3,682,936) $ (85,042,055) (4,307,296) $(103,756,681)
-------------------------------------------------------------------------------
Class A (167,005) (3,797,345) 513,476 12,658,470
-------------------------------------------------------------------------------
Class B (112,606) (2,542,292) 426,612 9,882,389
-------------------------------------------------------------------------------
Class C 50,620 1,175,235 90,321 1,920,469
-------------------------------------------------------------------------------
(3,911,927) $ (90,206,457) (3,276,887) $ (79,295,353)
-------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
5 EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian and transfer agent whereby credits
realized as a result of uninvested cash balances
were used to reduce a portion of the Fund's
expenses. During the six months ended March 31,
2000, the Fund's custodian and transfer agent fees
were reduced by $8 and $7,062, respectively, under
these new arrangements.
--------------------------------------------------------------------------------
6 LINE OF CREDIT The Fund and several Scudder Funds (the
"Participants") share in a $1 billion revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
among each of the Participants. Interest is
calculated based on the market rates at the time of
the borrowing. The Fund may borrow up to a maximum
of 33 percent of its net assets under the
agreement.
24
<PAGE> 25
NOTES
25
<PAGE> 26
NOTES
26
<PAGE> 27
NOTES
27
<PAGE> 28
TRUSTEES&OFFICERS
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
LINDA C. COUGHLIN KATHRYN L. QUIRK ANN M. MCCREARY
President Trustee, Vice President Vice President
and Secretary
PAUL BANCROFT III KATHLEEN T. MILLARD
Honorary Trustee JOAN E. SPERO Vice President
Trustee
SHERYLE J. BOLTON JOHN MILLETTE
Trustee ROBERT G. STONE JR. Vice President
Honorary Trustee and Secretary
WILLIAM T. BURGIN
Trustee JOHN R. HEBBLE
Treasurer
THOMAS J. DEVINE
Honorary Trustee CAROLINE PEARSON
Assistant Secretary
KEITH R. FOX
Trustee LOIS R. ROMAN
Vice President
WILLIAM H. LUERS
Trustee ROBERT TYMOCZKO
Vice President
WILSON NOLEN
Honorary Trustee
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
.............................................................................................
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
.............................................................................................
CUSTODIAN STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02109
.............................................................................................
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
.............................................................................................
INDEPENDENT ACCOUNTANTS PRICEWATERHOUSECOOPERS LLP
160 Federal Street
Boston, MA 02110
.............................................................................................
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606-5808
www.kemper.com
</TABLE>
[KEMPER FUNDS LOGO] Long-term investing in a short-term world(SM)
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Value Fund prospectus.
KVF - 3 (5/27/00) 1111870
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
