<PAGE> 1
KEMPER GLOBAL INCOME FUND
ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 1995
SEEKS HIGH CURRENT INCOME CONSISTENT WITH PRUDENT TOTAL RETURN ASSET MANAGEMENT
BY INVESTING PRIMARILY IN INVESTMENT GRADE FOREIGN AND DOMESTIC FIXED INCOME
SECURITIES
"...longer than average duration and selected market and currency gains...
enabled the fund to enjoy the second best year in its history..."
<PAGE> 2
Table of Contents
3
General
Economic Overview
5
Performance Update
7
Terms to Know
9
World Market Performance
10
Portfolio Statistics
11
Portfolio of
Investments
13
Report of
Independent Auditors
14
Financial Statements
16
Notes to
Financial Statements
20
Financial Highlights
At a Glance
Kemper Global Income Fund
Total Returns for the year ended December 31, 1995 (unadjusted for any sales
charge):
[BAR GRAPH]
<TABLE>
<CAPTION>
LIPPER GENERAL
WORLD INCOME
FUNDS
CATEGORY
CLASS A CLASS B CLASS C AVERAGE*
- ----------------------------------------------------------
<S> <C> <C> <C>
19.89% 19.21% 19.26% 18.05%
</TABLE>
Past performance is not predictive of future performance. Returns and net asset
value fluctuate. Shares are redeemable at current net asset value, which may be
more or less than original cost.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
12/31/95 12/31/94
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER GLOBAL INCOME FUND
CLASS A $9.05 $8.55
KEMPER GLOBAL INCOME FUND
CLASS B $9.09 $8.56
KEMPER GLOBAL INCOME FUND
CLASS C $9.09 $8.56
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER GLOBAL INCOME FUND RANKINGS*
- --------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER GENERAL WORLD INCOME FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #39 OF #48 OF #47 OF
135 FUNDS 135 FUNDS 135 FUNDS
5-YEAR #22 OF
29 FUNDS N/A N/A
</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 and, if they had, results may have been less favorable.
Returns and rankings are historical and do not reflect future performance.
- --------------------------------------------------------------------------------
DIVIDEND AND YIELD REVIEW
- --------------------------------------------------------------------------------
THE FOLLOWING TABLE SHOWS PER SHARE DIVIDEND AND YIELD INFORMATION FOR THE FUND
AS OF DECEMBER 31, 1995.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year Income: $1.16 $ 1.08 $1.09
December
Dividends: $0.06 $0.0531 $0.0538
Annualized
Distribution Rate+: 7.96% 7.01% 7.10%
SEC Yield+: 4.77% 4.29% 4.21%
- --------------------------------------------------------------------------------
</TABLE>
+ Current annualized distribution rate is the latest monthly dividend shown as
an annualized percentage of net asset value on December 31, 1995. Distribution
rate simply measures the level of dividends and is not a complete measure of
performance. The SEC yield is net investment income per share earned over the
month ended December 31, 1995 shown as an annualized percentage of the maximum
offering price on that date. The SEC yield is computed in accordance with a
standardized method prescribed by the Securities and Exchange Commission.
About Your Report
SHAREHOLDER REPORTS REVISED
Your fund's annual report is the best source for tracking the progress of your
investment. This report includes several changes that have been made in an
effort to provide additional information to you as well as explain significant
changes to the fund over the last fiscal year. In addition, the performance
update includes commentary from your fund's portfolio manager or management
team on what might be expected in the coming months.
Specifically, your report now includes:
- Terms you need to know related to your fund
- A look at your fund's portfolio composition and how it has changed
- The years to maturity and the duration of the fund's underlying
investments
If you have any comments about the revised format, please write to:
Kemper Funds
Shareholder Communications
120 South LaSalle Street
Chicago, IL 60603
<PAGE> 3
General Economic Overview
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS PRESIDENT, CHIEF EXECUTIVE AND CHIEF INVESTMENT OFFICER
OF KEMPER FINANCIAL SERVICES, INC. (KFS). KFS AND ITS AFFILIATES MANAGE
APPROXIMATELY $70 BILLION IN ASSETS, INCLUDING $43 BILLION IN RETAIL MUTUAL
FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR SHAREHOLDER:
Last year -- a year in which both the equity and the fixed-income markets
produced strong above-average returns -- will be a difficult year to follow.
However, based on what we see a few months into the new year, we believe 1996
also will be capable of rewarding investors. Unlike last year, however, we
expect there will be more volatility from markets and a wider range of winners
and losers in 1996. This is the time for careful decision-making.
What has changed? We continue to experience low interest rates, an
acceptable rate of economic growth and low inflation. Although certain
government reports have been late in coming due to the federal government
shutdown, there's little in the economic data that suggests cause for concern.
Yet, this year we must begin to consider the possibility of a recession
within the next 24 months. We have enjoyed one of the longest economic
expansions in the 20th century. By virtue of the length of the expansion alone,
it is reasonable to expect an eventual slowdown or negative growth. Moreover, a
recession can be triggered by a surprise not forecastable by current available
data. It could take the form of political turmoil in the Middle East,
instability in Russia or even a further downturn in Japan's economic health.
Any type of surprise has the potential to reverse the growth we have become
accustomed to.
Having enjoyed an almost uninterrupted climb in 1995, the markets also are
vulnerable to correction. A key reason that stock prices have been rising is
that there has been large cash flows directed to the market. Whenever positive
liquidity is the driving force in the market -- as opposed to investors'
reactions to individual companies' fundamentals -- one has to be cautious.
Moreover, corporate earnings will not continue to grow at their earlier,
breakneck paces. In 1996, we expect profit growth to be in the single-digit.
Despite all, at this point early in the year, we think the stock market has the
potential to return close to its historical average of about 10 percent.+
Remember, of course, that in January alone the Standard & Poor's 500 Stock
Index gained 3.4 percent. Our forecast assumes added stock market volatility
this year.
Our equities forecast assumes some help from the bond market. As you know,
the Federal Reserve Board has begun to ease short-term interest rates, and we
expect rates to drop further. The relationship between short and long-term
rates at this point in the economic cycle is an intriguing one, and one that
would argue against a recession forecast. Short-term interest rates are
falling. Yet, rates typically rise in an economy headed toward recession.
