<PAGE> 1
KEMPER TARGET EQUITY FUND
KEMPER RETIREMENT FUND
SERIES I, II, III, IV, V AND VI
REPORT TO SHAREHOLDERS FOR THE MONTH ENDED JULY 31, 1997 AND FOR THE YEAR ENDED
JUNE 30, 1997
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
" . . . It's in volatile markets that our scrupulous attention
to price targets can really add value . . ."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
Economic Overview
5
Performance Update
10
Largest Stock Holdings
12
Portfolios of Investments
29
Report of Independent Auditors
30
Financial Statements
36
Notes to Financial Statements
40
Financial Highlights
AT A GLANCE
- -------------------------------------------------------------------------------
KEMPER RETIREMENT FUND SERIES I-VI
TOTAL RETURNS*
- -------------------------------------------------------------------------------
FOR THE YEAR ENDED JULY 31, 1997
(UNADJUSTED FOR ANY SALES CHARGE)
<TABLE>
<S> <C>
SERIES I 27.63%
- -------------------------------------------------------------------------------
SERIES II 23.06%
- -------------------------------------------------------------------------------
SERIES III 25.06%
- -------------------------------------------------------------------------------
SERIES IV 24.21%
- -------------------------------------------------------------------------------
SERIES V 26.84%
- -------------------------------------------------------------------------------
SERIES VI 26.59%
- -------------------------------------------------------------------------------
</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
period 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
7/31/97 7/31/96
- -------------------------------------------------------------------------------
<S> <C> <C>
SERIES I $11.86 $11.22
- -------------------------------------------------------------------------------
SERIES II $13.38 $12.80
- -------------------------------------------------------------------------------
SERIES III $11.33 $10.74
- -------------------------------------------------------------------------------
SERIES IV $11.28 $10.52
- -------------------------------------------------------------------------------
SERIES V $10.86 $10.01
- -------------------------------------------------------------------------------
SERIES VI $11.57 $ 9.65
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
DIVIDEND REVIEW
- -------------------------------------------------------------------------------
DURING THE YEAR ENDED JULY 31, 1997, KEMPER RETIREMENT FUND SERIES I-VI MADE THE
FOLLOWING DISTRIBUTIONS PER SHARE:
<TABLE>
<CAPTION>
INCOME SHORT-TERM LONG-TERM
DIVIDEND CAPITAL GAIN CAPITAL GAIN
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
SERIES I $0.44 $0.84 $0.84
- -------------------------------------------------------------------------------
SERIES II $0.59 $0.73 $0.77
- -------------------------------------------------------------------------------
SERIES III $0.43 $0.69 $0.72
- -------------------------------------------------------------------------------
SERIES IV $0.38 $0.52 $0.67
- -------------------------------------------------------------------------------
SERIES V $0.39 $0.65 $0.55
- -------------------------------------------------------------------------------
SERIES VI $0.28 $0.28 --
- -------------------------------------------------------------------------------
</TABLE>
YOUR FUNDS' STYLE
MORNINGSTAR EQUITY STYLE BOX
Style Blend Growth
Value
/ / /X/ / / Large Size Source: Morningstar, Inc., Chicago, IL
312-696-6000. (Morningstar Style Box is based
/ / / / / / Medium on a portfolio date as of July 31, 1997.) The
Equity Style Box placement is based on a
/ / / / / / Small fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as the
size of the companies in which it invests, or
median market capitalization.
Please note that style boxes do not represent
an exact assessment of risk and do not
represent future performance. Please consult
the prospectus for a description of investment
policies.
TERMS TO KNOW
VOLATILITY Characteristic of a security, commodity or market to rise or fall
sharply in price within a short period of time. A stock may be volatile because
the outlook for the company is particularly uncertain or because of various
other reasons.
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 accrual of
interest. The security is redeemed at face value at maturity.
<PAGE> 3
ECONOMIC OVERVIEW
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER OF
ZURICH KEMPER INVESTMENTS, INC. (ZKI). ZKI AND ITS AFFILIATES MANAGE
APPROXIMATELY $80 BILLION IN ASSETS, INCLUDING $45 BILLION IN RETAIL MUTUAL
FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM HARVARD
UNIVERSITY.
DEAR SHAREHOLDER,
A self-regulating economy, a balanced budget agreement and a positive stock
market all have contributed to another excellent year for investors. Given the
extended length of today's bull market (which celebrated its 15th anniversary on
August 12), it is prudent to wonder whether the end is near. Our position is
that while there is a certain precariousness to today's environment, which we
will elaborate on below, we see little to suggest that there will be more than
occasional market corrections.
Bipartisan agreement to balance the federal budget by the year 2002 represents
significant progress that should benefit investors over the long term. By
reducing the burden of capital gains and eliminating certain tax loopholes, the
Taxpayer Relief Act of 1997 and the Balanced Budget Act of 1997 have the
potential to meaningfully affect behavior. Now that the ceiling has been raised
on capital gains from the sale of a home, empty nesters will be more inclined to
move out of homes and into smaller condominiums. Added investment and savings
options should help boost the country's sagging savings rate. From a social
perspective, government's action to widen the difference between the taxation
rate on capital gains and on income reflects a conscious effort to encourage
capital investment. The more people and businesses can do for themselves, the
less likely they are to rely on the government, which should help restrain
federal spending.
The maximum tax on long-term capital gains is now 20 percent versus a maximum
of approximately 40 percent on ordinary income earned by Americans in the
highest income tax brackets. This dramatic difference could have some influence
on the management of mutual funds in the future. Although few investment
decisions are based on their tax consequences, the legislation supports a "buy
and hold" approach to investing, by which a mutual fund generates investment
returns through gains on investments held 18 months or longer. Such gains are
taxed at the reduced capital gains rate. On the margin, portfolio managers
should focus on long-term investing -- the strategy that we have always
supported.
In addition, mutual funds will gain investment flexibility with the new law's
repeal of what has been called the "short/short rule." Previously, investment
companies had been subject to a 30 percent limitation on total income arising
from the sale of securities held less than three months -- or face severe tax
consequences. The lifting of this limitation provides newer funds, in
particular, with much needed maneuvering ability.
You can expect to hear more from Kemper about the implications of the new
legislation, and specifically about the tax reporting changes, over the next
several weeks and months. Overall, we believe that this legislation is something
the country can be proud of. It represents years of a commitment on the part of
the federal government to hold spending in check and refrain from creating new
programs. Expanding corporate revenues and profits in an extended period of low
inflation also contributed to making this investor-friendly environment
possible.
As we look toward the end of the year, we see little to trouble us. The
economy appears to be in excellent condition. Continuing the alternatingly
fast/slow pace that we have experienced for several months, the fast-growing
first quarter was followed by a slower second quarter. Such self-regulation has
minimized any need for the Federal Reserve Board to raise interest rates again.
We don't rule out the possibility of another hike in the fourth quarter,
however.
Inflation is very low. In spite of unemployment being the lowest we have seen
in decades, wage pressures are still manageable. For example, the United Parcel
Service strike and the earlier steel and airlines work actions represent the
most union activity we have seen in 10 years. Encouraged by the low unemployment
(and therefore high demand for workers), the unions are becoming bolder but in
the end seem ready to resolve disputes sensibly. As a consequence, wage
increases remain moderate.
3
<PAGE> 4
ECONOMIC OVERVIEW
- -------------------------------------------------------------------------------
ECONOMIC GUIDPOSTS
- -------------------------------------------------------------------------------
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 (07/31/97) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 6.22 6.42 6.64 6.49
PRIME RATE(2) 8.5 8.25 8.25 8.75
INFLATION RATE(3) 2.23 3.03 2.88 2.62
THE U.S. DOLLAR(4) 7.32 7.67 4.26 -4.11
CAPITAL GOODS ORDERS(5)* 7.11 3.61 16.26 1.75
INDUSTRIAL PRODUCTION(5)* 3.84 4.84 3.38 2.36
EMPLOYMENT GROWTH(6) 2.24 2.2 2.14 2.42
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on family income and retail sales.
* Data as of June 30, 1997.
Our primary concern is the very high valuations of the stock market. All
things considered, it is difficult to see where we can go from here. With prices
at such heady levels, the market can be expected to react negatively to even
minor earnings disappointments, as we have seen in August. Kemper's response to
this market is to remain fully invested and to reduce exposure by diversifying
across a wider group of investment opportunities. Research, the first step in
stock selection, is key in this kind of a market.
Bond markets are obviously cheered by recent events, and prospects for income
investors continue to be positive. Interest rates are stable and credit quality
has not been an issue. A dwindling supply of municipal bonds has enabled
municipal investments to outperform U.S. Treasuries.
In such a fully valued domestic market, it can make sense to look to
international markets for their growth potential. The strength of the dollar
thus far this year has diminished returns but international opportunities look
bright.
With this commentary as an economic backdrop, we encourage you to read the
following detailed report of your fund, including an interview with your fund's
portfolio management. Thank you for your continued support. We appreciate the
opportunity to serve your investment needs.
Sincerely,
/s/ Stephen B. Timbers
STEPHEN B. TIMBERS
PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER
Zurich Kemper Investments, Inc.
August 14, 1997
4
<PAGE> 5
PERFORMANCE UPDATE
[MCCORMICK PHOTO]
TRACY MCCORMICK CHESTER JOINED ZURICH KEMPER INVESTMENTS, INC., (ZKI) IN 1994
AND IS A SENIOR VICE PRESIDENT OF ZKI AND VICE PRESIDENT AND PORTFOLIO MANAGER
OF KEMPER RETIREMENT FUND SERIES. MCCORMICK CHESTER RECEIVED BOTH HER B.A. AND
M.B.A. DEGREES FROM MICHIGAN STATE UNIVERSITY.
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.
DESPITE A VOLATILE MARKET THAT RALLIED OVERALL BUT EXPERIENCED PERIODIC SHARP
DECLINES, THE STOCK PORTION OF KEMPER RETIREMENT SERIES PROVIDED GROWTH
POTENTIAL, WHILE THE ZERO-COUPON TREASURIES PROVIDED A CUSHION ON THE DAYS THE
MARKET DECLINED.
Q TRACY, COULD YOU GIVE US A BRIEF RECAP OF THE FUNDS' PERFORMANCE VERSUS THE
MARKET AND THEIR PEERS FOR THE LAST YEAR?
A Certainly. With large company stocks continuing to run, the bond component
held back returns, but for the one-year ended July 31, 1997, Series I returned
27.63 percent. This is the highest return of any of the Series. The S&P 500
returned 52.11% for the same period. The return of Series I is roughly half of
that of the market and the portfolio is made up of roughly 50% stocks.
Q HOW DID LARGE COMPANY STOCKS PERFORM DURING THE PERIOD?
A As reflected in the S&P 500's return, large capitalization stocks performed
fairly well overall. However, that strong return doesn't reflect the underlying
volatility in specific areas of the market -- finance and technology stocks in
particular -- which experienced sharp corrections. Because the market has come a
long way in the last two years, investors are wary of any earnings shortfall
that might signal the rally is running out of steam. Often, problems with
individual stocks would tarnish a whole group, regardless of the fundamentals.
So even if your stock picking was good, you sometimes still got caught in the
crossfire.
Q HOW DID YOU RESPOND TO THESE CONDITIONS?
A There's not a lot you can do to counter a market which is rotating quickly
- -- that is, when sectors are being built up and then torn down again in
succession. All you can do is try to use the rotations to pick up good quality
companies at low prices once they've come down. That's where our scrupulous
attention to price targets can really add value.
Our philosophy has always been "bottom-up" stock selection. Rather than focus
on economic conditions or entire sectors, we tend to choose stocks based on
their individual merits and seek those that offer above-average growth
prospects, but are selling at what we believe to be attractive prices. To do
that we set upper and lower price targets on stocks. If a stock falls below a
certain price level, we normally buy. If it rallies above a certain price level,
we normally sell. In this way we hope to benefit from most of the ride up but
avoid most of the ride down.
