<PAGE> 1
Kemper Target Equity Fund
Kemper Retirement Fund Series I, II, III, IV and V
Annual Report to Shareholders
For the Year Ended
June 30, 1995
Provides a guaranteed return of
investment on the designated
maturity date to investors who
reinvest all dividends and
hold their shares to the maturity date,
and seeks to provide long-term
growth of capital
(LOGO)
<PAGE> 2
DEAR SHAREHOLDER:
We are pleased to provide you with an economic overview and the performance of
your fund for the year ended June 30, 1995. In addition, following the economic
overview is a question and answer interview with your fund's Portfolio Manager.
<TABLE>
<CAPTION>
------------------------------------------------------------
TOTAL RETURN*
For the Year Ended June 30, 1995
(not adjusted for any sales charge)
<S> <C>
Series I 17.03%
Series II 16.52%
Series III 18.37%
Series IV 18.95%
Series V 19.97%
</TABLE>
------------------------------------------------------------
Returns are historical and do not represent future performance. Returns and net
asset value fluctuate. Shares are redeemable at current net asset value, which
may be more or less than original cost.
<TABLE>
<CAPTION>
------------------------------------------------------------
DIVIDENDS PAID DURING THE
YEAR ENDED JUNE 30, 1995
INCOME LONG-TERM
DIVIDENDS CAPITAL GAINS
<S> <C> <C>
Series I $0.41 $0.72
Series II $0.57 $0.64
Series III $0.43 $0.37
Series IV $0.37 --
Series V $0.21 --
</TABLE>
------------------------------------------------------------
GENERAL ECONOMIC OVERVIEW
Investors enjoyed generally positive performance in both the fixed-income and
equity markets in the first six months of 1995. At this midpoint in the year,
the returns of most leading securities markets are significantly higher than
they were at the same time in 1994.
But recently, several events occurred to challenge the markets:
- Early in July, the Federal Reserve Board acknowledged that economic growth had
slowed so much that a recession might now be possible. In response, the
Federal Reserve eased short-term interest rates by a small but symbolic 25
basis points. This action was significant because, since February 1994, the
Fed had been raising interest rates to slow down what was considered high
enough growth to rekindle troublesome inflation.
- Then, midway into July, the stock market took a brief tumble. After a two-day
period of anxiety, the market recovered and finished the month well ahead. But
such a sudden, severe mini-correction served to remind investors that the
current bull market will probably come to an end someday and that some sectors
may be overextended today.
- Finally, the late July release of the gross domestic product (GDP) revealed
that growth in the economy in the second quarter was almost nonexistent. The
economy has not experienced such a low real GDP change (0.5%) in four years.
Proof of the economic slowdown was good news for investors who worry about
runaway growth and its inevitable result, inflation. At the same time, we were
pleased to see economic data that suggest that certain sectors of the economy,
such as housing and foreign trade, are poised for growth in the third and
fourth quarters. These should help provide momentum and keep us clear of a
recession. In fact, we anticipate 2% to 3% real GDP growth for the next few
quarters. Nevertheless, additional action by the Federal Reserve to lower
interest rates would not surprise us.
------------------------------------------------------------
MOST MARKETS ARE HAVING A MUCH BETTER YEAR THAN IN 1994
Data show the 1994 and 1995 six-month comparative total returns for the
domestic and international equity and U.S. and non-U.S. bond markets.
<TABLE>
<CAPTION>
U.S. Non-U.S.
U.S. International Treasury Government
Stocks(1) Stocks(2) Bonds(3) Bonds(4)
<S> <C> <C> <C> <C>
First six months of 1995 20.19% 2.76% 11.19% 20.03%
First six months of 1994 -3.38% 8.92% -4.04% 3.68%
</TABLE>
------------------------------------------------------------
1 Standard & Poor's 500, an unmanaged index of common stocks that is generally
considered representative of the U.S. stock market.
2 Morgan Stanley Capital International EAFE Index, an unmanaged index that is
generally considered a measure of international equities in 15 major world
markets excluding the U.S. and Canada.
3 Salomon Brothers Treasury Index, including Treasury issues with a maturity of
one year or longer.
4 Salomon Brothers World Government, Non-U.S. Governments, Index, including the
performance of leading government bond markets excluding the U.S. (unmanaged).
This information is historical and does not represent future performance of
these asset classes or past or future performance of any Kemper fund. Investors
may not make direct investments in these unmanaged indices.
As we view the remainder of 1995, we believe that the opportunities for common
stock investors will be increasingly concentrated in higher quality investments.
Companies cannot necessarily count on the economy to provide above average
earnings support. Rather, stocks that have proven themselves with a pattern of
consistent earnings are likely to attract investor support. Specifically,
sectors that produce more consistent earnings, such as health care, consumer
nondurables, selected technology and selected capital goods can be expected to
do well. Picking the right sectors to invest in will be the key challenge for
equity investors during the next few quarters.
1
<PAGE> 3
In addition, we look for the fixed-income markets to continue their positive
performance, as they tend to do well during periods of slow growth and low
inflation.
Leading international economies are lagging the U.S. economy. Japan and Germany,
whose economies typically follow U.S. growth, are not as robust as in past
cycles. This phenomenon makes international investing very complex currently.
Moreover, conditions in emerging market countries underline the importance of
careful research and experience in understanding how these markets work.
Nevertheless, the same fundamentals that have driven markets higher in the U.S.
are to be found in many foreign countries currently.
Political leadership also has some bearing on the progress of the economy and
the state of the financial markets. In the months preceding a presidential
election year, it has been common for incumbents to attempt to stimulate growth.
Given our Republican Congress and Democratic President, however, we do not
consider this a foregone conclusion as we move closer to 1996.
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including a question-and-answer interview with
your fund's portfolio manager. Thank you for your continued support. We
appreciate the opportunity to serve your investment needs.
Sincerely,
[SIG]
Stephen B. Timbers
Chief Investment and Executive Officer
July 31, 1995
[PHOTO] Stephen Timbers is Chief Executive Officer and
is also Chief Investment Officer of Kemper
Financial Services, Inc. (KFS). KFS and its
affiliates manage approximately $60 billion in
assets, including $42 billion in retail mutual
funds. Timbers is a graduate of Yale
University and holds an M.B.A. from Harvard
University.
* Total return measures net investment income and capital gain or loss from
portfolio investments, assuming reinvestment of all dividends. 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.
2
<PAGE> 4
Q&A
A PERFORMANCE REVIEW AND AN INTERVIEW WITH PORTFOLIO MANAGER
TRACY McCORMICK CHESTER
[PHOTO OF TRACY MCCORMICK CHESTER]
Tracy McCormick Chester joined Kemper Financial Services, Inc. (KFS) in 1994
and is Portfolio Manager of Kemper Retirement Fund Series I-V. Ms. McCormick
Chester received both her B.A. and M.B.A. degrees from Michigan State
University.
Q: DURING THE FIRST SIX MONTHS OF 1995 THE BOND MARKET HAS REBOUNDED AND
WE'VE SEEN THE STOCK MARKET POST A SERIES OF RECORD HIGHS. WHAT SPARKED THIS
RALLY AND HOW DID THE RETIREMENT FUND SERIES FARE?
A: It became increasingly evident that the Federal Reserve Board's
aggressive interest rate hikes, which created such turmoil in 1994, had
effectively slowed economic growth and reduced the threat of rising inflation.
This was great news for the bond markets, which tend to perform best in a slow
growth, low inflation environment. Yields declined and bond prices shot up,
resulting in some strong gains for the funds' zero-coupon bonds.
Declining interest rates added fuel to the stock market, which was already
rising on the strength of some very good earnings reports. Technology stocks
were particularly strong. Indications that demand for semiconductors would
continue to outpace supply pushed companies like Intel and Microsoft to
excellent gains. That strength helped to boost the entire sector. Interest
rate-sensitive stocks like financial companies (Providian, Dean
Witter/Discover) did very well, along with large companies in pharmaceuticals
(Pfizer), health care (Abbott Laboratories) and consumer products (Campbell's
Soup, Gillette). Overall, the funds benefitted from adjustments we had made in
the second half of 1994--broader diversification and the elimination of
smaller, illiquid stocks in favor of larger companies with strong product
lines.
Q: THE U.S. DOLLAR WAS WEAK RELATIVE TO MANY FOREIGN CURRENCIES IN LATE 1994
AND EARLY 1995. HOW DID THIS AFFECT THE FUNDS?
A: Our bias toward larger blue chip companies with multinational exposure
served us well. Companies like Coca Cola, Colgate-Palmolive, McDonald's and
Philip Morris, which generate a great deal of their revenue overseas,
benefitted from strong sales and got an added boost when those profits were
translated back into U.S. dollars. When the dollar strengthened during the
second quarter, some of those stocks declined a bit. However, we intend to
maintain positions in most of these companies based on their strength as market
leaders and their ability to provide consistent earnings growth.
Q: WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR, AND HOW HAVE YOU
POSITIONED THE PORTFOLIOS?
A: Given that the gains seen during the first half of this year are greater
than the average gains seen in an entire year, we're cautious. For a number of
companies, valuations have run up considerably and any disappointment in
earnings could be severely punished.
With that in mind, we've trimmed a number of positions, especially in the
technology sector, where we think valuations are too high and earnings have
probably peaked. We'll maintain positions in selected companies like Intel
where strong product cycles should support continued growth. But others have
become a bit too speculative. We've added to defensive positions in life
insurers (American General, General Reinsurance), health care (Merck, Johnson &
Johnson) and selected basic industries, and initiated positions in sectors that
we think have reached the bottom of their cycles. These include computer and
electronic components and manufacturing (Loral, Boeing), retail (Tandy,
Wal-Mart, Office Depot, May department Stores) and lodging (LaQuinta Inns).
Overall, we believe there are still opportunities out there and the Retirement
Fund Series is well positioned for a slow growth environment. However,
research and individual stock selection will be very important.
3
<PAGE> 5
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS* 1 5
For the Periods Ended 6/30/95 YEAR YEAR LIFE OF FUND
(adjusted for the maximum sales
charge of 5.00%)
<S> <C> <C> <C>
Series I 11.19% 10.58% 12.25% (since 2/5/90)
Series II 10.67 N/A 12.86 (since 9/11/90)
Series III 12.44 N/A 8.24 (since 3/10/92)
Series IV 13.06 N/A 4.95 (since 1/15/93)
Series V 13.96 N/A 1.99 (since 11/15/93)
</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.