As is typical after a strong year in the domestic markets, many investors
will be looking overseas for superior return opportunities in 1996. This move
makes good sense to us, as well. Foreign economies' expansions often follow the
U.S. In fact, improvement abroad could help sustain this country's expansion as
it could boost the demand for exports.
The value of the dollar, having had a roller coaster year in 1995, should
settle down. Strength in foreign markets could boost those countries'
currencies, which would bring an end
to the current dollar rally later
this year.
As we head toward the November presidential elections, we can expect
continued discussion from both political parties about balancing the federal
budget and related taxation issues. Frankly, we see the candidates as waging a
war in sameness -- there's really little difference between the Republican
primary platform and what President Bill Clinton has committed to about a
balanced budget. Economically as well as socially, the trend in government is
toward conservativism.
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including an interview with your fund's portfolio
management. Thank you for your continued support. We appreciate the opportunity
to serve your investment needs.
Sincerely,
STEPHEN B. TIMBERS
Stephen B. Timbers
PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER
February 20, 1996
+SOURCE: BASED UPON THE AVERAGE OF THE STANDARD & POOR'S 500 STOCK INDEX SINCE
1928 (TOWERS DATA SYSTEMS). THIS DATA IS HISTORICAL AND DOES NOT REFLECT FUTURE
RESULTS. THE S&P 500 IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF THE U.S.
STOCK MARKET.
3
<PAGE> 4
General 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
(1/31/95) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10-year Treasury rate(1) 5.65 6.49 7.47 5.97
Prime rate(2) 8.50 8.75 9.00 6.00
Inflation rate(3)* 2.60 2.90 2.87 2.52
The U.S. dollar(4) -0.57 -4.11 -5.54 -0.07
Capital goods orders(5)* 11.63 7.10 23.00 15.48
Industrial production(6) 0.07 3.17 5.41 4.21
Employment growth(7) 1.18 2.03 3.15 2.49
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on corporate profits and equity performance.
(7) An influence on family income and retail sales.
SOURCE: ECONOMICS DEPARTMENT, KEMPER FINANCIAL SERVICES, INC.
* Data as of December 31, 1995
4
<PAGE> 5
Performance Update
[BEIMFORD PHOTO]
J. PATRICK BEIMFORD, JR. JOINED KEMPER FINANCIAL SERVICES, INC. IN 1976 AND IS
CHIEF INVESTMENT OFFICER FOR FIXED-INCOME INVESTMENTS AND PORTFOLIO CO-MANAGER
OF KEMPER GLOBAL INCOME FUND. BEIMFORD RECEIVED A BACHELOR OF SCIENCE AND
INDUSTRIAL MANAGEMENT DEGREE FROM PURDUE UNIVERSITY AND RECEIVED HIS M.B.A.
FROM THE UNIVERSITY OF CHICAGO.
[JOHNS PHOTO]
GORDON JOHNS JOINED KEMPER FINANCIAL SERVICES, INC. IN 1988 AND IS THE MANAGING
DIRECTOR OF KEMPER INVESTMENT MANAGEMENT COMPANY LIMITED, LONDON, AND IS
PORTFOLIO CO-MANAGER OF KEMPER GLOBAL INCOME FUND. JOHNS GRADUATED WITH A B.A.
IN LAW FROM BALLIOL COLLEGE, OXFORD.
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.
WITH BOTH INTEREST RATES AND INFLATION LOW, MOST WORLD BOND MARKETS RALLIED IN
1995. BELOW PORTFOLIO CO-MANAGER GORDON JOHNS DESCRIBES HOW HE POSITIONED
KEMPER GLOBAL INCOME FUND TO TAKE FULL ADVANTAGE.
Q. GORDON, 1995 WAS KEMPER GLOBAL INCOME FUND'S SECOND-BEST YEAR.* HOW
WOULD YOU CHARACTERIZE THE WORLD GOVERNMENT BOND MARKETS DURING 1995?
A. It was a very strong year. Nineteen of the 20 government markets
tracked by Salomon Brothers produced double-digit returns, in U.S. dollar
terms. It's worth noting that as strong as the U.S. bond market was in 1995,
its performance was the fifth weakest of the 20 government markets. That should
give you some indication of how strong other government markets were, as both
interest rates and inflation remained under control in most markets and for
most of the year.
For Kemper Global Income Fund, in particular, a longer than average
duration and selected market and currency gains are what enabled the fund to
enjoy the second best year in its history.
All in all, the markets produced a remarkable performance, really, when
you consider that the year started with a sort of hangover of both nervousness
and disappointment from 1994.
*CLASS A SHARES PRODUCED AN UNADJUSTED TOTAL RETURN OF 19.89 PERCENT FOR THE
YEAR ENDED DECEMBER 31, 1995, THE SECOND HIGHEST RETURN OF THE SIX FULL YEARS
THAT THE FUND HAS BEEN IN EXISTENCE. ITS HIGHEST UNADJUSTED TOTAL RETURN (22.66
PERCENT UNADJUSTED FOR A SALES CHARGE) WAS GENERATED IN 1990.
Q. AS DISAPPOINTING AS 1994 WAS, THOUGH, KEMPER GLOBAL INCOME FUND SURVIVED
THE YEAR BETTER THAN MOST OF ITS PEERS.
A. That's true and we continued a key element of our 1994 strategy as we
entered 1995, and again it was to our advantage.
Starting in August 1994, we positioned the portfolio to have a
relatively longer average duration than many of our peers. At its longest, our
average duration was 5.2 years in January 1995. During the course of the year,
the average duration was reduced and it was 4.4 years by December 31.
In general, earning opportunities are enhanced when you're willing to
invest in longer duration investments. The risk you take is that longer
durations make your portfolio more sensitive to interest rate changes. In
fact, we benefited because the changes that did occur were declining interest
rates around the world, which favored the portfolio. We maintained this
strategy for several months, adopting a more neutral duration -- in other
words, closer to the average -- only in the early summer of 1995.
5
<PAGE> 6
Performance Update
Q. WHAT DID YOU SEE THAT CONVINCED YOU TO ASSUME THE RISK OF LONGER
DURATIONS AT A TIME WHEN OTHERS WERE RETICENT?
A. I don't mean to suggest that we didn't share others' apprehensions. But
we parted ways on a few points.
For example, many investors expected the dollar to perform well early
in 1995. We did not, and we maintained a low dollar exposure. This helped us
as we headed toward April, when the dollar hit its post-World War II low.
