<PAGE> 1
Kemper Target Equity Fund
Kemper Worldwide 2004 Fund
SEMIANNUAL REPORT TO SHAREHOLDERS
FOR THE PERIOD ENDED DECEMBER 31, 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 a total return, a combination of capital growth and
income
"...We're seeing a trend toward more accommodative monetary policies and
modest inflation -- the same type of environment that helped spur growth in the
U.S. markets during 1995."
<PAGE> 2
Table of
Contents
3
General
Economic Overview
5
Performance Update
7
Terms to Know
8
Country
Concentrations
8
Individual Holdings
9
Portfolio of
Investments
14
Financial Statements
16
Notes to
Financial Statements
20
Financial Highlights
At A Glance
- --------------------------------------------------------------------------------
TOTAL RETURN*
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995 (UNADJUSTED FOR ANY SALES
CHARGE):
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
KEMPER WORLDWIDE
2004 FUND 9.22%
- --------------------------------------------------------------------------------
</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.
*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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
12/31/95 6/30/95
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER WORLDWIDE
2004 FUND $10.52 $9.96
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
During the reporting period, Kemper Worldwide 2004 Fund paid the following
dividend:
<TABLE>
<CAPTION>
KEMPER WORLDWIDE
2004 FUND
- --------------------------------------------------------------------------------
<S> <C>
INCOME DIVIDEND: $0.35
- --------------------------------------------------------------------------------
</TABLE>
About Your Report
SHAREHOLDER REPORTS REVISED
Your fund's semiannual and annual reports are one of your best sources for
tracking the progress of your investment. This report includes several changes
that have been made in an effort to provide additional information to you as
well as explain significant changes to the fund over the last fiscal period. In
addition, the performance update includes commentary from your fund's portfolio
manager or management team on what might be expected in the coming months.
Specifically, your report now includes:
- Terms you need to know related to your fund
- A look at your fund's country concentrations
- Your fund's largest individual holdings
If you have any comments about the revised format or if you have
suggestions for additional changes, please write to:
Kemper Funds
Shareholder Communications
120 South LaSalle Street
Chicago, IL 60603
<PAGE> 3
General Economic Overview
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS PRESIDENT, CHIEF EXECUTIVE AND CHIEF INVESTMENT OFFICER
OF KEMPER FINANCIAL SERVICES, INC. (KFS). KFS AND ITS AFFILIATES MANAGE
APPROXIMATELY $70 BILLION IN ASSETS, INCLUDING $43 BILLION IN RETAIL MUTUAL
FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR SHAREHOLDER:
Last year -- a year in which both the equity and the fixed-income
markets produced strong above-average returns -- will be a difficult year to
follow. However, based on what we see a few months into the new year, we
believe 1996 also will be capable of rewarding investors. Unlike last year,
however, we expect there will be more volatility from markets and a wider range
of winners and losers in 1996. This is the time for careful decision-making.
What has changed? We continue to experience low interest rates, an
acceptable rate of economic growth and low inflation. Although certain
government reports have been late in coming due to the federal government
shutdown, there's little in the economic data that suggests cause for concern.
Yet, this year we must begin to consider the possibility of a
recession within the next 24 months. We have enjoyed one of the longest
economic expansions in the 20th century. By virtue of the length of the
expansion alone, it is reasonable to expect an eventual slowdown or negative
growth. Moreover, a recession can be triggered by a surprise not forecastable
by current available data. It could take the form of political turmoil in the
Middle East, instability in Russia or even a further downturn in Japan's
economic health. Any type of surprise has the potential to reverse the growth
we have become accustomed to.
Having enjoyed an almost uninterrupted climb in 1995, the markets also
are vulnerable to correction. A key reason that stock prices have been rising is
that there have been large cash flows directed to the market. Whenever positive
liquidity is the driving force in the market -- as opposed to investors'
reactions to individual companies' fundamentals -- one has to be cautious.
Moreover, corporate earnings will not continue to grow at their earlier,
breakneck paces. In 1996, we expect profit growth to be in the single-digit.
Despite all, at this point early in the year, we think the stock market has the
potential to return close to its historical average of about 10 percent.+
Remember, of course, that in January alone the Standard & Poor's 500 Stock
Index gained 3.4 percent. Our forecast assumes added stock market volatility
this year.
Our equities forecast assumes some help from the bond market. As you
know, the Federal Reserve Board has begun to ease short-term interest rates,
and we expect rates to drop further. The relationship between short and
long-term rates at this point in the economic cycle is an intriguing one, and
one that would argue against a recession forecast. Short-term interest rates
are falling. Yet, rates typically rise in an economy headed toward recession.
As is typical after a strong year in the domestic markets, many
investors will be looking overseas for superior return opportunities in 1996.
This move makes good sense to us, as well. Foreign economies'
expansions often follow the U.S. In fact, improvement abroad could help sustain
this country's expansion as it could boost the demand for exports.
The value of the dollar, having had a roller coaster year in 1995,
should settle down. Strength in foreign markets could boost those countries'
currencies, which would bring an end to the current dollar rally later
this year.