Growth of an assumed $10,000 investment in
KEMPER RETIREMENT FUND -- SERIES I from 2/5/90 through 6/30/95
KEMPER RETIREMENT FUND - SERIES 1
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
-------- ---------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
2/5/90 $10,000.00 $9.4800 5.00% 1,054.852 $9.0100 $9,504
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
=============== COST OF SHARES ============== ==================== VALUE OF SHARES ===========
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 10,000 306 306 10,306 0 10,380 0 10,380 306 10,686 1,086
12/31/91 10,000 945 1,251 11,251 130 13,755 140 13,895 1,424 15,319 1,175
12/31/92 10,000 717 1,967 11,967 975 12,490 1,108 13,598 2,013 15,611 1,319
12/31/93 10,000 659 2,627 12,627 1,371 12,268 2,474 14,742 2,644 17,386 1,495
12/31/94 10,000 613 3,239 13,239 1,076 10,306 3,157 13,463 2,835 16,298 1,668
6/30/95 10,000 0 3,239 13,239 0 11,804 3,616 15,420 3,247 18,667 1,668
Totals 3,239 3,553 11,804 3,616 15,420 3,247 18,667 1,668
</TABLE>
Average Annual Total Return for This Illustration: 12.24% (Annual Compounding)
<TABLE>
<S> <C> <C> <C> <C> <C>
Average Annual Total Returns 1-Year 5-Year 10-Year Inception Inception Date
after Maximum 5.00% Sales Charge ------ ------ ------ --------- --------------
for Periods Ending 6/30/95: 11.19% 10.58% ---- 12.25% 2/5/90
</TABLE>
<TABLE>
<CAPTION>
01/31/90 11/30/90 11/30/91 11/30/92 11/30/93 11/30/94 05/31/95
02/28/90 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 06/30/95
Cum Cum Cum Cum Cum Cum Cum
Fund Name Tot Return Tot Return Tot Return Tot Return Tot Return Tot Return Tot Return
--------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Russell 1000
Grow IX Tr 0.71 3.54 14.13 1.00 1.73 1.68 3.86
10000 10071 10,846 15,309 16,076 16,542 16,983 20,429
</TABLE>
COST OF LIVING INDEX
PREPARED FOR: LIS MCELDOWNEY
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
-------- ---------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
2/5/90 $10,000.00 $127.4000 0.00% 78.493 $127.4000 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
=============== COST OF SHARES ============== ==================== VALUE OF SHARES ============
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 10,000 0 0 10,000 0 10,502 0 10,502 0 10,502 78
12/31/91 10,000 0 0 10,000 0 10,824 0 10,824 0 10,824 78
12/31/92 10,000 0 0 10,000 0 11,138 0 11,138 0 11,138 78
12/31/93 10,000 0 0 10,000 0 11,444 0 11,444 0 11,444 78
12/31/94 10,000 0 0 10,000 0 11,750 0 11,750 0 11,750 78
6/30/95 10,000 0 0 10,000 0 11,970 0 11,970 0 11,970 78
Totals 0 0 11,970 0 11,970 0 11,970 78
</TABLE>
Average Annual Total Return for This Illustration: 3.33% (Annual Compounding)
<TABLE>
<CAPTION>
1-Year 5-Year 10-Year
------ ------ ------
<S> <C> <C> <C>
Average Annual Total Returns
at Net Asset Value
for Periods Ending 6/30/95: 2.84% 3.21% 3.52%
</TABLE>
Growth of an assumed $10,000 investment in
KEMPER RETIREMENT FUND -- SERIES II from 9/11/90 through 6/30/95
KEMPER RETIREMENT FUND - SERIES 2
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
-------- ---------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
9/10/90 $10,000.00 $9.4700 5.00% 1,055.966 $9.0000 $9,504
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
=============== COST OF SHARES ============== ==================== VALUE OF SHARES ============
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 10,000 84 84 10,084 0 10,073 0 10,073 85 10,158 1,065
12/31/91 10,000 341 425 10,425 0 13,929 0 13,929 482 14,441 1,093
12/31/92 10,000 601 1,026 11,026 109 13,664 110 13,774 1,077 14,851 1,148
12/31/93 10,000 689 1,715 11,715 654 14,129 772 14,901 1,807 16,708 1,249
12/31/94 10,000 712 2,427 12,427 799 11,890 1,450 13,340 1,233 15,573 1,383
6/30/95 10,000 0 2,427 12,427 0 13,664 1,666 15,330 2,567 17,897 1,383
Totals 2,427 1,563 13,664 1,666 15,330 2,567 17,897 1,383
</TABLE>
Average Annual Total Return for This Illustration: 12.87% (Annual Compounding)
<TABLE>
<CAPTION>
1-Year 5-Year 10-Year Inception Inception Date
------ ------ -------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Average Annual Total Returns
after Maximum 5.00% Sales Charge
for Periods Ending 6/30/95: 10.67% ---- ---- 12.86% 9/10/90
</TABLE>
<TABLE>
<CAPTION>
1 month 1 month 1 month 1 month 1 month 1 month 1 month
07/31/90 08/31/90 11/30/90 11/30/91 11/30/92 11/30/93 05/31/94 05/31/95
08/31/90 09/30/90 12/31/90 12/31/91 12/31/92 12/31/93 06/30/94 06/30/95
Cum Cum Cum Cum Cum Cum Cum Cum
Fund Name Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret
--------- ------- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Russell 1000 Grow IX Tr -9.59 -5.39 3.54 14.13 1.00 1.73 -2.95 3.86
10000 9,461 10,498 14,818 15,560 16,012 14,701 19,185
</TABLE>
COST OF LIVING INDEX
PREPARED FOR: LIS MCELDOWNEY
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
-------- ---------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
9/10/90 $10,000.00 $131.6000 0.00% 75.988 $131.6000 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
=============== COST OF SHARES ============== ==================== VALUE OF SHARES ===================
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/90 10,000 0 0 10,000 0 10,167 0 10,167 0 10,167 76
12/31/91 10,000 0 0 10,000 0 10,479 0 10,479 0 10,479 76
12/31/92 10,000 0 0 10,000 0 10,783 0 10,783 0 10,783 76
12/31/93 10,000 0 0 10,000 0 11,079 0 11,079 0 11,079 76
12/31/94 10,000 0 0 10,000 0 11,375 0 11,375 0 11,375 76
6/30/95 10,000 0 0 10,000 0 11,588 0 11,588 0 11,588 76
Totals 0 0 11,588 0 11,588 0 11,588 76
</TABLE>
Average Annual Total Return for This Illustration: 3.06% (Annual Compounding)
<TABLE>
<CAPTION>
1-Year 5-Year 10-Year
------ ------ --------
<S> <C> <C> <C>
Average Annual Total Returns
at Net Asset Value
for Periods Ending 6/30/95: 2.84% 3.21% 3.52%
</TABLE>
4
<PAGE> 6
Growth of an assumed $10,000 investment in
KEMPER RETIREMENT FUND -- SERIES III from 3/10/92 through 6/30/95
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
---- ---------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
3/10/92 $10,000.00 $9.4700 5.00% 1,055.966 $9.0000 $9,504
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
=============== COST OF SHARES ============== ===================== VALUE OF SHARES ==================
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 10,000 190 190 10,190 0 10,423 0 10,423 191 10,614 1,075
12/31/93 10,000 398 588 10,588 0 11,446 0 11,446 612 12,058 1,112
12/31/94 10,000 478 1,066 11,066 412 9,767 413 10,180 1,002 11,182 1,209
6/30/95 10,000 0 1,066 11,066 0 11,352 480 11,832 1,164 12,996 1,209
Totals 1,066 412 11,352 480 11,832 1,164 12,996 1,209
</TABLE>
Average Annual Total Return for This Illustration: 8.24% (Annual Compounding)
<TABLE>
<CAPTION> 1-Year 5-Year 10-Year Inception Inception Date
------ ------ ------- --------- --------------
<S> <C> <C> <C> <C> <C>
Average Annual Total Returns
after Maximum 5.00% Sales Charge
for Periods Ending 6/30/95: 12.44% ---- ---- 8.24% 3/10/92
</TABLE>
<TABLE>
<CAPTION>
02/29/92 11/30/92 11/30/93 11/30/94 05/31/95
03/31/92 12/31/92 12/31/93 12/31/94 06/20/95
Cum Cum Cum Cum Cum
Fund Name Tot Return Tot Return Tot Return Tot Return Tot Return
--------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Russell 1000 Grow IX Tr -2.73 1.00 1.73 1.68 3.86
10000 9,727 10,745 11,057 11,351 13,655
</TABLE>
COST OF LIVING INDEX
PREPARED FOR: LIS MCELDOWNEY
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
---- ---------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
3/10/92 $10,000.00 $138.6000 0.00% 72.150 $138.6000 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
=============== COST OF SHARES =============== =================== VALUE OF SHARES =====================
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/92 10,000 0 0 10,000 0 10,238 0 10,238 0 10,238 72
12/31/93 10,000 0 0 10,000 0 10,519 0 10,519 0 10,519 72
12/31/94 10,000 0 0 10,000 0 10,801 0 10,801 0 10,801 72
6/30/95 10,000 0 0 10,000 0 11,003 0 11,003 0 11,003 72
Totals 0 0 11,003 0 11,003 0 11,003 72
</TABLE>
Average Annual Total Return for This Illustration: 2.86% (Annual Compounding)
<TABLE>
<CAPTION>
1-Year 5-Year 10-Year
------ ------ -------
<S> <C> <C> <C>
Average Annual Total Returns
at Net Asset Value
for Periods Ending 6/30/95: 2.84% 3.21% 3.52%
</TABLE>
KEMPER RETIREMENT FUND -- SERIES 4
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
---- ---------- -------- -------- --------- --------- ---------
<C> <C> <C> <C> <C> <C> <C>
1/15/93 $10,000.00 $9.4700 5.00% 1,055.966 9.0000 $9,504
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
============== COST OF SHARES =============== ===================== VALUE OF SHARES ==============
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/93 10,000 158 158 10,158 0 10,327 0 10,327 160 10,487 1,072
12/31/94 10,000 397 555 10,555 0 9,092 0 9,092 538 9,630 1,118
6/30/95 10,000 0 555 10,555 0 10,634 0 10,634 629 11,263 1,118
Totals 555 0 10,634 0 10,634 629 11,263 1,118
</TABLE>
Average Annual Total Return for This Illustration: 4.95% (Annual Compounding)
<TABLE>
<CAPTION> 1-Year 5-Year 10-Year Inception Inception Date
------ ------ ------- --------- --------------
<S> <C> <C> <C> <C> <C>
Average Annual Total Returns
after Maximum 5.00% Sales Charge
for Periods Ending 6/30/95: 13.06% ---- ---- 4.95% 1/15/93
</TABLE>
<TABLE>
<CAPTION>
1 month 1 month 1 month 1 month 1 month
11/30/92 12/31/92 05/31/93 11/30/93 05/31/94 08/31/94 11/30/94 02/28/95 05/31/95
12/31/92 01/31/93 06/30/93 12/31/93 06/30/94 09/30/94 12/31/94 03/31/95 06/30/95
Cum Cum Cum Cum Cum Cum Cum Cum Cum
Fund Name Tot Return Tot Return Tot Return Tot Return Tot Return Tot Return Tot Return Tot Return Tot Return
--------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Russell 1000 Grow IX Tr 1.00 -1.15 -0.92 1.73 -2.95 -1.37 1.68 2.92 3.86
10000 9,885 9,762 10,290 9,448 10,174 10,250 11,225 12,330
</TABLE>
COST OF LIVING INDEX
<TABLE>
<CAPTION>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
---- ---------- -------- -------- --------- --------- ---------
<C> <C> <C> <C> <C> <C> <C>
1/15/93 $10,000.00 $141.9000 0.00% 70.472 $141.9000 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
<TABLE>
<CAPTION>
=============== COST OF SHARES ============== ==================== VALUE OF SHARES ===================
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividends Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/93 10,000 0 0 10,000 0 10,120 0 10,120 0 10,120 70
6/30/93 10,000 0 0 10,000 0 10,176 0 10,176 0 10,176 70
9/30/93 10,000 0 0 10,000 0 10,226 0 10,226 0 10,226 70
12/31/93 10,000 0 0 10,000 0 10,275 0 10,275 0 10,275 70
3/31/94 10,000 0 0 10,000 0 10,374 0 10,374 0 10,374 70
6/30/94 10,000 0 0 10,000 0 10,430 0 10,430 0 10,430 70
9/30/94 10,000 0 0 10,000 0 10,529 0 10,529 0 10,529 70
12/31/94 10,000 0 0 10,000 0 10,550 0 10,550 0 10,550 70
3/31/95 10,000 0 0 10,000 0 10,669 0 10,669 0 10,669 70
6/30/95 10,000 0 0 10,000 0 10,747 0 10,747 0 10,747 70
6/30/95 10,000 0 0 10,000 0 10,747 0 10,747 0 10,747 70
Totals 0 0 10,747 0 10,747 0 10,747 70
</TABLE>
Average Annual Total Return for This Illustration: 2.87% (Annual Compounding)
<TABLE>
<CAPTION>
1-Year 5-Year 10-Year
------ ------ -------
<S> <C> <C> <C>
Average Annual Total Returns
at Net Asset Value
for Periods Ending 6/30/95: 2.84% 3.21% 3.52%
</TABLE>
5
<PAGE> 7
Growth of an assumed $10,000 investment in
KEMPER RETIREMENT FUND -- SERIES V from 11/15/93 through 6/30/95
<TABLE>
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
---- ---------- ----- -------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
11/15/93 $10,000.00 $9.4700 5.00% 1,055.966 $9.0000 $9,504
<CAPTION>
Dividends and Capital Gains Reinvested
=============== COST OF SHARES ============== ==================== VALUE OF SHARES ==================
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividend Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/93 10,000 0 0 10,000 0 9,483 0 9,483 0 9,483 1,056
12/31/94 10,000 222 222 10,222 0 8,553 0 8,553 222 8,775 1,083
6/30/95 10,000 0 222 10,222 0 10,064 0 10,064 261 10,325 1,083
Totals 222 0 10,064 0 10,064 261 10,325 1,083
<CAPTION>
Average Annual Total Return for This Illustration: 1.98% (Annual Compounding)
1-Year 5-Year 10-Year Inception Incaption Date
------ ------ ------- --------- --------------
<S> <C> <C> <C> <C> <C>
Average Annual Total Returns
after Maximum 5.00% Sales Charge
for Periods Ending 6/30/95: 13.96% ---- ---- 1.99% 11/15/93
<CAPTION>
1 month 1 month 1 month 1 month 1 month 1 month 1 month 1 month 1 month
09/30/93 10/31/93 11/30/93 12/31/93 01/31/94 02/28/94 03/31/94 04/30/94 05/31/94 08/31/94 11/30/94 02/28/95 05/31/95
10/31/93 11/30/93 12/31/93 01/31/94 02/28/94 03/31/94 04/30/94 05/31/94 06/30/94 09/30/94 12/31/94 03/31/95 06/30/95
Cum Cum Cum Cum Cum Cum Cum Cum Cum Cum Cum Cum Cum
Fund Name Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret Tot Ret
--------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Russell 1000
Grow IX Tr 2.78 -0.66 1.73 2.31 -1.82 -4.83 0.48 -1.51 -2.95 -1.37 1.68 2.92 3.86
10000 9934 10107 10338 10156 9673 9721 9570 9275 9,989 10,073 10,997 12,012
<CAPTION>
COST OF LIVING INDEX
Sales Net Asset Initial
Initial Offering Charge Shares Value Net Asset
Date Investment Price Included Purchased per Share Value
---- ---------- ----- -------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
11/15/93 $10,000.00 $145.7000 0.00% 68.634 $145.7000 $10,000
<CAPTION>
Dividends and Capital Gains Reinvested
=============== COST OF SHARES ============== ==================== VALUE OF SHARES ===================
Annual Cumulative Total Annual From From
Cumulative Income Income Investment Cap Gain From Cap Gains Sub- Dividend Total Shares
Date Investment Dividends Dividends Cost Distrib'n Investment Reinvested Total Reinvested Value Held
-------- ---------- --------- --------- ---------- --------- ---------- ---------- ----- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/93 10,000 0 0 10,000 0 10,007 0 10,007 0 10,007 69
12/31/93 10,000 0 0 10,000 0 10,007 0 10,007 0 10,007 69
1/31/94 10,000 0 0 10,000 0 10,034 0 10,034 0 10,034 69
2/28/94 10,000 0 0 10,000 0 10,069 0 10,069 0 10,069 69