Our normal practice is to not have less than a 20 percent U.S. dollar
position. We can have more, of course, and often do, but we maintained that
minimum for a great deal of 1995. You can compare this to the Salomon Brothers
World Government Bond Index*, which had a dollar exposure of approximately 34
percent as of November 30, 1995. As it happened, non-dollar currencies were
significantly stronger than the dollar.
I should note that the fund's performance in the first quarter suffered
because we had insufficient exposure to the yen. From that point on, the yen
weakened considerably, and the level of our exposure -- which we had not
adjusted in response to its strength -- helped performance.
*THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX IS AN UNMANAGED INDEX THAT IS
GENERALLY CONSIDERED REPRESENTATIVE OF WORLD GOVERNMENT BOND MARKETS. THIS
INDEX SERVES AS A BENCHMARK TO WHICH WORLD INCOME BOND FUNDS COMPARE THEIR
PERFORMANCE.
Q. WHAT ABOUT INDIVIDUAL MARKETS? WHICH WERE THE STANDOUTS IN 1995?
A. As I've alluded, selected non-U.S. dollar markets were the outstanding
performers. The table on page 9 provides detail, but I'll just highlight a few
of our favorite markets.
Finland has been an outstanding story for the last couple of years. In
1992, the Finnish government took bold steps to control its ballooning
deficit. These measures have succeeded, and Finland today is one of the
fastest-growing European markets. Export growth is high, inflation is less than
2 percent, and wage growth is low. All of these contributed to a Finnish bond
market that returned 30.5 percent, in U.S. dollar terms, according to Salomon
Brothers.
The fund had a stake in Finland throughout 1995, ranging to a high of 10
percent. That's much higher than either the index or our peers.
Portugal was another strong market in 1995 -- returning 27.9, according
to Salomon Brothers -- and one in which our investment was relatively high.
Q. WHICH WERE THE MARKETS TO AVOID IN 1995?
A. Japan, which was the bottom-performer with a return of 9.6 percent in
U.S. dollar terms, is the most obvious example. As a general guide, we'll have
a minimum of 10 percent of the portfolio invested in Japan. Japan is the second
largest weighting in the Salomon Brothers index, following the U.S., and we
think a minimum of 10 percent in Japan is prudent. We maintained that level of
our exposure through most of the year. Japan in 1995 was plagued by many
economic and fundamental problems. However, its outlook had improved slightly
by the end of the year.
On the other hand, we avoided Sweden and perhaps shouldn't have.
Sweden's economy was in serious trouble early in 1995, and we did not
anticipate its quick recovery. But, growth picked up, government revenue rose
and the result was a massive bond rally. Sweden was the best-performing market
last year, returning 34.8 percent.
Q. GORDON, WAS IT A TYPICAL YEAR -- OR WAS THERE ANYTHING THAT 1995 TAUGHT
YOU ABOUT WORLD BOND MARKETS?
A. In April, one dollar was worth 79.85 yen. But in just five months, the
dollar shot to 104.55 yen -- an increase of 31 percent, which is a fairly
dramatic change in a short time. So, while our underweighted position in the
yen was a drag on the first third of the year, the portfolio was better
positioned for the remaining two-thirds.
Another surprise to us all was the moderate level of activity last year.
Consumers around the world did not go shopping, which means that consumers did
very little to stimulate economic growth.
6
<PAGE> 7
Performance Update
Q. WHAT CAN SHAREHOLDERS EXPECT FROM WORLD MARKETS IN 1996?
A. For the long term, we are encouraged by what we are calling a newfound
fiscal rectitude. From Canada to the United States and also in Europe,
governmental leaders are taking a more responsible attitude toward budget
deficits. Bond markets take heart from apparently serious intentions to reduce
deficits and rein in spending.
For 1996, we think that the world background is benign for bond
investors. Having enjoyed outstanding values in the first half of 1995, we have
had a relatively cautious outlook since the summer. Overall, we believe markets
will represent fair value.
Q. HOW, THEN, ARE YOU POSITIONING THE FUND -- AND WHAT ARE THE RISKS TO
YOUR STRATEGY?
A. As I mentioned, our view of the dollar has shifted in the last several
months. Now the fund has a significant exposure to dollar-bloc countries (which
includes the United States, New Zealand, Australia and Canada) and, in fact,
much more than the Salomon Brothers World Government Bond Index. So you see,
the fund is positioned for a significant dollar rally, which we anticipate.
We start the new year with some concerns. In the U.S., we're concerned
that the federal government will deliver a disappointing budget package. With
unemployment as low as it is in the U.S., we expect that wages will inevitably
rise, which could result in an uptick in inflation.
Slow growth made 1995's rallies possible in Europe. But low growth keeps
government revenues down, which makes it difficult to reduce the deficit. And,
of course, such slow growth cannot help unemployment, which continues to be
quite high in some countries.
Finally, prospects for Japan seem mixed. The economy could grow quite
sharply in the first part of 1996, which could in itself set back bond markets.
We assess the political and currency attributes of each market on an
ongoing basis, in an attempt to maintain relatively strong and stable
performance. In both 1994 and in 1995 -- two very different years for world bond
market performance -- Kemper Global Income Fund outperformed the average*
returned by its Lipper peer group of general world income funds. We'll do our
best to continue this record in 1996.
*FOR THE ONE-YEAR PERIOD ENDED DECEMBER 31, 1994, WORLD INCOME FUNDS TRACKED BY
LIPPER ANALYTICAL SERVICES, INC. DECLINED AN AVERAGE 5.88 PERCENT WHILE CLASS A
SHARES OF KEMPER GLOBAL INCOME FUND SLIPPED 1.47 PERCENT. FOR THE ONE-YEAR
PERIOD ENDED DECEMBER 31, 1995, CLASS A SHARES OF THE FUND PRODUCED A 19.89
PERCENT TOTAL RETURN VERSUS THE PEER GROUP AVERAGE OF 18.05 PERCENT.
LIPPER RANKINGS ARE BASED UPON CHANGES IN CLASS A SHARE NET ASSET VALUE
WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF SALES CHARGES
AND, IF THEY HAD, RESULTS MAY HAVE BEEN LESS FAVORABLE. RANKINGS ARE
HISTORICAL AND DO NOT REFLECT FUTURE PERFORMANCE. RETURNS AND NET ASSET VALUE
FLUCTUATE. SHARES ARE REDEEMABLE AT NET ASSET VALUE, WHICH MAY BE MORE OR LESS
THAN THE ORIGINAL COST.