As we head toward the November presidential elections, we can expect
continued discussion from both political parties about balancing the federal
budget and related taxation issues. Frankly, we see the candidates as waging a
war in sameness -- there's really little difference between the Republican
primary platform and what President Bill Clinton has committed to about a
balanced budget. Economically as well as socially, the trend in government is
toward conservativism.
With that as an economic backdrop, we encourage you to read the
following detailed report of your fund, including an interview with your fund's
portfoliomanagement. Thank you for your continued support. We appreciate the
opportunity to serve your investment needs.
Sincerely,
/S/ Stephen B. Timbers
Stephen B. Timbers
PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER
February 20, 1996
+ SOURCE: BASED UPON THE AVERAGE OF THE STANDARD & POOR'S 500 STOCK INDEX SINCE
1928 (TOWER DATA SYSTEMS). THIS DATA IS HISTORICAL AND DOES NOT REFLECT FUTURE
RESULTS. THE S&P 500 IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF THE
U.S. STOCK MARKET.
3
<PAGE> 4
General Economic Overview
ECONOMIC GUIDEPOSTS
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund
performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The 10-year
Treasury rate and the prime rate are prevailing interest rates. The other data
report year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
Now (1/31/96) 6 months ago 1 year ago 2 years ago
<S> <C> <C> <C> <C>
10-Year Treasury rate(1) 5.65 6.49 7.47 5.97
Prime rate(2) 8.50 8.75 9.00 6.00
Inflation rate(3) 2.60 2.90 2.87 2.52
The U.S. Dollar(4) -0.57 -4.11 -5.54 -0.07
Capital goods orders(5)* 11.63 7.10 23.00 15.48
Industrial production(6) 0.07 3.17 5.41 4.21
Employment growth(7) 1.18 2.03 3.15 2.49
</TABLE>
* Data as of December 31, 1995
1 Falling interest rates in recent years have been a big plus for financial
assets.
2 The interest rate that commercial lenders charge their best borrowers.
3 Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
4 Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
5 These influence corporate profits and equity performance.
6 An influence on corporate profits and equity performance.
7 An influence on family income and retail sales.
SOURCE: ECONOMICS DEPARTMENT, KEMPER FINANCIAL SERVICES, INC.
4
<PAGE> 5
Performance Update
[FERRO PHOTO]
DENNIS FERRO BECAME PORTFOLIO MANAGER OF THE FUND IN MARCH, 1994 WHEN HE JOINED
KEMPER FINANCIAL SERVICES, INC. (KFS). PRIOR TO KEMPER, HE WAS PRESIDENT,
MANAGING DIRECTOR AND CHIEF INVESTMENT OFFICER FOR CIGNA INTERNATIONAL. FERRO
IS AN EXECUTIVE VICE-PRESIDENT OF KFS AND DIRECTOR OF INTERNATIONAL EQUITIES.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
PORTFOLIO MANAGER DENNIS FERRO DISCUSSES THE TRENDS AFFECTING THE FOREIGN STOCK
MARKETS AND HOW HE'S POSITIONED KEMPER WORLDWIDE 2004 FUND FOR 1996.
Q. HOW DID THE INTERNATIONAL MARKETS PERFORM DURING THE SECOND HALF OF 1995?
A. Quite well, actually. For the six months ended December 31, the EAFE Index
(an unmanaged index that is a generally accepted benchmark for major overseas
markets) was up 8.55%. Granted, that seems rather modest compared with the
strong gains in the U.S. market -- the Dow Jones Industrial Average and
Standard & Poor's 500 were both up approximately 13% during the same period.
But it's certainly an attractive six-month gain.
In most European markets we're seeing a trend toward more accommodative
monetary policies (declining interest rates) and modest inflation -- the same
type of environment that helped spurgrowth in the U.S. markets during 1995.
Japan began to show some improvement and we saw some strong performance "down
under" in Australia and New Zealand.
Q. HOW DID YOU POSITION KEMPER WORLDWIDE 2004 FUND FOR THIS ENVIRONMENT IN
TERMS OF MARKETS AND SPECIFIC BUSINESS SECTORS?
A. We stayed committed to the peripheral markets of Europe -- Sweden,
Switzerland, the Netherlands and the U.K. -- which offered more growth than
Germany and France which are considered core countries. We also took advantage
of opportunities in Australia, New Zealand and the non-Japanese markets of
Southeast Asia.
In terms of sectors, we favored traditional growth stocks over cyclical
companies. Our technology and telecommunications investments were particularly
beneficial. Toward year-end we began to take profits in stocks that had enjoyed
strong gains and appeared to be fully valued. We also reduced our exposure to
telecommunications stocks when it became evident that inventories were rising
and profit margins would be coming under pressure. Those assets were put into
more defensive positions, including additional pharmaceuticals (Astra AB, Roche
Holdings, Ciba-Geigy) and financial (Union Bank) stocks. These adjustments are
reflected in the fund's top holdings (see page 8). We also broadened the health
care position to include some European biotech companies, and added to selected
retail companies that are attractively priced and should benefit from improving
consumer confidence.
Q. EARLIER IN THE YEAR, YOU WERE MAINTAINING A LOW EXPOSURE TO JAPAN. HAS
THAT CHANGED?