3/31/94 10,000 0 0 10,000 0 10,103 0 10,103 0 10,103 69
4/30/94 10,000 0 0 10,000 0 10,117 0 10,117 0 10,117 69
5/31/94 10,000 0 0 10,000 0 10,124 0 10,124 0 10,124 69
6/30/94 10,000 0 0 10,000 0 10,158 0 10,158 0 10,158 69
7/31/94 10,000 0 0 10,000 0 10,185 0 10,185 0 10,185 69
8/31/94 10,000 0 0 10,000 0 10,226 0 10,226 0 10,226 69
9/30/94 10,000 0 0 10,000 0 10,254 0 10,254 0 10,254 69
10/31/94 10,000 0 0 10,000 0 10,261 0 10,261 0 10,261 69
11/30/94 10,000 0 0 10,000 0 10,275 0 10,275 0 10,275 69
12/31/94 10,000 0 0 10,000 0 10,275 0 10,275 0 10,275 69
1/31/95 10,000 0 0 10,000 0 10,316 0 10,316 0 10,316 69
2/28/95 10,000 0 0 10,000 0 10,357 0 10,357 0 10,357 69
3/31/95 10,000 0 0 10,000 0 10,391 0 10,391 0 10,391 69
4/30/95 10,000 0 0 10,000 0 10,426 0 10,426 0 10,426 69
5/31/95 10,000 0 0 10,000 0 10,446 0 10,446 0 10,446 69
6/30/95 10,000 0 0 10,000 0 10,467 0 10,467 0 10,467 69
6/30/95 10,000 0 0 10,000 0 10,467 0 10,467 0 10,467 69
Totals 0 0 10,467 0 10,467 0 10,467 69
<CAPTION>
Average Annual Total Return for This Illustration: 2.70% (Annual Compounding)
1-Year 5-Year 10-Year
------ ------ -------
<S> <C> <C> <C>
Average Annual Total Returns
at Net Asset Value
for Periods Ending 6/30/95: 2.84% 3.21% 3.52%
</TABLE>
1 Includes reinvestment of dividends and adjustments for the maximum
sales charge of 5.00%. When comparing the Kemper Retirement Fund
Series I-V to the Russell 1000(R) Growth Index,** you should also note
that the fund's performance reflects the maximum sales charge of
5.00%, while no such charges are reflected in the performance of this
index.
* Total return and average annual total return measure net investment
income and capital gain or loss from portfolio investments, assuming
reinvestment of all dividends. Average annual total return reflects
annualized change while total return reflects aggregate change. 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.
** The Russell 1000(R) Growth Index is an unmanaged index comprised of
common stocks of larger U.S. companies with greater than average
growth orientation and represents the universe of stocks from which
"earnings/growth" money managers typically select. Assumes
reinvestment of dividends. 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.
6
<PAGE> 8
KEMPER RETIREMENT FUND SERIES I
PORTFOLIO OF INVESTMENTS June 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount or
Number of
Shares Value
--------- --------
<S> <C> <C>
U. S. GOVERNMENT
OBLIGATIONS-48.5%
-------------------------------------------------------------
U.S. Treasury,
zero coupon, 1999
(Cost: $45,603) $66,500 $ 51,522
-------------------------------------------------------------
COMMON STOCKS
BROADCASTING AND PUBLISHING-1.2%
-------------------------------------------------------------
Readers Digest Association 16,000shs. 706
-------------------------------------------------------------
Singapore Press Holdings Ltd. 744 11
-------------------------------------------------------------
(a)Viacom International "B" 11,192 519
-------------------------------------------------------------
1,236
CHEMICALS-2.1%
-------------------------------------------------------------
Air Products & Chemicals 9,000 502
-------------------------------------------------------------
B.F. Goodrich Co. 3,200 172
-------------------------------------------------------------
E.I. DuPont de Nemours & Co. 7,000 481
-------------------------------------------------------------
Monsanto Co. 6,000 541
-------------------------------------------------------------
Pall Corp. 25,000 556
-------------------------------------------------------------
2,252
COMMUNICATIONS AND MEDIA-.9%
----------------------------------
(a)Cox Communications Inc. 18,000 349
-------------------------------------------------------------
SBC Communications, Inc. 12,800 610
-------------------------------------------------------------
959
COMPUTER SOFTWARE, ELECTRONIC DATA PROCESSING AND
ELECTRONIC COMPONENTS-8.3%
-------------------------------------------------------------
Adobe Systems 9,000 522
-------------------------------------------------------------
AMP, Inc. 7,000 296
-------------------------------------------------------------
(a)Atmel Corporation 10,500 581
-------------------------------------------------------------
(a)BMC Software 7,000 541
-------------------------------------------------------------
(a)Cisco Systems 4,000 202
-------------------------------------------------------------
(a)Compaq Computer Corp. 5,000 227
-------------------------------------------------------------
First Data Corporation 12,000 683
-------------------------------------------------------------
General Motors Corporation, "E" 9,300 405
-------------------------------------------------------------
Hewlett-Packard, Co. 8,600 641
-------------------------------------------------------------
(a)Informix Corp. 24,000 609
-------------------------------------------------------------
Intel Corp. 20,400 1,292
-------------------------------------------------------------
Linear Technology Corp. 4,000 264
-------------------------------------------------------------
Loral Corp. 9,000 466
-------------------------------------------------------------
(a)Microsoft Corp. 8,000 723
-------------------------------------------------------------
(a)Novell 30,000 598
-------------------------------------------------------------
(a)Silicon Graphics Inc. 10,000 399
-------------------------------------------------------------
(a)Sun Microsystems 8,000 388
-------------------------------------------------------------
8,837
CONSTRUCTION-.4%
-------------------------------------------------------------
Fluor Corp. 9,000 468
-------------------------------------------------------------
Road Builder 1,000 3
-------------------------------------------------------------
471
CONSUMER PRODUCTS AND SERVICES-8.0%
-------------------------------------------------------------
Campbell Soup Co. 12,000 588
-------------------------------------------------------------
Coca-Cola Co. 18,000 1,148
-------------------------------------------------------------
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
-------------------------------------------------------------
Colgate-Palmolive Co. 10,000 $ 731
-------------------------------------------------------------
(a)CUC International 10,000 420
-------------------------------------------------------------
Gillette Co. 10,000 446
-------------------------------------------------------------
Greencore Group PLC 1,705 13
-------------------------------------------------------------
PepsiCo 25,000 1,141
-------------------------------------------------------------
Philip Morris Companies 17,900 1,331
-------------------------------------------------------------
Pioneer Hi-Bred International 8,000 336
-------------------------------------------------------------
Procter & Gamble Co. 9,200 661
-------------------------------------------------------------
Sara Lee Corp. 37,000 1,054
-------------------------------------------------------------
Service Corp. International 20,000 632
-------------------------------------------------------------
8,501
DRUGS AND HEALTH CARE-8.2%
-------------------------------------------------------------
Abbott Laboratories 32,000 1,296
-------------------------------------------------------------
(a)Amgen, Inc. 5,000 402
-------------------------------------------------------------
(a)Boston Scientific Corp. 22,000 701
-------------------------------------------------------------
(a)Centocor Inc. 20,000 286
-------------------------------------------------------------
Columbia/HCA Healthcare Corp. 10,000 433
-------------------------------------------------------------
Eli Lilly & Co. 10,200 801
-------------------------------------------------------------
Johnson & Johnson 11,500 778
-------------------------------------------------------------
Merck & Co., Inc. 22,000 1,078
-------------------------------------------------------------
Pfizer 5,000 462
-------------------------------------------------------------
(a)R. P. Scherer Corp. 5,000 211
-------------------------------------------------------------
SmithKline Beecham PLC 27,000 1,222
-------------------------------------------------------------
St. Jude Medical 11,000 551
-------------------------------------------------------------
United Healthcare Corp. 10,000 414
-------------------------------------------------------------
8,635
ELECTRICAL EQUIPMENT-2.6%
-------------------------------------------------------------
Emerson Electric Co. 15,000 1,072
-------------------------------------------------------------
General Electric Co. 20,000 1,128
-------------------------------------------------------------
GM Hughes Electronics Corp. 10,000 395
-------------------------------------------------------------
York International Corp. 3,900 175
-------------------------------------------------------------
2,770
ENERGY AND RELATED SERVICES-2.2%
-------------------------------------------------------------
Enron Corp. 15,800 555
-------------------------------------------------------------
Mobil Corp. 6,200 595
-------------------------------------------------------------
Noble Affiliates 18,800 479
-------------------------------------------------------------
Schlumberger Ltd. 8,000 497
-------------------------------------------------------------
Union Texas Petroleum Holdings 10,000 211
-------------------------------------------------------------
2,337
ENTERTAINMENT AND RESTAURANTS-2.3%
-------------------------------------------------------------
Harrah's Entertainment 8,250 232
-------------------------------------------------------------
La Quinta Inns, Inc. 8,000 216
-------------------------------------------------------------
McDonald's Corp. 23,000 900
-------------------------------------------------------------
Promus Companies 4,125 91
-------------------------------------------------------------
Tabcorp Holdings Ltd. 2,818 6
-------------------------------------------------------------
Walt Disney Company 18,500 1,029
-------------------------------------------------------------
2,474
</TABLE>
7
<PAGE> 9
(Dollars in thousands)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
FINANCIAL SERVICES-3.1%
----------------------------------------------------------
Aalberts Industries N.V. 248 $ 14
----------------------------------------------------------
Allied Irish Banks PLC 835 4
----------------------------------------------------------
American General Corp. 18,000 608
----------------------------------------------------------
American International Group, Inc. 2,600 296
----------------------------------------------------------
Boatmen's Bancshares 16,000 564
----------------------------------------------------------
CITIC Pacific Ltd. 3,000 8
----------------------------------------------------------
Dean Witter Discover 10,000 470
----------------------------------------------------------
General Re Corp. 2,400 321
----------------------------------------------------------
Hagemeyer N.V. 126 6
----------------------------------------------------------
Providian Corp. 25,500 924
----------------------------------------------------------
Sanyo Shinpan Finance Co., Ltd. 600 44
----------------------------------------------------------
Sumitomo Corporation 1,000 9
----------------------------------------------------------
3,268
MANUFACTURING AND METALS-3.0%
----------------------------------------------------------
Allied-Signal 8,700 387
----------------------------------------------------------
Armstrong World Industries 7,000 351
----------------------------------------------------------
Boeing Co. 15,000 939
----------------------------------------------------------
(a)Crown Cork & Seal Co. 10,000 501
----------------------------------------------------------
Federal Signal Corp. 16,000 346
----------------------------------------------------------
Leggett & Platt Incorporated 5,000 220
----------------------------------------------------------
WMX Technologies 17,000 482
----------------------------------------------------------
3,226
PAPER AND FOREST PRODUCTS-.6%
----------------------------------------------------------
Scott Paper Co. 13,000 643
----------------------------------------------------------
RETAILING-3.3%
----------------------------------------------------------
Home Depot 14,000 569
----------------------------------------------------------
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
May Department Stores Co. 14,000 $ 583
----------------------------------------------------------
(a)Office Depot 18,000 506
----------------------------------------------------------
Tandy Corp. 14,000 726
----------------------------------------------------------
Wal-Mart Stores 43,000 1,150
----------------------------------------------------------
3,534
TELECOMMUNICATIONS-.5%
----------------------------------------------------------
A T & T 10,800 574
----------------------------------------------------------
TRANSPORTATION-.4%
----------------------------------------------------------
(a)Wisconsin Central
Transportation Corp. 8,600 421
----------------------------------------------------------
TOTAL COMMON STOCKS-47.1%
(Cost: $41,283) 50,138
----------------------------------------------------------
CONVERTIBLE CORPORATE OBLIGATION-.6%
----------------------------------
Thermo Electron Corp., 5.00%, 2001
(Cost: $503) $ 500 682
----------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield-6.00% and 6.36%
Due-July 1995
----------------------------------------------------------
ConAgra Inc. 900 899
----------------------------------------------------------
Sheffield Receivables Corp. 1,600 1,599
----------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS-2.3%
(Cost: $2,498) 2,498
----------------------------------------------------------
TOTAL INVESTMENTS-98.5%
(Cost: $89,887) 104,840
----------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES-1.5% 1,642
----------------------------------------------------------
NET ASSETS-100% $106,482
==========================================================
</TABLE>
See accompanying Notes to Portfolios of Investments.