Terms to Know
BOND RALLY A sharp, short-lived rise in bond values after a period of either
little movement or falling values.
CURRENCY RISK The U.S. dollar value of a foreign security tends to decrease
when the value of the U.S. dollar rises against the foreign currency in which
the security is denominated. Conversely, the U.S. dollar value of a foreign
security tends to increase when the value of the U.S. dollar falls against the
currency.
DURATION Duration is a measure of the interest rate sensitivity of a
portfolio, incorporating time to maturity and coupon size. The longer the
duration, the greater the interest rate risk.
TOTAL RETURN A fund's total return measures both the net investment income and
any realized and unrealized appreciation or depreciation of the underlying
investments in its portfolio for the period, assuming that dividends are
reinvested. It represents the aggregate percentage or dollar value change over
the period.
7
<PAGE> 8
Performance Update
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 1995 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
LIFE OF
1-YEAR 5-YEAR CLASS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER GLOBAL INCOME FUND
CLASS A 14.53% 6.27% 9.30% (SINCE 10/1/89)
- --------------------------------------------------------------------------------
KEMPER GLOBAL INCOME FUND
CLASS B 16.20% N/A 11.24% (SINCE 5/31/94)
- --------------------------------------------------------------------------------
KEMPER GLOBAL INCOME FUND
CLASS C 19.26% N/A 13.05% (SINCE 5/31/94)
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
KEMPER GLOBAL INCOME FUND CLASS A FROM 10/1/89 THROUGH 12/31/95
- --------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
10/1/89 12/31/95
- --------------------------------------------------------------------------------
<S> <C> <C>
- - KEMPER GLOBAL INCOME FUND
CLASS A(1) $10,000 $17,432
- - SALOMON BROTHERS WORLD GOVERNMENT
BOND INDEX+ 10,000 19,451
- - CONSUMER PRICE INDEX++ 10,000 12,280
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN KEMPER GLOBAL INCOME FUND CLASS B
FROM 5/31/94 THROUGH 12/31/95
- --------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
5/31/94 12/31/95
- --------------------------------------------------------------------------------
<S> <C> <C>
- - KEMPER GLOBAL INCOME FUND $10,000 $11,846
CLASS B(1)
- - SALOMON BROTHERS WORLD GOVERNMENT
BOND INDEX+ 10,000 12,276
- - CONSUMER PRICE INDEX++ 10,000 10,407
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN KEMPER GLOBAL INCOME FUND CLASS C
FROM 5/31/94 THROUGH 12/31/95
- --------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
5/31/94 12/31/95
- --------------------------------------------------------------------------------
<S> <C> <C>
- - KEMPER GLOBAL INCOME FUND $10,000 $12,154
CLASS C(1)
- - SALOMON BROTHERS WORLD GOVERNMENT
BOND INDEX+ 10,000 12,276
- - CONSUMER PRICE INDEX++ 10,000 10,407
- --------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and net asset
value fluctuate. Shares are redeemable at current net asset value, which may
be more or less than original cost.
* Average annual total return measures net investment income and capital gain
or loss from portfolio investments, assuming reinvestment of dividends and for
Class A shares adjustment for the maximum sales charge of 4.50% and for Class B
shares adjustment for the applicable contingent deferred sales charge (CDSC)
as follows: 1-year, 3%; 5-year, 1%; since inception, 0%. The maximum CDSC is
4%. During the periods noted, securities prices fluctuated. For additional
information, see the Prospectus and Statement of Additional Information and the
Financial Highlights at the end of this report.
1 Performance includes reinvestment of dividends and adjustment for the maximum
sales charge for A Shares and the contingent deferred sales charge in effect
at the end of the period for B Shares. In comparing the Kemper Global Income
Fund to the two indices, you should also note that the fund's performance
reflects the maximum sales charge, while no such charges are reflected in the
performance of the indices.
The special risk considerations associated with an investment in the fund,
including risks related to foreign investments and to a non-diversified
investment company, are discussed in the prospectus. Risks associated with
foreign securities, including fluctuating exchange rates, government
regulations and differences in liquidity, may affect your investment. As a
non-diversified investment company, the fund may invest more than 5% of its
assets in the securities of a particular foreign government.
+ The Salomon Brothers World Government Bond Index is an unmanaged index on a
U.S. dollar total return basis with all dividends reinvested and is comprised
of government bonds from 14 countries. The minimum maturity is one year.
Source is Lipper Analytical Services, Inc.
++ The Consumer Price Index is a statistical measure of change, over time, in
the prices of goods and services in major expenditure groups for all urban
consumers. Source is Towers Data Systems.
8
<PAGE> 9
World Market Performance
ALL BUT JAPAN RETURNED 10% OR BETTER
THE TABLE BELOW PRESENTS THE ONE-YEAR RETURNS OF 20 GOVERNMENT BOND MARKETS
TRACKED BY SALOMON BROTHERS FOR THE PERIOD ENDING DECEMBER 31, 1995, EXPRESSED
IN U.S. DOLLAR TERMS. THIS INFORMATION IS HISTORICAL AND DOES NOT REFLECT
FUTURE RETURNS OF THESE MARKETS.
