<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED JUNE 30, 2000
KEMPER INTERMEDIATE
GOVERNMENT TRUST
"... Despite Federal Reserve monetary tightening and increased bond market
volatility, U.S. government securities outperformed both the S&P 500 index and
the Nasdaq Composite index for the first six months of fiscal year 2000. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
7
PORTFOLIO STATISTICS
8
PORTFOLIO OF INVESTMENTS
10
FINANCIAL STATEMENTS
13
FINANCIAL HIGHLIGHTS
14
NOTES TO FINANCIAL STATEMENT
17
SHAREHOLDERS' MEETING
AT A GLANCE
TERMS TO KNOW
TOTAL RETURNS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<S> <C> <C> <C>
BASED ON NAV 3.64%
.........................................................
BASED ON MARKET PRICE 4.28%
.........................................................
</TABLE>
NET ASSET VALUE AND MARKET PRICE
<TABLE>
<CAPTION>
AS OF AS OF
6/30/00 12/31/99
.........................................................
<S> <C> <C> <C> <C>
NET ASSET VALUE $7.10 $7.14
.........................................................
MARKET PRICE $6.44 $6.44
.........................................................
</TABLE>
DISTRIBUTION REVIEW
THE FOLLOWING TABLE SHOWS PER SHARE DISTRIBUTION AND YIELD INFORMATION AS OF
JUNE 30, 2000.
<TABLE>
<CAPTION>
KEMPER INTERMEDIATE
GOVERNMENT TRUST
.....................................................
<S> <C> <C> <C>
SIX-MONTH DISTRIBUTION: $0.270
.....................................................
JUNE DISTRIBUTION: $0.045
.....................................................
ANNUALIZED DISTRIBUTION
RATE (BASED ON NET ASSET
VALUE) 7.61%
.....................................................
ANNUALIZED DISTRIBUTION
RATE (BASED ON MARKET
VALUE) 8.39%
.....................................................
</TABLE>
STATISTICAL NOTE: CURRENT ANNUALIZED DISTRIBUTION RATE IS THE LATEST MONTHLY
DIVIDEND SHOWN AS AN ANNUALIZED PERCENTAGE OF NET ASSET VALUE/MARKET PRICE ON
THE DATE SHOWN. DISTRIBUTION RATE SIMPLY MEASURES THE LEVEL OF DIVIDENDS AND IS
NOT A COMPLETE MEASURE OF PERFORMANCE. TOTAL RETURN MEASURES AGGREGATE CHANGE IN
NET ASSET VALUE/MARKET PRICE ASSUMING REINVESTMENT OF DIVIDENDS. MARKET PRICE,
DISTRIBUTION RATES, NET ASSET VALUE AND RETURNS ARE HISTORICAL AND WILL
FLUCTUATE AND DO NOT GUARANTEE FUTURE RESULTS. ADDITIONAL INFORMATION CONCERNING
PERFORMANCE IS CONTAINED IN THE FINANCIAL HIGHLIGHTS APPEARING AT THE END OF
THIS REPORT.
BASIS POINT The movement of interest rates or yields expressed in hundredths of
a percent. For example, an increase in yield from 5 percent to 6 percent is 100
basis points.
CREDIT SPREAD The difference in yields between higher-quality and lower-quality
bonds, typically comparing the same types of bonds. For example, if AAA-rated
corporate bonds yield 5 percent, and BBB-rated corporate bonds yield 6 percent,
the credit spread is 1 percent. When the spread becomes less because the higher
yield drops or the lower yield rises, the spread is said to narrow. When the
opposite occurs, the spread is said to widen.
DURATION The interest-rate sensitivity of a fixed-income investment or
portfolio, measured in years. The longer the duration, the greater the
portfolio's sensitivity to interest-rate fluctuations.
FEDERAL FUNDS RATE The interest rate that banks charge each other on overnight
loans. The Federal Reserve Board's Open Market Committee sets a target rate to
either make credit more easily available or tighten monetary policy in an
attempt to avoid economic imbalances such as high inflation.
INVERTED YIELD CURVE A market phenomenon in which intermediate-term bonds
(securities with two- to 10-year maturities) have higher income potential and
current yields than long-term bonds (securities with 10- to 30-year maturities).
Historically it has occurred during a period of rising short-term interest rates
and been viewed as an indicator of a future economic slowdown.