8
<PAGE> 10
KEMPER RETIREMENT FUND SERIES II
PORTFOLIO OF INVESTMENTS June 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount or
Number of
Shares Value
--------- --------
<S> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS-63.3%
------------------------------------------------------------
U.S. Treasury,
zero coupon, 2000
(Cost: $99,127) $148,200 $109,680
------------------------------------------------------------
COMMON STOCKS
BROADCASTING AND PUBLISHING-.8%
------------------------------------------------------------
Readers Digest Association 19,000 shs. 838
------------------------------------------------------------
Singapore Press Holdings Ltd. 720 11
------------------------------------------------------------
(a)Viacom International "B" 13,010 603
------------------------------------------------------------
1,452
CHEMICALS-1.6%
------------------------------------------------------------
Air Products & Chemicals 10,800 602
------------------------------------------------------------
B.F. Goodrich Co. 4,000 215
------------------------------------------------------------
E.I. DuPont de Nemours & Co. 9,000 619
------------------------------------------------------------
Monsanto Co. 7,000 631
------------------------------------------------------------
Pall Corp. 28,000 623
------------------------------------------------------------
2,690
COMMUNICATIONS AND MEDIA-.6%
------------------------------------------------------------
(a)Cox Communications Inc. 20,000 388
------------------------------------------------------------
SBC Communications, Inc. 15,000 714
------------------------------------------------------------
1,102
COMPUTER SOFTWARE, ELECTRONIC DATA PROCESSING AND ELECTRONIC
COMPONENTS-6.1%
------------------------------------------------------------
Adobe Systems 11,000 638
------------------------------------------------------------
AMP, Inc. 8,000 338
------------------------------------------------------------
(a)Atmel Corporation 12,300 681
------------------------------------------------------------
(a)BMC Software 8,500 657
------------------------------------------------------------
(a)Cisco Systems 5,500 278
------------------------------------------------------------
(a)Compaq Computer Corp. 6,000 272
------------------------------------------------------------
First Data Corporation 15,000 853
------------------------------------------------------------
General Motors Corporation, "E" 11,400 496
------------------------------------------------------------
Hewlett-Packard, Co. 10,000 745
------------------------------------------------------------
(a)Informix Corp. 30,000 761
------------------------------------------------------------
Intel Corp. 23,600 1,494
------------------------------------------------------------
Linear Technology Corp. 5,000 330
------------------------------------------------------------
Loral Corp. 9,800 507
------------------------------------------------------------
(a)Microsoft Corp. 9,500 859
------------------------------------------------------------
(a)Novell 35,000 698
------------------------------------------------------------
(a)Silicon Graphics Inc. 12,400 494
------------------------------------------------------------
(a)Sun Microsystems 10,000 485
------------------------------------------------------------
10,586
CONSTRUCTION-.3%
------------------------------------------------------------
Fluor Corp. 9,000 468
------------------------------------------------------------
Road Builder 1,000 3
------------------------------------------------------------
471
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
CONSUMER PRODUCTS AND SERVICES-5.8%
------------------------------------------------------------
Campbell Soup Co. 14,000 $ 686
------------------------------------------------------------
Coca-Cola Co. 21,000 1,339
------------------------------------------------------------
Colgate-Palmolive Co. 12,100 885
------------------------------------------------------------
(a)CUC International 12,500 525
------------------------------------------------------------
Gillette Co. 11,000 491
------------------------------------------------------------
Greencore Group PLC 2,100 16
------------------------------------------------------------
PepsiCo 31,000 1,414
------------------------------------------------------------
Philip Morris Companies 20,600 1,532
------------------------------------------------------------
Pioneer Hi-Bred International 9,000 378
------------------------------------------------------------
Procter & Gamble Co. 10,900 783
------------------------------------------------------------
Sara Lee Corp. 43,000 1,226
------------------------------------------------------------
Service Corp. International 24,000 759
------------------------------------------------------------
10,034
DRUGS AND HEALTH CARE-6.0%
------------------------------------------------------------
Abbott Laboratories 38,200 1,547
------------------------------------------------------------
(a)Amgen, Inc. 6,000 483
------------------------------------------------------------
(a)Boston Scientific Corp. 26,000 829
------------------------------------------------------------
(a)Centocor Inc. 20,000 286
------------------------------------------------------------
Columbia/HCA Healthcare Corp. 11,700 506
------------------------------------------------------------
Eli Lilly & Co. 12,500 981
------------------------------------------------------------
Johnson & Johnson 13,500 913
------------------------------------------------------------
Merck & Co., Inc. 24,800 1,215
------------------------------------------------------------
Pfizer 6,000 554
------------------------------------------------------------
(a)R. P. Scherer Corp. 6,000 253
------------------------------------------------------------
SmithKline Beecham PLC 32,000 1,448
------------------------------------------------------------
St. Jude Medical 14,000 702
------------------------------------------------------------
United Healthcare Corp. 12,000 496
------------------------------------------------------------
U.S. Bioscience, with warrants
expiring 1998 316 2
------------------------------------------------------------
10,215
ELECTRICAL EQUIPMENT-1.8%
------------------------------------------------------------
Emerson Electric Co. 17,000 1,216
------------------------------------------------------------
General Electric Co. 22,500 1,268
------------------------------------------------------------
GM Hughes Electronics Corp. 12,000 474
------------------------------------------------------------
York International Corp. 4,700 211
------------------------------------------------------------
3,169
ENERGY AND RELATED SERVICES-1.6%
------------------------------------------------------------
Enron Corp. 19,700 692
------------------------------------------------------------
Mobil Corp. 7,300 701
------------------------------------------------------------
Noble Affiliates 22,500 574
------------------------------------------------------------
Schlumberger Ltd. 10,000 621
------------------------------------------------------------
Union Texas Petroleum Holdings 12,000 253
------------------------------------------------------------
2,841
ENTERTAINMENT AND RESTAURANTS-1.7%
------------------------------------------------------------
Harrah's Entertainment 11,050 311
------------------------------------------------------------
La Quinta Inns, Inc. 10,000 270
------------------------------------------------------------
</TABLE>
9
<PAGE> 11
(Dollars in thousands)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
------------------------------------------------------------
McDonald's Corp. 26,000 $ 1,017
------------------------------------------------------------
Promus Companies 5,525 122
------------------------------------------------------------
Tabcorp Holdings Ltd. 3,340 7
------------------------------------------------------------
Walt Disney Company 21,500 1,196
------------------------------------------------------------
2,923
FINANCIAL SERVICES-2.2%
------------------------------------------------------------
Aalberts Industries N.V. 300 17
------------------------------------------------------------
Allied Irish Banks PLC 800 4
------------------------------------------------------------
American General Corp. 22,000 743
------------------------------------------------------------
American International Group, Inc. 3,200 365
------------------------------------------------------------
Boatmen's Bancshares 18,500 652
------------------------------------------------------------
CITIC Pacific Ltd. 3,000 8
------------------------------------------------------------
Dean Witter Discover 12,000 564
------------------------------------------------------------
General Re Corp. 2,800 375
------------------------------------------------------------
Hagemeyer N.V. 146 7
------------------------------------------------------------
Providian Corp. 30,000 1,088
------------------------------------------------------------
Sanyo Shinpan Finance Co., Ltd. 300 22
------------------------------------------------------------
Sumitomo Corporation 1,000 9
------------------------------------------------------------
3,854
MANUFACTURING AND METALS-2.2%
------------------------------------------------------------
Allied-Signal 10,100 449
------------------------------------------------------------
Armstrong World Industries 9,000 451
------------------------------------------------------------
Boeing Co. 18,000 1,127
------------------------------------------------------------
(a)Crown Cork & Seal Co. 12,000 602
------------------------------------------------------------
Federal Signal Corp. 19,000 411
------------------------------------------------------------
Leggett & Platt Incorporated 6,000 264
------------------------------------------------------------
WMX Technologies 21,000 596
------------------------------------------------------------
3,900
PAPER AND FOREST PRODUCTS-.4%
------------------------------------------------------------
Scott Paper Co. 15,000 742
------------------------------------------------------------
RETAILING-2.4%
------------------------------------------------------------
The Gap 400 14
------------------------------------------------------------
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
------------------------------------------------------------
Home Depot 16,900 $ 687
------------------------------------------------------------
May Department Stores Co. 18,000 749
------------------------------------------------------------
(a)Office Depot 22,000 619
------------------------------------------------------------
Tandy Corp. 15,000 778
------------------------------------------------------------
Wal-Mart Stores 48,000 1,284
------------------------------------------------------------
4,131
TELECOMMUNICATIONS-.4%
------------------------------------------------------------
A T & T 12,300 653
------------------------------------------------------------
TRANSPORTATION-.3%
------------------------------------------------------------
(a)Wisconsin Central Transportation
Corp. 10,000 490
------------------------------------------------------------
TOTAL COMMON STOCKS-34.2%
(Cost: $48,684) 59,253
------------------------------------------------------------
CONVERTIBLE CORPORATE
OBLIGATION-.5%
------------------------------------------------------------
Thermo Electron Corp., 5.00%, 2001
(Cost: $604) $ 600 818
------------------------------------------------------------
MONEY MARKET
INSTRUMENT-1.3%
Yield-6.46%
Due-July 1995
------------------------------------------------------------
Enron Corp.
(Cost: $2,298) 2,300 2,298
------------------------------------------------------------
TOTAL INVESTMENTS-99.3%
(Cost: $150,713) 172,049
------------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES-.7% 1,288
------------------------------------------------------------
NET ASSETS-100% $173,337
============================================================
</TABLE>
See accompanying Notes to Portfolios of Investments.