[BAR GRAPH]
<TABLE>
<S> <C>
SWEDEN 34.83%
DENMARK 30.56
FINLAND 30.51
SPAIN 29.48
SWITZERLAND 29.17
NETHERLANDS 28.39
PORTUGAL 27.89
FRANCE 27.69
BELGIUM 27.15
GERMANY 25.91
NORWAY 24.93
AUSTRIA 24.38
CANADA 23.45
IRELAND 21.44
ITALY 19.96
UNITED STATES 18.30
NEW ZEALAND 15.96
UNITED KINGDOM 15.22
AUSTRALIA 14.94
JAPAN 9.57
</TABLE>
In the News
WHERE YOU MIGHT HAVE READ ABOUT
KEMPER GLOBAL INCOME FUND IN 1995
- - MONEY, December 1995
- - FINANCIAL PLANNING, November 1995
9
<PAGE> 10
Portfolio Statistics
PORTFOLIO COMPOSITION
[PIE CHART]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ON 12/31/95 ON 12/31/94
<S> <C> <C>
FOREIGN/U.S. GOVERNMENT SECURITIES 86% 73%
- --------------------------------------------------------------------------------
OTHER* 10 26
- --------------------------------------------------------------------------------
CASH AND EQUIVALENTS 4 1
- --------------------------------------------------------------------------------
*INCLUDES SUPRANATIONAL ENTITIES AND 100% 100%
CORPORATES GUARANTEED BY GOVERNMENTS
- --------------------------------------------------------------------------------
<CAPTION>
YEARS TO MATURITY
ON 12/31/95 ON 12/31/94
<S> <C> <C>
- --------------------------------------------------------------------------------
CASH AND EQUIVALENTS 4% --
- --------------------------------------------------------------------------------
1-10 YEARS 87 100
- --------------------------------------------------------------------------------
10-20 YEARS 9 --
- --------------------------------------------------------------------------------
100% 100%
- --------------------------------------------------------------------------------
<CAPTION>
DURATION
ON 12/31/95 ON 12/31/94
<S> <C> <C>
- --------------------------------------------------------------------------------
4.4 years 5.5 years
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
Portfolio of Investments
KEMPER GLOBAL INCOME FUND
Portfolio of Investments at December 31, 1995
(in thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS (85.9%) LOCAL CURRENCY U.S. DOLLAR
CURRENCY AND CORPORATE OBLIGATIONS (10.2%) PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CANADIAN DOLLAR--2.1% Government of Canada, 7.25%, 2003 4,250 $ 3,169
- ---------------------------------------------------------------------------------------------------------------
FINNISH Republic of Finland
MARKKA--8.7% 11.00%, 1997 13,000 3,257
11.00%, 1999 12,000 3,176
9.50%, 2004 26,000 6,841
------------------------------------------------------------------------------
13,274
- ---------------------------------------------------------------------------------------------------------------
FRENCH Kingdom of Denmark, 5.50%, 1999 35,000 7,085
FRANC--19.0% French Treasury
6.75%, 2003 6,000 1,249
7.75%, 2005 25,000 5,515
Kingdom of Spain, 6.50%, 2001 39,000 8,070
------------------------------------------------------------------------------
21,919
------------------------------------------------------------------------------
European Investment Bank, 8.50%, 2002 32,000 7,263
------------------------------------------------------------------------------
29,182
- ---------------------------------------------------------------------------------------------------------------
IRISH PUNT--10.3% Government of Ireland
6.25%, 1999 3,900 6,195
6.25%, 2004 6,500 9,626
------------------------------------------------------------------------------
15,821
- ---------------------------------------------------------------------------------------------------------------
JAPANESE YEN--9.8% Republic of Austria, 5.00%, 2001 600,000 6,579
------------------------------------------------------------------------------
Export-Import Bank of Japan, 4.375%, 2003 200,000 2,123
IBRD, 4.75%, 2004 350,000 3,858
Japanese Development Bank, 6.50%, 2001 200,000 2,356
------------------------------------------------------------------------------
8,337
------------------------------------------------------------------------------
14,916
- ---------------------------------------------------------------------------------------------------------------
NETHERLANDS Dutch State Loan
GUILDER--5.9% 7.75%, 2000 3,400 2,339
8.25%, 2002 5,500 3,934
8.25%, 2007 3,800 2.752
------------------------------------------------------------------------------
9,025
- ---------------------------------------------------------------------------------------------------------------
NORWEGIAN Kingdom of Norway
KRONER--7.9% 9.00%, 1999 20,000 3,482
7.00%, 2001 29,000 4,828
5.75%, 2004 25,000 3,791
------------------------------------------------------------------------------
12,101
- ---------------------------------------------------------------------------------------------------------------
NEW ZEALAND Government of New Zealand
DOLLAR--9.6% 8.00%, 1998 3,300 2,170
6.50%, 2000 7,000 4,435
10.00%, 2002 11,000 8,134
------------------------------------------------------------------------------
14,739
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
Portfolio of Investments
<TABLE>
<CAPTION>
(IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS (85.9%) LOCAL CURRENCY U.S. DOLLAR
CURRENCY AND CORPORATE OBLIGATIONS (10.2%) PRINCIPAL VALUE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PORTUGUESE Government of Portugal
ESCUDO--5.2% 8.375%, 1999 290,000 $ 1,909
11.875%, 2000 825,000 5,992
------------------------------------------------------------------------------
7,901
- ---------------------------------------------------------------------------------------------------------------
U.S. DOLLAR--17.6%
U.S. Treasury Notes
6.375%, 2000 16,300 16,892
6.25%, 2003 3,500 3,645
7.50%, 2005 5,700 6,449
-----------------------------------------------------------------------------
26,986
=============================================================================
TOTAL GOVERNMENT AND CORPORATE
OBLIGATIONS--96.1%
(Cost: $142,038) 147,114
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS--1.6%
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Yield--5.90%
Due--January 1996
(Cost: $2,398) $ 2,400 2,398
-----------------------------------------------------------------------------
TOTAL INVESTMENTS--97.7%
(Cost: $144,436) 149,512
=============================================================================
CASH AND OTHER ASSETS,
LESS LIABILITIES--2.3% 3,447
=============================================================================
NET ASSETS--100% $ 152,959
=============================================================================
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
The Fund is a non-diversified investment company and may invest a relatively
high percentage of its assets in the obligations of a limited number of issuers.
Based on the cost of investments of $144,436,000 for federal income tax purposes
at December 31, 1995, the aggregate gross unrealized appreciation was
$5,464,000, the aggregate gross unrealized depreciation was $388,000 and the net
unrealized appreciation was $5,076,000.
See accompanying Notes to Financial Statements.