Q CAN YOU GIVE US SOME EXAMPLES?
A The most vivid example from the last year is probably our approach to
technology stocks. Technology is a "growth cyclical" industry, which simply
means that, while it's a long-term growth sector, that growth tends to happen in
spurts. In October
5
<PAGE> 6
PERFORMANCE UPDATE
technology stocks made up only 10 percent of the portfolio -- low by our usual
standards. Our underweighting was primarily the result of two factors: a glut of
semiconductor chips on the market (which kept semiconductor stocks under
pressure) and relatively high prices on networking stocks. In March and April
earnings estimates on networking stocks started coming in slightly under
expectations. This had a devastating effect as momentum investors, who were
looking for the slightest weakness, headed for the exits. As a result technology
stocks experienced a fairly broad and rapid sell-off.
However, although they were richly priced earlier, a number of technology
companies boast growth rates in excess of 30 percent per year, far above that of
the market as a whole. In mid-April price declines had made many fast growers
available at very attractive values, and as a result we boosted our technology
weighting. Purchases were mainly in the semiconductor area, since their
inventory correction appears to be ending. We also bought Cisco Systems, the
largest supplier of routing equipment that directs the flow of data between
local area networks. Software is another area we purchased.
Those were our major changes. In other areas we reduced health care, which had
held up well during the first quarter turbulence. We sold Johnson & Johnson and
Merck and looked to reinvest in companies with more upside potential. Our
transportation weighting is down right now since we sold Ryder when it achieved
our price goal.
Finally, we used sell-offs to upgrade the quality of the portfolio. An example
is Pfizer, which rarely declines to a level where it shows upside in our
valuation model. When it dipped below the mid-80s, we viewed that as a buying
opportunity.
Q WERE THERE ANY AREAS WHERE THE STRATEGY DIDN'T WORK?
A One area that we usually like to overweight is consumer nondurables --
that is, products that people use on a regular basis, such as soft drinks, soap,
and other household products. We usually try to have at least 20 percent of the
portfolio in such stocks, but we had lightened up on them for valuation reasons
- - they were just too expensive. Consumer nondurables are usually thought of as
defensive-type stocks, since demand for them tends to be fairly constant. The
market's uncertainty caused investors to favor these types of stocks and their
prices continued to climb. We participated in some of that increase, but not as
much as we normally would have.
Q HAS THE MODEST BUT STEADY RISE IN INTEREST RATES OVER THE PAST SIX MONTHS
INFLUENCED YOUR STOCK-PICKING OR THE PERFORMANCE OF THE BONDS?
A Only indirectly. In the first quarter there was concern over the impact of
rising rates on financial stocks. We believe the sector remains attractive due
to industry consolidations, still-reasonable valuations overall, and a lack of
major loan problems. So when financial stocks sold off during a brief period in
the first quarter, we were able to buy solid companies at relatively low cost.
We purchased BankBoston, a very high quality name, and broadened our financial
stock exposure beyond banks and brokerages to include more insurance companies.
In particular, we bought American General and increased our position in
Jefferson-Pilot, due to our belief that consolidation within the life insurance
industry will result in increased earning power for the companies who are doing
the consolidating.
The bonds are a relatively fixed part of the portfolio. They will fluctuate on
a day to day basis but they continue to do their job. However, because of the
bonds we tend to underweight financial stocks because we don't want to increase
the exposure to interest rates.
Q CONVENTIONAL WISDOM SAYS THAT OPPORTUNITIES ARE MOST OFTEN OVERLOOKED WITH
SMALL COMPANY STOCKS BECAUSE THEY'RE LESS WIDELY FOLLOWED. DOES THAT MEAN
OPPORTUNITIES WITH LARGE COMPANY STOCKS ARE LESS COMMON?
A That hasn't been our experience. We've found that opportunities with big
companies can be just as overlooked. But to find those opportunities, we have to
do our homework. Our usual strategy is to look for catalysts
6
<PAGE> 7
PERFORMANCE UPDATE
like new management, consolidation, or new product cycles. That has enabled us
to find good values in large company stocks like R.R. Donnelley and Stanley
Works, which stand to benefit from the fresh vision of their new managements.
Q AS YOU MENTIONED, LARGE COMPANY STOCKS HAVE ENJOYED A FAIRLY PROLONGED
RALLY OVER THE LAST COUPLE OF YEARS. ARE YOU CONSIDERING ANY MID-CAP PURCHASES
TO ENHANCE THE FUNDS' RETURN POTENTIAL?
A Right now, we're looking at a few companies in the upper mid-cap area of
the market, but we're doing so selectively. We're not about to become a mid-cap
fund ... whenever we buy relatively smaller companies, we take smaller
positions so we can quickly reduce our exposure if needed.
Regardless of the size of the company we're researching, our
price-conscious approach will remain in place. Making sure we're getting a solid
company at a good price is the most important consideration for us.
ABOUT YOUR REPORT
CHANGE IN FISCAL YEAR
The fiscal year end for Kemper Retirement Fund Series I-VI has been changed to
July 31 from June 30. Therefore, this report contains information about the fund
covering the 13-month period ended July 31, 1997. Your next shareholder report
will be a semiannual report dated January 31.
7
<PAGE> 8
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
KEMPER RETIREMENT FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
FOR PERIODS ENDED JULY 31, 1997 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SERIES I 21.25% 11.47% 13.95% (since 2/5/90)
- --------------------------------------------------------------------------------------------------
SERIES II 16.94 10.13% 13.57% (since 9/10/90)
- --------------------------------------------------------------------------------------------------
SERIES III 18.76 11.13 11.29% (since 3/10/92)
- --------------------------------------------------------------------------------------------------
SERIES IV 18.04 N/A 9.65% (since 1/15/93)
- --------------------------------------------------------------------------------------------------
SERIES V 20.46 N/A 10.04% (since 11/15/93)
- --------------------------------------------------------------------------------------------------
SERIES VI 20.24 N/A 13.19% (since 5/1/95)
- --------------------------------------------------------------------------------------------------
</TABLE>
[LINE GRAPH]
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Retirement Fund Series I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2/5/90 12/31/92 12/31/95 07/31/97
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Retirement Fund(1) 10000 15611 20169 26570
Russell 100(R) Growth Index+ 10000 16076 23300 32895
Lehman Brothers Gov't Corp. Bond Index++ 10000 13715 17522 19092
</TABLE>
[LINE GRAPH]
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Retirement Fund Series II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
9/10/90 12/31/92 12/31/95 07/31/97
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Retirement Fund(1) 10000 14851 19241 24035
Russell 100(R) Growth Index+ 10000 16447 23128 32653
Lehman Brothers Gov't Corp. Bond Index++ 10000 13238 16912 18428
</TABLE>
[LINE GRAPH]
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Retirement Fund Series III
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3/10/92 12/31/94 12/31/96 07/31/97
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Retirement Fund(1) 10000 11182 15179 17810
Russell 100(R) Growth Index+ 10000 11670 17372 22604
Lehman Brothers Gov't Corp. Bond Index++ 10000 11638 14280 15120
</TABLE>
Past performance is not predictive of future performance. Returns and net asset
value fluctuate. Shares are redeemable at current net asset value, which may be
more or less than original cost.
* Average annual total return measures net investment income and capital gain
or loss from portfolio investments, assuming reinvestment of 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 Retirement Fund Series
to Russell 1000(R) Growth 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 index.
+ 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 Lehman Brothers Government/Corporate Bond Index is an unmanaged index
comprised of intermediate and long-term government and investment grade
corporate debt securities. Source is Towers Data Systems.
8
<PAGE> 9
PERFORMANCE UPDATE
[LINE GRAPH]
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Retirement Fund Series IV FROM 01/15/93 THROUGH 7/31/97
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1/15/93 12/31/94 12/31/96 7/31/97
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Retirement Fund(1) 10000 9630 13443 15195
Russell 1000(R) Growth Index+ 10000 10369 15436 20085
Lehman Brothers Gov't Corp. Bond Index++ 10000 10714 13146 13920
</TABLE>
[LINE GRAPH]
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Retirement Fund Series V FROM 11/15/93 THROUGH 7/31/97
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
11/15/93 12/31/94 12/31/96 7/31/97
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Retirement Fund(1) 10000 8775 12447 14259
Russell 1000(R) Growth Index+ 10000 10146 14958 19462
Lehman Brothers Gov't Corp. Bond Index++ 10000 9582 11757 12449
</TABLE>
[LINE GRAPH]
- -------------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Retirement Fund Series VI FROM 5/1/95 THROUGH 7/31/95
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5/1/95 12/31/95 12/31/96 7/31/97
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Retirement Fund(1) 10000 10725 11563 13220
Russell 1000(R) Growth Index+ 10000 12259 13302 17307
Lehman Brothers Gov't Corp. Bond Index++ 10000 11202 11527 12206
</TABLE>
9
<PAGE> 10
LARGEST STOCK HOLDINGS
THE FUNDS' LARGEST STOCK HOLDINGS*
Percentages based on the funds' total common stock holdings on July 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
HOLDINGS SERIES I SERIES II SERIES III SERIES IV SERIES V SERIES VI
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JEFFERSON-PILOT 2.52% 2.26% 2.40% 2.42% 2.40% 2.19%
- ---------------------------------------------------------------------------------------------
MORGAN STANLEY 2.01% 1.94% 2.21% 1.96% 2.01% 1.79%
DEAN WITTER
- ---------------------------------------------------------------------------------------------
STANLEY WORKS 2.00% 1.79% 1.85% 1.87% 2.00% 2.06%
- ---------------------------------------------------------------------------------------------
MOBIL 1.93% 2.09% 2.01% 2.14% 1.88% 2.20%
- ---------------------------------------------------------------------------------------------
SEARS, ROEBUCK 1.85% 1.72% 1.92% 1.84% 2.04% 1.95%
- ---------------------------------------------------------------------------------------------
MAY DEPARTMENT STORES 1.81% 1.70% 1.51% 1.52% 1.79% 1.76%
- ---------------------------------------------------------------------------------------------
PHILIP MORRIS 1.80% 1.61% 1.83% 1.89% 1.70% 1.61%
- ---------------------------------------------------------------------------------------------
BANC ONE 1.80% 1.69% 1.84% 1.66% 1.86% 1.96%
- ---------------------------------------------------------------------------------------------
HEWLETT-PACKARD 1.77% 2.11% 1.70% 1.72% 1.76% 1.80%
- ---------------------------------------------------------------------------------------------
SUN MICROSYSTEMS 1.76% 1.65% 1.62% 1.40% 1.75% 1.56%
- ---------------------------------------------------------------------------------------------
AMERICAN GENERAL 1.72% 1.76% 1.71% 1.73% 1.72% 1.83%
- ---------------------------------------------------------------------------------------------
CISCO SYSTEMS 1.71% 1.79% 1.74% 1.76% 1.71% 1.63%
- ---------------------------------------------------------------------------------------------
ANALOG DEVICES 1.69% 1.68% 1.91% 1.72% 1.74% 1.58%
- ---------------------------------------------------------------------------------------------
R.R. DONNELLEY & SONS 1.61% 1.65% 1.56% 1.58% 1.67% 1.79%
- ---------------------------------------------------------------------------------------------
</TABLE>
*The funds' holdings are subject to change.
10
<PAGE> 11
LARGEST STOCK HOLDINGS
DESCRIPTION OF THE FUNDS' LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
HOLDINGS
- --------------------------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------------------------
JEFFERSON-PILOT Writes life, health and accident insurance and
annuities. Owns and operates radio and television
stations.
- --------------------------------------------------------------------------------------------
MORGAN STANLEY Principally involved in credit services, securities
DEAN WITTER and investment banking.
