<PAGE> 1
KEMPER TARGET EQUITY FUND
KEMPER RETIREMENT FUND
SERIES VII
REPORT TO SHAREHOLDERS FOR THE MONTH ENDED JULY 31, 1997 AND FOR THE PERIOD
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
7
Largest Stock Holdings
8
Portfolio of Investments
14
Report of Independent Auditors
15
Financial Statements
17
Notes to Financial Statements
19
Financial Highlights
AT A GLANCE
- -------------------------------------------------------------------------------
KEMPER RETIREMENT FUND SERIES VII
TOTAL RETURN*
- -------------------------------------------------------------------------------
FOR THE THREE-MONTH PERIOD ENDED JULY 31, 1997
- -------------------------------------------------------------------------------
SERIES VII 8.67% (UNADJUSTED FOR ANY SALES
CHARGE)
3.27% (ADJUSTED FOR MAXIMUM
5% SALES CHARGE)
- -------------------------------------------------------------------------------
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 5/01/97
- -------------------------------------------------------------------------------
<S> <C> <C>
SERIES VII $9.78 $9.00
- -------------------------------------------------------------------------------
</TABLE>
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 SENIOR VICE PRESIDENT OF ZKI AND VICE PRESIDENT AND PORTFOLIO MANAGER OF
KEMPER RETIREMENT FUND SERIES VII. 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 VII PROVIDED
GROWTH POTENTIAL, WHILE THE ZERO-COUPON TREASURIES PROVIDED A CUSHION ON THE
DAYS THE MARKET DECLINED.
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 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.
5
<PAGE> 6
PERFORMANCE UPDATE
Q HAS THE MODEST BUT STEADY RISE IN INTEREST RATES INFLUENCED YOUR MANAGEMENT
STYLE?
A Only indirectly. 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. However, we believe the
sector remains attractive due to industry consolidations, still-reasonable
valuations overall, and a lack of major loan problems. 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 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.
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 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 FUND'S 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 VII has been changed to
July 31 from June 30. Therefore, this report contains information about the fund
covering the 3-month period ended July 31, 1997. Your next shareholder report
will be a semiannual report dated January 31.
6
<PAGE> 7
LARGEST STOCK HOLDINGS
THE FUND'S 10 LARGEST STOCK HOLDINGS*
REPRESENTING 19.9% OF THE FUND'S TOTAL COMMON STOCKS ON JULY 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
HOLDINGS PERCENT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 MORGAN STANLEY DEAN WITTER Principally involved in credit services, securities 2.3%
and investment banking.
2 NORFOLK SOUTHERN A holding company that owns all the common stock of 2.2%
the major freight railroad, Norfolk Southern Railway
Co., and a motor carrier, North American Van Lines,
Inc.
3 SEARS, ROEBUCK A leading retailer of apparel, home and automotive 2.2%
products and related services for families throughout
North America. In addition, it is the nation's number
one credit provider among retailers.
4 MOBIL Produces, transports, refines and markets petroleum 2.1%
and natural gas and related products.
5 AMOCO Engaged in the exploration, development and production 1.9%
of crude oil and natural gas, and in the refining and
marketing of petroleum products and petrochemicals.
6 BANC ONE Operates 65 banks with 1400 offices throughout the 1.9%
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.
7 MAY DEPARTMENT STORES Owns and operates retail department stores and self 1.9%
service shoe stores.
8 AMERICAN GENERAL One of the nation's largest consumer financial 1.8%
services organizations. It is a leading provider of
retirement annuities, consumer loans and life
insurance.
9 STANLEY WORKS A world-wide producer of tools, hardware and specialty 1.8%
hardware for consumer, home improvement, industrial
and professional use.
10 AIR PRODUCTS & CHEMICALS An international supplier of industrial gases and 1.8%
related equipment.
</TABLE>
*The fund's holdings are subject to change.