12
<PAGE> 13
Report of Independent Auditors
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER GLOBAL INCOME FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Global Income Fund as of
December 31, 1995, the related statements of operations for the year then ended
and changes in net assets for each of the two years in the period then ended,
and financial highlights for each of the fiscal periods since 1991. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
Global Income Fund at December 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and financial highlights for each of the fiscal periods since
1991, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 16, 1996
13
<PAGE> 14
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $144,436) $149,512
- -------------------------------------------------------------------------------------------------------
Cash 684
- -------------------------------------------------------------------------------------------------------
Receivable for:
Interest 4,858
- -------------------------------------------------------------------------------------------------------
Investments sold 558
- -------------------------------------------------------------------------------------------------------
Fund shares sold 960
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS 156,572
=======================================================================================================
- -------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------------
Payable for:
Dividends to shareholders 2,783
- -------------------------------------------------------------------------------------------------------
Investments purchased 459
- -------------------------------------------------------------------------------------------------------
Fund shares redeemed 170
- -------------------------------------------------------------------------------------------------------
Management fee 97
- -------------------------------------------------------------------------------------------------------
Distribution services fee 31
- -------------------------------------------------------------------------------------------------------
Administrative services fee 26
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees 18
- -------------------------------------------------------------------------------------------------------
Other 29
- -------------------------------------------------------------------------------------------------------
Total liabilities 3,613
- -------------------------------------------------------------------------------------------------------
NET ASSETS $152,959
=======================================================================================================
- -------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------------
Paid-in capital $198,298
- -------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (50,353)
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and assets and liabilities in foreign currencies 4,554
- -------------------------------------------------------------------------------------------------------
Undistributed net investment income 460
- -------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $152,959
=======================================================================================================
- -------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($102,988,000 + 11,379,000 shares outstanding) $9.05
- -------------------------------------------------------------------------------------------------------
Maximum offering price per share (net asset value, plus 4.71%
of net asset value or 4.50% of offering price) $9.48
=======================================================================================================
CLASS B SHARES
Net asset value and redemption price (subject to contingent deferred sales charge)
per share ($49,692,000 + 5,470,000 shares outstanding) $9.09
=======================================================================================================
CLASS C SHARES
Net asset value and redemption price per share
($253,000 + 28,000 shares outstanding) $9.09
=======================================================================================================
CLASS I SHARES
Net asset value and redemption price per share
($26,000 + 3,000 shares outstanding) $9.05
=======================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
14
<PAGE> 15
Financial Statements
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------
Interest income $12,835
- -------------------------------------------------------------------------------------------------------
Expenses:
Management fee 1,238
- -------------------------------------------------------------------------------------------------------
Distribution services fee 391
- -------------------------------------------------------------------------------------------------------
Administrative services fee 325
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 449
- -------------------------------------------------------------------------------------------------------
Professional fees 53
- -------------------------------------------------------------------------------------------------------
Reports to shareholders 52
- -------------------------------------------------------------------------------------------------------
Trustees' fees and other 34
- -------------------------------------------------------------------------------------------------------
Total expenses 2,542
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 10,293
=======================================================================================================
- -------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------
Net realized gain on sales of investments and foreign currency transactions 14,530
- -------------------------------------------------------------------------------------------------------
Change in net unrealized depreciation on investments and
assets and liabilities in foreign currencies 5,108
- -------------------------------------------------------------------------------------------------------
Net gain on investments 19,638
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $29,931
=======================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
-------- -------
<S> <C> <C>
Net investment income $ 10,293 7,503
- ---------------------------------------------------------------------------------------------------------
Net realized gain (loss) 14,530 (6,845)
- ---------------------------------------------------------------------------------------------------------
Change in net unrealized depreciation/appreciation 5,108 (757)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 29,931 (99)
- ---------------------------------------------------------------------------------------------------------
Net equalization credits 24 42
- ---------------------------------------------------------------------------------------------------------
Distribution from net investment income (19,283) (4,876)
- ---------------------------------------------------------------------------------------------------------
Tax return of capital distribution -- (2,738)
- ---------------------------------------------------------------------------------------------------------
Total dividends to shareholders (19,283) (7,614)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share transactions (28,413) 95,350
- ---------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (17,741) 87,679
=========================================================================================================
- ---------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------
Beginning of year 170,700 83,021
- ---------------------------------------------------------------------------------------------------------
END OF YEAR (including undistributed net investment
income of $460 and $643, respectively) $152,959 170,700
=========================================================================================================
</TABLE>
15
<PAGE> 16
Notes to Financial Statements
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE FUND Kemper Global Income Fund is an open-end management
investment company organized as a business trust
under the laws of Massachusetts. The Fund currently
offers four classes of shares. Class A shares are
sold to investors subject to an initial sales
charge. Class B shares are sold without an initial
sales charge but are subject to higher ongoing
expenses than Class A shares and a contingent
deferred sales charge payable upon certain
redemptions. Class B shares automatically convert
to Class A shares six years after issuance. Class C
shares are sold without an initial or a contingent
deferred sales charge but are subject to higher
ongoing expenses than Class A shares and do not
convert into another class. Class I shares, which
are sold to a limited group of investors, are not
subject to initial or contingent deferred sales
charges and have lower ongoing expenses than other
classes. Differences in class expenses will result
in the payment of different per share income
dividends by class. Each share represents an
identical interest in the investments of the Fund
and has the same rights.
- --------------------------------------------------------------------------------
2 SIGNIFICANT ACCOUNTING INVESTMENT VALUATION. Investments are stated at
POLICIES value. Fixed income securities are valued by using
market quotations, or independent pricing services
that use prices provided by market makers or
estimates of market values obtained from yield data
relating to instruments or securities with similar
characteristics. Portfolio securities that are
traded on a domestic securities exchange are valued
at the last sale price on the exchange where
primarily traded or, if there is no recent sale, at
the last current bid quotation. Portfolio
securities that are primarily traded on foreign
securities exchanges are generally valued at the
preceding closing values of such securities on
their respective exchanges where primarily traded.
Securities not so traded are valued at the last
current bid quotation if market quotations are
available. Exchange traded options are valued at
the last sale price unless there is no sale price,
in which event prices provided by market makers are
used. Over-the-counter traded options are valued
based upon prices provided by market makers.
Financial futures and options thereon are valued at
the settlement price established each day by the
board of trade or exchange on which they are
traded. Forward foreign currency contracts and
foreign currencies are valued at the forward and
current exchange rates, respectively, prevailing on
the day of valuation. Other securities and assets
are valued at fair value as determined in good
faith by the Board of Trustees.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency
values are converted into U.S. dollar values at the
mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by a
recognized dealer. If such quotations are not
readily available, the rate of exchange is
determined in good faith by the Board of Trustees.
Income and expenses and purchases and sales of
investments are translated into U.S. dollars at the
rate of exchange prevailing on the respective dates
of such transactions. The Fund includes that
portion of the results of operations resulting from
changes in foreign exchange rates with
16
<PAGE> 17
Notes to Financial Statements
net realized and unrealized gain or loss from
investments and foreign currency transactions, as
appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Interest income includes premium and
discount amortization on money market instruments
and discount amortization on long-term fixed income
securities. Realized gains and losses from
investment transactions are reported on an
identified cost basis.