- --------------------------------------------------------------------------------------------
STANLEY WORKS A world-wide producer of tools, hardware and
specialty hardware for consumer, home improvement,
industrial and professional use.
- --------------------------------------------------------------------------------------------
MOBIL Produces, transports, refines and markets petroleum
and natural gas and related products.
- --------------------------------------------------------------------------------------------
SEARS, ROEBUCK A leading retailer of apparel, home and automotive
products and related services for families
throughout North America. In addition, it is the
nation's number one credit provider among
retailers.
- --------------------------------------------------------------------------------------------
MAY DEPARTMENT Owns and operates retail department stores and self
STORES service shoe stores.
- --------------------------------------------------------------------------------------------
PHILIP MORRIS The largest cigarette maker in the U.S. Through its
Miller Brewing subsidiary, it is also the country's
second-largest brewer. This company is also a major
branded food producer through its Kraft Foods
subsidiaries.
- --------------------------------------------------------------------------------------------
BANC ONE Operates 65 banks with 1400 offices throughout the
United States. The bank offers depository and
lending services to individual and commercial
customers. It also provides data processing,
venture capital and merchant banking, trust,
brokerage, investment management and equipment
leasing services.
- --------------------------------------------------------------------------------------------
HEWLETT-PACKARD One of the largest suppliers of enterprise computer
systems. Huge success in low-cost printers for use
with personal computers is being followed up with
rapid growth in its own PC business.
- --------------------------------------------------------------------------------------------
SUN MICROSYSTEMS Provides high performance workstations.
- --------------------------------------------------------------------------------------------
AMERICAN GENERAL One of the nation's largest consumer financial
services organizations. It is a leading provider of
retirement annuities, consumer loans and life
insurance.
- --------------------------------------------------------------------------------------------
CISCO SYSTEMS Largest, most comprehensive supplier of routing
software and related systems that direct the flow
of data between local area networks. A play on the
explosive growth of the Internet.
- --------------------------------------------------------------------------------------------
ANALOG DEVICES Designs, manufactures and sells precision
electronic components and subsystems for signal
processing.
- --------------------------------------------------------------------------------------------
R.R. DONNELLEY & SONS The world's largest provider of print and print
related services.
- --------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
PORTFOLIOS OF INVESTMENTS
KEMPER RETIREMENT FUND -- SERIES I THROUGH SERIES VI
PORTFOLIOS OF INVESTMENTS AT JULY 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
------------------- ---------------------
SERIES I SERIES II
------------------- ---------------------
PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT U.S. Treasury, zero coupon,
OBLIGATIONS--38.8%, 1999 through 2006
53.6%, 49.9%, 55.0%, (Cost: $42,509, $87,290,
48.4% AND 56.8% $58,971, $74,327, $59,132
and $40,346) $51,800 $45,509 $110,700 $92,962
--------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER NUMBER
COMMON STOCKS OF SHARES VALUE OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRIES--3.3%, Air Products & Chemicals 8,000 706 7,000 617
2.5%, 2.8%, 2.5%, Betz Dearborn Inc. 9,400 616 11,500 753
2.8% AND 2.2% Cementos Mexicanos, S.A. de
C.V., "B" 3,400 19 4,000 22
Crown Cork & Seal Co. 20,000 1,011 23,000 1,163
E.I. DuPont De Nemours 5,000 335 6,000 402
W.R. Grace & Co. 11,000 677 14,000 861
Rentokil Initial PLC 3,800 14 4,400 16
Technip S.A. 116 15 136 17
Temple-Inland Inc. 6,500 438 7,500 505
Toray Industries 2,000 13 2,000 13
--------------------------------------------------------------------------------
3,844 4,369
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--6.2%, 5.0%, Emerson Electric Co. 10,400 614 13,800 814
5.3%, 5.0%, 5.4% AND 5.0% General Electric Co. 10,600 744 12,600 884
B.F. Goodrich Co. 18,100 818 22,700 1,026
Honda Motor Co., Ltd. 500 17 500 17
Honeywell 14,000 1,046 16,200 1,210
Matsushita Electric Industrial
Co., Ltd. 800 17 900 19
Murata Manufacturing 400 19 500 24
Raytheon Co. 18,000 1,006 19,000 1,062
Sony Corp. 100 10 200 20
Sundstrand Corp. 16,000 992 19,000 1,178
(a)U.S. Industries 6,000 242 8,000 323
United Technologies 11,000 930 13,000 1,099
WMX Technologies Inc. 27,000 864 30,000 960
--------------------------------------------------------------------------------
7,319 8,636
- --------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--7.4%, CVS Corp. 8,400 478 11,200 637
5.6%, 6.1%, 5.5%, (a)Clear Channel Communications 7,900 492 9,500 591
6.5% AND 5.4% Dillard Department Stores 23,000 870 25,000 945
R.R. Donnelley & Sons Co. 26,000 1,045 31,000 1,246
Harcourt General 13,000 614 15,000 709
Hudson's Bay Co. 1,350 30 1,600 36
May Department Stores Co. 21,100 1,179 23,000 1,285
Reed International PLC 1,556 16 1,814 18
Sears, Roebuck & Co. 19,000 1,203 20,500 1,298
Stanley Works 28,700 1,300 29,800 1,350
Time Warner Inc. 13,000 709 14,000 764
Tribune Co. 9,000 476 10,500 556
Wm. Wrigley Jr. Co. 2,600 200 2,600 200
--------------------------------------------------------------------------------
8,612 9,635
</TABLE>
12
<PAGE> 13
PORTFOLIOS OF INVESTMENTS
<TABLE>
<CAPTION>
- ----------------- ----------------- ----------------- --------------------
SERIES III SERIES IV SERIES V SERIES VI
- ----------------- ----------------- ----------------- --------------------
- -------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$82,400 $63,399 $103,400 $74,750 $102,600 $66,319 $70,700 $41,553
- -------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
7,000 617 6,000 529 8,000 706 3,000 265
8,500 557 8,900 583 9,400 616 5,000 327
3,400 19 3,400 19 3,400 19 1,700 9
20,000 1,011 19,000 961 20,000 1,011 8,900 450
4,000 268 4,000 268 5,000 335 2,000 134
10,000 615 10,000 615 10,000 615 5,400 332
3,800 14 3,800 14 3,800 14 1,880 7
116 15 116 15 116 15 58 7
5,500 370 5,500 370 6,500 438 1,500 101
2,000 13 2,000 13 2,000 13 1,000 7
- ------------------------------------------------------------------------------
3,499 3,387 3,782 1,639
- ------------------------------------------------------------------------------
10,200 602 10,200 602 10,800 637 5,200 307
10,800 758 11,800 828 12,600 884 6,000 421
18,100 818 18,100 818 18,100 818 10,000 452
500 17 500 17 500 17 200 7
13,200 986 13,200 986 14,000 1,046 5,800 433
800 17 800 17 800 17 400 8
400 19 400 19 400 19 200 9
14,000 782 14,000 782 18,000 1,006 9,000 503
100 10 100 10 100 10 100 10
13,000 806 13,000 806 15,000 930 7,600 471
6,000 242 6,000 242 6,000 242 3,000 121
10,000 846 10,000 846 11,000 930 6,000 507
27,000 864 25,000 800 27,000 864 13,000 416
- ------------------------------------------------------------------------------
6,767 6,773 7,420 3,665
- ------------------------------------------------------------------------------
8,200 466 8,200 466 8,400 478 5,000 284
7,300 454 7,300 454 7,900 492 3,600 224
20,000 756 19,000 718 23,000 870 10,000 378
23,000 924 23,000 924 27,000 1,085 13,000 522
13,000 614 12,000 567 13,000 614 6,000 284
1,350 30 1,350 30 1,350 30 700 16
16,000 894 16,000 894 20,900 1,168 9,200 514
1,556 16 1,556 16 1,556 16 778 8
18,000 1,140 17,000 1,076 21,000 1,330 9,000 570
24,250 1,099 24,250 1,099 28,800 1,305 13,300 603
13,000 709 12,000 655 15,000 818 6,000 327
8,000 423 8,000 423 9,000 476 4,500 238
2,100 162 2,100 162 2,600 200 -- --
- ------------------------------------------------------------------------------
7,687 7,484 8,882 3,968
</TABLE>
13
<PAGE> 14
PORTFOLIOS OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
-------------------- ----------------------
SERIES I SERIES II
-------------------- ----------------------
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSUMER STAPLES--4.8%, Avon Products 3,000 $ 218 4,000 $ 290
3.6%, 3.9%, 3.7%, 4.0% CPC International 2,000 192 3,000 288
AND 2.9% H.J. Heinz Co. 12,000 554 13,000 600
International Flavors &
Fragrances 13,000 690 14,000 743
PepsiCo 19,200 736 21,200 812
Philip Morris Companies 25,900 1,169 27,000 1,218
Procter & Gamble Co. 2,500 380 3,000 456
Sara Lee Corp. 20,000 876 18,000 789
Unilever N.V., ADR 3,500 763 5,000 1,090
----------------------------------------------------------------------------------
5,578 6,286
- ---------------------------------------------------------------------------------------------------------------------------
ENERGY--2.6%, AMOCO Corp. 10,000 940 12,000 1,128
2.2%, 2.2%, 2.2%, 2.2% British Petroleum 1,060 14 1,248 17
AND 2.0% Mobil Corp. 16,400 1,255 20,600 1,576
Unocal Corp. 14,000 560 15,000 600
(a)Western Atlas 4,000 318 6,000 477
----------------------------------------------------------------------------------
3,087 3,798
- ---------------------------------------------------------------------------------------------------------------------------
FINANCE--7.3%, American Express Co. 8,000 670 8,000 670
5.6%, 6.3%, 5.7%, 6.3% American General Corp. 21,000 1,118 25,000 1,331
AND 5.4% Banc One Corp. 20,800 1,167 22,800 1,280
Banco Santander, S.A. 321 9 372 10
Bank of Ireland 1,893 23 2,210 27
BankAmerica Corp. 6,000 453 7,000 529
CITIC Pacific Ltd. 2,000 13 3,000 19
Cheung Kong Holdings Ltd. 1,000 11 1,000 11
Development Bank of
Singapore 1,000 13 1,000 13
First Bank System 5,200 463 6,200 552
Fleet Financial Group, Inc. 7,000 475 7,000 475
ING Groep N.V. 494 24 573 28
ITT Hartford Group 5,300 462 6,200 540
Jefferson-Pilot Corp. 23,000 1,634 24,000 1,705
Mellon Bank Corp. 6,000 303 7,000 353
Morgan Stanley Dean Witter 25,000 1,308 28,000 1,465
Washington Mutual 6,000 415 9,000 622
----------------------------------------------------------------------------------
8,561 9,630
</TABLE>
14
<PAGE> 15
PORTFOLIOS OF INVESTMENTS
<TABLE>
<CAPTION>
- ----------------- --------------- ------------- --------------------
SERIES III SERIES IV SERIES V SERIES VI
- ----------------- --------------- ------------- ---------------------
- -----------------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3,000 $ 218 3,000 $ 218 3,000 $ 218 2,000 $ 145
2,000 192 2,000 192 2,000 192 1,000 96
9,000 416 9,000 416 12,000 554 5,000 231
12,000 637 11,000 584 13,000 690 6,000 318
18,000 690 18,000 690 19,200 736 7,200 276
24,000 1,083 24,600 1,110 24,600 1,110 10,400 469
2,500 380 2,500 380 2,500 380 -- --
14,000 613 14,000 613 20,000 876 6,000 263
3,500 763 3,500 763 3,500 763 1,500 327
- -----------------------------------------------------------------------------------------
4,992 4,966 5,519 2,125
- -----------------------------------------------------------------------------------------
9,000 846 10,000 940 11,000 1,034 5,000 470
1,060 14 1,060 14 1,060 14 302 4
15,600 1,193 16,400 1,255 16,000 1,224 8,400 643
12,000 480 12,000 480 12,000 480 6,000 240
4,000 318 4,000 318 4,000 318 1,500 119
- -----------------------------------------------------------------------------------------
2,851 3,007 3,070 1,476
- -----------------------------------------------------------------------------------------
6,000 503 6,000 503 8,000 670 3,000 251
19,000 1,012 19,000 1,012 21,000 1,118 10,000 533
19,400 1,089 17,400 976 21,600 1,212 10,200 572
321 9 321 9 321 9 162 5
1,893 23 1,893 23 1,893 23 945 12
6,000 453 6,000 453 6,000 453 3,000 227
2,000 13 2,000 13 2,000 13 1,000 6
1,000 11 1,000 11 1,000 11 1,000 11