10
<PAGE> 12
KEMPER RETIREMENT FUND SERIES III
PORTFOLIO OF INVESTMENTS June 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount or
Number of
Shares Value
--------- --------
<S> <C> <C>
U. S. GOVERNMENT
OBLIGATIONS-59.7%
----------------------------------------------------------
U.S. Treasury, zero coupon, 2002
(Cost: $68,140) $111,000 $ 74,394
----------------------------------------------------------
COMMON STOCKS
BROADCASTING AND PUBLISHING-.9%
----------------------------------------------------------
Readers Digest Association 16,000shs. 706
----------------------------------------------------------
Singapore Press Holdings Ltd. 720 11
----------------------------------------------------------
(a)Viacom International "B" 9,373 435
----------------------------------------------------------
1,152
CHEMICALS-1.8%
----------------------------------------------------------
Air Products & Chemicals 8,700 485
----------------------------------------------------------
B.F. Goodrich Co. 3,200 172
----------------------------------------------------------
E.I. DuPont de Nemours & Co. 7,000 481
----------------------------------------------------------
Monsanto Co. 6,000 541
----------------------------------------------------------
Pall Corp. 25,000 556
----------------------------------------------------------
2,235
COMMUNICATIONS AND MEDIA-.7%
----------------------------------------------------------
(a)Cox Communications Inc. 18,000 349
----------------------------------------------------------
SBC Communications, Inc. 12,000 571
----------------------------------------------------------
920
COMPUTER SOFTWARE, ELECTRONIC DATA PROCESSING AND
ELECTRONIC COMPONENTS-6.8%
----------------------------------------------------------
Adobe Systems 9,000 522
----------------------------------------------------------
AMP, Inc. 6,800 287
----------------------------------------------------------
(a)Atmel Corporation 10,500 581
----------------------------------------------------------
(a)BMC Software 7,000 541
----------------------------------------------------------
(a)Cisco Systems 4,800 243
----------------------------------------------------------
(a)Compaq Computer Corp. 5,000 227
----------------------------------------------------------
First Data Corporation 10,200 580
----------------------------------------------------------
General Motors Corporation, "E" 8,800 383
----------------------------------------------------------
Hewlett-Packard, Co. 8,200 611
----------------------------------------------------------
(a)Informix Corp. 20,000 508
----------------------------------------------------------
Intel Corp. 19,400 1,228
----------------------------------------------------------
Linear Technology Corp. 4,000 264
----------------------------------------------------------
Loral Corp. 6,800 352
----------------------------------------------------------
(a)Microsoft Corp. 8,000 723
----------------------------------------------------------
(a)Novell 28,000 558
----------------------------------------------------------
(a)Silicon Graphics Inc. 10,000 399
----------------------------------------------------------
(a)Sun Microsystems 8,000 388
----------------------------------------------------------
8,395
CONSTRUCTION-.3%
----------------------------------------------------------
Fluor Corp. 7,000 364
----------------------------------------------------------
Road Builder 1,000 3
----------------------------------------------------------
367
CONSUMER PRODUCTS AND SERVICES-6.4%
----------------------------------------------------------
Campbell Soup Co. 11,000 539
----------------------------------------------------------
Coca-Cola Co. 16,500 1,052
----------------------------------------------------------
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
Colgate-Palmolive Co. 9,000 $ 658
----------------------------------------------------------
(a)CUC International 9,000 378
----------------------------------------------------------
Gillette Co. 10,000 446
----------------------------------------------------------
Greencore Group PLC 1,650 12
----------------------------------------------------------
PepsiCo 24,000 1,095
----------------------------------------------------------
Philip Morris Companies 15,400 1,145
----------------------------------------------------------
Pioneer Hi-Bred International 8,000 336
----------------------------------------------------------
Procter & Gamble Co. 8,700 625
----------------------------------------------------------
Sara Lee Corp. 36,000 1,026
----------------------------------------------------------
Service Corp. International 20,000 633
----------------------------------------------------------
7,945
DRUGS AND HEALTH CARE-6.7%
----------------------------------------------------------
Abbott Laboratories 27,300 1,106
----------------------------------------------------------
(a)Amgen, Inc. 5,000 402
----------------------------------------------------------
(a)Boston Scientific Corp. 20,000 638
----------------------------------------------------------
(a)Centocor Inc. 20,000 286
----------------------------------------------------------
Columbia/HCA Healthcare Corp. 9,500 411
----------------------------------------------------------
Eli Lilly & Co. 10,400 816
----------------------------------------------------------
Johnson & Johnson 11,000 744
----------------------------------------------------------
Merck & Co., Inc. 21,300 1,044
----------------------------------------------------------
Pfizer 5,200 480
----------------------------------------------------------
(a)R. P. Scherer Corp. 5,000 211
----------------------------------------------------------
SmithKline Beecham PLC 27,000 1,222
----------------------------------------------------------
St. Jude Medical 11,000 551
----------------------------------------------------------
United Healthcare Corp. 10,000 414
----------------------------------------------------------
8,325
ELECTRICAL EQUIPMENT-2.1%
----------------------------------------------------------
Emerson Electric Co. 14,500 1,037
----------------------------------------------------------
General Electric Co. 17,000 958
----------------------------------------------------------
GM Hughes Electronics Corp. 10,000 395
----------------------------------------------------------
York International Corp. 3,900 175
----------------------------------------------------------
2,565
ENERGY AND RELATED SERVICES-1.8%
----------------------------------------------------------
Enron Corp. 15,800 555
----------------------------------------------------------
Mobil Corp. 5,800 557
----------------------------------------------------------
Noble Affiliates 18,000 459
----------------------------------------------------------
Schlumberger Ltd. 8,000 497
----------------------------------------------------------
Union Texas Petroleum Holdings 10,000 211
----------------------------------------------------------
2,279
ENTERTAINMENT AND RESTAURANTS-1.9%
----------------------------------------------------------
Harrah's Entertainment 7,950 224
----------------------------------------------------------
La Quinta Inns, Inc. 8,000 216
----------------------------------------------------------
McDonald's Corp. 22,000 861
----------------------------------------------------------
Promus Companies 3,975 87
----------------------------------------------------------
Tabcorp Holdings Ltd. 3,175 7
----------------------------------------------------------
Walt Disney Company 17,100 951
----------------------------------------------------------
2,346
</TABLE>
11
<PAGE> 13
(Dollars in thousands)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
FINANCIAL SERVICES-2.4%
----------------------------------------------------------
Aalberts Industries N.V. 240 $ 14
----------------------------------------------------------
Allied Irish Banks PLC 750 4
----------------------------------------------------------
American General Corp. 15,000 506
----------------------------------------------------------
American International Group, Inc. 2,600 296
----------------------------------------------------------
Boatmen's Bancshares 15,500 546
----------------------------------------------------------
CITIC Pacific Ltd. 3,000 8
----------------------------------------------------------
Dean Witter Discover 8,000 376
----------------------------------------------------------
General Re Corp. 2,000 268
----------------------------------------------------------
Hagemeyer N.V. 123 5
----------------------------------------------------------
Providian Corp. 25,500 924
----------------------------------------------------------
Sanyo Shinpan Finance Co., Ltd. 600 44
----------------------------------------------------------
Sumitomo Corporation 1,000 9
----------------------------------------------------------
3,000
MANUFACTURING AND METALS-2.4%
----------------------------------------------------------
Allied-Signal 8,700 387
----------------------------------------------------------
Armstrong World Industries 7,000 351
----------------------------------------------------------
Boeing Co. 13,800 864
----------------------------------------------------------
(a)Crown Cork & Seal Co. 10,000 501
----------------------------------------------------------
Federal Signal Corp. 14,000 303
----------------------------------------------------------
Leggett & Platt Incorporated 5,000 220
----------------------------------------------------------
WMX Technologies 16,500 468
----------------------------------------------------------
3,094
PAPER AND FOREST PRODUCTS-.5%
----------------------------------------------------------
Scott Paper Co. 13,000 644
----------------------------------------------------------
RETAILING-2.6%
----------------------------------------------------------
Home Depot 14,200 577
----------------------------------------------------------
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
May Department Stores Co. 12,000 $ 500
----------------------------------------------------------
(a)Office Depot 18,000 506
----------------------------------------------------------
Tandy Corp. 10,000 519
----------------------------------------------------------
Wal-Mart Stores 43,000 1,150
----------------------------------------------------------
3,252
TELECOMMUNICATIONS-.4%
----------------------------------------------------------
A T & T 10,000 531
----------------------------------------------------------
TRANSPORTATION-.3%
----------------------------------------------------------
(a)Wisconsin Central
Transportation Corp. 8,200 402
----------------------------------------------------------
TOTAL COMMON STOCKS-38.0%
(Cost: $39,124) 47,452
----------------------------------------------------------
CONVERTIBLE CORPORATE OBLIGATION-.5%
----------------------------------------------------------
Thermo Electron Corp., 5.00%, 2001
(Cost: $503) $ 500 681
----------------------------------------------------------
MONEY MARKET INSTRUMENT-1.4%
Yield-6.46%
Due-July 1995
----------------------------------------------------------
Enron Corp.
(Cost: $1,699) 1,700 1,699
----------------------------------------------------------
TOTAL INVESTMENTS-99.6%
(Cost: $109,466) 124,226
----------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES-.4% 455
----------------------------------------------------------
NET ASSETS-100% $124,681
----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
12
<PAGE> 14
KEMPER RETIREMENT FUND SERIES IV
PORTFOLIO OF INVESTMENTS June 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount or
Number of
Shares Value
--------- --------
<S> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS-64.1%
----------------------------------------------------------
U.S. Treasury,
zero coupon, 2003
(Cost: $99,014) $155,900 $ 97,611
----------------------------------------------------------
COMMON STOCKS
BROADCASTING AND PUBLISHING-.8%
----------------------------------------------------------
Readers Digest Association 16,000 shs. 706
----------------------------------------------------------
Singapore Press Holdings Ltd. 720 11
----------------------------------------------------------
(a)Viacom International "B" 11,374 527
----------------------------------------------------------
1,244
CHEMICALS-1.5%
----------------------------------------------------------
Air Products & Chemicals 9,300 518
----------------------------------------------------------
B.F. Goodrich Co. 3,200 172
----------------------------------------------------------
E.I. DuPont de Nemours & Co. 7,000 481
----------------------------------------------------------
Monsanto Co. 6,000 541
----------------------------------------------------------
Pall Corp. 25,000 556
----------------------------------------------------------
2,268
COMMUNICATIONS AND MEDIA-.6%
----------------------------------------------------------
(a)Cox Communications Inc. 18,000 349
----------------------------------------------------------
SBC Communications, Inc. 13,000 619
----------------------------------------------------------
968
COMPUTER SOFTWARE, ELECTRONIC DATA PROCESSING AND
ELECTRONIC COMPONENTS-5.8%
----------------------------------------------------------
Adobe Systems 9,000 522
----------------------------------------------------------
AMP, Inc. 6,800 287
----------------------------------------------------------
(a)Atmel Corporation 10,500 581
----------------------------------------------------------
(a)BMC Software 7,000 541
----------------------------------------------------------
(a)Cisco Systems 5,100 258
----------------------------------------------------------
(a)Compaq Computer Corp. 5,000 227
----------------------------------------------------------
First Data Corporation 12,000 683
----------------------------------------------------------
General Motors Corporation, "E" 9,100 396
----------------------------------------------------------
Hewlett-Packard, Co. 8,800 656
----------------------------------------------------------
(a)Informix Corp. 24,000 609
----------------------------------------------------------
Intel Corp. 21,400 1,355
----------------------------------------------------------
Linear Technology Corp. 4,000 264
----------------------------------------------------------
Loral Corp. 6,800 352
----------------------------------------------------------
(a)Microsoft Corp. 8,000 723
----------------------------------------------------------
(a)Novell 31,000 618
----------------------------------------------------------
(a)Silicon Graphics Inc. 10,000 399
----------------------------------------------------------
(a)Sun Microsystems 8,000 388
----------------------------------------------------------
8,859
CONSTRUCTION-.2%
----------------------------------------------------------
Fluor Corp. 7,000 364
----------------------------------------------------------
Road Builder 1,000 3
----------------------------------------------------------
367
CONSUMER PRODUCTS AND SERVICES-5.6%
----------------------------------------------------------
Campbell Soup Co. 12,000 588
----------------------------------------------------------
Coca-Cola Co. 18,300 1,167
----------------------------------------------------------
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
Colgate-Palmolive Co. 9,800 $ 717
----------------------------------------------------------
(a)CUC International 10,000 420
----------------------------------------------------------
Gillette Co. 10,800 482
----------------------------------------------------------
Greencore Group PLC 1,950 15
----------------------------------------------------------
PepsiCo 26,000 1,186
----------------------------------------------------------
Philip Morris Companies 18,000 1,339
----------------------------------------------------------
Pioneer Hi-Bred International 8,000 336
----------------------------------------------------------
Procter & Gamble Co. 9,200 661
----------------------------------------------------------
Sara Lee Corp. 37,000 1,055
----------------------------------------------------------
Service Corp. International 20,000 632
----------------------------------------------------------
8,598
DRUGS AND HEALTH CARE-5.6%
----------------------------------------------------------
Abbott Laboratories 32,500 1,316
----------------------------------------------------------
(a)Amgen, Inc. 5,000 402
----------------------------------------------------------
(a)Boston Scientific Corp. 22,000 701
----------------------------------------------------------
(a)Centocor Inc. 20,000 286
----------------------------------------------------------
Columbia/HCA Healthcare Corp. 10,000 433
----------------------------------------------------------
Eli Lilly & Co. 10,200 801
----------------------------------------------------------
Johnson & Johnson 11,700 791
----------------------------------------------------------
Merck & Co., Inc. 19,900 975
----------------------------------------------------------
Pfizer 5,500 508
----------------------------------------------------------
(a)R. P. Scherer Corp. 5,000 211
----------------------------------------------------------
SmithKline Beecham PLC 25,000 1,131
----------------------------------------------------------
St. Jude Medical 11,000 551
----------------------------------------------------------
United Healthcare Corp. 10,000 414