FUND SHARE VALUATION. Fund shares are sold and
redeemed on a continuous basis at net asset value
(plus an initial sales charge on most sales of
Class A shares). Proceeds payable on redemption of
Class B shares will be reduced by the amount of any
applicable contingent deferred sales charge. On
each day the New York Stock Exchange is open for
trading, the net asset value per share is
determined as of the earlier of 3:00 p.m. Chicago
time or the close of the Exchange. The net asset
value per share is determined separately for each
share class by dividing the attributable net assets
by the number of outstanding shares of each class.
Because of the need to obtain prices as of the
close of trading on various exchanges throughout
the world, the calculation of net asset value does
not take place contemporaneously with the
determination of the prices of the Fund's foreign
securities.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies and therefore no
federal income tax provision is required. The
accumulated net realized loss on sales of
investments for federal income tax purposes at
December 31, 1995, amounting to approximately
$50,307,000, is available to offset future taxable
gains. Of this amount, approximately $45,783,000
was obtained in the 1994 fund acquisitions (see
note 5). Under Internal Revenue Code provisions the
amount of acquired loss carryover available each
year is limited to approximately $7,000,000. If not
applied, the loss carryover expires during the
period 1997 through 2002.
DIVIDENDS TO SHAREHOLDERS. The Fund declares and
pays dividends of net investment income monthly and
any net realized capital gains annually, which are
recorded on the ex-dividend date. Dividends are
determined in accordance with income tax principles
which may treat certain transactions differently
from generally accepted accounting principles.
These differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
EQUALIZATION ACCOUNTING. A portion of proceeds from
sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment
income so that income per share available for
distribution is not affected by sales or
redemptions of shares.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH MANAGEMENT AGREEMENT. The Fund has a management
AFFILIATES agreement with Kemper Financial Services, Inc.
(KFS) and pays a management fee at an annual rate
of .75% of the first $250 million of average daily
net assets declining to .62% of average daily net
assets in excess of $12.5 billion.
17
<PAGE> 18
Notes to Financial Statements
The Fund incurred a management fee of $1,238,000
for the year ended December 31, 1995.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI). Underwriting commissions paid in connection
with the distribution of Class A shares are as
follows:
<TABLE>
<CAPTION>
COMMISSIONS COMMISSIONS ALLOWED BY KDI
RETAINED --------------------------------
BY KDI TO ALL FIRMS TO AFFILIATES
------------- ------------ -------------
<S> <C> <C> <C>
Year ended December 31, 1995 $ 11,000 73,000 3,000
</TABLE>
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of the Class B and Class C
shares. Pursuant to the agreement, KDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares. In addition, KDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B shares. Distribution fees and commissions
paid in connection with the sale of Class B and
Class C shares and the CDSC received in connection
with the redemption of Class B shares are as
follows:
<TABLE>
<CAPTION>
DISTRIBUTION COMMISSIONS AND DISTRIBUTION
FEES AND FEES PAID BY KDI
CDSC RECEIVED --------------------------------
BY KDI TO ALL FIRMS TO AFFILIATES
------------- ------------ -------------
<S> <C> <C> <C>
Year ended December 31, 1995 $ 536,000 114,000 19,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to Class A, Class B and Class C shareholders, the
Fund pays KDI a fee at an annual rate of up to .25%
of average daily net assets of each class. KDI in
turn has various agreements with financial services
firms that provide these services and pays these
firms based on assets of Fund accounts the firms
service. Administrative services fees (ASF) paid
are as follows:
<TABLE>
<CAPTION>
ASF ASF PAID BY KDI
PAID BY THE --------------------------------
FUND TO KDI TO ALL FIRMS TO AFFILIATES
------------- ------------ -------------
<S> <C> <C> <C>
Year ended December 31, 1995 $ 325,000 327,000 46,000
</TABLE>
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. For the year ended
December 31, 1995, the transfer agent remitted
shareholder services fees to KSvC of $265,000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of KFS.
During the year ended December 31, 1995, the Fund
made no direct payments to its officers and
incurred trustees' fees of $17,000 to independent
trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended December 31, 1995, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
Purchases $349,479
Proceeds from sales 387,774
18
<PAGE> 19
Notes to Financial Statements
- --------------------------------------------------------------------------------
5 CAPITAL SHARE The following table summarizes the activity in
TRANSACTIONS capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
----------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------
SHARES SOLD
------------------------------------------------------------------------------
Class A 1,126 $ 10,635 3,146 $ 28,131
------------------------------------------------------------------------------
Class B 934 8,823 589 5,090
------------------------------------------------------------------------------
Class C 42 393 12 104
------------------------------------------------------------------------------
Class I 3 27 -- --
------------------------------------------------------------------------------
------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
------------------------------------------------------------------------------
Class A 945 8,702 532 4,663
------------------------------------------------------------------------------
Class B 418 3,856 82 709
------------------------------------------------------------------------------
Class C 2 22 -- --
------------------------------------------------------------------------------
------------------------------------------------------------------------------
SHARES REDEEMED
------------------------------------------------------------------------------
Class A (4,728) (43,893) (5,754) (50,420)
------------------------------------------------------------------------------
Class B (1,801) (16,796) (1,104) (9,675)
------------------------------------------------------------------------------
Class C (19) (182) (9) (81)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
CONVERSION OF SHARES
------------------------------------------------------------------------------
Class A 106 999 15 132
------------------------------------------------------------------------------
Class B (105) (999) (15) (132)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
SHARES ISSUED IN ACQUISITION(A):
------------------------------------------------------------------------------
Class A -- -- 7,058 60,897
------------------------------------------------------------------------------
Class B -- -- 6,472 55,932
------------------------------------------------------------------------------
NET (DECREASE) INCREASE
FROM CAPITAL SHARE
TRANSACTIONS $ (28,413) $ 95,350
------------------------------------------------------------------------------
</TABLE>
(a) On August 26, 1994, the Fund acquired the
assets of Kemper Investment Portfolios -- Short
Term Global Income Portfolio and Kemper Short
Term Global Income Fund in a tax-free exchange.