<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,
When an irresistible force such as the ebullient U.S. economy meets an immovable
object, such as a determined Federal Reserve Board, the old song is right:
Something's gotta give. One possibility -- the economy could slow down as the
Fed has ordered. Or, if market volatility becomes truly distressful, the Fed
could back off, as it has in the past. A third possibility is that neither the
Fed nor the economy will give way until it until it's too late, which could lead
to a recession. Recent evidence suggests, however, that the economy probably
will slow down as ordered. The Fed decided to leave rates unchanged at its June
meeting, and in his testimony before Congress in late July, Fed Chairman Alan
Greenspan said he believes a slowdown has indeed arrived.
Before explaining why we agree with the Fed that a slowdown is a good bet,
let's review how monetary policy works. Central bankers often sound like witch
doctors reading animal entrails, so it's understandable that many people are
confused about monetary policy. But monetary policy still works in the same way
it always has. First, it changes the price and availability of money. More
subtly, it alters people's perceptions about and confidence in the future,
thereby adjusting their willingness to take risks.
The Fed only started raising interest rates about a year ago, and it takes at
least that long for higher rates to impact borrowers. There are two reasons.
First, interest rates on many existing loans are fixed. And, a family who has
just selected a dream house isn't going walk away if mortgage rates rise a
notch. Similarly, a company that has just approved an expansion program won't
stop cold because the prime rate is higher. So it's foolish to think that
America's economy has become less interest-sensitive because the economy roared
through the first several months of this year. Americans are more in hock than
ever, so higher interest rates will hurt more than ever. The May dip in housing
starts and auto sales -- especially the higher priced, gas guzzling sport
utility vehicles -- is probably the first sign that higher rates are biting.
They will bite harder in coming months. We look for both housing starts and
vehicle sales to drop about 10 percent in 2001.
Confidence is harder to measure, but there are some early flutters of
weakness. It's true that consumers remain cheerily upbeat. But corporate bond
markets, the most sensitive barometer of business confidence and a vital source
of corporate funds, have been nervous. Investors are demanding a big premium
before they'll buy lower quality bonds, which means there's less new money for
companies to spend. Corporate bond issuance through mid-June was 35 percent
below the first five and a half months of 1999.
So far, companies have been able to get around the bond market stinginess by
turning to their bankers. Banks lent businesses 8 percent more from January
through May of this year than they did during the first five months of 1999. But
some banks are beginning to worry, too. Bank examiners have been questioning the
quality of loans and the level of reserves. In response, more bankers are
tightening lending standards and raising rates. This is a textbook case of how
tighter monetary policy eventually slows an economy.
Aren't bond market and banker concerns overdone? As long as the economy keeps
growing at 3 percent or so, won't that guarantee such good profits that paying
the bills will be a cinch? Not necessarily. Profits are far more cyclical than
economic growth. Earnings actually fell during 1998, even though the economy
continued to roll. That was a global crisis, when foreign earnings fell sharply.
But take a look at the last "soft landing" during 1995. Revenue growth dipped
and pricing power fell, squeezing profits. The same thing is likely to happen
again in the coming slowdown -- and this time, tight labor markets could make it
even tougher for companies to control costs quickly. Assuming growth is between
2.5 percent and 3 percent by the end of 2001, we believe year-over-year profit
comparisons will have turned slightly negative.
A profit slowdown when new lines of credit are hard to come by will take its
toll on capital spending. We expect growth in business outlays for buildings and
equipment to slip from over 12 percent this year to around 8 percent in 2001.
That's still quite robust, and the "high-tech imperative" is the reason why.
Executives believe that they have no option but to keep up with the
technological revolution that is transforming the world. The fact that high-tech
gear keeps getting cheaper year after year and also helps save on expensive
labor makes the decision to buy it easy. Indeed, unit sales of computers and
peripherals to businesses have sustained growth rates in excess of 40 percent
since 1995. And the rush is on to lay down the infrastructure for the next
generation of wireless communications. We estimate that the sector will see unit
growth of about
3
<PAGE> 4
ECONOMIC GUIDEPOSTS
ECONOMIC ACTIVITY IS A KEY INFLUENCE ON INVESTMENT PERFORMANCE AND
SHAREHOLDER DECISION-MAKING. PERIODS OF RECESSION OR BOOM, INFLATION OR
DEFLATION, CREDIT EXPANSION OR CREDIT CRUNCH HAVE A SIGNIFICANT IMPACT ON
MUTUAL FUND PERFORMANCE.
THE FOLLOWING ARE SOME SIGNIFICANT ECONOMIC GUIDEPOSTS AND THEIR
INVESTMENT RATIONALE THAT MAY HELP YOUR INVESTMENT DECISION-MAKING. THE
10-YEAR TREASURY RATE AND THE PRIME RATE ARE PREVAILING INTEREST RATES.