----------------------------------------------------------
8,520
ELECTRICAL EQUIPMENT-1.7%
----------------------------------------------------------
Emerson Electric Co. 15,000 1,073
----------------------------------------------------------
General Electric Co. 18,000 1,015
----------------------------------------------------------
GM Hughes Electronics Corp. 10,000 395
----------------------------------------------------------
York International Corp. 3,900 175
----------------------------------------------------------
2,658
ENERGY AND RELATED SERVICES-1.6%
----------------------------------------------------------
Enron Corp. 16,700 587
----------------------------------------------------------
Mobil Corp. 6,200 595
----------------------------------------------------------
Noble Affiliates 18,800 479
----------------------------------------------------------
Schlumberger Ltd. 8,000 497
----------------------------------------------------------
Union Texas Petroleum Holdings 10,000 211
----------------------------------------------------------
2,369
ENTERTAINMENT AND RESTAURANTS-1.6%
----------------------------------------------------------
Harrah's Entertainment 7,550 212
----------------------------------------------------------
La Quinta Inns, Inc. 8,000 216
----------------------------------------------------------
McDonald's Corp. 23,000 900
----------------------------------------------------------
Promus Companies 3,775 83
----------------------------------------------------------
Tabcorp Holdings Ltd. 3,175 7
----------------------------------------------------------
Walt Disney Company 17,000 946
----------------------------------------------------------
2,364
</TABLE>
13
<PAGE> 15
(Dollars in thousands)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
FINANCIAL SERVICES-2.2%
----------------------------------------------------------
Aalberts Industries N.V. 240 $ 14
----------------------------------------------------------
Allied Irish Banks PLC 800 4
----------------------------------------------------------
American General Corp. 18,000 608
----------------------------------------------------------
American International Group, Inc. 2,600 296
----------------------------------------------------------
Boatmen's Bancshares 16,000 564
----------------------------------------------------------
CITIC Pacific Ltd. 3,000 8
----------------------------------------------------------
Dean Witter Discover 10,000 470
----------------------------------------------------------
General Re Corp. 2,500 335
----------------------------------------------------------
Hagemeyer N.V. 146 7
----------------------------------------------------------
Providian Corp. 25,500 924
----------------------------------------------------------
Sanyo Shinpan Finance Co., Ltd. 600 44
----------------------------------------------------------
Sumitomo Corporation 1,000 9
----------------------------------------------------------
3,283
MANUFACTURING AND METALS-2.1%
----------------------------------------------------------
Allied-Signal 8,700 387
----------------------------------------------------------
Armstrong World Industries 7,000 351
----------------------------------------------------------
Boeing Co. 14,500 908
----------------------------------------------------------
(a)Crown Cork & Seal Co. 10,000 501
----------------------------------------------------------
Federal Signal Corp. 19,000 411
----------------------------------------------------------
Leggett & Platt Incorporated 5,000 220
----------------------------------------------------------
WMX Technologies 17,000 482
----------------------------------------------------------
3,260
PAPER AND FOREST PRODUCTS-.4%
----------------------------------------------------------
Scott Paper Co. 13,000 643
----------------------------------------------------------
RETAILING-2.4%
----------------------------------------------------------
Home Depot 16,000 650
----------------------------------------------------------
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
May Department Stores Co. 14,000 $ 583
----------------------------------------------------------
(a)Office Depot 17,000 478
----------------------------------------------------------
Tandy Corp. 14,000 726
----------------------------------------------------------
Wal-Mart Stores 43,000 1,150
----------------------------------------------------------
3,587
TELECOMMUNICATIONS-.4%
----------------------------------------------------------
A T & T 11,000 584
----------------------------------------------------------
TRANSPORTATION-.3%
----------------------------------------------------------
(a)Wisconsin Central Transportation
Corp. 8,000 392
----------------------------------------------------------
TOTAL COMMON STOCKS-32.8%
(Cost: $41,563) 49,964
----------------------------------------------------------
CONVERTIBLE CORPORATE OBLIGATION-.5%
----------------------------------------------------------
Thermo Electron Corp., 5.00%, 2001
(Cost: $503) $ 500 681
----------------------------------------------------------
MONEY MARKET INSTRUMENT-1.4%
Yield-6.01%
Due-July 1995
----------------------------------------------------------
Sheffield Receivables Corp.
(Cost: $2,099) 2,100 2,099
----------------------------------------------------------
TOTAL INVESTMENTS-98.8%
(Cost: $143,179) 150,355
----------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES-1.2% 1,824
----------------------------------------------------------
NET ASSETS-100% $152,179
----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
14
<PAGE> 16
KEMPER RETIREMENT FUND SERIES V
PORTFOLIO OF INVESTMENTS June 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount or
Number of
Shares Value
--------- --------
<S> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS-57.2%
----------------------------------------------------------
U.S. Treasury, zero coupon, 2004
(Cost: $69,282) $139,300 $ 77,241
----------------------------------------------------------
COMMON STOCKS
BROADCASTING AND PUBLISHING-1.0%
----------------------------------------------------------
Readers Digest Association 17,100 shs. 755
----------------------------------------------------------
Singapore Press Holdings Ltd. 588 9
----------------------------------------------------------
(a)Viacom International "B" 11,798 547
----------------------------------------------------------
1,311
CHEMICALS-1.9%
----------------------------------------------------------
Air Products & Chemicals 12,700 708
----------------------------------------------------------
B.F. Goodrich Co. 3,200 172
----------------------------------------------------------
E.I. DuPont de Nemours & Co. 7,000 481
----------------------------------------------------------
Monsanto Co. 7,000 631
----------------------------------------------------------
Pall Corp. 26,000 578
----------------------------------------------------------
2,570
COMMUNICATIONS AND MEDIA-.6%
----------------------------------------------------------
(a)Cox Communications Inc. 18,000 349
----------------------------------------------------------
SBC Communications, Inc. 10,000 476
----------------------------------------------------------
825
COMPUTER SOFTWARE, ELECTRONIC DATA PROCESSING AND
ELECTRONIC COMPONENTS-7.0%
----------------------------------------------------------
Adobe Systems 10,500 609
----------------------------------------------------------
AMP, Inc. 9,200 389
----------------------------------------------------------
(a)Atmel Corporation 10,500 581
----------------------------------------------------------
(a)BMC Software 7,000 541
----------------------------------------------------------
(a)Cisco Systems 4,500 228
----------------------------------------------------------
(a)Compaq Computer Corp. 5,000 227
----------------------------------------------------------
First Data Corporation 12,000 683
----------------------------------------------------------
General Motors Corporation, "E" 11,700 509
----------------------------------------------------------
Hewlett-Packard, Co. 9,200 685
----------------------------------------------------------
(a)Informix Corp. 28,000 711
----------------------------------------------------------
Intel Corp. 18,400 1,165
----------------------------------------------------------
Linear Technology Corp. 3,000 198
----------------------------------------------------------
Loral Corp. 11,800 611
----------------------------------------------------------
(a)Microsoft Corp. 9,500 859
----------------------------------------------------------
(a)Novell 34,000 678
----------------------------------------------------------
(a)Silicon Graphics Inc. 10,000 399
----------------------------------------------------------
(a)Sun Microsystems 8,000 388
----------------------------------------------------------
9,461
CONSTRUCTION-.3%
----------------------------------------------------------
Fluor Corp. 7,000 364
----------------------------------------------------------
Road Builder 1,000 3
----------------------------------------------------------
367
CONSUMER PRODUCTS AND SERVICES-6.6%
----------------------------------------------------------
Campbell Soup Co. 14,000 686
----------------------------------------------------------
Coca-Cola Co. 13,500 861
----------------------------------------------------------
Colgate-Palmolive Co. 12,800 936
----------------------------------------------------------
(a)CUC International 12,500 525
----------------------------------------------------------
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
Gillette Co. 10,000 $ 446
----------------------------------------------------------
Greencore Group PLC 1,960 15
----------------------------------------------------------
PepsiCo 31,000 1,414
----------------------------------------------------------
Philip Morris Companies 20,600 1,532
----------------------------------------------------------
Pioneer Hi-Bred International 8,000 336
----------------------------------------------------------
Procter & Gamble Co. 10,200 733
----------------------------------------------------------
Sara Lee Corp. 34,500 983
----------------------------------------------------------
Service Corp. International 16,000 506
----------------------------------------------------------
8,973
DRUGS AND HEALTH CARE-6.7%
----------------------------------------------------------
Abbott Laboratories 31,500 1,276
----------------------------------------------------------
(a)Amgen, Inc. 5,000 402
----------------------------------------------------------
(a)Boston Scientific Corp. 22,000 701
----------------------------------------------------------
(a)Centocor Inc. 20,000 286
----------------------------------------------------------
Columbia/HCA Healthcare Corp. 12,600 545
----------------------------------------------------------
Eli Lilly & Co. 10,400 816
----------------------------------------------------------
Johnson & Johnson 12,500 845
----------------------------------------------------------
Merck & Co., Inc. 27,400 1,343
----------------------------------------------------------
Pfizer 6,000 554
----------------------------------------------------------
(a)R. P. Scherer Corp. 4,000 169
----------------------------------------------------------
SmithKline Beecham PLC 24,000 1,086
----------------------------------------------------------
St. Jude Medical 11,000 551
----------------------------------------------------------
United Healthcare Corp. 10,000 414
----------------------------------------------------------
8,988
ELECTRICAL EQUIPMENT-1.9%
----------------------------------------------------------
Emerson Electric Co. 13,200 944
----------------------------------------------------------
General Electric Co. 19,800 1,116
----------------------------------------------------------
GM Hughes Electronics Corp. 10,000 395
----------------------------------------------------------
York International Corp. 3,900 175
----------------------------------------------------------
2,630
ENERGY AND RELATED SERVICES-1.7%
----------------------------------------------------------
Enron Corp. 18,900 664
----------------------------------------------------------
Mobil Corp. 6,000 576
----------------------------------------------------------
Noble Affiliates 14,700 375
----------------------------------------------------------
Schlumberger Ltd. 8,000 497
----------------------------------------------------------
Union Texas Petroleum Holdings 10,000 211
----------------------------------------------------------
2,323
ENTERTAINMENT AND RESTAURANTS-1.9%
----------------------------------------------------------
Harrah's Entertainment 6,000 169
----------------------------------------------------------
La Quinta Inns, Inc. 8,000 216
----------------------------------------------------------
McDonald's Corp. 26,500 1,037
----------------------------------------------------------
Promus Companies 3,000 66
----------------------------------------------------------
Tabcorp Holdings Ltd. 2,958 6
----------------------------------------------------------
Walt Disney Company 18,200 1,012
----------------------------------------------------------
2,506
FINANCIAL SERVICES-2.5%
----------------------------------------------------------
Aalberts Industries N.V. 245 14
----------------------------------------------------------
Allied Irish Banks PLC 740 3
----------------------------------------------------------
American General Corp. 21,000 709
----------------------------------------------------------
</TABLE>
15
<PAGE> 17
(Dollars in thousands)
<TABLE>
<CAPTION>
Number of
Shares Value
--------- --------
<S> <C> <C>
----------------------------------------------------------
American International Group, Inc. 2,600 $ 296
----------------------------------------------------------
Boatmen's Bancshares 17,000 599
----------------------------------------------------------
CITIC Pacific Ltd. 3,000 8
----------------------------------------------------------
Dean Witter Discover 10,000 470
----------------------------------------------------------
General Re Corp. 2,500 335
----------------------------------------------------------
Hagemeyer N.V. 119 5
----------------------------------------------------------
Providian Corp. 24,000 870
----------------------------------------------------------
Sanyo Shinpan Finance Co., Ltd. 400 29
----------------------------------------------------------
Sumitomo Corporation 1,000 9
----------------------------------------------------------
3,347
MANUFACTURING AND METALS-2.4%
----------------------------------------------------------
Allied-Signal 8,700 387
----------------------------------------------------------
Armstrong World Industries 7,000 351
----------------------------------------------------------
Boeing Co. 15,500 971
----------------------------------------------------------
(a)Crown Cork & Seal Co. 10,000 501
----------------------------------------------------------
Federal Signal Corp. 13,000 281
----------------------------------------------------------
Leggett & Platt Incorporated 5,000 220
----------------------------------------------------------
WMX Technologies 17,200 488
----------------------------------------------------------
3,199
PAPER AND FOREST PRODUCTS-.5%
----------------------------------------------------------
Scott Paper Co. 13,000 643
----------------------------------------------------------
RETAILING-3.1%
----------------------------------------------------------
Home Depot 17,700 719
----------------------------------------------------------
May Department Stores Co. 17,000 708
----------------------------------------------------------
(a)Office Depot 24,000 675
----------------------------------------------------------
Tandy Corp. 14,000 726
----------------------------------------------------------
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
Wal-Mart Stores 50,000 $ 1,337
----------------------------------------------------------
4,165
TELECOMMUNICATIONS-.4%
----------------------------------------------------------
A T & T 10,800 574
----------------------------------------------------------
TRANSPORTATION-.1%
----------------------------------------------------------
(a)Wisconsin Central
Transportation Corp. 4,000 196
----------------------------------------------------------
TOTAL COMMON STOCKS-38.6%
(Cost: $44,390) 52,078
----------------------------------------------------------
CONVERTIBLE CORPORATE OBLIGATIONS-.3%
----------------------------------------------------------
Thermo Electron Corp., 5.00%, 2001
(Cost: $302) $ 300 409
----------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield-6.00% to 6.36%
Due-July 1995
----------------------------------------------------------
ConAgra Inc. 1,800 1,799
----------------------------------------------------------
Sheffield Receivables Corp. 1,000 999
----------------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS-2.1%
(Cost: $2,798) 2,798
----------------------------------------------------------
TOTAL INVESTMENTS-98.2%
(Cost: $116,772) 132,526
----------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES-1.8% 2,411
----------------------------------------------------------
NET ASSETS-100% $134,937
==========================================================
</TABLE>
See accompanying Notes to Portfolios of Investments.