7
<PAGE> 8
PORTFOLIO OF INVESTMENTS
KEMPER RETIREMENT FUND SERIES VII
PORTFOLIO OF INVESTMENTS AT JULY 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT U.S. Treasury, zero coupon, 2008
OBLIGATIONS--52.1% (Cost: $2,282,000) $4,600,000 $2,371,000
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRIES--2.2%
Air Products & Chemicals 300 26,000
Betz Dearborn Inc. 300 20,000
Crown Cork & Seal Co. 300 15,000
E.I. DuPont De Nemours 200 13,000
W.R. Grace & Co. 200 12,000
Temple-Inland Inc. 200 13,000
-----------------------------------------------------------------------------
99,000
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--3.1% Emerson Electric Co. 300 18,000
General Electric Co. 200 14,000
B.F. Goodrich Co. 300 14,000
Honeywell 300 22,000
Raytheon Co. 300 17,000
(a)U.S. Industries 300 12,000
United Technologies 250 21,000
WMX Technologies Inc. 700 22,000
-----------------------------------------------------------------------------
140,000
- ----------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--5.0% CVS Corp. 300 17,000
(a)Clear Channel Communications 400 25,000
Dillard Department Stores 600 23,000
R.R. Donnelley & Sons Co. 400 16,000
Harcourt General 500 24,000
May Department Stores Co. 500 28,000
Sears, Roebuck & Co. 500 32,000
Stanley Works 600 27,000
Time Warner Inc. 400 22,000
Tribune Co. 100 5,000
Wm. Wrigley Jr. Co. 100 8,000
-----------------------------------------------------------------------------
227,000
- ----------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--1.5%
CPC International 100 10,000
H.J. Heinz Co. 100 5,000
International Flavors & Fragrances 400 21,000
PepsiCo 300 12,000
Sara Lee Corp. 500 22,000
-----------------------------------------------------------------------------
70,000
- ----------------------------------------------------------------------------------------------------------------------
ENERGY--2.5% AMOCO Corp. 300 28,000
Mobil Corp. 400 31,000
Pennzoil Co. 100 8,000
Unocal Corp. 600 24,000
(a)Western Atlas 300 24,000
-----------------------------------------------------------------------------
115,000
</TABLE>
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE--4.8% American Express Co. 100 $ 8,000
American General Corp. 500 27,000
Banc One Corp. 500 28,000
BankAmerica Corp. 200 15,000
BankBoston 100 8,000
First Bank System 200 18,000
Fleet Financial Group, Inc. 270 18,000
ITT Hartford Group 200 17,000
Jefferson-Pilot Corp. 300 21,000
Mellon Bank Corp. 200 10,000
Morgan Stanley Dean Witter 650 34,000
Washington Mutual 200 14,000
-----------------------------------------------------------------------------
218,000
- ----------------------------------------------------------------------------------------------------------------------
HEALTH CARE--5.0% (a)ALZA Corp. 700 23,000
Abbott Laboratories 400 26,000
American Home Products Corp. 300 25,000
C.R. Bard 500 19,000
(a)Biogen 500 19,000
Biomet, Inc. 200 4,000
(a)HealthCare COMPARE Corp. 200 11,000
(a)Healthsouth Corp. 300 8,000
Eli Lilly & Co. 100 11,000
McKesson Corp. 200 17,000
Perkin-Elmer Corp. 200 16,000
Pharmacia & Upjohn, Inc. 400 15,000
(a)Tenet Healthcare Corp. 700 21,000
United Healthcare Corp. 200 11,000
-----------------------------------------------------------------------------
226,000
- ----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--5.6% AMP Inc. 300 16,000
(a)Analog Devices 500 16,000
(a)Cadence Design Systems 200 9,000
(a)Cisco Systems 300 24,000
Computer Associates International 200 14,000
Harris Corp. 200 17,000
Hewlett-Packard Co. 300 21,000
Intel Corp. 200 18,000
Motorola 300 24,000
(a)Oracle Corp. 300 16,000
(a)Parametric Technology Corp. 200 10,000
(a)PeopleSoft Inc. 100 6,000
Pitney Bowes Inc. 300 23,000
(a)Sun Microsystems 500 23,000
(a)Tellabs, Inc. 200 12,000
(a)Xilinx, Inc. 200 9,000
-----------------------------------------------------------------------------
258,000
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.3% CSX Corp. 400 25,000
Norfolk Southern Corp. 300 33,000
- ----------------------------------------------------------------------------------------------------------------------
58,000
</TABLE>
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UTILITIES--1.4% AT&T 400 $ 15,000
(a)AirTouch Communications 300 10,000
Ameritech Corp. 300 20,000
SBC Communications Inc. 300 18,000
-----------------------------------------------------------------------------
63,000
-----------------------------------------------------------------------------
TOTAL COMMON STOCKS--32.4%
(Cost: $1,377,000) 1,474,000
-----------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C
MONEY MARKET Yield--5.42% to 5.43%
INSTRUMENTS--19.7% Due--August 1997
Federal Home Loan Bank $ 400,000 400,000
Federal National Mortgage Association 500,000 498,000
-----------------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS
(Cost: $898,000) 898,000
-----------------------------------------------------------------------------
TOTAL INVESTMENTS--104.2%
(Cost: $4,557,000) 4,743,000
-----------------------------------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS--(4.2)% (193,000)
-----------------------------------------------------------------------------
NET ASSETS--100% $4,550,000
-----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $4,557,000 for federal income tax purposes
at July 31, 1997, the gross unrealized appreciation was $188,000, the gross
unrealized depreciation was $2,000 and the net unrealized appreciation on
investments was $186,000.