THE OTHER DATA REPORT YEAR-TO-YEAR PERCENTAGE CHANGES.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (7/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6 6.7 5.8 5.5
Prime rate (2) 9.5 8.5 8 8.5
Inflation rate (3)* 3.7 2.7 2 1.6
The U.S. dollar (4) 1.4 1.5 -2.2 8.5
Capital goods orders (5)* 39 20.5 -1 7.2
Industrial production (5)* 5.9 4.7 3.9 3.9
Employment growth (6) 2 2.3 2.4 2.4
</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 6/30/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
ECONOMIC OVERVIEW
50 percent this year, double the growth in 1999. It's hard even for superstars
to sustain these stratospheric compound growth rates forever, and we do expect
some moderation next year. However, high-tech orders continue to ratchet
upwards, and the shortage in semiconductors and other components has persisted
long enough to cause major players to announce huge capacity additions.
Another battle the Fed must win before is succeeds in slowing the economy is
bringing consumers to heel. Most families still feel better off than they were
last year and much richer than they were five years ago. That's a powerful
incentive to spend and enjoy. Indeed, total real consumption has been galloping
at a 5 percent rate or better since early 1998. But consumers are so important
to the economy that if they don't start spending less freely, there won't be a
slowdown. We expect the Fed to be successful and slow down shoppers in the
months ahead -- but the victory won't be an easy one. We expect at least one
more rate hike and more a few more financial fireworks before consumers and the
economy hoist the white flag.
So what will the slowdown look like? During the spring, retail sales, housing
starts and job creation slowed, but strength in high tech orders and capital
equipment production probably will help keep the slowdown from becoming too
abrupt. We expect about 3.5 percent growth in the second half. That would still
produce a hearty 5 percent growth for full year 2000. During 2001, the full
impact of the Fed's recent tightening will probably rein growth in to just 3
percent.
Sincerely,
Kemper Distributors, Inc.
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 JULY 26, 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
BOND PRICES ROSE THIS PAST SPRING IN RESPONSE TO
ECONOMIC INDICATORS THAT SUGGEST THE FEDERAL
RESERVE BOARD'S EFFORTS TO SLOW U.S. ECONOMIC
GROWTH HAVE BEEN WORKING. LONG-TERM SECURITIES
BENEFITED TO A GREATER DEGREE THAN INTERMEDIATE
SECURITIES AS THE TREASURY IMPLEMENTED A BUYBACK
PROGRAM FOR 30-YEAR BONDS.
Q HOW DID GOVERNMENT BONDS BEHAVE AND KEMPER INTERMEDIATE GOVERNMENT TRUST
PERFORM DURING THE FIRST HALF OF FISCAL YEAR 2000?
A The first six months of the year was a rewarding time for government bond
investors. Kemper Intermediate Government Trust's return based on market price
was an attractive 4.28 percent for the six months ended June 30, 2000. Total
return based on net asset value was 3.64 percent. Both results outpaced the 3.48
percent return of the unmanaged Lehman Brothers Intermediate Government Bond
index for the period.
Despite Federal Reserve monetary tightening and increased bond market
volatility, intermediate government securities outperformed both the S&P 500
index (-1.00 percent) and the Nasdaq Composite index (-2.54 percent) for the
first six months of fiscal year 2000.
During the period, strong economic growth prompted the Federal Reserve Board
to raise its short-term interest-rate target three times by a total of 100 basis
points (1 percent) to 6.50 percent. This past winter, the government also
announced a buyback plan for 30-year Treasuries. The buyback has helped support
long-term bond prices even as the Fed has tightened short-term credit. The
result has been an inversion of the yield curve.
Between December 31, 1999, and June 30, 2000, yields for two-year Treasuries
rose 12 basis points (0.12 percent) while yields for long-term bonds fell 58
basis points (0.58 percent). At midyear, two-year Treasury notes yielded 6.36
percent, 46 basis points more than 30-year Treasury bonds.
Q MORTGAGE SECURITIES COMPRISED MORE THAN HALF OF THE TRUST'S PORTFOLIO AS
OF JUNE 30. HOW HAVE MORTGAGES PERFORMED SINCE DECEMBER?
A Mortgage interest rates for consumers reached their highest level in three
years. Still, housing
U.S. TREASURY YIELDS
December 31, 1999 vs. June 30, 2000
Yields on long-term Treasuries declined more than intermediate-term Treasuries
between December 31, 1999, and June 30, 2000
[LINE GRAPH]
<TABLE>
<CAPTION>
12/31/99 6/30/00
-------- -------
<S> <C> <C>
3-month 5.31% 5.86%
6-month 5.73 6.22
1-year 5.96 6.06
2-year 6.24 6.36
5-year 6.34 6.18
10-year 6.44 6.02
30-year 6.48 5.90
</TABLE>
SOURCE: BLOOMBERG BUSINESS NEWS.