16
<PAGE> 18
NOTES TO PORTFOLIOS OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments for federal income tax purposes at June 30,
1995, the unrealized appreciation and depreciation on investments is as follows:
<TABLE>
<CAPTION>
Series I Series II Series III Series IV Series V
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost of investments for federal income tax purposes $89,887,000 150,713,000 109,466,000 143,179,000 116,772,000
=================================================================================================================================
Gross unrealized appreciation 15,219,000 21,640,000 15,024,000 8,853,000 16,035,000
---------------------------------------------------------------------------------------------------------------------------------
Gross unrealized depreciation 266,000 304,000 264,000 1,677,000 281,000
---------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation 14,953,000 21,336,000 14,760,000 7,176,000 15,754,000
=================================================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE> 19
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER TARGET EQUITY FUND--
KEMPER RETIREMENT FUND SERIES I, II, III, IV AND V
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Kemper Target Equity Fund--Kemper Retirement
Fund Series I, II, III, IV and V as of June 30, 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 for Series I, II, III and IV and for the year
then ended and the period from November 15, 1993 (initial public offering) to
June 30, 1994 for Series V and the financial highlights for each of the fiscal
periods since 1991. These financial statements and financial highlights are the
responsibility of the Funds' 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 June
30, 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
Target Equity Fund--Kemper Retirement Fund Series I, II, III, IV and V at June
30, 1995, the results of their operations and the changes in their net assets
for the periods referred to above, and the financial highlights for each of the
fiscal periods since 1991, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
August 11, 1995
18
<PAGE> 20
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1995
(in thousands)
<TABLE>
<CAPTION>
SERIES
--------------------------------------------
ASSETS I II III IV V
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments, at value
(Cost: $89,887,
$150,713, $109,466,
$143,179 and
$116,772,
respectively) $104,840 172,049 124,226 150,355 132,526
------------------------------------------------------------------
Cash 34 20 95 576 71
------------------------------------------------------------------
Receivable for:
Investments sold 2,604 2,600 1,639 2,451 3,460
------------------------------------------------------------------
Dividends and
interest 92 107 97 90 93
------------------------------------------------------------------
Total assets 107,570 174,776 126,057 153,472 136,150
------------------------------------------------------------------
LIABILITIES AND NET ASSETS
------------------------------------------------------------------
Payable for:
Fund shares
redeemed 41 130 309 182 125
------------------------------------------------------------------
Investments
purchased 945 1,147 942 950 946
------------------------------------------------------------------
Management fee 44 72 52 64 57
------------------------------------------------------------------
Administrative
services fee 22 37 26 33 28
------------------------------------------------------------------
Custodian and
transfer agent fees
and related
expenses 18 36 31 52 51
------------------------------------------------------------------
Other 18 17 16 12 6
------------------------------------------------------------------
Total liabilities 1,088 1,439 1,376 1,293 1,213
------------------------------------------------------------------
Net assets $106,482 173,337 124,681 152,179 134,937
==================================================================
ANALYSIS OF NET ASSETS
------------------------------------------------------------------
Excess of amounts
received from
issuance of shares
over amounts paid on
redemptions of shares
on account of capital $ 87,439 145,275 105,469 146,039 121,070
------------------------------------------------------------------
Undistributed net
realized gain (loss)
on investments 2,061 2,954 1,967 (3,840) (4,202)
------------------------------------------------------------------
Net unrealized
appreciation on
investments 14,953 21,336 14,760 7,176 15,754
------------------------------------------------------------------
Undistributed net
investment income 2,029 3,772 2,485 2,804 2,315
------------------------------------------------------------------
Net assets applicable
to shares
outstanding $106,482 173,337 124,681 152,179 134,937
==================================================================
THE PRICING OF SHARES
------------------------------------------------------------------
Shares outstanding,
no par value 9,518 13,394 11,599 15,106 14,163
------------------------------------------------------------------
Net asset value and
redemption price per
share (net assets /
shares outstanding) $11.19 12.94 10.75 10.07 9.53
==================================================================
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF OPERATIONS
Year ended June 30, 1995
(in thousands)
<TABLE>
<CAPTION>
SERIES
---------------------------------------
INVESTMENT INCOME I II III IV V
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividends $ 757 890 708 751 603
------------------------------------------------------------------
Interest 4,318 8,423 5,497 6,529 4,613
------------------------------------------------------------------
Total investment
income 5,075 9,313 6,205 7,280 5,216
------------------------------------------------------------------
EXPENSES
------------------------------------------------------------------
Management fee 514 848 604 731 514
------------------------------------------------------------------
Administrative services
fee 249 415 297 362 244
------------------------------------------------------------------
Custodian and transfer
agent fees and related
expenses 181 274 237 249 262
------------------------------------------------------------------
Professional fees 21 34 24 29 15
------------------------------------------------------------------
Reports to shareholders 18 29 21 25 46
------------------------------------------------------------------
Trustees' fees and other 19 20 19 19 17
------------------------------------------------------------------
Total expenses 1,002 1,620 1,202 1,415 1,098
------------------------------------------------------------------
Net investment income 4,073 7,693 5,003 5,865 4,118
------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
------------------------------------------------------------------
Net realized gain (loss)
on sales of investments 2,405 3,240 1,948 (1,684) (3,553)
------------------------------------------------------------------
Change in net unrealized
appreciation on
investments 9,708 14,922 13,385 21,482 20,561
------------------------------------------------------------------
Net gain on investments 12,113 18,162 15,333 19,798 17,008
------------------------------------------------------------------
Net increase in net assets
resulting from operations $16,186 25,855 20,336 25,663 21,126
==================================================================
</TABLE>
19
<PAGE> 21
STATEMENTS OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
SERIES I SERIES II
-------------------- --------------------
YEAR ENDED YEAR ENDED
-------------------- --------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
OPERATIONS 1995 1994 1995 1994
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income $ 4,073 3,938 7,693 7,701
-----------------------------------------------------------------------------------------------------------------------
Net realized gain 2,405 8,403 3,240 10,642
-----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 9,708 (15,948) 14,922 (25,035)
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 16,186 (3,607) 25,855 (6,692)
-----------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
-----------------------------------------------------------------------------------------------------------------------
Distribution from net investment income (3,759) (3,713) (7,527) (8,051)
-----------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments (6,595) (10,538) (8,450) (8,191)
-----------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders (10,354) (14,251) (15,977) (16,242)
-----------------------------------------------------------------------------------------------------------------------
Net decrease from capital share transactions (3,114) (718) (9,596) (6,805)
-----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,718 (18,576) 282 (29,739)
-----------------------------------------------------------------------------------------------------------------------
NET ASSETS
-----------------------------------------------------------------------------------------------------------------------
Beginning of year 103,764 122,340 173,055 202,794
-----------------------------------------------------------------------------------------------------------------------
End of year $106,482 103,764 173,337 173,055
-----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income at end of year $ 2,029 1,715 3,772 3,604
=======================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
SERIES III SERIES IV
-------------------- --------------------
YEAR ENDED YEAR ENDED
-------------------- --------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
OPERATIONS 1995 1994 1995 1994
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income $ 5,003 5,046 5,865 5,002
-----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 1,948 5,988 (1,684) (1,751)
-----------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 13,385 (16,904) 21,482 (16,596)
-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 20,336 (5,870) 25,663 (13,345)
-----------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
-----------------------------------------------------------------------------------------------------------------------
Distribution from net investment income (5,019) (4,782) (5,860) (2,602)
-----------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments (4,317) -- -- --
-----------------------------------------------------------------------------------------------------------------------
Total dividends to shareholders (9,336) (4,782) (5,860) (2,602)
-----------------------------------------------------------------------------------------------------------------------
Net (decrease) increase from capital share transactions (9,451) (9,848) (14,279) 100,720
-----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 1,549 (20,500) 5,524 84,773
-----------------------------------------------------------------------------------------------------------------------
NET ASSETS
-----------------------------------------------------------------------------------------------------------------------
Beginning of year 123,132 143,632 146,655 61,882
-----------------------------------------------------------------------------------------------------------------------
End of year $124,681 123,132 152,179 146,655
-----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income at end of year $ 2,485 2,499 2,804 2,797
=======================================================================================================================
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
SERIES V
-------------------------------
YEAR ENDED NOVEMBER 15, 1993
JUNE 30, TO
OPERATIONS 1995 JUNE 30, 1994
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 4,118 727
------------------------------------------------------------------------------------------------------------------
Net realized loss (3,553) (646)
------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 20,561 (4,807)
------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 21,126 (4,726)
------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
------------------------------------------------------------------------------------------------------------------
Distribution from net investment income (2,533) --
------------------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 52,069 68,901
------------------------------------------------------------------------------------------------------------------
Total increase in net assets 70,662 64,175
------------------------------------------------------------------------------------------------------------------
NET ASSETS
------------------------------------------------------------------------------------------------------------------
Beginning of period 64,275 100
------------------------------------------------------------------------------------------------------------------
End of period $134,937 64,275
------------------------------------------------------------------------------------------------------------------
Undistributed net investment income at end of period $ 2,315 727
==================================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUNDS
Kemper Retirement Fund Series I, II, III, IV and V (the Funds) are series of
Kemper Target Equity Fund (the Trust), an open-end, management investment
company, organized as a business trust under the laws of Massachusetts. The
objectives of the Funds are to provide a guaranteed return of investment on the
Maturity Date (November 15, 1999 for Series I, August 15, 2000 for Series II,
February 15, 2002 for Series III, February 15, 2003 for Series IV and November
15, 2004 for Series V) to investors who reinvest all dividends and hold their
shares to the Maturity Date, and to provide long-term growth of capital. The
assurance that investors who reinvest all dividends and hold their shares until
the Maturity Date will receive at least their original investment on the
Maturity Date is provided by the principal amount of the zero coupon U.S.
Treasury obligations in the Funds' portfolios, as well as by a guarantee from
Kemper Financial Services, Inc. (KFS), the Funds' investment manager.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at value. Portfolio securities that are traded on a
domestic securities exchange or securities listed on the NASDAQ National Market
are valued at the last sale price on the exchange or market where primarily
traded or listed or, if there is no recent sale, at the last current bid
quotation. Portfolio securities that are primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on their respective exchanges where primarily traded. Securities not
so traded or listed are valued at the last current bid quotation if market
quotations are available. Fixed income securities are valued by using market
quotations, or independent pricing services that use prices provided by market
makers or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics. Options are valued at
the last sale price unless the bid price is higher or the asked price is lower,
in which event such bid or asked price is used. Financial futures and options
thereon are valued at the settlement price established each day by the board of
trade or exchange on which they are traded. Forward foreign currency contracts
are valued at the forward rates prevailing on the day of valuation. Other
securities and assets are valued at fair value as determined in good faith by
the Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Dividend income is recorded on the ex-dividend date,
and interest income is recorded on the accrual basis. Interest income includes
premium and discount amortization on money market instruments; it also includes
original issue and market discount amortization on long-term fixed income
securities. Realized gains and losses from investment transactions are reported
on an identified cost basis. Gains and losses on premiums from expired options
are recognized on date of expiration. Realized and unrealized gains and losses
on financial futures, options and forward foreign currency contracts are
included in net realized and unrealized gain (loss) on investments, as
appropriate.
EXPENSES
Expenses arising in connection with a series of the Trust are allocated to that
series. Other Trust expenses are allocated among the series in proportion to
their relative net assets.