See accompanying Notes to Financial Statements.
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
KEMPER RETIREMENT FUND SERIES VII
PORTFOLIO OF INVESTMENTS AT JUNE 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT U.S. Treasury, zero coupon, 2008
OBLIGATIONS--47.5% (Cost: $963,000) $2,000,000 $ 970,000
-----------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--1.7% Air Products & Chemicals 200 16,000
Betz Dearborn Inc. 100 7,000
Crown Cork & Seal Co. 100 5,000
W.R. Grace & Co. 100 6,000
-----------------------------------------------------------------------------
34,000
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--3.9% Emerson Electric Co. 100 5,000
General Electric Co. 100 7,000
B.F. Goodrich Co. 200 9,000
Honeywell 200 15,000
Raytheon Co. 200 10,000
United Technologies 250 21,000
WMX Technologies Inc. 400 13,000
-----------------------------------------------------------------------------
80,000
- ----------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--5.5% CVS Corp. 100 5,000
(a)Clear Channel Communications 100 6,000
Dillard Department Stores 200 7,000
R.R. Donnelley & Sons Co. 200 7,000
Harcourt General 300 14,000
Hilton Hotels Corp. 100 3,000
(a)MGM Grand 200 7,000
May Department Stores Co. 200 9,000
Sears, Roebuck & Co. 300 16,000
Stanley Works 400 16,000
Time Warner Inc. 200 10,000
Tribune Co. 100 5,000
Wm. Wrigley Jr. Co. 100 7,000
-----------------------------------------------------------------------------
112,000
- ----------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--.9% CPC International 100 9,000
H.J. Heinz Co. 100 5,000
PepsiCo 100 4,000
-----------------------------------------------------------------------------
18,000
- ----------------------------------------------------------------------------------------------------------------------
ENERGY--1.5% AMOCO Corp. 100 9,000
Mobil Corp. 200 14,000
Pennzoil Co. 100 8,000
-----------------------------------------------------------------------------
31,000
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCE--4.5% American Express Co. 100 $ 7,000
American General Corp. 300 14,000
Banc One Corp. 200 10,000
BankBoston 100 7,000
First Bank System 100 9,000
Fleet Financial Group, Inc. 70 4,000
ITT Hartford Group 100 8,000
Jefferson-Pilot Corp. 100 7,000
Mellon Bank Corp. 200 9,000
Morgan Stanley Dean Witter 250 11,000
Washington Mutual 100 6,000
-----------------------------------------------------------------------------
92,000
- ----------------------------------------------------------------------------------------------------------------------
HEALTH CARE--4.3% (a)ALZA Corp. 400 12,000
Abbott Laboratories 100 7,000
American Home Products Corp. 100 8,000
C.R. Bard 100 4,000
(a)Biogen 100 3,000
Biomet, Inc. 200 4,000
(a)HealthCare COMPARE Corp. 100 5,000
(a)Healthsouth Corp. 300 7,000
Eli Lilly & Co. 100 11,000
McKesson Corp. 100 8,000
Perkin-Elmer Corp. 100 8,000
(a)Tenet Healthcare Corp. 200 6,000
United Healthcare Corp. 100 5,000
-----------------------------------------------------------------------------
88,000
- ----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--5.5% (a)Cadence Design Systems 100 3,000
(a)Cisco Systems 200 13,000
Computer Associates International 100 6,000
Harris Corp. 100 8,000
Hewlett-Packard Co. 200 11,000
Intel Corp. 100 14,000
Motorola 200 15,000
(a)Oracle Corp. 100 5,000
(a)Parametric Technology Corp. 100 4,000
(a)PeopleSoft Inc. 100 5,000
Pitney Bowes Inc. 100 7,000
(a)Sun Microsystems 300 11,000
(a)Tellabs, Inc. 200 11,000
-----------------------------------------------------------------------------
113,000
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.3% CSX Corp. 300 17,000
Norfolk Southern Corp. 100 10,000
-----------------------------------------------------------------------------
27,000
- ----------------------------------------------------------------------------------------------------------------------
UTILITIES--1.0% AT&T 200 7,000
Ameritech Corp. 100 7,000
SBC Communications Inc. 100 6,000
-----------------------------------------------------------------------------
20,000
-----------------------------------------------------------------------------
TOTAL COMMON STOCKS--30.1%
(Cost: $598,000) 615,000
-----------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.50%
INSTRUMENT--17.1% Due--July 1997
Federal Home Loan Bank
(Cost: $350,000) $350,000 $ 350,000
-----------------------------------------------------------------------------
TOTAL INVESTMENTS--94.7%
(Cost: $1,911,000) 1,935,000
-----------------------------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--5.3% 108,000
-----------------------------------------------------------------------------
NET ASSETS--100% $2,043,000
-----------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $1,911,000 for federal income tax purposes
at June 30, 1997, the gross unrealized appreciation was $30,000, the gross
unrealized depreciation was $6,000 and the net unrealized appreciation on
investments was $24,000.