1,000 13 1,000 13 1,000 13 500 6
5,300 472 5,300 472 5,200 463 3,000 267
7,000 475 7,000 475 7,000 475 3,500 238
494 24 494 24 494 24 243 12
6,400 558 6,400 558 6,300 549 3,100 270
20,000 1,421 20,000 1,421 22,000 1,563 9,000 640
6,000 303 6,000 303 6,000 303 3,000 151
25,000 1,308 22,000 1,151 25,000 1,308 10,000 523
5,500 380 5,500 380 6,000 415 3,000 207
- -----------------------------------------------------------------------------------------
8,067 7,797 8,622 3,931
</TABLE>
15
<PAGE> 16
PORTFOLIOS OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
------------------ -------------------
SERIES I SERIES II
------------------ -------------------
- -----------------------------------------------------------------------------------------------------------------
NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HEALTH CARE--8.7%, (a)ALZA Corp. 27,200 $ 879 31,200 $ 1,008
6.9%, 7.3%, 6.8%,
7.4% AND 6.1%
Abbott Laboratories 14,000 916 16,000 1,047
American Home Products Corp. 9,000 742 10,000 824
C.R. Bard 8,000 301 10,000 376
(a)Biogen 14,000 539 15,000 578
Biomet, Inc. 25,000 498 31,000 618
Bristol-Myers Squibb Co. 7,000 549 11,000 863
(a)British Biotech PLC 3,000 8 4,000 10
(a)Fresenius Medical Care AG 166 11 192 13
(a)HealthCare COMPARE Corp. 14,000 798 17,000 969
(a)Healthsouth Corp. 20,000 530 21,000 557
Eli Lilly & Co. 4,000 452 5,500 622
McKesson Corp. 8,700 754 8,100 702
Medtronic, Inc. 5,000 436 5,000 436
Perkin-Elmer Corp. 7,600 620 9,600 784
Pfizer Inc. 7,000 417 11,000 656
Pharmacia & Upjohn, Inc. 11,000 415 12,000 453
Roche Holding AG 2 19 2 19
(a)Tenet Healthcare Corp. 27,700 829 28,600 856
United Healthcare Corp. 8,000 456 10,000 570
--------------------------------------------------------------------------
10,169 11,961
- -----------------------------------------------------------------------------------------------------------------
TECHNOLOGY--11.9%, AMP Inc. 10,000 523 12,000 627
9.7%, 10.0%, 9.2%, (a)Analog Devices 35,000 1,100 40,333 1,268
10.1% AND 8.5% (a)Applied Materials Inc. 3,000 276 4,000 367
(a)Cadence Design Systems 13,700 609 17,800 791
(a)Cisco Systems 14,000 1,114 17,000 1,353
Computer Associates
International 7,000 476 8,000 545
L.M. Ericsson Telephone Co.,
"B" 408 18 476 21
Harris Corp. 6,000 521 7,000 608
Hewlett-Packard Co. 16,400 1,149 22,800 1,597
Intel Corp. 4,000 367 6,000 551
Linear Technology Corp. 7,000 468 9,000 602
(a)Microsoft Corp. 4,000 566 4,000 566
Motorola 12,500 1,004 14,800 1,189
(a)Oracle Corp. 17,000 925 20,000 1,089
(a)Parametric Technology Corp. 12,000 588 13,500 661
Pitney Bowes Inc. 14,000 1,052 16,000 1,202
(a)Sun Microsystems 25,000 1,142 27,200 1,243
(a)Tellabs, Inc. 8,000 479 12,000 719
(a)Teradyne 12,500 584 15,000 701
Texas Instruments 2,500 288 3,500 402
(a)Xilinx, Inc. 14,000 663 16,000 758
-----------------------------------------------------------------------------
13,912 16,860
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
- ----------------- ----------------- ---------------- ------------------
SERIES III SERIES IV SERIES V SERIES VI
- ----------------- ----------------- ---------------- ------------------
- -------------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
24,400 $ 788 24,400 $ 788 27,200 $ 879 9,900 $ 320
14,000 916 14,000 916 14,000 916 7,500 491
9,000 742 9,000 742 9,000 742 4,000 330
7,000 263 7,000 263 8,000 301 4,000 150
14,000 539 14,000 539 14,000 539 7,000 270
26,000 518 26,000 518 25,000 498 10,000 199
7,000 549 7,000 549 7,000 549 4,000 314
3,000 8 3,000 8 3,000 8 1,500 4
166 11 166 11 166 11 84 6
12,000 684 12,000 684 14,000 798 6,000 342
15,000 398 15,000 398 20,000 530 7,000 185
4,000 452 4,000 452 4,000 452 2,000 226
6,000 520 6,000 520 8,700 754 3,000 260
4,000 349 4,000 349 5,000 436 2,000 175
7,600 620 7,600 620 7,600 620 3,500 286
7,000 417 7,000 417 7,000 417 3,000 179
10,000 378 10,000 378 11,000 415 5,000 189
2 19 2 19 2 19 1 10
22,000 659 22,000 659 27,700 829 11,100 332
7,000 399 7,000 399 8,000 456 3,200 182
- -------------------------------------------------------------------------------------
9,229 9,229 10,169 4,450
- -------------------------------------------------------------------------------------
10,000 523 10,000 523 10,000 523 5,000 261
36,000 1,132 32,000 1,006 36,000 1,132 14,666 461
3,000 276 3,000 276 3,000 276 2,000 184
12,500 555 12,500 555 13,700 609 7,000 311
13,000 1,034 13,000 1,034 14,000 1,114 6,000 477
7,000 476 6,000 408 7,000 476 4,000 272
408 18 408 18 408 18 204 9
5,000 434 5,000 434 6,000 521 3,000 261
14,400 1,009 14,400 1,009 16,400 1,149 7,500 525
4,000 367 4,000 367 4,000 367 2,000 184
7,000 468 7,000 468 6,000 401 3,000 201
3,000 425 4,000 566 4,000 566 -- --
10,400 835 10,400 835 12,000 964 5,600 450
15,000 817 15,000 817 17,000 925 8,000 435
10,500 514 10,500 514 12,000 588 4,500 221
13,000 977 13,000 977 14,000 1,052 6,000 451
21,000 959 18,000 822 25,000 1,142 10,000 457
7,000 419 7,000 419 8,000 479 5,000 299
12,400 580 11,400 533 12,400 580 5,200 243
2,500 288 2,500 288 2,500 288 1,500 172
14,000 663 14,000 663 14,000 663 6,500 308
- -------------------------------------------------------------------------------------
12,769 12,532 13,833 6,182
</TABLE>
17
<PAGE> 18
PORTFOLIOS OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
----------------- ------------------
SERIES I SERIES II
----------------- ------------------
- --------------------------------------------------------------------------------------------------------------------
NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRANSPORTATION--2.1%, CSX Corp. 16,000 $ 988 18,000 $ 1,112
1.6%, 1.7%, 1.5%, 1.8% Norfolk Southern Corp. 10,000 1,107 11,000 1,219
AND 1.5% Swire Pacific Ltd., "A" 1,000 9 1,000 9
Union Pacific Corp. 5,500 394 6,500 466
------------------------------------------------------------------------------
2,498 2,806
- -----------------------------------------------------------------------------------------------------------------------
UTILITIES--1.2%, AT&T 16,000 589 18,000 663
.9%, 1.0%, 1.0%, 1.0% (a)AirTouch Communications 8,000 264 9,000 296
AND .9% SBC Communications Inc. 8,600 509 10,000 592
Telefonica de Espana S.A. 515 14 600 16
Telefonica del Peru, S.A.,
ADS 500 12 500 12
------------------------------------------------------------------------------
1,388 1,579
------------------------------------------------------------------------------
TOTAL COMMON STOCKS--55.5%, 43.6%,
46.6%, 43.1%, 47.5% AND 39.9%
(Cost: $50,983, $58,733, $46,587,
$45,850, $51,293 and $23,386) 64,968 75,560
<CAPTION>
------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MONEY MARKET Yield--5.55% to 5.80%
INSTRUMENTS--5.7%, Due--August and
2.7%, 3.3%, 1.8%, 4.2% September 1997
AND 2.7% Sanwa Business Credit $ 3,900 3,888 $3,000 2,984
Other 2,800 2,797 1,700 1,699
------------------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS
(Cost: $6,686, $4,682,
$4,188, $2,394, $5,800 and
$1,989) 6,685 4,683
------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.0%, 99.9%, 99.8%,
99.9%, 100.1% AND 99.4%
(Cost: $100,178, $150,705, $109,746,
$122,571, $116,225 and $65,721) 117,162 173,205
------------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--0%, .1%, .2%, .1%,
(.1%) AND .6% (45) 178
------------------------------------------------------------------------------
NET ASSETS--100% $117,117 $173,383
------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIOS OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments for federal income tax purposes at July 31,
1997, the unrealized appreciation and depreciation on investments is as follows
(in thousands):
<TABLE>
<CAPTION>
SERIES I SERIES II SERIES III SERIES IV SERIES V SERIES VI
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Cost of investments for federal income tax
purposes $100,178 $150,705 $109,746 $122,571 $116,225 $65,721
- ------------------------------------------------------------------------------------------------------------------------
Gross unrealized appreciation 17,021 22,543 17,173 13,237 21,080 7,040
- ------------------------------------------------------------------------------------------------------------------------
Gross unrealized depreciation 37 43 37 36 39 16
- ------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation 16,984 22,500 17,136 13,201 21,041 7,024
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 19
PORTFOLIOS OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------ ------------------- ------------------ --------------------
SERIES III SERIES IV SERIES V SERIES VI
- ------------------ ------------------- ------------------ --------------------
- ----------------------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
14,000 $ 865 14,000 $ 865 16,000 $ 988 7,000 $ 432
8,000 886 8,000 886 10,000 1,107 4,500 498
1,000 9 1,000 9 1,000 9 500 5
5,000 358 5,000 358 5,500 394 2,500 179
- ----------------------------------------------------------------------------------------------
2,118 2,118 2,498 1,114
- ----------------------------------------------------------------------------------------------
16,000 589 16,000 589 16,000 589 8,000 295
8,000 264 8,000 264 8,000 264 3,000 99
7,400 438 7,700 456 8,000 474 4,100 243
515 14 515 14 515 14 260 7
500 12 500 12 500 12 350 9
- ----------------------------------------------------------------------------------------------
1,317 1,335 1,353 653
- ----------------------------------------------------------------------------------------------
59,296 58,628 65,148 29,203
- ----------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- -- $1,000 995 $3,900 3,888 $2,000 1,989
4,200 4,187 1,400 1,399 1,929 1,911 -- --
- ----------------------------------------------------------------------------------------------
4,187 2,394 5,799 1,989
- ----------------------------------------------------------------------------------------------
126,882 135,772 137,266 72,745
- ----------------------------------------------------------------------------------------------
216 158 (135) 426
- ----------------------------------------------------------------------------------------------
$127,098 $135,930 $137,131 $ 73,171
- ----------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
PORTFOLIOS OF INVESTMENTS
KEMPER RETIREMENT FUND
SERIES I THROUGH SERIES VI
Portfolios of Investments at June 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
-------------------- --------------------
SERIES I SERIES II
-------------------- --------------------
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT U.S. Treasury, zero coupon,
OBLIGATIONS--40.1%, 1999 through 2006
55.4%, 51.3%, 56.0%, (Cost: $42,195, $88,041,
49.7% AND 59.6% $59,645, $75,167, $60,046
and $42,000) $51,800 $44,815 $112,400 $92,683
--------------------------------------------------------------------------------
NUMBER NUMBER
COMMON STOCKS OF SHARES VALUE OF SHARES VALUE
BASIC INDUSTRIES--2.5%, Air Products & Chemicals 5,000 406 5,000 406
2.0%, 2.1%, 1.9%,
2.1% AND 1.6%
Betz Dearborn Inc. 9,400 620 11,500 759
Cementos Mexicanos, S.A. de
C.V., "B" 3,400 16 4,000 19
Crown Cork & Seal Co. 15,000 802 18,000 962
W.R. Grace & Co. 11,000 606 14,000 772
Rentokil Initial PLC 3,800 13 4,400 15
Technip S.A. 116 13 136 16
Temple-Inland Inc. 5,000 270 6,000 324
Toray Industries 2,000 14 2,000 14
--------------------------------------------------------------------------------
2,760 3,287
- --------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--6.3%, 5.0%, Boeing Co. 4,000 212 6,400 340
5.3%, 5.0%, 5.5% AND 5.1%
Emerson Electric Co. 10,400 573 13,800 760
General Electric Co. 10,600 693 12,600 824
B.F. Goodrich Co. 18,100 784 22,700 983
Honda Motor Co., Ltd. 500 15 500 15
Honeywell 14,000 1,062 16,200 1,229
Matsushita Electric Industrial
Co., Ltd. 800 16 900 18
Murata Manufacturing 400 16 500 20
Raytheon Co. 18,000 918 19,000 969
Sony Corp. 100 9 200 17
Sundstrand Corp. 16,000 893 19,000 1,060