- --------------------------------------------------------------------------------
6 FORWARD FOREIGN In order to protect itself against a decline in
CURRENCY CONTRACTS the value of particular foreign currencies against
the U.S. Dollar, the Fund has entered into forward
contracts to deliver foreign currency in exchange
for U.S. Dollars as described below. The Fund bears
the market risk that arises from changes in foreign
exchange rates, and accordingly, the unrealized
gain (loss) on these contracts is reflected in the
accompanying financial statements. The Fund also
bears the credit risk if the counterparty fails to
perform under the contract. At December 31, 1995,
the Fund had outstanding forward foreign currency
contracts as follows (in thousands):
<TABLE>
<CAPTION>
Foreign currency Contract Settlement Unrealized
to be delivered amount date loss
<S> <C> <C> <C>
---------------------------------------------------------------------
4,280 Canadian dollars $ 3,108 January 1996 $ (29)
---------------------------------------------------------------------
146,200 French francs 29,519 March and (430)
October 1996
---------------------------------------------------------------------
Total $ (459)
---------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, YEAR ENDED JUNE 30,
-------------- ------------ -----------------------
1995 1994 1993 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $8.55 9.29 9.21 9.44 9.26 9.98
- -------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .61 .60 .27 .72 .76 .94
- -------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.05 (.74) .16 (.17) .22 --
- -------------------------------------------------------------------------------------------------------
Total from investment operations 1.66 (.14) .43 .55 .98 .94
- -------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income 1.16 .38 -- .72 .73 1.22
- -------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- -- .11 .06 .07 .44
- -------------------------------------------------------------------------------------------------------
Tax return of capital distribution -- .22 .24 -- -- --
- -------------------------------------------------------------------------------------------------------
Total dividends 1.16 .60 .35 .78 .80 1.66
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.05 8.55 9.29 9.21 9.44 9.26
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 19.89% (1.47) 4.73 6.16 10.77 9.30
- -------------------------------------------------------------------------------------------------------
ANNUALIZED RATIO TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------------------
Expenses 1.34% 1.53 1.29 1.52 1.53 1.60
- -------------------------------------------------------------------------------------------------------
Net investment income 6.43% 6.67 5.75 7.87 8.32 9.17
- -------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
Financial Highlights
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS I
---------------------------- ---------------------------- -----------------
MAY 31, MAY 31, NOVEMBER 22,
YEAR ENDED 1994 TO YEAR ENDED 1994 TO 1995 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $8.56 8.70 8.56 8.70 9.57
- ---------------------------------------------------------------------- ----------------------------- -----------------
Income from investment operations:
Net investment income .56 .30 .57 .30 .07
- ---------------------------------------------------------------------- ----------------------------- -----------------
Net realized and unrealized gain (loss) 1.05 (.14) 1.05 (.14) (.03)
- ---------------------------------------------------------------------- ----------------------------- -----------------
Total from investment operations 1.61 .16 1.62 .16 .04
- ---------------------------------------------------------------------- ----------------------------- -----------------
Less dividends:
Distribution from net investment income 1.08 .19 1.09 .19 .56
- ---------------------------------------------------------------------- ----------------------------- -----------------
Tax return of capital distribution -- .11 -- .11 --
- ---------------------------------------------------------------------- ----------------------------- -----------------
Total dividends 1.08 .30 1.09 .30 .56
- ---------------------------------------------------------------------- ----------------------------- -----------------
Net asset value, end of period $9.09 8.56 9.09 8.56 9.05
- ---------------------------------------------------------------------- ----------------------------- -----------------
TOTAL RETURN (NOT ANNUALIZED) 19.21% 1.89 19.26 1.91 .43
- ------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
Expenses 1.98% 2.27 2.06 2.23 .88
- ---------------------------------------------------------------------- ----------------------------- -----------------
Net investment income 5.79% 5.89 5.71 5.93 6.40
- ---------------------------------------------------------------------- ----------------------------- -----------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, --------------------------
1995 1994 1993 1993 1992 1991
---- ---- ------------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $152,959 170,700 83,021 78,068 71,790 58,631
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 220% 378 484 372 292 346
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges.
21
<PAGE> 22
SPECIAL SHAREHOLDERS' MEETING
On September 19, 1995, a special shareholders' meeting was held. Kemper Global
Income Fund shareholders were asked to vote on four separate issues: election of
nine Trustees to the Board of Trustees, ratification of Ernst & Young LLP as
independent auditors, approval of a new investment management agreement with
Kemper Financial Services, Inc. or its successor on the same terms as the
current agreement and for Class B and Class C shareholders only, approval of a
new 12b-1 distribution plan with Kemper Distributors, Inc. or its successor on
the same terms as the current plan. We are pleased to report that all nominees
were elected and all other items were approved. Following are the results for
each issue:
1) Election of Trustees
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
David W. Belin 11,322,169 364,628
Lewis A. Burnham 11,338,530 348,267
Donald L. Dunaway 11,337,362 349,435
Robert B. Hoffman 11,333,856 352,941
Donald R. Jones 11,333,856 352,941
David B. Mathis 11,316,326 370,471
Shirley D. Peterson 11,336,193 350,604
William P. Sommers 11,330,350 356,447
Stephen B. Timbers 11,335,024 351,773
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the fund
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
11,106,677 146,496 433,624
</TABLE>
3) Approval of new investment management agreement
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
10,775,157 261,842 649,798
</TABLE>
4) Approval of new 12b-1 distribution plan
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
Class B Shares 3,186,188 79,786 246,842
Class C Shares 7,758 0 0
</TABLE>
22
<PAGE> 23
NOTES
23
<PAGE> 24
Trustees and Officers
TRUSTEES
STEPHEN B. TIMBERS
President and Trustee
DAVID W. BELIN
Trustee
LEWIS A. BURNHAM
Trustee
DONALD L. DUNAWAY
Trustee
ROBERT B. HOFFMAN
Trustee
DONALD R. JONES
Trustee
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
OFFICERS
JOHN E. PETERS
Vice President
J. PATRICK BEIMFORD, JR.
Vice President
GORDON K. JOHNS
Vice President
JOHN E. NEAL
Vice President
PHILIP J. COLLORA
Vice President and
Secretary
CHARLES F. CUSTER
Vice President and
Assistant Secretary
JEROME DUFFY
Treasurer
ELIZABETH C. WERTH
Assistant Secretary
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
FOREIGN CUSTODIAN THE CHASE MANHATTAN BANK, N.A.
Chase Metro Tech Center
Brooklyn, NY 11245
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER KEMPER FINANCIAL SERVICES, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street
Chicago, IL 60603
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