A. Yes, but only recently. In early 1995 we'd increased our Japanese
position, and regretted it almost immediately. The Kobe earthquake created a
number of short-term problems, and fallout from the collapse of the Barings
Bank also shook confidence in the Far East. We decided it was
5
<PAGE> 6
Performance Update
best to maintain a relatively low weighting until we were confident the
government had formulated a plan for economic recovery. In recent months we've
seen some encouraging developments and have gradually added to our Japanese
positions. As of December 31, the fund had about 21% of common stocks in Japan,
compared with about 15% on June 30. We've concentrated on banking stocks
(Sumimoto Trust, Daiwa Securities) and companies that should benefit from
increased capital spending and import/export activity.
As the Japanese markets improve, we also expect some strengthening in
other Asian markets such as Thailand and Singapore. We've modestly added to our
positions in those countries as well. These markets tend to benefit from stable
or declining rates in the U.S. and also from increasing intra-regional trade.
Q. ARE YOU STILL AVOIDING THE LATIN AMERICAN MARKETS?
A. Yes. While there have been a few short-term rallies, these markets still
seem to be influenced more by political movements than economic fundamentals. I
think we can find more value and better growth opportunities relative to risk
in Southeast Asia, Australia and New Zealand.
Q. AS OF DECEMBER 31, ZERO-COUPON BONDS ACCOUNTED FOR 64% OF THE FUND'S
ASSETS. HOW DID THESE BONDS PERFORM DURING THE PERIOD?
A. Very well. Low inflation and declining interest rates to a certain extent
gave those bonds a real boost. Because zero coupon bonds don't make periodic
interest payments, their values are very sensitive to movements in interest
rates. When rates fall, as they did during 1995, the value of zero-coupon bonds
- -- especially those with longer maturities -- tends to rise rapidly. This is
because they offer a fixed rate of reinvestment, which becomes more attractive
the farther rates fall.
Q. SINCE KEMPER WORLDWIDE 2004 FUND IS COMPRISED OF COMMON STOCKS AND
ZERO-COUPON BONDS, HOW SHOULD SHAREHOLDERS EVALUATE THE FUND'S PROGRESS?
A. To evaluate their fund as a whole, shareholders will do best to look at
total return -- which measures both realized and unrealized appreciation or
depreciation of the fund's holdings.
Performance of the fund's equity (stock) investments can be compared
with the EAFE (Europe, Australasia, Far-East) Index. However, it's important to
realize that there will always be some variance in the performance of the fund
and that of the index. This is because of differences in the composition of the
unmanaged index and the fund's portfolio -- in both sector and country
weightings -- and, of course the fixed-income portion of the fund's portfolio.
The bond portion of the portfolio is unmanaged; those securities will
stay in the portfolio until maturity. But it's important to be aware of the
influence these bonds have on the fund's total return. As I mentioned, the
value of a zero-coupon bond is very sensitive to changing interest rates. So if
we were to see rates climb back up, the value of these bonds would decline. But
as they get closer to maturity, at which time they'll attain their face value,
the influence of interest rates declines.
Q. WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
A. Generally positive. We believe continued low inflation and steady or
declining interest rates should continue to support the foreign stock markets.
We'll continue to focus on growth stocks and markets that offer attractive
growth potential in exchange for reasonable risk. At the same time, the U.S.
economic picture remains favorable for the bond portion of the portfolio.
6
<PAGE> 7
Performance Update
- --------------------------------------------------------------------------------
Average Annual Total Returns*
- --------------------------------------------------------------------------------
For periods ended December 31, 1995 (adjusted for the maximum sales charge)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR FUND
-----------------------------------------------------------------
<S> <C> <C> <C>
KEMPER WORLDWIDE 2004 FUND 15.61% 9.59% (SINCE 5/3/94)
-----------------------------------------------------------------
</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 Worldwide
2004 Fund from 5/3/94 through 12/31/95
- -----------------------------------------------------------
<TABLE>
<CAPTION>
5/3/94 12/31/94 12/31/95
<S> <C> <C> <C>
- - KEMPER WORLDWIDE 2004 FUND(1) $10,000 $10,688 $14,663
- - RUSSELL 1000(R) GROWTH INDEX+ 10,000 9,567 11,642
- - THE EAFE INDEX ++ 10,000 10,008 11,164
</TABLE>
* Average annual total return measures net investment income and capital gain
or loss from portfolio investments, assuming reinvestment of all dividends.
Average annual total return reflects annualized 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.
1 Performance includes reinvestment of dividends and adjustment for the maximum
sales charge of 5.0%. When comparing Kemper Worldwide 2004 Fund to the Russell
1000(R) Growth Index,+ and EAFE Index++ you should note that the fund's
performance reflects the maximum sales charge, while no such charges are
reflected in the performance of the indices.
+ 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 EAFE Index (Morgan Stanley Capital International Europe, Australasia,
Far East Index) is an unmanaged index generally accepted as a benchmark for
major overseas markets. Source is Towers Data Systems.
Terms to Know
INDEX An unmanaged group of stocks that is considered representative of the
stock or bond markets. An index does not take into account any fees or expenses
related to the individual securities that it tracks. However, for performance
comparisons, the index is adjusted to reflect the reinvestment of dividends of
the securities in the index.
SECTOR A specific industry group.