(a)Tubos de Acero de Mexico,
S.A., ADR 800 15 800 15
(a)U.S. Filter Corp. 10,000 273 14,000 382
United Technologies 11,000 913 13,000 1,079
WMX Technologies Inc. 20,000 642 22,000 707
--------------------------------------------------------------------------------
7,034 8,418
</TABLE>
20
<PAGE> 21
PORTFOLIOS OF INVESTMENTS
<TABLE>
<CAPTION>
----------------- ----------------- ----------------- -----------------
SERIES III SERIES IV SERIES V SERIES VI
----------------- ----------------- ----------------- -----------------
- ------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$83,900 $62,781 $105,100 $73,525 $104,900 $64,954 $74,000 $41,344
- ------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5,000 406 4,000 325 5,000 406 2,000 162
8,500 561 8,900 587 9,400 620 5,000 330
- ------------------------------------------------------------------------------
3,400 16 3,400 16 3,400 16 1,700 8
15,000 802 14,000 748 15,000 802 5,900 315
10,000 551 10,000 551 10,000 551 5,400 298
3,800 13 3,800 13 3,800 13 1,880 7
116 13 116 13 116 13 58 7
4,000 216 4,000 216 5,000 270 -- --
2,000 14 2,000 14 2,000 14 1,000 7
- ------------------------------------------------------------------------------
2,592 2,483 2,705 1,134
- ------------------------------------------------------------------------------
4,000 212 4,000 212 4,000 212 2,000 106
10,200 562 10,200 562 10,800 595 5,200 286
10,800 706 11,800 771 12,600 824 6,000 392
18,100 784 18,100 784 18,100 784 10,000 433
500 15 500 15 500 15 200 6
13,200 1,002 13,200 1,002 14,000 1,062 5,800 440
800 16 800 16 800 16 400 8
400 16 400 16 400 16 200 8
14,000 714 14,000 714 18,000 918 9,000 459
100 9 100 9 100 9 100 9
13,000 726 13,000 726 15,000 837 7,600 424
800 15 800 15 800 15 400 7
10,000 273 10,000 273 11,000 300 5,000 136
10,000 830 10,000 830 11,000 913 6,000 498
19,000 610 19,000 610 20,000 642 9,000 289
- ------------------------------------------------------------------------------
6,490 6,555 7,158 3,501
</TABLE>
21
<PAGE> 22
PORTFOLIOS OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
----------------- --------------------
SERIES I SERIES II
----------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSUMER CYCLICALS--7.5%, CVS Corp. 8,400 $ 431 11,200 $ 574
5.5%, 5.9%, 5.4%, 6.5% (a)Clear Channel Communications 5,900 363 7,500 461
AND 5.5% Dillard Department Stores 18,000 623 20,000 692
R.R. Donnelley & Sons Co. 26,000 952 31,000 1,135
Harcourt General 13,000 619 15,000 714
Hilton Hotels Corp. 17,000 452 20,000 531
Hudson's Bay Co. 1,350 30 1,600 36
(a)MGM Grand 15,000 555 14,000 518
May Department Stores Co. 19,100 902 20,000 945
Reed International PLC 1,556 15 1,814 18
Sears, Roebuck & Co. 15,000 806 13,500 726
Stanley Works 28,700 1,148 29,800 1,192
Time Warner Inc. 12,000 579 11,000 531
Tribune Co. 16,000 769 18,500 889
Wm. Wrigley Jr. Co. 2,600 174 2,600 174
----------------------------------------------------------------------------------
8,418 9,136
- ---------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--4.3%, Avon Products 3,000 212 4,000 282
3.3%, 3.6%, 3.4%, 3.6% CPC International 8,000 739 10,000 923
AND 2.7% H.J. Heinz Co. 14,000 646 15,000 692
PepsiCo 19,200 721 21,200 796
Philip Morris Companies 30,900 1,371 30,000 1,331
Procter & Gamble Co. 2,500 353 3,000 424
Unilever N.V., ADR 3,500 763 5,000 1,090
----------------------------------------------------------------------------------
4,805 5,538
- ---------------------------------------------------------------------------------------------------------------------------
ENERGY--2.1%, AMOCO Corp. 10,000 869 12,000 1,043
1.7%, 1.8%, 1.8%, 1.8% British Petroleum 1,060 13 1,248 16
AND 1.7% Mobil Corp. 16,400 1,146 20,600 1,439
Unocal Corp. 8,000 311 9,000 349
----------------------------------------------------------------------------------
2,339 2,847
- ---------------------------------------------------------------------------------------------------------------------------
FINANCE--7.2%, American Express Co. 9,000 670 9,000 670
5.2%, 5.8%, 5.4%, American General Corp. 21,000 1,003 25,000 1,194
6.1% AND 5.1% Banc One Corp. 18,800 911 18,800 911
Banco Santander, S.A. 321 10 372 11
Bank of Ireland 1,864 20 2,176 24
CITIC Pacific Ltd. 2,000 12 3,000 19
Cheung Kong Holdings Ltd. 1,000 10 1,000 10
Development Bank of Singapore 1,000 13 1,000 13
First Bank System 7,200 615 7,200 615
Fleet Financial Group, Inc. 7,000 443 7,000 443
ING Groep N.V. 494 23 573 26
ITT Hartford Group 5,300 439 6,200 513
Jefferson-Pilot Corp. 23,000 1,607 24,000 1,677
Mellon Bank Corp. 6,000 271 7,000 316
Morgan Stanley Dean Witter 25,000 1,077 26,000 1,120
Provident Companies Inc. 5,000 268 5,000 268
Travelers/Aetna Property
Casualty Corp. 3,400 136 4,000 159
Washington Mutual 8,000 478 12,000 717
----------------------------------------------------------------------------------
8,006 8,706
</TABLE>
22
<PAGE> 23
PORTFOLIOS OF INVESTMENTS
<TABLE>
<CAPTION>
---------------- ------------- --------------- ----------------
SERIES III SERIES IV SERIES V SERIES VI
---------------- ------------- --------------- ----------------
- -------------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8,200 $ 420 8,200 $ 420 8,400 $ 431 5,000 $ 256
5,300 326 5,300 326 5,900 363 2,600 160
15,000 519 14,000 485 18,000 623 8,000 277
23,000 842 23,000 842 27,000 989 13,000 476
13,000 619 12,000 571 13,000 619 6,000 286
16,000 425 16,000 425 19,000 505 9,000 239
1,350 30 1,350 30 1,350 30 700 16
12,000 444 12,000 444 15,000 555 6,000 222
14,000 662 14,000 662 17,900 846 8,200 387
1,556 15 1,556 15 1,556 15 778 8
12,000 645 12,000 645 15,000 806 6,000 322
24,250 970 24,250 970 28,800 1,152 13,300 532
10,000 482 9,000 434 12,000 579 5,000 241
15,000 721 15,000 721 16,000 769 8,000 384
2,100 141 2,100 141 2,600 174 -- --
- --------------------------------------------------------------------------------------
7,261 7,131 8,456 3,806
- --------------------------------------------------------------------------------------
3,000 212 3,000 212 3,000 212 2,000 141
7,000 646 7,000 646 8,000 739 4,000 369
11,000 507 11,000 507 14,000 646 6,000 277
18,000 676 18,000 676 19,200 721 7,200 270
27,000 1,198 27,600 1,225 27,600 1,225 11,400 506
2,500 353 2,500 353 2,500 353 -- --
3,500 763 3,500 763 3,500 763 1,500 327
- --------------------------------------------------------------------------------------
4,355 4,382 4,659 1,890
- --------------------------------------------------------------------------------------
9,000 782 10,000 869 11,000 956 5,000 435
1,060 13 1,060 13 1,060 13 302 4
15,600 1,090 16,400 1,146 16,000 1,118 8,400 587
8,000 311 8,000 311 8,000 311 4,000 155
- --------------------------------------------------------------------------------------
2,196 2,339 2,398 1,181
- --------------------------------------------------------------------------------------
6,000 447 6,000 447 9,000 670 3,000 224
19,000 907 19,000 907 21,000 1,003 10,000 478
15,400 746 15,400 746 17,600 852 8,200 397
321 10 321 10 321 10 162 5
1,864 20 1,864 20 1,864 20 931 10
2,000 12 2,000 12 2,000 12 1,000 6
1,000 10 1,000 10 1,000 10 1,000 10
1,000 13 1,000 13 1,000 13 500 6
6,300 538 6,300 538 7,200 615 3,600 307
7,000 443 7,000 443 7,000 443 3,500 221
494 23 494 23 494 23 243 11
6,400 530 6,400 530 6,300 521 3,100 257
20,000 1,398 20,000 1,398 22,000 1,537 9,000 629
6,000 271 6,000 271 6,000 271 3,000 135
22,000 947 22,000 947 25,000 1,077 10,000 431
4,000 214 4,000 214 5,000 268 2,000 107
2,900 116 2,900 116 3,400 136 1,700 68
7,500 448 7,500 448 8,000 478 4,000 239
- --------------------------------------------------------------------------------------
7,093 7,093 7,959 3,541
</TABLE>
23
<PAGE> 24
PORTFOLIOS OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
------------------- --------------------
SERIES I SERIES II
------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------
NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HEALTH CARE--9.3%, (a)ALZA Corp. 22,200 $ 644 26,200 $ 760
7.2%, 7.3%, 6.9%, Abbott Laboratories 19,000 1,268 21,000 1,402
7.9% AND 6.3% American Home Products Corp. 7,000 536 8,000 612
(a)Biogen 14,000 474 15,000 508
Biomet, Inc. 40,000 745 46,000 857
Bristol-Myers Squibb Co. 7,000 567 11,000 891
(a)British Biotech PLC 3,000 11 4,000 15
(a)Fresenius Medical Care AG 166 12 192 14
(a)HealthCare COMPARE Corp. 21,000 1,100 20,000 1,048
(a)Healthsouth Corp. 20,000 499 21,000 524
Eli Lilly & Co. 6,000 656 8,000 874
McKesson Corp. 8,700 674 9,100 705
Medtronic, Inc. 7,000 567 8,000 648
Perkin-Elmer Corp. 10,600 843 13,600 1,082
Pfizer Inc. 6,000 717 8,000 956
Roche Holding AG 2 18 2 18
(a)Tenet Healthcare Corp. 25,700 760 26,600 786
United Healthcare Corp. 6,000 312 7,000 364
----------------------------------------------------------------------------
10,403 12,064
- ----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--11.6%, (a)Analog Devices 30,000 797 35,333 939
9.5%, 9.5%, 8.9%, 9.8% (a)Applied Materials Inc. 5,000 354 7,000 496-
AND 8.1% (a)Cadence Design Systems 13,700 459 16,800 563
(a)Cisco Systems 14,000 940 17,000 1,141
Computer Associates
International 5,000 278 6,000 334
L.M. Ericsson Telephone Co.,
"B" 408 16 476 19
Harris Corp. 7,000 588 9,000 756
Hewlett-Packard Co. 18,400 1,030 24,800 1,389
Intel Corp. 2,000 284 3,000 425
Linear Technology Corp. 7,000 362 9,000 466
(a)Microsoft Corp. 4,000 506 4,000 506
Motorola 16,500 1,254 18,800 1,429
(a)Oracle Corp. 20,000 1,007 24,000 1,209
(a)Parametric Technology
Corp. 12,000 511 13,500 575
(a)PeopleSoft Inc. 10,000 528 12,000 633
Pitney Bowes Inc. 14,000 973 16,000 1,112
(a)Sun Microsystems 22,000 819 23,200 863
(a)Tellabs, Inc. 17,000 950 24,000 1,341
(a)Teradyne 13,500 530 16,000 628
Texas Instruments 3,000 252 4,000 336
(a)Xilinx, Inc. 12,000 589 14,000 687
----------------------------------------------------------------------------
13,027 15,847
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--2.1%, CSX Corp. 16,000 888 18,000 999
1.6%, 1.7%, 1.5%, 1.8% Norfolk Southern Corp. 10,000 1,007 11,000 1,108-
AND 1.5% Swire Pacific Ltd., "A" 1,000 9 1,000 9
Union Pacific Corp. 6,500 458 8,000 564
----------------------------------------------------------------------------
2,362 2,680
</TABLE>
24
<PAGE> 25
PORTFOLIOS OF INVESTMENTS
<TABLE>
<CAPTION>
- ----------------- -------------- --------------- -------------------
SERIES III SERIES IV SERIES V SERIES VI
- ----------------- -------------- --------------- -------------------
- --------------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
19,400 $ 563 19,400 $ 563 22,200 $ 644 6,900 $ 200
17,000 1,135 17,000 1,135 19,000 1,268 8,500 567
7,000 536 7,000 536 7,000 536 3,000 230
14,000 474 14,000 474 14,000 474 7,000 237
36,000 671 36,000 671 40,000 745 18,000 335
7,000 567 7,000 567 7,000 567 4,000 324
3,000 11 3,000 11 3,000 11 1,500 6
166 12 166 12 166 12 84 6
15,000 786 15,000 786 20,000 1,048 7,000 367
15,000 374 15,000 374 20,000 499 7,000 175
5,000 547 5,000 547 6,000 656 2,500 273
7,000 542 7,000 542 8,700 674 3,000 232
5,000 405 5,000 405 7,000 567 3,000 243
9,600 764 9,600 764 10,600 843 5,000 398
6,000 717 6,000 717 6,000 717 3,000 358
2 18 2 18 2 18 1 9
20,000 591 20,000 591 25,700 760 10,100 299
5,000 260 5,000 260 6,000 312 2,000 104
- -------------------------------------------------------------------------------------
8,973 8,973 10,351 4,363
- -------------------------------------------------------------------------------------
28,000 744 28,000 744 28,000 744 11,666 310
5,000 354 5,000 354 5,000 354 3,000 212
12,500 419 12,500 419 13,700 459 7,000 235
13,000 873 13,000 873 14,000 940 6,000 403
5,000 278 4,000 223 5,000 278 2,000 111
408 16 408 16 408 16 204 8
7,000 588 7,000 588 7,000 588 4,000 336
16,400 918 16,400 918 18,400 1,030 8,500 476
2,000 284 2,000 284 2,000 284 1,000 142
7,000 362 7,000 362 6,000 310 3,000 155
3,000 379 4,000 506 4,000 506 -- --
13,400 1,018 13,400 1,018 15,500 1,178 6,600 502
18,000 907 18,000 907 20,000 1,007 9,500 479