FUND SHARE VALUATION
Fund shares were sold during limited offering periods which ended during the
years 1990 through 1994, and are redeemed on a continuous basis. Fund shares
were sold and are redeemed at net asset value (plus a commission on most sales).
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 by dividing the total value of each Fund's investments and other
assets, less liabilities, by the respective number of shares outstanding.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS
Each 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 June 30, 1995, amounting to approximately
$3,828,000 in Kemper Retirement Fund Series IV and $4,195,000 in Kemper
Retirement Fund Series V, are available to offset future taxable gains in the
respective Funds. If not applied, the loss carryovers expire during the period
2001 through 2004.
22
<PAGE> 24
Dividends payable to its shareholders are recorded by each Fund on the
ex-dividend date.
Distributions are determined in accordance with income tax principles which may
treat certain transactions differently from generally accepted accounting
principles.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Trust has a management agreement with KFS and the Funds pay a management fee
at an annual rate of .50% of average daily net assets. The Funds incurred a
management fee of $3,211,000 for the year ended June 30, 1995.
UNDERWRITING AGREEMENT
The Trust has an underwriting agreement with Kemper Distributors, Inc. (KDI).
Before February 1, 1995, KFS was the Trust's principal underwriter. As principal
underwriter for the Trust, KDI (as successor to KFS), retained commissions of
$300,000 for the year ended June 30, 1995, after allowing $2,993,000 as
commissions to firms, of which $434,000 was paid to firms affiliated with KDI.
ADMINISTRATIVE SERVICES AGREEMENT
The Trust has an administrative services agreement with KDI. Before February 1,
1995, KFS was the Trust's administrator. For providing information and
administrative services to shareholders, the Funds pay KDI a fee at an annual
rate of up to .25% of average daily net assets. KDI in turn has various
agreements with financial services firms that provide these services and pays
these firms based on assets of Fund accounts the firms service. For the year
ended June 30, 1995, the Funds incurred an administrative services fee of
$1,567,000, all of which KDI (as successor to KFS) paid to firms, including
$239,000 that was paid to firms affiliated with KDI.
CUSTODIAN AND TRANSFER AGENT AGREEMENT
The Trust has a custodian agreement and a transfer agent agreement with
Investors Fiduciary Trust Company (IFTC), which was 50% owned by KFS until
January 31, 1995, when KFS completed the sale of IFTC to a third party. For the
year ended June 30, 1995, the Funds incurred custodian and transfer agent fees
of $845,000 (excluding related expenses). Pursuant to a services agreement with
IFTC, Kemper Service Company (KSvC), an affiliate of KFS, is the shareholder
service agent of the Trust. For the year ended June 30, 1995, IFTC remitted
shareholder service fees of $698,000 to KSvC with respect to the Funds.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Trust are also officers or directors of KFS.
During the year ended June 30, 1995, the Trust made no payments to its officers
and the Funds incurred trustees' fees of $75,000 to independent trustees.
4. INVESTMENT TRANSACTIONS
For the year ended June 30, 1995, investment transactions (excluding short-term
instruments) are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Series Series Series
Series I II III IV Series V
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases $ 63,220 78,175 61,723 65,282 127,631
-------------------------------------------------------------------
Proceeds from
sales 66,594 88,301 66,816 71,164 69,072
-------------------------------------------------------------------
</TABLE>
5. CAPITAL SHARE TRANSACTIONS
The following tables summarize the activity in capital shares of the Funds (in
thousands):
<TABLE>
<CAPTION>
Year ended June 30,
---------------------------------------------------------
1995 1994
----------------------- -----------------------
SERIES I Shares Amount Shares Amount
------ -------- ------ --------
<S> <C> <C> <C> <C>
Shares issued in reinvestment of dividends 1,053 $ 10,275 1,217 $ 14,015
---------------------------------------------------------------------------------------------------------------------------------
Less shares redeemed 1,260 13,389 1,228 14,733
---------------------------------------------------------------------------------------------------------------------------------
Net decrease from capital
share transactions (207) $ (3,114) (11) $ (718)
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year ended June 30,
---------------------------------------------------------
1995 1994
----------------------- -----------------------
SERIES II Shares Amount Shares Amount
------ -------- ------ --------
<S> <C> <C> <C> <C>
Shares issued in reinvestment of dividends 1,415 $ 15,925 1,216 $ 16,187
---------------------------------------------------------------------------------------------------------------------------------
Less shares redeemed 2,086 25,521 1,691 22,992
---------------------------------------------------------------------------------------------------------------------------------
Net decrease from capital
share transactions (671) $ (9,596) (475) $ (6,805)
=================================================================================================================================
</TABLE>
23
<PAGE> 25
<TABLE>
<CAPTION>
Year ended June 30,
----------------------------------------------------------
1995 1994
------------------------ ------------------------
SERIES III Shares Amount Shares Amount
------ -------- ------ --------
<S> <C> <C> <C> <C>
Shares issued in reinvestment of dividends 1,037 $ 9,388 447 $ 4,798
---------------------------------------------------------------------------------------------------------------------------------
Less shares redeemed 1,919 18,839 1,368 14,646
---------------------------------------------------------------------------------------------------------------------------------
Net decrease from capital share transactions (882) $ (9,451) (921) $(9,848)
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year ended June 30,
----------------------------------------------------------
1995 1994
------------------------ ------------------------
SERIES IV Shares Amount Shares Amount
------ -------- ------ --------
<S> <C> <C> <C> <C>
Shares sold -- $ -- 11,183 $110,536
---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 680 5,848 258 2,508
---------------------------------------------------------------------------------------------------------------------------------
680 5,848 11,441 113,044
---------------------------------------------------------------------------------------------------------------------------------
Less shares redeemed 2,191 20,127 1,293 12,324
---------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase from capital
share transactions (1,511) $(14,279) 10,148 $100,720
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year ended June 30,
------------------------ November 15, 1993 to
1995 June 30, 1994
------------------------ ------------------------
SERIES V Shares Amount Shares Amount
------ -------- ------ --------
<S> <C> <C> <C> <C>
Shares sold 7,150 $ 59,864 8,027 $ 70,165
---------------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 299 2,422 -- --
---------------------------------------------------------------------------------------------------------------------------------
7,449 62,286 8,027 70,165
---------------------------------------------------------------------------------------------------------------------------------
Less shares redeemed 1,175 10,217 149 1,264
---------------------------------------------------------------------------------------------------------------------------------
Net increase from capital
share transactions 6,274 $52,069 7,878 $68,901
=================================================================================================================================
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------------------------
SERIES I 1995 1994 1993 1992 1991
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $10.67 12.57 12.01 11.05 10.16
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .45 .42 .41 .42 .41
---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.20 (.78) 1.59 1.53 .77
---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.65 (.36) 2.00 1.95 1.18
---------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .41 .40 .42 .45 .26
---------------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments .72 1.14 1.02 .54 .03
---------------------------------------------------------------------------------------------------------------------------------
Total dividends 1.13 1.54 1.44 .99 .29
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $11.19 10.67 12.57 12.01 11.05
=================================================================================================================================
TOTAL RETURN (%): 17.03 (3.76) 17.47 17.58 11.97
=================================================================================================================================
RATIOS TO AVERAGE NET ASSETS (%):
Expenses .97 .91 .92 .92 1.09
---------------------------------------------------------------------------------------------------------------------------------
Net investment income 3.96 3.32 3.19 3.37 4.21
=================================================================================================================================
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $106,482 103,764 122,340 116,041 108,782
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 63 59 61 57 106
=================================================================================================================================
</TABLE>
24
<PAGE> 26
<TABLE>
<CAPTION>
Year ended June 30, September 11,
--------------------------------------------------- 1990 to
SERIES II 1995 1994 1993 1992 June 30, 1991
-------- -------- ------- ------- --------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $12.30 13.95 12.40 10.75 9.00
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .60 .56 .53 .38 .20
------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.25 (1.04) 1.67 1.59 1.63
------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.85 (.48) 2.20 1.97 1.83
------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .57 .58 .49 .25 .08
------------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments .64 .59 .16 .07 --
------------------------------------------------------------------------------------------------------------------------------
Total dividends 1.21 1.17 .65 .32 .08
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.94 12.30 13.95 12.40 10.75
==============================================================================================================================
TOTAL RETURN (%): 16.52 (4.07) 18.18 18.35 20.45
==============================================================================================================================
RATIOS TO AVERAGE NET ASSETS (%):
Expenses .96 .90 .95 .93 1.16
------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.54 3.91 3.83 3.98 3.75
==============================================================================================================================
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $173,337 173,055 202,794 187,438 78,638
------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 47 44 51 51 64
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Year ended June 30,
------------------------------------- March 10, 1992
SERIES III 1995 1994 1993 to June 30, 1992
-------- -------- ------- ----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $9.87 10.72 9.10 9.00
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .44 .40 .29 .12
------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.24 (.88) 1.51 (.02)
------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.68 (.48) 1.80 .10
------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .43 .37 .18 --
------------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments .37 -- -- --
------------------------------------------------------------------------------------------------------------------------------
Total dividends .80 .37 .18 --
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.75 9.87 10.72 9.10
==============================================================================================================================
TOTAL RETURN (%): 18.37 (4.76) 19.96 1.11
==============================================================================================================================
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.00 .95 .95 .97
------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.14 3.59 3.46 3.95
==============================================================================================================================
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $124,681 123,132 143,632 62,536
------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 52 47 59 12
==============================================================================================================================
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
SERIES IV
Year ended June 30, January 15, 1993
---------------------------- to
PER SHARE OPERATING PERFORMANCE: 1995 1994 June 30, 1993
-------- ---------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $8.83 9.57 9.00
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .39 .26 .06
--------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.22 (.85) .51
--------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.61 (.59) .57
--------------------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income .37 .15 --
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.07 8.83 9.57
================================================================================================================================
TOTAL RETURN (%): 18.95 (6.31) 6.33
================================================================================================================================
RATIOS TO AVERAGE NET ASSETS (%):
Expenses .97 .97 1.21
--------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.01 3.43 2.87
================================================================================================================================
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $152,179 146,655 61,882
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 45 51 31
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SERIES V
Year ended November 15, 1993
June 30, to
PER SHARE OPERATING PERFORMANCE: 1995 June 30, 1994
---------- -----------------
<S> <C> <C>
Net asset value, beginning of period $8.15 9.00
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .28 .15
--------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.31 (1.00)
--------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.59 (.85)
--------------------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income .21 --
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.53 8.15
================================================================================================================================
TOTAL RETURN (%): 19.97 (9.44)
================================================================================================================================
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.07 1.29
--------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.01 3.13
================================================================================================================================
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $134,937 64,275
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 73 35
================================================================================================================================
</TABLE>
NOTE FOR ALL SERIES: Ratios have been determined on an annualized basis. Total
return is not annualized and does not reflect the effect of any sales charges.
26
<PAGE> 28
(LOGO)
KEMPER FINANCIAL SERVICES, INC.
120 South LaSalle Street
Chicago, IL 60603
KEMPER TARGET EQUITY FUND--
KEMPER RETIREMENT FUND SERIES I, II, III, IV AND V
<TABLE>
<S> <C>
Trustees Officers
STEPHEN B. TIMBERS JOHN E. PETERS
President Vice President
and Trustee
TRACY M. CHESTER
ARTHUR R. GOTTSCHALK Vice President
Trustee
C. BETH COTNER
FREDERICK T. KELSEY Vice President
Trustee
DENNIS H. FERRO
DAVID B. MATHIS Vice President
Trustee
PHILIP J. COLLORA
JOHN B. TINGLEFF Vice President and
Trustee Secretary
JOHN G. WEITHERS CHARLES F. CUSTER
Trustee Vice President and
Assistant Secretary
JEROME L. DUFFY
Treasurer
ELIZABETH C. WERTH
Assistant Secretary
-----------------------------------------------------------
Legal Counsel Custodian and Transfer Agent
VEDDER, PRICE, KAUFMAN INVESTORS FIDUCIARY
& KAMMHOLZ TRUST COMPANY
222 North LaSalle Street 127 West 10th Street
Chicago, IL 60601 Kansas City, MO 64105
Shareholder Service Agent Independent Auditors
KEMPER SERVICE COMPANY ERNST & YOUNG LLP
P.O. Box 419557 233 South Wacker Drive
Kansas City, MO 64141 Chicago, IL 60606
800-621-1048
</TABLE>
Investment Manager
KEMPER FINANCIAL SERVICES, INC.
Principal Underwriter
KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street
Chicago, IL 60603
(LOGO)
Printed on recycled paper.
241700
KRF-2 (8/95) Printed in the U.S.A.