TOTAL RETURN A fund's total return figure measures both the net investment
income generated by, and the effect of, any realized and unrealized
appreciation or depreciation of the underlying investments in its portfolio for
the period. Total return assumes the reinvestment of all dividends and it
represents the aggregate percentage or dollar value change over the period.
ZERO-COUPON BOND A bond that makes no periodic interest payments but instead
is sold at a deep discount from its face value. The buyer of such a bond
receives the rate of return by the gradual appreciation of the security due to
the accrual of interest. The security is redeemed at face value at maturity.
7
<PAGE> 8
Country Concentrations
THE FUND'S COMMON STOCK GEOGRAPHIC DISTRIBUTION
COMMON STOCKS COMPRISE 35% OF THE PORTFOLIO AND THE REMAINDER (65%) OF THE
PORTFOLIO IS INVESTED IN ZERO-COUPON BONDS AND MONEY MARKET INSTRUMENTS.
<TABLE>
<S> <C>
JAPAN 21%
UNITED KINGDOM 19%
OTHER* 13%
SWITZERLAND 8%
HONG KONG 7%
FRANCE 6%
SPAIN 6%
IRELAND 6%
SWEDEN 5%
AUSTRALLA 5%
GERMANY 4%
</TABLE>
* PLEASE SEE PAGES 9-12 FOR A COMPLETE LISTING.
Individual Holdings
YOUR FUND'S FIVE LARGEST STOCK HOLDINGS
REPRESENTING 4.72% OF THE FUND'S TOTAL NET ASSETS ON DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Holdings Percent
- --------------------------------------------------------------------------------
1. Roche Researches, develops and manufactures pharmaceuticals, 1.05%
Holding drugs, vitamins, fine chemicals, fragrances, flavors
AG and diagnostic equipment; products are distributed
throughout Europe, the U.S., Asia and Latin America.
2. Australia Provides full banking and financial services in 0.97%
and New Australia, New Zealand and 40 countries worldwide,
Zealand primarily in the Asia/Pacific Region.
Banking
Group
3. Union Bank of Offers banking and financial services in the 0.96%
Switzerland domestic and international markets including foreign
currency and bank note dealing and money market
investments.
4. Ciba-Geigy Leading worldwide biological and chemical group; 0.87%
Ltd. engaged in research, development, production and sale
of health care products, agricultural products and
industrial specialties.
5. Astra A B Develops, manufactures and markets pharmaceuticals. 0.87%
8
<PAGE> 9
Portfolio of Investments
KEMPER WORLDWIDE 2004 FUND
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT U.S. Treasury, zero coupon, 2004
OBLIGATIONS--63.6%
(Cost: $19,695) $ 37,900 $ 23,022
==========================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPE--21.4%
FINLAND--.4%
Oy Nokia AB
TELECOMMUNICATIONS EQUIPMENT MANUFACTURER 3,900 151
--------------------------------------------------------------------------
FRANCE--2.0%
Axa Group
INSURANCE COMPANY 4,500 304
Carrefour S.A.
FOOD RETAILER 500 304
Technip S.A.
OIL SERVICES COMPANY 1,900 131
==========================================================================
739
--------------------------------------------------------------------------
GERMANY--1.4%
Allianz A.G. Holding
INSURANCE COMPANY 140 274
Mannesmann, A.G.
CONSTRUCTION AND ENGINEERING COMPANY 170 54
Veba, A.G.
ELECTRIC UTILITY COMPANY 4,500 191
==========================================================================
519
--------------------------------------------------------------------------
HUNGARY--.2%
(a) MOL Magyar Olajes Gazipari
OIL AND GAS COMPANY 7,500 62
--------------------------------------------------------------------------
IRELAND--2.0%
Bank of Ireland
BANKING 25,000 181
Greencore Group PLC
FOOD PROCESSING 19,781 171
Independent Newspapers Ltd.
PUBLISHER 47,428 296
Kerry Group PLC
FOOD PROCESSING 8,370 64
==========================================================================
712
--------------------------------------------------------------------------
ITALY--1.0%
STET
TELECOMMUNICATIONS COMPANY 25,000 71
(a) Telecom Italia Mobile
MOBILE TELECOMMUNICATIONS PROVIDER 170,000 300
==========================================================================
371
--------------------------------------------------------------------------
NETHERLANDS--.8%
Getronics N.V.
INFORMATION SYSTEMS 3,900 182
PolyGram N.V.
MUSIC RECORDING COMPANY 1,850 98
==========================================================================
280
--------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
Portfolio of Investments
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SPAIN--2.0%
Banco Bilbao Vizcaya
BANKING 3,948 $ 142
Empresa Nacional de Electricidad S.A.
ELECTRIC UTILITY COMPANY 5,300 300
Iberdrola, S.A.