[VANDENBERG PHOTO]
RICHARD VANDENBERG IS LEAD PORTFOLIO MANAGER OF KEMPER INTERMEDIATE GOVERNMENT
TRUST. HE JOINED SCUDDER KEMPER INVESTMENTS, INC. IN 1996 AND IS A MANAGING
DIRECTOR. HE HAS 25 YEARS OF FIXED-INCOME PORTFOLIO MANAGEMENT EXPERIENCE.
[DUGENSKE PHOTO]
JOHN DUGENSKE IS A PORTFOLIO MANAGER FOR KEMPER INTERMEDIATE GOVERNMENT TRUST.
HE IS A VICE PRESIDENT OF SCUDDER KEMPER INVESTMENTS, JOINING THE FIRM IN 1998.
[DOLAN PHOTO]
SCOTT DOLAN IS A PORTFOLIO MANAGER FOR KEMPER INTERMEDIATE GOVERNMENT TRUST. HE
JOINED SCUDDER KEMPER INVESTMENTS IN 1989 AND IS A VICE PRESIDENT.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
PERFORMANCE UPDATE
5
<PAGE> 6
and related consumer spending remained brisk as many consumers turned to
adjustable-rate mortgages (ARMs). Consumer credit rose at an 11.2 percent rate
in the first quarter of 2000, the fastest pace since 1995. As the U.S. economy
slows, some market observers believe some lenders may encounter problems with
mortgages made to marginally qualified home buyers. Overall, however, the credit
quality of the mortgage market remains excellent. To reduce risk, the trust
focuses on the highest-quality mortgage securities available.
During the six months ended June 30, the mortgage market was negatively
affected by comments from the Treasury about the implicit government guarantees
associated with Fannie Mae (FNMA) and Freddie Mac (FHLMC) securities. Some bond
investors also grew concerned about the regulatory environment for Fannie Mae
and Freddie Mac, two of the largest private mortgage market participants. In
general, mortgages backed by the Government National Mortgage Association (GNMA,
or Ginnie Maes) outperformed FNMA securities and other forms of mortgage debt
between October and April. The fund's positioning in GNMA securities (see
Portfolio Composition) helped its performance during the first half of fiscal
year 2000.
Q WHY DID SHORT-TERM BOND YIELDS RISE WHILE LONG-TERM YIELDS FELL?
A Since January, normal relationships between bonds of different maturities
have been obscured. Usually, 30-year bonds provide more income potential than
securities maturing in five years or less, since they involve more interest-
rate risk. However, this past winter, 30-year bonds rallied after the Treasury
announced plans to buy back some long-term bonds from investors. Prior to the
announcement, some institutional investors made large investments based on the
belief that long-term Treasury prices would fall sharply this year. When these
investors realized that the government's action would reduce the supply of
30-year bonds, these securities suddenly became a much more prized commodity.
This past spring, spreads (the difference in interest rates between
Treasuries and non-Treasury debt) narrowed and long-term bond prices continued
to rise in response to economic indicators that suggest the Fed's efforts to
slow U.S. economic growth have been working. One indicator is that jobless
claims have consistently been higher than expectations. This has offset other
signs such as rising gasoline prices that suggest the potential for rising
inflation.
Q IS THERE ANY WAY TO ESTIMATE HOW MUCH A GIVEN CHANGE IN INTEREST RATES CAN
AFFECT THE RETURN FROM GOVERNMENT BONDS?
A Generally, a 100-basis-point increase in interest rates translates into a
price decline of slightly more than 1 percent for a bond or fixed-income mutual
fund that has an average duration of one year. Bond prices and fixed-income
mutual fund net asset values are also affected by market factors such as credit
risk and, for mortgages, the risk that borrowers will prepay what they owe.
Q FINALLY, HOW ARE YOU POSITIONING THE PORTFOLIO FOR THE ROAD AHEAD?
A The dual dynamic of the Fed's attempt to keep inflation in check and an
overall reduction in bond supply may dictate what happens in the second half.
While a substantial increase in rate seems unlikely given the inflation numbers
we've seen so far, that could easily change if U.S. economic growth doesn't slow
from the current 5.5 percent pace (as measured by gross domestic product).