10,500 447 10,500 447 12,000 511 4,500 192
8,000 422 8,000 422 10,000 528 3,500 185
13,000 904 13,000 904 14,000 973 6,000 417
15,000 558 15,000 558 21,000 782 9,000 335
15,000 838 15,000 838 17,000 950 8,000 447
13,400 526 12,400 486 13,400 526 5,700 224
3,000 252 3,000 252 3,000 252 2,000 168
12,000 589 12,000 589 12,000 589 6,000 294
- -------------------------------------------------------------------------------------
11,676 11,708 12,805 5,631
- -------------------------------------------------------------------------------------
14,000 777 14,000 777 16,000 888 7,000 389
8,000 806 8,000 806 10,000 1,007 4,500 453
1,000 9 1,000 9 1,000 9 500 5
6,000 423 6,000 423 6,500 458 3,000 211
- -------------------------------------------------------------------------------------
2,015 2,015 2,362 1,058
</TABLE>
25
<PAGE> 26
PORTFOLIOS OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
-------------------- ---------------------
SERIES I SERIES II
-------------------- ---------------------
- -----------------------------------------------------------------------------------------------------------------------
NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
UTILITIES--1.0%, AT&T 16,000 $ 561 18,000 $ 631
.8%, .9%, .8%, .8% SBC Communications Inc. 8,600 532 10,000 619
AND .8% Telefonica de Espana S.A. 515 15 600 17
Telefonica del Peru, S.A.,
ADS 500 13 500 13
------------------------------------------------------------------------------
1,121 1,280
------------------------------------------------------------------------------
TOTAL COMMON STOCKS--53.9%, 41.8%,
43.9%, 41.0%, 45.9% AND 38.4%
(Cost: $49,986, $57,307, $44,402,
$44,320, $49,844 and $22,552) 60,275 69,803
------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MONEY MARKET Yield--5.66% to 6.50%
INSTRUMENTS--3.6%, Due--July 1997
1.8%, 3.6%, 1.2%, 3.3% (Cost: $3,991, $2,996,
AND 1.4% $4,395, $1,595, $4,287 and
$1,000) $4,000 3,991 $3,000 2,996
------------------------------------------------------------------------------
TOTAL INVESTMENTS--97.6%, 99.0%, 98.8%,
98.2%, 98.9% AND 99.4%
(Cost: $96,172, $148,344, $108,442,
$121,082, $114,177 and $65,552) 109,081 165,482
------------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--2.4%, 1.0%, 1.2%,
1.8%, 1.1% AND .6% 2,729 1,688
------------------------------------------------------------------------------
NET ASSETS--100% $111,810 $167,170
------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO PORTFOLIOS OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments for federal income tax purposes at June 30,
1997, the unrealized appreciation and depreciation on investments is as follows
(in thousands):
<TABLE>
<CAPTION>
SERIES I SERIES II SERIES III SERIES IV SERIES V SERIES VI
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cost of investments for federal income tax
purposes $96,172 $148,344 $108,442 $121,082 $114,177 $65,552
- --------------------------------------------------------------------------------------------------------------------------
Gross unrealized appreciation 13,088 17,371 12,604 9,596 15,260 4,189
- --------------------------------------------------------------------------------------------------------------------------
Gross unrealized depreciation 179 233 172 1,814 259 740
- --------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation 12,909 17,138 12,432 7,782 15,001 3,449
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE> 27
PORTFOLIOS OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------ ------------------ ----------------- -----------------------
SERIES III SERIES IV SERIES V SERIES VI
- ------------------------ ------------------ ----------------- -----------------------
- --------------------------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
16,000 $ 561 16,000 $ 561 16,000 $ 561 8,000 $ 281
7,400 458 7,700 476 8,000 495 4,100 254
515 15 515 15 515 15 260 8
500 13 500 13 500 13 350 9
- --------------------------------------------------------------------------------------------------
1,047 1,065 1,084 552
- --------------------------------------------------------------------------------------------------
53,698 53,744 59,937 26,657
- --------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$4,400 4,395 $1,600 1,595 $4,300 4,287 $1,000 1,000
- --------------------------------------------------------------------------------------------------
120,874 128,864 129,178 69,001
- --------------------------------------------------------------------------------------------------
1,460 2,361 1,497 391
- --------------------------------------------------------------------------------------------------
$122,334 $131,225 $130,675 $ 69,392
- --------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 28
THIS PAGE INTENTIONALLY LEFT BLANK
28
<PAGE> 29
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER TARGET EQUITY FUND--
KEMPER RETIREMENT FUND SERIES I, II, III, IV, V AND VI
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, V and VI as of July 31, 1997 and June 30,
1997, the related statements of operations for the month ended July 31, 1997 and
the year ended June 30, 1997, and changes in net assets for the month ended July
31, 1997 and for each of the two years in the period ended June 30, 1997, and
the financial highlights for each of the fiscal periods since 1993. 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 July
31, 1997 and June 30, 1997, 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 each
of Kemper Target Equity Fund--Kemper Retirement Fund Series I, II, III, IV, V
and VI at July 31, 1997 and June 30, 1997, the results of their operations, the
changes in their net assets and the financial highlights for the periods
referred to above in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
August 20, 1997
29
<PAGE> 30
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
------------------------ ------------------------
SERIES I SERIES II
------------------------ ------------------------
JULY 31, JUNE 30, JULY 31, JUNE 30,
1997 1997 1997 1997
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $100,178, $96,172, $150,705, $148,344,
$109,746, $108,442, $122,571, $121,082, $116,225,
$114,177, $65,721 and $65,552) $117,162 109,081 173,205 165,482
- -------------------------------------------------------------------------------------------------------------------
Cash 108 696 658 679
- -------------------------------------------------------------------------------------------------------------------
Receivable for:
Investments sold 544 2,664 462 1,859
- -------------------------------------------------------------------------------------------------------------------
Dividends and interest 66 55 79 77
- -------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 117,880 112,496 174,404 168,097
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased 641 524 715 657
- -------------------------------------------------------------------------------------------------------------------
Fund shares redeemed 20 61 162 134
- -------------------------------------------------------------------------------------------------------------------
Management fee 48 47 71 70
- -------------------------------------------------------------------------------------------------------------------
Administrative services fee 23 23 35 35
- -------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related
expenses 21 22 31 21
- -------------------------------------------------------------------------------------------------------------------
Trustees' fees 10 9 7 10
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 763 686 1,021 927
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS $117,117 111,810 173,383 167,170
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 89,138 89,919 136,874 138,648
- -------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on investments 8,641 6,954 10,037 7,980
- -------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 16,984 12,908 22,500 17,137
- -------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 2,354 2,029 3,972 3,405
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $117,117 111,810 173,383 167,170
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------------------------------------------------
Shares outstanding 9,877 9,943 12,959 13,094
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (net
assets / shares outstanding) $11.86 11.24 13.38 12.77
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
30
<PAGE> 31
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ----------------------- ------------------- ------------------- -------------------
SERIES III SERIES IV SERIES V SERIES VI
- ----------------------- ------------------- ------------------- -------------------
JULY 31, JUNE 30, JULY 31, JUNE 30, JULY 31, JUNE 30, JULY 31, JUNE 30,
1997 1997 1997 1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
126,882 120,874 135,772 128,864 137,266 129,178 72,745 69,001
- -----------------------------------------------------------------------------------------
489 522 486 610 99 434 612 176
- -----------------------------------------------------------------------------------------
414 1,602 415 2,443 544 1,790 213 628
- -----------------------------------------------------------------------------------------
60 49 61 50 65 54 31 26
- -----------------------------------------------------------------------------------------
127,845 123,047 136,734 131,967 137,974 131,456 73,601 69,831
=========================================================================================
- -----------------------------------------------------------------------------------------
562 536 562 536 562 524 273 271
- -----------------------------------------------------------------------------------------
70 60 127 90 163 146 53 68
- -----------------------------------------------------------------------------------------
52 51 56 55 56 55 30 29
- -----------------------------------------------------------------------------------------
26 25 28 28 28 28 15 15
- -----------------------------------------------------------------------------------------
30 31 25 24 28 22 56 53
- -----------------------------------------------------------------------------------------
7 10 6 9 6 6 3 3
- -----------------------------------------------------------------------------------------
747 713 804 742 843 781 430 439
- -----------------------------------------------------------------------------------------
127,098 122,334 135,930 131,225 137,131 130,675 73,171 69,392
=========================================================================================
- -----------------------------------------------------------------------------------------
99,147 100,970 112,512 114,986 104,269 106,033 61,188 61,920
- -----------------------------------------------------------------------------------------
8,252 6,750 7,618 6,220 9,042 7,238 3,580 2,851
- -----------------------------------------------------------------------------------------
17,136 12,431 13,201 7,781 21,041 15,000 7,024 3,449
- -----------------------------------------------------------------------------------------
2,563 2,183 2,599 2,238 2,779 2,404 1,379 1,172
- -----------------------------------------------------------------------------------------
127,098 122,334 135,930 131,225 137,131 130,675 73,171 69,392
=========================================================================================
- -----------------------------------------------------------------------------------------
11,213 11,377 12,053 12,279 12,624 12,791 6,325 6,390
11.33 10.75 11.28 10.69 10.86 10.22 11.57 10.86
- -----------------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 32
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
--------------------------- ----------------------------
SERIES I SERIES II
--------------------------- ----------------------------