ELECTRIC UTILITY COMPANY 30,000 274
==========================================================================
716
--------------------------------------------------------------------------
SWEDEN--1.9%
Astra AB
PHARMACEUTICAL COMPANY 7,900 316
H & M Hennes & Mauritz AB
RETAILING 2,410 135
LM Ericsson Telephone Co., "B"
TELECOMMUNICATIONS EQUIPMENT MANUFACTURER 11,550 227
==========================================================================
678
--------------------------------------------------------------------------
SWITZERLAND--2.9%
Ciba-Geigy Limited
PHARMACEUTICAL COMPANY 360 318
Roche Holding AG
PHARMACEUTICAL COMPANY 48 381
Union Bank of Switzerland
BANKING 320 347
==========================================================================
1,046
--------------------------------------------------------------------------
UNITED KINGDOM--6.8%
Abbey National PLC
FINANCIAL SERVICES 30,000 296
British Bio-Technology Group
PHARMACEUTICAL COMPANY 10,000 280
Burton Group PLC
RETAILER 100,000 209
Cable and Wireless PLC
TELECOMMUNICATIONS COMPANY 40,000 286
Dixons Group PLC
ELECTRONICS RETAILER 28,900 200
Forte PLC
HOTELS AND RESTAURANT OPERATOR 22,000 113
Glaxo Wellcome PLC
PHARMACEUTICAL COMPANY 20,000 284
Medeva PLC
PHARMACEUTICAL COMPANY 36,000 150
National Westminster Bank PLC
BANKING 20,000 201
Reed International PLC
PUBLISHER 10,000 152
SmithKline Beecham PLC
PHARMACEUTICAL COMPANY 25,000 276
==========================================================================
2,447
==========================================================================
TOTAL EUROPEAN COUNTRIES 7,721
--------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
Portfolio of Investments
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PACIFIC REGION--11.1%
- ---------------------------------------------------------------------------------------------------------
HONG KONG--2.5%
Cheung Kong Holdings Ltd.
REAL ESTATE COMPANY 35,000 $ 213
CITIC Pacific Ltd.
CONGLOMERATE HOLDING COMPANY 50,000 171
Henderson Land Development Co., Ltd
PROPERTY DEVELOPER 18,000 108
Hong Kong Telecommunications Ltd.
TELECOMMUNICATIONS COMPANY 50,000 89
HSBC Holdings PLC
BANKING 8,212 124
New World Development Co., Ltd.
INVESTMENT HOLDING AND PROPERTY INVESTMENT
COMPANY 30,000 57
Peregrine Investment Holdings
INVESTMENT BANKING 93,000 120
==========================================================================
882
--------------------------------------------------------------------------
JAPAN--7.2%
Bridgestone Corp.
RUBBER RELATED PRODUCTS MANUFACTURER 7,000 111
Daiwa Securities Co., Ltd.
STOCK BROKER 9,000 138
Fuji Bank Ltd.
BANKING 7,000 155
Fujisawa Pharmaceutical
PHARMACEUTICAL COMPANY 15,000 144
Mabuchi Motor Co., Ltd.
ENGINE MANUFACTURER 3,000 187
Mitsubishi Paper Mills Ltd.
PAPER MANUFACTURER 14,000 84
Mitsui & Co. Ltd
STEEL PRODUCTS WHOLESALER 16,000 141
Omron Corporation
ELECTRONICS MANUFACTURER 5,000 115
Seven Eleven Japan Co., Ltd.
CONVENIENCE RETAILER 1,000 71
Sumitomo Bank Ltd.
BANKING 7,000 149
Sumitomo Corp.
HOLDING COMPANY 18,000 183
Sumitomo Metal Industries
STEEL MANUFACTURER 60,000 182
Sumitomo Trust & Banking
BANKING 10,000 142
Taisei Corporation
CONSTRUCTION COMPANY 25,000 167
Teijin Ltd.
SYNTHETIC FIBER MANUFACTURER 16,000 82
Tokyu Department Store
RETAILER 44,000 291
Toray Industries
SYNTHETIC FIBER MANUFACTURER 27,000 178
(a) Ube Industries, Ltd.
DIVERSIFIED COMPANY 25,000 95
==========================================================================
2,615
--------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
Portfolio of Investments
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SINGAPORE--1.2%
DBS Bank
BANKING 8,000 $ 100
Fraser & Neave Ltd.
BEER AND SOFT DRINK MANUFACTURER 11,000 140
Jurong Shipyard Ltd.
SHIPYARD COMPANY 9,000 69
Keppel Corp. Limited
CONGLOMERATE HOLDING COMPANY 6,000 53
Singapore Press Holdings
PUBLISHER 5,000 88
==========================================================================
450
--------------------------------------------------------------------------
THAILAND--.2%
Advanced Info Service Ltd.
TELECOMMUNICATIONS COMPANY 2,700 48
Siam Cement Co. Ltd.
CEMENT COMPANY 700 39
==========================================================================
87
==========================================================================
TOTAL PACIFIC REGION 4,034
--------------------------------------------------------------------------
COMMONWEALTH COUNTRIES--2.5%
AUSTRALIA--1.6%
Australia and New Zealand Banking Group Limited
FINANCIAL SERVICES 74,900 352
Qantas Airways Limited
AIR TRANSPORTATION COMPANY 5,000 83
TABcorp Holdings Ltd.
ENTERTAINMENT AND GAMING 59,300 168
==========================================================================
603
--------------------------------------------------------------------------
CANADA--.2%
(a) Canadian National Railway Co.
RAILWAY COMPANY 3,800 57
--------------------------------------------------------------------------
NEW ZEALAND--.7%
Lion Nathan Ltd.