At some point, we believe there is potential for higher bond prices. First,
however, the Fed needs to be convinced that domestic inflation will not become
problematic. Although we think short-term bond market volatility may continue
for the rest of fiscal year 2000, positive trends are in place. U.S.
FANNIE MAE MORTGAGE COMMITMENT RATES
(60-day, 30-year fixed-rate loans) June 30, 1995 to June 30, 2000
[LINE GRAPH]
<TABLE>
<CAPTION>
AVERAGE FANNIE MAE MORTGAGE COMMITMENT
RATE
--------------------------------------
<S> <C>
6/30/95 7.86%
8.03
7.93
7.85
7.65
7.46
7.20
7.21
7.65
8.00
8.24
8.35
6/30/96 8.29
8.37
8.34
8.17
7.87
7.63
7.82
7.97
8.00
8.30
8.19
8.04
6/30/97 7.82
7.44
7.70
7.49
7.34
7.32
7.22
7.03
7.16
7.16
7.16
7.01
6/30/98 7.03
7.01
6.81
6.48
6.65
6.71
6.71
6.70
7.08
7.03
6.99
7.39
6/30/99 7.78
7.92
8.08
7.87
7.87
7.99
8.13
8.50
8.38
8.37
8.53
8.68
6/30/00 8.28
</TABLE>
SOURCE: BLOOMBERG BUSINESS NEWS. THIS CHART SHOWS THE AVERAGE LOAN RATE THAT A
HOME BUYER COULD HAVE EXPECTED TO PAY FOR A 30-YEAR TERM, FIXED-RATE LOAN FOR A
HOME PURCHASE WITHIN 60 DAYS.
PERFORMANCE UPDATE 6
<PAGE> 7
PERFORMANCE UPDATE PORTFOLIO STATISTICS
economic growth is moderating, Washington's tax coffers are overflowing with
record surpluses, and the government's debt buyback program is expected to
continue.
We are comfortable with a positioning that we think can allow us to take
advantage of increases in income potential consistent with our efforts to
preserve principal. For investors seeking to reduce the volatility of an overall
equity portfolio, we think the trust could be an attractive alternative.
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
ON 6/30/00 ON 12/31/99
<S> <C> <C> <C> <C>
MORTGAGES 51% 31%
................................................................................
U.S. TREASURIES 28 23
................................................................................
U.S. GOVERNMENTS -- 26
................................................................................
SHORT-TERM GOVERNMENTS 17 10
................................................................................
CASH EQUIVALENTS (ONE YEAR OR
LESS) 4 10
--------------------------------------------------------------------------------
100% 100%
</TABLE>
[PIE CHART] [PIE CHART]
AVERAGE MATURITY
<TABLE>
<CAPTION>
ON 6/30/00 ON 12/31/99
<S> <C> <C> <C> <C>
AVERAGE MATURITY 13.2 years 7.0 years
--------------------------------------------------------------------------------
</TABLE>
*PORTFOLIO COMPOSITION IS SUBJECT TO CHANGE.
7
<PAGE> 8
PORTFOLIO OF INVESTMENTS
KEMPER INTERMEDIATE GOVERNMENT TRUST
Portfolio of Investments at June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
REPURCHASE
AGREEMENTS--17.2%
Goldman Sachs:
6.640%, to be repurchased at $20,025,822
on 07/05/2000* $20,000,000 $ 20,000,000
6.520%, to be repurchased at $20,050,711
on 07/07/2000* 20,000,000 20,000,000
Merrill Lynch, 6.610%, to be repurchased at
$10,012,853 on 07/03/2000* 10,000,000 10,000,000
State Street Bank and Trust Company,
6.480%, to be repurchased at $428,231 on
07/03/2000* 428,000 428,000
---------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $50,428,000) 50,428,000
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
SHORT-TERM
OBLIGATIONS--4.4%
Federal Home Loan Discount Notes, 6.570%**,
07/03/2000
(Cost $12,995,255) 13,000,000 12,995,255
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
U. S. TREASURY
OBLIGATIONS (B)--22.5%
U.S. Treasury Bonds:
6.250%, 05/15/2030 10,000,000 10,492,200
6.500%, 02/15/2010 14,750,000 15,254,745
8.000%, 11/15/2021 33,200,000 40,135,815
---------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $64,959,267) 65,882,760
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL
MORTGAGE
ASSOCIATION--7.6%
Federal National Mortgage Association,
8.500% with various maturities to
07/01/2030(c)
(Cost $22,110,000) 22,000,000 22,391,875
---------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL
MORTGAGE
ASSOCIATION--11.9%
Government National Mortgage Association
Pass-thru:
7.000% with various maturities to
04/15/2029 1,258,351 1,222,445
7.500% with various maturities to
07/15/2029(c) 2,875,347 2,853,580
8.000% with various maturities to
12/01/2029(c) 4,498,009 4,540,854
9.000% with various maturities to
02/01/2030(c) 25,542,956 26,405,610
---------------------------------------------------------------------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATIONS
(Cost $35,049,180) 35,022,489
---------------------------------------------------------------------------
</TABLE>
8 The accompanying notes are an integral part of the financial statements.
<PAGE> 9
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
FEDERAL HOME
LOAN MORTGAGE
CORPORATIONS--36.4%
Federal Home Loan Mortgage Corp.:
5.560% with various maturities to
12/25/2029 23,746,807 $ 24,013,958
5.758%, 01/15/2029 11,276,135 11,286,706
5.950% with various maturities to
01/01/2031 4,894,901 4,898,725
8.000% with various maturities to
06/01/2030(c) 24,000,000 24,116,251
8.500% with various maturities to
06/01/2030 40,000,000 40,800,000
9.000%, 02/15/2020 21,683 22,523
9.000%, 08/15/2021 6,623 6,879
10.250% with various maturities to
07/01/2016 1,415,715 1,518,680
---------------------------------------------------------------------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATIONS
(Cost $106,077,620) 106,663,722
---------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $291,619,322)(a) 293,384,101
---------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Repurchase agreements are fully collateralized by U.S. Treasury or Government
agency securities.
** Annualized yield at time of purchase, not a coupon rate.
(a) The cost for federal income tax purposes was $291,619,322. At June 30, 2000,
the net unrealized appreciation for all securities based on tax cost was
$1,764,779. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess market value over tax cost of
$1,914,046 and aggregate gross unrealized depreciation for all securities in
which there was an excess of cost over market value of $149,267.
(b) At June 30, 2000, these securities, in part or in whole, have been
segregated to cover initial margin requirements for open futures contracts.
(c) When-issued or forward delivery pools included.
At June 30, 2000, open futures contracts sold short were as follows:
<TABLE>
<CAPTION>
AGGREGATE FACE UNREALIZED
-------------------------- APPRECIATION/
FUTURES CONTRACTS EXPIRATION DATE VALUE MARKET VALUE (DEPRECIATION)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury 10 Year Note............... 150 August 19, 2000 $14,670,960 $14,772,657 $(101,697)
At June 30, 2000, open long futures contracts were as follows:
U.S. Treasury Bond....................... 200 August 19, 2000 18,971,512 19,468,750 497,238
---------
TOTAL UNREALIZED APPRECIATION (DEPRECIATION) ON OPEN FUTURES CONTRACTS............................. $ 395,541
=========
</TABLE>
The accompanying notes are an integral part of the financial statements. 9
<PAGE> 10
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (including repurchase agreements of
$50,428,000) (cost $291,619,322) $293,384,101
----------------------------------------------------------------------------
Cash 28,351
----------------------------------------------------------------------------
Receivable for investments sold 64,581,944
----------------------------------------------------------------------------
Interest receivable 1,496,094
----------------------------------------------------------------------------
Other assets 9,000
----------------------------------------------------------------------------
TOTAL ASSETS 359,499,490
----------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 117,716,502
----------------------------------------------------------------------------
Payable for daily variation margin on open futures contracts 85,156
----------------------------------------------------------------------------
Accrued management fee 169,457
----------------------------------------------------------------------------
Other accrued expenses 88,149
----------------------------------------------------------------------------
Total liabilities 118,059,264
----------------------------------------------------------------------------
NET ASSETS, AT VALUE $241,440,226
----------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
----------------------------------------------------------------------------
Accumulated distributions in excess of net investment income $ (2,006,567)
----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
----------------------------------------------------------------------------
Investments 1,764,779
----------------------------------------------------------------------------
Futures 395,541
----------------------------------------------------------------------------
Accumulated net realized gain (loss) (55,988,738)
----------------------------------------------------------------------------
Paid-in-capital 297,275,211
----------------------------------------------------------------------------
NET ASSETS, AT VALUE $241,440,226
----------------------------------------------------------------------------
NET ASSET VALUE
Net asset value per share ($241,440,226 / 33,996,171 shares
of beneficial interest, $.01 par value, unlimited number
of shares authorized) $7.10
----------------------------------------------------------------------------
</TABLE>
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 8,195,983
---------------------------------------------------------------------------
Expenses:
Management fee 986,429
---------------------------------------------------------------------------
Services to shareholders 35,338
---------------------------------------------------------------------------
Custodian fees 11,142
---------------------------------------------------------------------------
Auditing 8,809
---------------------------------------------------------------------------
Legal 6,433
---------------------------------------------------------------------------
Trustees' fees and expenses 8,911
---------------------------------------------------------------------------
Reports to shareholders 37,068
---------------------------------------------------------------------------
Registration fees 621
---------------------------------------------------------------------------
Other 44,648