ONE MONTH ONE MONTH
ENDED YEAR ENDED ENDED YEAR ENDED
JULY 31, JUNE 30, JULY 31, JUNE 30,
1997 1997 1997 1997
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------
Interest $ 335 4,130 613 7,429
- -------------------------------------------------------------------------------------------------------------
Dividends 70 796 83 926
- -------------------------------------------------------------------------------------------------------------
Total investment income 405 4,926 696 8,355
- -------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 48 543 71 835
- -------------------------------------------------------------------------------------------------------------
Administrative services fee 23 262 35 406
- -------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and
related expenses 9 149 21 210
- -------------------------------------------------------------------------------------------------------------
Professional fees -- 27 1 42
- -------------------------------------------------------------------------------------------------------------
Reports to shareholders -- 13 -- 17
- -------------------------------------------------------------------------------------------------------------
Trustees' fees and other -- 21 1 28
- -------------------------------------------------------------------------------------------------------------
Total expenses 80 1,015 129 1,538
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 325 3,911 567 6,817
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investments 1,687 11,460 2,057 13,354
- -------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on
investments 4,076 3,032 5,363 3,964
- -------------------------------------------------------------------------------------------------------------
Net gain on investments 5,763 14,492 7,420 17,318
- -------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $6,088 18,403 7,987 24,135
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
32
<PAGE> 33
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ---------------------------- ---------------------- ---------------------- ----------------------
SERIES III SERIES IV SERIES V SERIES VI
- ---------------------------- ---------------------- ---------------------- ----------------------
ONE MONTH ONE MONTH ONE MONTH ONE MONTH
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JULY 31, JUNE 30, JULY 31, JUNE 30, JULY 31, JUNE 30, JULY 31, JUNE 30,
1997 1997 1997 1997 1997 1997 1997 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
403 4,781 396 5,055 411 5,096 233 2,330
- ------------------------------------------------------------------------------------------------------
64 745 62 753 70 794 33 353
- ------------------------------------------------------------------------------------------------------
467 5,526 458 5,808 481 5,890 266 2,683
- ------------------------------------------------------------------------------------------------------
52 605 56 674 56 648 30 302
- ------------------------------------------------------------------------------------------------------
26 297 28 333 28 319 14 144
- ------------------------------------------------------------------------------------------------------
8 188 13 212 21 208 15 164
- ------------------------------------------------------------------------------------------------------
-- 30 -- 31 -- 33 -- --
- ------------------------------------------------------------------------------------------------------
-- 11 -- 15 -- 14 -- --
- ------------------------------------------------------------------------------------------------------
1 24 -- 26 1 24 -- 3
- ------------------------------------------------------------------------------------------------------
87 1,155 97 1,291 106 1,246 59 613
- ------------------------------------------------------------------------------------------------------
380 4,371 361 4,517 375 4,644 207 2,070
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
1,502 11,164 1,398 10,377 1,804 11,793 729 3,804
- ------------------------------------------------------------------------------------------------------
4,705 2,920 5,420 4,714 6,041 4,036 3,575 3,566
- ------------------------------------------------------------------------------------------------------
6,207 14,084 6,818 15,091 7,845 15,829 4,304 7,370
- ------------------------------------------------------------------------------------------------------
6,587 18,455 7,179 19,608 8,220 20,473 4,511 9,440
- ------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 34
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
---------------------------- -----------------------------
SERIES I SERIES II
---------------------------- -----------------------------
ONE ONE
MONTH YEAR ENDED MONTH YEAR ENDED
ENDED JUNE 30, ENDED JUNE 30,
JULY 31, ------------------ JULY 31, ------------------
1997 1997 1996 1997 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- --------------------------------------------------------------------------------------------------------------
Net investment income $ 325 3,911 3,965 567 6,817 7,175
- --------------------------------------------------------------------------------------------------------------
Net realized gain 1,687 11,460 15,205 2,057 13,354 18,830
- --------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 4,076 3,032 (5,077) 5,363 3,964 (8,163)
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 6,088 18,403 14,093 7,987 24,135 17,842
- --------------------------------------------------------------------------------------------------------------
Distribution from net investment income -- (3,911) (3,962) -- (7,159) (7,198)
- --------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- (14,931) (6,844) -- (18,195) (8,965)
- --------------------------------------------------------------------------------------------------------------
Total dividends to shareholders -- (18,842) (10,806) -- (25,354) (16,163)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share
transactions (781) 4,946 (2,466) (1,774) (36) (6,591)
- --------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,307 4,507 821 6,213 (1,255) (4,912)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------
Beginning of period 111,810 107,303 106,482 167,170 168,425 173,337
- --------------------------------------------------------------------------------------------------------------
END OF PERIOD $117,117 111,810 107,303 173,383 167,170 168,425
- --------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME
AT END OF PERIOD $ 2,354 2,029 2,041 3,972 3,405 3,759
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
34
<PAGE> 35
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ----------------------------- ---------------------------- --------------------------- ---------------------------
SERIES III SERIES IV SERIES V SERIES VI
- ----------------------------- ---------------------------- --------------------------- ---------------------------
ONE ONE ONE ONE
MONTH YEAR ENDED MONTH YEAR ENDED MONTH YEAR ENDED MONTH YEAR ENDED
ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30,
JULY 31, ----------------- JULY 31, ----------------- JULY 31, ----------------- JULY 31, ---------------
1997 1997 1996 1997 1997 1996 1997 1997 1996 1997 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
380 4,371 4,570 361 4,517 5,079 375 4,644 4,885 207 2,070 1,051
- -----------------------------------------------------------------------------------------------------------------------
1,502 11,164 14,496 1,398 10,377 13,801 1,804 11,793 13,996 729 3,804 978
- -----------------------------------------------------------------------------------------------------------------------
4,705 2,920 (5,249) 5,420 4,714 (4,109) 6,041 4,036 (4,790) 3,575 3,566 (160)
- -----------------------------------------------------------------------------------------------------------------------
6,587 18,455 13,817 7,179 19,608 14,771 8,220 20,473 14,091 4,511 9,440 1,869
- -----------------------------------------------------------------------------------------------------------------------
-- (4,464) (4,807) -- (4,509) (5,653) -- (4,663) (4,780) -- (1,591) (382)
- -----------------------------------------------------------------------------------------------------------------------
-- (14,623) (6,226) -- (14,118) -- -- (14,346) -- -- (1,589) (324)
- -----------------------------------------------------------------------------------------------------------------------
-- (19,087) (11,033) -- (18,627) (5,653) -- (19,009) (4,780) -- (3,180) (706)
- -----------------------------------------------------------------------------------------------------------------------
(1,823) 1,478 (5,977) (2,474) (8,614) (22,439) (1,764) (536) (14,501) (732) 13,443 41,337
- -----------------------------------------------------------------------------------------------------------------------
4,764 846 (3,193) 4,705 (7,633) (13,321) 6,456 928 (5,190) 3,779 19,703 42,500
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
122,334 121,488 124,681 131,225 138,858 152,179 130,675 129,747 134,937 69,392 49,689 7,189
- -----------------------------------------------------------------------------------------------------------------------
127,098 122,334 121,488 135,930 131,225 138,858 137,131 130,675 129,747 73,171 69,392 49,689
- -----------------------------------------------------------------------------------------------------------------------
2,563 2,183 2,288 2,599 2,238 2,239 2,779 2,404 2,428 1,379 1,172 696
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF Kemper Retirement Fund Series I, II, III, IV, V and
THE FUNDS VI (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 to investors who
reinvest all dividends and hold their shares to the
Maturity Date, and to provide long-term growth of
capital. The Maturity Date for each Fund is as
follows:
<TABLE>
<CAPTION>
FUND MATURITY DATE
---- -------------
<S> <C>
Series I November 15, 1999
Series II August 15, 2000
Series III February 15, 2002
Series IV February 15, 2003
Series V November 15, 2004
Series VI May 15, 2006
</TABLE>
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 Zurich Kemper Investments, Inc.
(ZKI), the Funds' investment manager.
In 1997, the Trust changed its fiscal year end from
June 30 to July 31. As a result, the financial
statements for the year ended June 30, 1997, and
the one month ended July 31, 1997 are presented
together in this report to shareholders.
- --------------------------------------------------------------------------------
2 SIGNIFICANT INVESTMENT VALUATION. Investments are stated at
ACCOUNTING POLICIES 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. 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. 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
discount
36
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS
amortization on 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 were sold during
limited offering periods which ended during the
years 1990 through 1997, 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. 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.
DIVIDENDS TO SHAREHOLDERS. The Trust declares and
pays dividends of any net investment income and net
realized capital gains annually, which are recorded
on the ex-dividend date. Dividends are determined
in accordance with income tax principles which may
treat certain transactions differently from
generally accepted accounting principles.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH MANAGEMENT AGREEMENT. The Trust has a management
AFFILIATES agreement with ZKI 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
$313,000 for the one month ended July 31, 1997 and
$3,607,000 for the year ended June 30, 1997. Zurich
Investment Management Limited, an affiliate of ZKI,
serves as sub-adviser with respect to foreign
securities investments in the Funds, and is paid by
ZKI for its services.