BEER AND SOFT DRINK MANUFACTURER 101,800 243
==========================================================================
TOTAL COMMONWEALTH COUNTRIES 903
==========================================================================
TOTAL COMMON STOCKS--35.0%
(Cost: $11,136) 12,658
==========================================================================
</TABLE>
12
<PAGE> 13
Portfolio of Investments
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET
INSTRUMENTS--1.7%
Yield--5.90%
Due--January 1996
(Cost: $600) $ 600 $ 600
==========================================================================
TOTAL INVESTMENTS--100.3%
(Cost: $31,431) 36,280
==========================================================================
LIABILITIES, LESS CASH AND OTHER
ASSETS--(.3)% (101)
==========================================================================
NET ASSETS--100% $ 36,179
==========================================================================
At December 31, 1995, the Fund's portfolio of investments had the following
industry diversification (in thousands):
<CAPTION>
VALUE %
<S> <C> <C> <C>
--------------------------------------------------------------------------
Financial services $ 3,295 9.1
--------------------------------------------------------------------------
Chemicals, medical equipment and pharmaceuticals 2,327 6.4
--------------------------------------------------------------------------
Communications 1,172 3.2
--------------------------------------------------------------------------
Food and beverages 922 2.6
--------------------------------------------------------------------------
Retailing 906 2.5
--------------------------------------------------------------------------
Utilities 765 2.1
--------------------------------------------------------------------------
Consumer products and services 645 1.8
--------------------------------------------------------------------------
Diversified 643 1.8
--------------------------------------------------------------------------
Publishing 536 1.5
--------------------------------------------------------------------------
Automobiles, parts, service and transportation 438 1.2
--------------------------------------------------------------------------
Construction and building materials 368 1.0
--------------------------------------------------------------------------
Industrial products and services 333 .9
--------------------------------------------------------------------------
Oil and gas 193 .6
--------------------------------------------------------------------------
Electrical and electronics 115 .3
--------------------------------------------------------------------------
TOTAL COMMON STOCKS 12,658 35.0
--------------------------------------------------------------------------
U. S. GOVERNMENT OBLIGATIONS 23,022 63.6
--------------------------------------------------------------------------
CASH AND OTHER NET ASSETS 499 1.4
--------------------------------------------------------------------------
NET ASSETS $ 36,179 100.0
==========================================================================
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Based on the cost of investments of $31,431,000 for federal income tax
purposes at December 31, 1995, the aggregate gross unrealized appreciation
was $4,987,000, the aggregate gross unrealized depreciation was $138,000 and
the net unrealized appreciation on investments was $4,849,000.
See accompanying Notes to Financial Statements.
13
<PAGE> 14
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
(in thousands)
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------
Investments, at value
(Cost: $31,431) $36,280
Cash 71
Receivable for:
Fund shares sold 36
Investments sold 575
Dividends and interest 31
TOTAL ASSETS 36,993
==============================================================================
- ------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------------
Payable for:
Fund shares redeemed 3
Investments purchased 746
Management fee 17
Administrative services fee 7
Custodian and transfer agent
fees and related expenses 32
Other 9
Total liabilities 814
- ------------------------------------------------------------------------------
NET ASSETS $36,179
==============================================================================
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------------------------
Paid-in capital $31,869
Accumulated net realized loss on investments
and foreign currency transactions (426)
Net unrealized appreciation on investments and
assets and liabilities in foreign currencies 4,856
Undistributed net investment income (120)
- ------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $36,179
==============================================================================
THE PRICING OF SHARES
- ------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($36,179 / 3,440 shares outstanding) $10.52
- ------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
(net asset value, plus 5.26% of
net asset value or 5.00% of offering price) $11.07
==============================================================================
</TABLE>
See accompanying Notes to Financial Statements.
14
<PAGE> 15
Financial Statements
STATEMENT OF OPERATIONS
Six months ended December 31, 1995
(in thousands)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------
Interest $ 685
Dividends 106
Less foreign taxes withheld 9
Total investment income 782
Expenses:
Management fee 100
Administrative services fee 41
Custodian and transfer agent fees and related expenses 54
Professional fees 7
Reports to shareholders 19
Trustees' fees and other 15
Total expenses 236
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 546
=======================================================================================================
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on sales of investments and foreign currency transactions 464
Change in net unrealized appreciation on investments and assets and
liabilities in foreign currencies 1,965
Net gain on investments 2,429
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,975
=======================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------------------
Net investment income $ 546 809
Net realized gain (loss) 464 (916)
Change in net unrealized appreciation 1,965 2,964
Net increase in net assets resulting from operations 2,975 2,857
Distribution from net investment income (1,157) (301)
Net increase from capital share transactions 3,662 22,243
TOTAL INCREASE IN NET ASSETS 5,480 24,799
=========================================================================================================
- ---------------------------------------------------------------------------------------------------------
NET ASSETS
=========================================================================================================
Beginning of period 30,699 5,900
- ---------------------------------------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment
income of $491 at June 30, 1995) $36,179 30,699
=========================================================================================================
</TABLE>
15
<PAGE> 16
Notes to Financial Statements
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE FUND Kemper Worldwide 2004 Fund (the Fund) is a 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 Fund are to
provide a guaranteed return of investment on the
Maturity Date (November 15, 2004) to investors who
reinvest all dividends and hold their shares to the
Maturity Date, and to provide total return, a
combination of capital growth and income. The Fund
pursues its objectives by investing a portion of
its assets in zero coupon U.S. Treasury obligations
and the balance of its assets primarily in an
internationally diversified portfolio of foreign
securities. 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 Fund's portfolio,
as well as by a guarantee from Kemper Financial
Services, Inc. (KFS), the Fund's investment
manager.