---------------------------------------------------------------------------
Total expenses, before expense reductions 1,139,399
---------------------------------------------------------------------------
Expense reductions (2,818)
---------------------------------------------------------------------------
Total expenses, after expense reductions 1,136,581
---------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 7,059,402
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments (2,228,971)
---------------------------------------------------------------------------
Futures (255,016)
---------------------------------------------------------------------------
(2,483,987)
---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments 2,829,851
---------------------------------------------------------------------------
Futures 395,541
---------------------------------------------------------------------------
3,225,392
---------------------------------------------------------------------------
Net gain (loss) on investment transactions 741,405
---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 7,800,807
---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
2000 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ 7,059,402 14,278,259
----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (2,483,987) (14,449,644)
----------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on investment transactions 3,225,392 (4,310,072)
----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 7,800,807 (4,481,457)
----------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (9,065,969) (14,280,689)
----------------------------------------------------------------------------------------------------
Tax return of capital -- (5,267,117)
----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (1,265,162) (24,029,263)
----------------------------------------------------------------------------------------------------
Net assets at beginning of period 242,705,388 266,734,651
----------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including accumulated
distributions in excess of net investment income of
$2,006,567 at June 30, 2000) $241,440,226 242,705,388
----------------------------------------------------------------------------------------------------
OTHER INFORMATION
Shares outstanding at beginning of period 33,996,171 33,996,171
----------------------------------------------------------------------------------------------------
Shares outstanding at end of period 33,996,171 33,996,171
----------------------------------------------------------------------------------------------------
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ONE MONTH
ENDED ENDED YEAR ENDED
JUNE 30, YEAR ENDED DECEMBER 31, DECEMBER 31, NOVEMBER 30,
----------- --------------------------- ------------ ---------------------
2000 1999 1998 1997 1996 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $7.14 7.85 7.86 7.90 8.02 8.31 7.77
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations: Net
investment income (loss) .21(a) .42(a) .52 .58 .04 .61 .58
---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions .02 (.55) .07 .04 (.10) (.27) .56
---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .23 (.13) .59 .62 (.06) .34 1.14
---------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (.27) (.43) (.56) (.59) (.05) (.62) (.60)
---------------------------------------------------------------------------------------------------------------------------------
Tax return of capital -- (.15) (.04) (.07) (.01) (.01) --
---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.27) (.58) (.60) (.66) (.06) (.63) (.60)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.10 7.14 7.85 7.86 7.90 8.02 8.31
---------------------------------------------------------------------------------------------------------------------------------
MARKET VALUE, END OF YEAR $6.44 6.44 7.56 7.56 7.13 7.38 7.13
---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN
Based on net asset value (%) 3.64** (1.29) 7.80 8.18 (.81)** 4.38 15.20
---------------------------------------------------------------------------------------------------------------------------------
Based on market value (%) 4.28** (7.61) 8.13 15.76 (2.66)** 12.73 8.50
---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in millions) 241 243 267 267 269 273 282
---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) .95* .98 .91 .95 .95* .91 .95
---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) .95* .98 .91 .95 .95* .91 .95
---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) 5.91* 5.64 6.68 7.44 6.74* 7.61 7.28
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 1,070* 821 422 351 72* 577 552
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return based on net asset value reflects changes in the Fund's net
asset value during the period. Total return based on market value reflects
changes in market value. Each figure includes reinvestments of dividends. These
figures will differ depending upon the level of any discount from or premium to
net asset value at which the Fund's shares trade during the period.
* Annualized
** Not annualized
(a) Based on monthly average shares outstanding during the period.
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1
SIGNIFICANT
ACCOUNTING POLICIES Kemper Intermediate Government Trust (the "Fund")
is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-
end, diversified management investment company
organized as a Massachusetts business trust.
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 Fund, whose quotations reflect
broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents
are unable to provide such quotations, the most
recent bid quotation supplied by a bona fide market
maker shall be used.
Money market instruments purchased with an original
maturity of sixty days or less are valued at
amortized cost.
All other securities are valued at their fair value
as determined in good faith by the Valuation
Committee of the Board of Trustees.