UNDERWRITING AGREEMENT. The Trust has an
underwriting agreement with Zurich Kemper
Distributors, Inc. (ZKDI) (formerly known as Kemper
Distributors, Inc.). Underwriting commissions paid
in connection with the distribution of fund shares
of Series VI are as follows:
<TABLE>
<CAPTION>
COMMISSIONS
RETAINED BY COMMISSIONS ALLOWED
ZKDI BY ZKDI TO FIRMS
----------- -------------------
<C> <C>
Year ended June 30, 1997 $96,000 736,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Trust has an
administrative services agreement with ZKDI. For
providing information and administrative services
to shareholders, the Funds pay ZKDI a fee at an
annual rate of up to .25% of average daily net
assets. ZKDI 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 ZKDI
ASF PAID BY ----------------------------
THE FUNDS TO ZKDI TO ALL FIRMS TO AFFILIATES
----------------- ------------ -------------
<S> <C> <C> <C>
One month ended July 31, 1997 $ 154,000 157,000 2,000
Year ended June 30, 1997 1,761,000 1,761,000 24,000
</TABLE>
37
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Trust's transfer agent,
Zurich Kemper Service Company (ZKSvC) (formerly
known as Kemper Service Company) is the shareholder
service agent for the Funds. Under the agreement,
ZKSvC received shareholder services fees of $39,000
for the one month ended July 31, 1997 and $596,000
for the year ended June 30, 1997.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Trust are also officers or directors of ZKI.
For the one month period ended July 31, 1997 and
the year ended June 30, 1997, the Funds made no
payments to their officers and incurred trustees'
fees of $2,000 and $96,000, respectively, to
independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT Investment transactions (excluding short-term
TRANSACTIONS instruments) are as follows (in thousands):
<TABLE>
<CAPTION>
SERIES I SERIES II SERIES III SERIES IV SERIES V SERIES VI
-------- --------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
One month ended
July 31, 1997:
---------------------
Purchases $ 7,727 9,175 7,834 7,193 8,162 3,778
Proceeds from sales 8,103 10,557 7,825 7,901 9,431 5,327
Year ended
June 30, 1997:
---------------------
Purchases $102,479 120,670 92,432 92,455 102,744 59,066
Proceeds from sales 112,453 137,112 109,140 116,660 116,293 46,994
</TABLE>
- --------------------------------------------------------------------------------
5 CAPITAL SHARE The following table summarizes the activity in
TRANSACTIONS capital shares of the Funds (in thousands):
<TABLE>
<CAPTION>
ONE MONTH ENDED YEAR ENDED JUNE 30,
JULY 31, 1997 1997 1996
--------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SERIES I
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends -- $ -- 1,818 $ 18,601 995 $ 10,634
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (66) (781) (1,235) (13,655) (1,153) (13,100)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital
share transactions (66) $ (781) 583 $ 4,946 (158) $ (2,466)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SERIES II
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends -- $ -- 2,129 $ 25,117 1,286 $ 15,951
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (135) (1,774) (1,983) (25,153) (1,732) (22,542)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital
share transactions (135) $ (1,774) 146 $ (36) (446) $ (6,591)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SERIES III
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends -- $ -- 1,937 $ 19,255 1,056 $ 11,016
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (164) (1,823) (1,658) (17,777) (1,557) (16,993)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital
share transactions (164) $ (1,823) 279 $ 1,478 (501) $ (5,977)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ONE MONTH ENDED YEAR ENDED JUNE 30,
JULY 31, 1997 1997 1996
--------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SERIES IV
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends -- $ -- 1,866 $ 18,506 559 $ 5,780
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (226) (2,474) (2,563) (27,120) (2,689) (28,219)
- -----------------------------------------------------------------------------------------------------------------------
Net decrease from capital share
transactions (226) $ (2,474) (697) $ (8,614) (2,130) $(22,439)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SERIES V
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends -- $ -- 2,001 $ 18,814 478 $ 4,701
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (167) (1,764) (1,929) (19,350) (1,922) (19,202)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital
share transactions (167) $ (1,764) 72 $ (536) (1,444) $(14,501)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SERIES VI
- -----------------------------------------------------------------------------------------------------------------------
Shares sold -- $ -- 1,919 $ 19,497 4,459 $ 43,103
- -----------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends -- -- 311 3,125 71 688
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (65) (732) (894) (9,179) (252) (2,454)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital
share transactions (65) $ (732) 1,336 $ 13,443 4,278 $ 41,337
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 40
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
SERIES I
---------------------------------------------------------------------------
ONE MONTH
ENDED YEAR ENDED JUNE 30,
JULY 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.24 11.46 11.19 10.67 12.57 12.01
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03 .42 .44 .45 .42 .41
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .59 1.48 1.03 1.20 (.78) 1.59
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .62 1.90 1.47 1.65 (.36) 2.00
- --------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .44 .44 .41 .40 .42
- --------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- 1.68 .76 .72 1.14 1.02
- --------------------------------------------------------------------------------------------------------------------------
Total dividends -- 2.12 1.20 1.13 1.54 1.44
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.86 11.24 11.46 11.19 10.67 12.57
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 5.52% 18.43 13.91 17.03 (3.76) 17.47
- --------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------------
Expenses .84% .93 .95 .97 .91 .92
- --------------------------------------------------------------------------------------------------------------------------
Net investment income 3.38% 3.60 3.68 3.96 3.32 3.19
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $117,117 111,810 107,303 106,482 103,764 122,340
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 86% 94 71 63 59 61
- --------------------------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the one month period ended July 31, 1997 and the years
ended June 30, 1997 and June 30, 1996 were $.0601, $.0590 and $.0586, respectively.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
SERIES II
---------------------------------------------------------------------------
ONE MONTH
ENDED YEAR ENDED JUNE 30,
JULY 31, -----------------------------------------------------------
1997 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.77 13.01 12.94 12.30 13.95 12.40
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .05 .56 .58 .60 .56 .53
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .56 1.29 .77 1.25 (1.04) 1.67
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .61 1.85 1.35 1.85 (.48) 2.20
- --------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .59 .57 .57 .58 .49
- --------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- 1.50 .71 .64 .59 .16
- --------------------------------------------------------------------------------------------------------------------------
Total dividends -- 2.09 1.28 1.21 1.17 .65
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.38 12.77 13.01 12.94 12.30 13.95
- --------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 4.78% 15.56 10.92 16.52 (4.07) 18.18
- --------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------------------
Expenses .90% .92 .94 .96 .90 .95
- --------------------------------------------------------------------------------------------------------------------------
Net investment income 3.98% 4.08 4.16 4.54 3.91 3.83
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $173,383 167,170 168,425 173,337 173,055 202,794
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 67% 70 54 47 44 51
- --------------------------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the one month period ended July 31, 1997 and the years
ended June 30, 1997 and June 30, 1996 were $.0602, $.0590 and $.0585, respectively.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE FOR ALL SERIES: Total return does not reflect the effect of any sales
charges.
40
<PAGE> 41
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-----------------------------------------------------------
SERIES III
-----------------------------------------------------------
ONE MONTH
ENDED YEAR ENDED JUNE 30,
JULY 31, -----------------------------------------------
1997 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.75 10.95 10.75 9.87 10.72 9.10
- -------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .42 .43 .44 .40 .29
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .54 1.22 .78 1.24 (.88) 1.51
- -------------------------------------------------------------------------------------------------------------
Total from investment operations .58 1.64 1.21 1.68 (.48) 1.80
- -------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .43 .44 .43 .37 .18
- -------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- 1.41 .57 .37 -- --
- -------------------------------------------------------------------------------------------------------------
Total dividends -- 1.84 1.01 .80 .37 .18
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.33 10.75 10.95 10.75 9.87 10.72
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 5.40% 16.38 11.72 18.37 (4.76) 19.96
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------------------
Expenses .83% .95 .96 1.00 .95 .95
- -------------------------------------------------------------------------------------------------------------
Net investment income 3.63% 3.61 3.67 4.14 3.59 3.46
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $127,098 122,334 121,488 124,681 123,132 143,632
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 79% 74 59 52 47 59
- -------------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the one month period ended July 31, 1997
and the years ended June 30, 1997 and June 30, 1996 were $.0602, $.0590 and $.0585, respectively.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------
SERIES IV
-----------------------------------------------------------
ONE MONTH
ENDED YEAR ENDED JUNE 30, JANUARY 15
JULY 31, ------------------------------------- TO JUNE 30,
1997 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.69 10.70 10.07 8.83 9.57 9.00
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03 .39 .40 .39 .26 .06
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .56 1.17 .64 1.22 (.85) .51
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations .59 1.56 1.04 1.61 (.59) .57
- -----------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .38 .41 .37 .15 --
- -----------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- 1.19 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total dividends -- 1.57 .41 .37 .15 --
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.28 10.69 10.70 10.07 8.83 9.57
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 5.52% 15.73 10.47 18.95 (6.31) 6.33
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------------------------------------------
Expenses .88% .96 .95 .97 .97 1.21
- -----------------------------------------------------------------------------------------------------------------
Net investment income 3.22% 3.35 3.46 4.01 3.43 2.87
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $135,930 131,225 138,858 152,179 146,655 61,882
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 66% 66 52 45 51 31
- -----------------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the one month period ended July 31, 1997 and
the years ended June 30, 1997 and June 30, 1996 were $.0602, $.0590 and $.0586, respectively.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 42
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------------------------------------------------------------
SERIES V
------------------------------------------------------------------
ONE MONTH NOVEMBER 15,
ENDED YEAR ENDED JUNE 30, 1993 TO
JULY 31, --------------------------------- JUNE 30,
1997 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.22 10.20 9.53 8.15 9.00
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03 .39 .39 .28 .15
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .61 1.22 .64 1.31 (1.00)
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations .64 1.61 1.03 1.59 (.85)
- ---------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .39 .36 .21 --
- ---------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- 1.20 -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total dividends -- 1.59 .36 .21 --
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.86 10.22 10.20 9.53 8.15
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 6.26% 17.14 10.95 19.97 (9.44)
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------------------
Expenses .94% .96 .96 1.07 1.29
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 3.34% 3.59 3.64 4.01 3.13
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $137,131 130,675 129,747 134,937 64,275
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 76% 79 58 73 35
- ---------------------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the one month period ended July 31, 1997 and the
years ended June 30, 1997 and June 30, 1996 were $.0602, $.0590 and $.0587, respectively.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
SERIES VI
--------------------------------------------------
ONE MONTH
ENDED YEAR ENDED JUNE 30, MAY 1 TO
JULY 31, -------------------- JUNE 30,
1997 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.86 9.83 9.26 9.00
- ------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03 .33 .24 .06
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .68 1.26 .57 .20
- ------------------------------------------------------------------------------------------------------
Total from investment operations .71 1.59 .81 .26
- ------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- .28 .13 --
- ------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- .28 .11 --
- ------------------------------------------------------------------------------------------------------
Total dividends -- .56 .24 --
- ------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.57 10.86 9.83 9.26
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 6.54% 16.64 8.79 2.89
- ------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ------------------------------------------------------------------------------------------------------
Expenses 1.00% 1.02 1.27 1.09
- ------------------------------------------------------------------------------------------------------
Net investment income 3.43% 3.43 3.47 3.91
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $73,171 69,392 49,689 7,189
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 65% 74 34 --
- ------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the one month period ended July 31,
1997 and the years ended June 30, 1997 and June 30, 1996 were $.0603, $.0586 and $.0582, respectively.
- ------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 43
NOTES
43
<PAGE> 44
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
STEPHEN B. TIMBERS TRACY M. CHESTER
President and Trustee Vice President
JAMES E. AKINS CHARLES R. MANZONI, JR.
Trustee Vice President
ARTHUR R. GOTTSCHALK JOHN E. NEAL
Trustee Vice President
FREDERICK T. KELSEY STEVEN H. REYNOLDS
Trustee Vice President
FRED B. RENWICK PHILIP J. COLLORA
Trustee Vice President and
Secretary
JOHN B. TINGLEFF
Trustee JEROME L. DUFFY
Treasurer
JOHN G. WEITHERS
Trustee ELIZABETH C. WERTH
Assistant Secretary
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT ZURICH 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
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER ZURICH KEMPER INVESTMENTS, INC.
PRINCIPAL UNDERWRITER ZURICH KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
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