- --------------------------------------------------------------------------------
2 SIGNIFICANT ACCOUNTING
POLICIES INVESTMENT VALUATION. Investments are stated at
value. Any portfolio securities that are primarily
traded on a domestic securities exchange are valued
at the last sale price on that exchange or, if
there is no recent last sale price available, 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.
A security that is listed or traded on more than
one exchange is valued at the quotation on the
exchange determined to be the primary market for
such security by the Board of Trustees or its
delegates. All other securities not so traded are
valued at the last current bid quotation if market
quotations are available. Fixed income securities
are valued by using market quotations, or
independent pricing services that use prices
provided by market makers or estimates of market
values obtained from yield data relating to
instruments or securities with similar
characteristics. Equity options are valued at the
last sale price unless the bid price is higher or
the asked price is lower, in which event such bid
or asked price is used. Exchange traded fixed
income options are valued at the last sale price
unless there is no sale price, in which event
prices provided by market makers are used.
Over-the-counter traded fixed income options are
valued based upon current prices provided by market
makers. Financial futures and options thereon are
valued at the settlement price established each day
by the board of trade or exchange on which they are
traded. Forward foreign currency contracts and
foreign currencies are valued at the forward and
current exchange rates, respectively, prevailing on
the day of valuation. Other securities and assets
are valued at fair value as determined in good
faith by the Board of Trustees.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency
values are converted into U.S. dollar values at the
mean between the bid and offered quotations of such
currencies against U.S. dollars as last
16
<PAGE> 17
Notes to Financial Statements
quoted by a recognized dealer. If such quotations
are not readily available, the rate of exchange is
determined in good faith by the Board of Trustees.
Income and expenses and purchases and sales of
investments are translated into U.S. dollars at the
rate of exchange prevailing on the respective dates
of such transactions. The Fund includes that
portion of the results of operations resulting from
changes in foreign exchange rates with the net
realized and unrealized gain (loss) on investments,
as appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, except that certain dividends
from foreign securities are recorded as soon as the
information is available to the Fund. Interest
income is recorded on the accrual basis and
includes amortization of money market instrument
premium and discount; 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.
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 are sold to the
public during a limited offering period, which may
be extended or shortened at the option of the Fund.
Fund shares are redeemed on a continuous basis and
are sold and 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 the Funds
investments and other assets, less liabilities, by
the number of shares outstanding.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies for the six
months ended December 31, 1995. The accumulated net
realized loss on sales of investments for federal
income tax purposes at December 31, 1995, amounting
to approximately $519,000, is available to offset
future taxable gains. If not applied, the loss
carryover expires during the period 2003 through
2004.
DIVIDENDS TO SHAREHOLDERS. The Trust declares and
pays dividends of net investment income and net
realized capital gains on an annual basis, which
are recorded on the ex-dividend date. Dividends are
determined in accordance with income tax principles
which may treat certain transactions differently
from generally accepted accounting principles.
17
<PAGE> 18
Notes to Financial Statements
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Trust has a management
agreement with KFS and the Fund pays a management
fee at an annual rate of .60% of average daily net
assets. The Fund incurred a management fee of
$100,000 for the six months ended December 31,
1995.
UNDERWRITING AGREEMENT. The Trust has an
underwriting agreement with Kemper Distributors,
Inc. (KDI). Underwriting commissions paid in
connection with the distribution of the Fund's
shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS
ALLOWED BY KDI
COMMISSIONS ----------------------------
RETAINED BY KDI TO ALL FIRMS TO AFFILIATES
---------------- ------------ -------------
<S> <C> <C> <C>
Six months ended December 31, 1995 $ 22,000 197,000 21,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Trust has an
administrative services agreement with KDI. For
providing information and administrative services
to shareholders, the Fund pays KDI a fee at an
annual rate of up to .25% of average daily net
assets. KDI in turn has various agreements with
financial services firms that provide these
services and pays these firms based on assets of
Fund accounts the firms service. Administrative
services fees (ASF) paid are as follows:
<TABLE>
<CAPTION>
ASF PAID BY KDI
ASF PAID BY ----------------------------
THE FUND TO KDI TO ALL FIRMS TO AFFILIATES
----------------- ------------ -------------
<S> <C> <C> <C>
Six months ended December 31,
1995 $41,000 41,000 4,000
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Trust's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent. For the six months ended December
31, 1995, the transfer agent remitted shareholder
services fees to KSvC of $18,000 with respect to
the Fund.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Trust are also officers or directors of KFS.