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). During the period, the Fund
purchased interest rate and securities index
futures to manage the duration of the portfolio as
a temporary substitute for purchasing selected
investments and to lock in the purchase price of a
security which it expects to purchase in the near
future. In addition, the Fund also sold interest
rate and
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
securities index futures to hedge against declines
in the value of portfolio securities and as a
temporary substitute for selling selected
investments.
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.
WHEN ISSUED/DELAYED DELIVERY SECURITIES. The Fund
may purchase securities with delivery or payment to
occur at a later date beyond the normal settlement
period. At the time the Fund enters into a
commitment to purchase a security, the transaction
is recorded and the value of the security is
reflected in the net asset value. The value of the
security may vary with market fluctuations. No
interest accrues to the Fund until payment takes
place. At the time the Fund enters into this type
of transaction it is required to segregate cash or
other liquid assets at least equal to the amount of
the commitment.
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 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.
In addition, from November 1, 1999 through December
31, 1999 the Fund incurred approximately $2,881,000
of net realized capital losses. As permitted by tax
regulations, the Fund intends to elect to defer
these losses and treat them as arising in the
fiscal year ended December 31, 2000. As of December
31, 1999 the Fund had a net tax basis capital loss
carryforward of approximately $50,624,000 which may
be applied against any realized net taxable capital
gains of each succeeding year until fully utilized
or until December 31, 2000 ($8,431,000), December
31, 2001 ($23,615,000), December 31, 2004
($6,375,000), and December 31, 2007 ($12,203,000),
the respective expiration dates, whichever occurs
first.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made monthly.
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
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
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. 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 & SALES
OF SECURITIES For the six months ended June 30, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $1,024,396,841
Proceeds from sales 1,004,285,213
--------------------------------------------------------------------------------
3
TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper). The Fund pays a monthly
investment management fee of 1/12 of the annual
rate of .80% of average weekly net assets. The Fund
incurred a management fee of $986,429 for the six
months ended June 30, 2000.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the Fund. Under the agreement,
KSvC received shareholder services fees of $10,781
for the six months ended June 30, 2000 of which
$26,112 was unpaid.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. For the six months ended June 30,
2000, the Fund made no payments to its officers and
incurred trustees' fees of $37,068 to independent
trustees.
--------------------------------------------------------------------------------
4
EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian 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 June 30, 2000, the Fund's custodian
and transfer agent fees were reduced by $2,030 and
$788, respectively under these arrangements.
--------------------------------------------------------------------------------
5
LINE OF CREDIT The Fund and several Kemper funds (the
"Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
request that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
pro rata 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.
16
<PAGE> 17
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On May 25, 2000, a special shareholders' meeting was held. Kemper Intermediate
Government Trust shareholders were asked to vote on two separate issues:
election of members to the Board of Trustees, and ratification of Ernst & Young
LLP as independent auditors. The following are the results for each issue:
1) Election of Trustees
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
James E. Akins 31,106,465 579,955
Linda C. Coughlin 31,141,762 544,658
James R. Edgar 31,144,236 542,184
Arthur R. Gottschalk 31,172,025 514,395
Frederick T. Kelsey 31,189,135 497,285
Thomas W. Littauer 31,206,471 479,949
Fred B. Renwick 31,113,363 573,057
John G. Weithers 31,205,078 481,342
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the fund. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
31,252,422 158,788 275,211
</TABLE>
17
<PAGE> 18
NOTES
18
<PAGE> 19
NOTES
19
<PAGE> 20
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
JAMES E. AKINS MARK S. CASADY LINDA J. WONDRACK
Trustee President Vice President
LINDA C. COUGHLIN PHILIP J. COLLORA MAUREEN E. KANE
Trustee Vice President and Assistant Secretary
Secretary
JAMES R. EDGAR CAROLINE PEARSON
Trustee JOHN R. HEBBLE Assistant Secretary
Treasurer
ARTHUR R. GOTTSCHALK BRENDA LYONS
Trustee ANN M. MCCREARY Assistant Treasurer
Vice President
FREDERICK T. KELSEY
Trustee KATHRYN L. QUIRK
Vice President
THOMAS W. LITTAUER
Trustee and Vice President RICHARD L. VANDENBERG
Vice President
FRED B. RENWICK
Trustee
JOHN G. WEITHERS
Trustee
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
.............................................................................................
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219066
Kansas City, MO 64121-9066
.............................................................................................
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
</TABLE>
TRUSTEES&OFFICERS
KEMPER FUNDS LOGO Long-term investing in a short-term world(SM)
Printed on recycled paper in the U.S.A.
KIGT - 3 (8/17/00) 1118720
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