During the six months ended December 31, 1995, the
Trust made no payments to its officers and the Fund
incurred trustees' fees of $10,000 to independent
trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT TRANSACTIONS For the six months ended December 31, 1995,
investment transactions (excluding short-term
instruments) are as follows (in thousands):
Purchases $11,921
Proceeds from sales 8,707
18
<PAGE> 19
Notes to Financial Statements
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 566 $5,809 2,657 $24,385
-----------------------------------------------------------------------------
Shares issued in
reinvestment of dividends 108 1,109 32 290
-----------------------------------------------------------------------------
674 6,918 2,689 24,675
-----------------------------------------------------------------------------
Less shares redeemed 316 3,256 261 2,432
-----------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE
TRANSACTIONS 358 $3,662 2,428 $22,243
-----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6 FORWARD FOREIGN
CURRENCY CONTRACTS In order to protect itself against a decline in the
value of particular foreign currencies against the
U.S. Dollar, the Fund has entered into forward
contracts to deliver foreign currency in exchange
for U.S. Dollars as described below. The Fund bears
the market risk that arises from changes in foreign
exchange rates, and accordingly, the net unrealized
gain on these contracts is reflected in the
accompanying financial statements. The Fund also
bears the credit risk if the counterparty fails to
perform under the contract. At December 31, 1995,
the Fund has the following forward foreign currency
contracts outstanding with settlement dates in
March, 1996 (in thousands):
<TABLE>
<CAPTION>
UNREALIZED
FOREIGN CURRENCY CONTRACT GAIN (LOSS)
TO BE DELIVERED AMOUNT AT 12/31/95
<S> <C> <C>
--------------------------------------------------------
446 British Pounds $ 680 $ (11)
--------------------------------------------------------
1,552 French Francs 311 (6)
--------------------------------------------------------
202 German Marks 140 (2)
--------------------------------------------------------
159,112 Japanese Yen 1,589 33
--------------------------------------------------------
386 Swiss Francs 330 (7)
--------------------------------------------------------
Net unrealized gain $ 7
--------------------------------------------------------
</TABLE>
19
<PAGE> 20
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MAY 3, 1994 TO
DECEMBER 31, 1995 JUNE 30, 1995 JUNE 30, 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.96 9.02 9.00
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .15 .27 .02
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .76 .79 --
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .91 1.06 .02
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .35 .12 --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.52 9.96 9.02
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 9.22% 11.91 .22
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses 1.40% 1.29 1.32
- --------------------------------------------------------------------------------------------------------------
Net investment income 3.24% 3.77 2.59
==============================================================================================================
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $36,179 30,699 5,900
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 52% 75 --
- --------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges.
20
<PAGE> 21
Special Shareholder Meeting
SPECIAL SHAREHOLDER MEETING
On September 19, 1995, the results of the proxy solicitation were announced at a
special shareholder meeting. Kemper Target Equity Fund shareholders were asked
to vote on three separate issues: election of eight Trustees to the Board of
Trustees, ratification of Ernst & Young LLP as independent auditors and approval
of a new investment management agreement with Kemper Financial Services, Inc. or
its successor on the same terms as the current agreement. All seven series of
Kemper Target Equity Fund voted together on items one and two which is why the
number of votes is higher for these items. We are pleased to report that all
nominees were elected and all other items were approved. Following are the
results for each issue:
1) Election of Trustees
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
James E. Akins 37,666,268 2,382,927
Arthur R. Gottschalk 37,676,278 2,374,917
Frederick T. Kelsey 37,662,263 2,386,932
David B. Mathis 37,770,396 2,278,799
Fred B. Renwick 37,690,297 2,358,898
Stephen B. Timbers 37,718,332 2,330,863
John B. Tingleff 37,762,386 2,286,809
John G. Weithers 38,014,696 2,034,499
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the fund
For Against Abstain
37,794,664 521,615 1,732,910
3) Approval of new investment management agreement
For Against Abstain
1,611,806 29,360 69,352
21
<PAGE> 22
NOTES
22
<PAGE> 23
NOTES
23
<PAGE> 24
Trustees and Officers
TRUSTEES
OFFICERS
STEPHEN B. TIMBERS
President and Trustee
JAMES E. AKINS
Trustee
ARTHUR R. GOTTSCHALK
Trustee
FREDERICK T. KELSEY
Trustee
FRED B. RENWICK
Trustee
JOHN B. TINGLEFF
Trustee
JOHN G. WEITHERS
Trustee
TRACY M. CHESTER
Vice President
DENNIS H. FERRO
Vice President
JOHN E. NEAL
Vice President
JOHN E. PETERS
Vice President
STEVEN H. REYNOLDS
Vice President
PHILIP J. COLLORA
Vice President and
Secretary
CHARLES F. CUSTER
Vice President and
Assistant Secretary
JEROME L. DUFFY
Treasurer
ELIZABETH C. WERTH
Assistant Secretary
- --------------------------------------------------------------------------------
LEGAL COUNSEL
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT
KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT
INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
FOREIGN CUSTODIAN
THE CHASE MANHATTAN BANK, N.A.
Chase Metro Tech Center
Brooklyn, NY 11245
- --------------------------------------------------------------------------------
INVESTMENT MANAGER
KEMPER FINANCIAL SERVICES, INC.
PRINCIPAL UNDERWRITER
KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street
Chicago, IL 60603
[LOGO]
Printed on recycled paper.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Worldwide 2004 Fund
prospectus.
KWF4-3 (2/96) [KEMPER FUNDS LOGO]
1009500
Printed in the U.S.A.