See accompanying Notes to Financial Statements.
13
<PAGE> 14
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER TARGET EQUITY FUND--
KEMPER RETIREMENT FUND SERIES VII
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Kemper Target Equity Fund--Kemper
Retirement Fund Series VII as of July 31, 1997 and June 30, 1997, the related
statements of operations and changes in net assets and the financial highlights
for the month ended July 31, 1997 and the period from May 1, 1997 (commencement
of operations) to June 30, 1997. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of 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 Kemper
Target Equity Fund--Kemper Retirement Fund Series VII at July 31, 1997 and June
30, 1997, the results of its operations, the changes in its 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
14
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
JULY 31, JUNE 30,
1997 1997
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $4,557,000 and $1,911,000, respectively) $4,743,000 1,935,000
- -------------------------------------------------------------------------------------------------
Cash 189,000 49,000
- -------------------------------------------------------------------------------------------------
Receivable for:
Investments sold 4,000 5,000
- -------------------------------------------------------------------------------------------------
Fund shares sold 389,000 108,000
- -------------------------------------------------------------------------------------------------
TOTAL ASSETS 5,325,000 2,097,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------
Payable for:
Investments purchased 772,000 52,000
- -------------------------------------------------------------------------------------------------
Management fee and other 3,000 2,000
- -------------------------------------------------------------------------------------------------
Total liabilities 775,000 54,000
- -------------------------------------------------------------------------------------------------
NET ASSETS $4,550,000 2,043,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------
Paid-in capital $4,353,000 2,016,000
- -------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (3,000) (2,000)
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 186,000 24,000
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 14,000 5,000
- -------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $4,550,000 2,043,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------------------------------
Shares outstanding 465,000 221,000
- -------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $ 9.78 9.23
- -------------------------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
(net asset value, plus 5.26% of
net asset value or 5.00% of offering price) $ 10.29 9.72
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
ONE MONTH
ENDED MAY 1(A) TO
JULY 31, JUNE 30,
1997 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------
Interest and dividend income $ 11,000 7,000
- -------------------------------------------------------------------------------------------------------
Management fee and other expenses (2,000) (2,000)
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 9,000 5,000
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------
Net realized loss on sales of investments (1,000) (2,000)
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on investments 162,000 24,000
- -------------------------------------------------------------------------------------------------------
Net gain on investments 161,000 22,000
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 170,000 27,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ONE MONTH
ENDED MAY 1(A) TO
JULY 31, JUNE 30,
1997 1997
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- -------------------------------------------------------------------------------------------------------
Net investment income $ 9,000 5,000
- -------------------------------------------------------------------------------------------------------
Net realized loss (1,000) (2,000)
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 162,000 24,000
- -------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 170,000 27,000
- -------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 2,337,000 1,916,000
- -------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 2,507,000 1,943,000
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------
Beginning of period 2,043,000 100,000
- -------------------------------------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment
income of $14,000 and $5,000, respectively) $4,550,000 2,043,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations.
See accompanying Notes to Financial Statements.
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF Kemper Retirement Fund Series VII (the Fund) is a
THE FUND series of Kemper Target Equity Fund (the Trust), an
open-end, management investment company, organized
as a business trust under the laws of
Massachusetts. The objectives of the Fund are to
provide a guaranteed return of investment on the
Maturity Date (May 15, 2008) to investors who
reinvest all dividends and hold their shares to the
Maturity Date, and to provide long-term growth of
capital. The assurance that investors who reinvest
all dividends and hold their shares until the
Maturity Date will receive at least their original
investment on the Maturity Date is provided by the
principal amount of the zero coupon U.S. Treasury
obligations in the Fund's portfolio, as well as by
a guarantee from Zurich Kemper Investments, Inc.
(ZKI), the Fund's investment manager.
The Fund commenced operations on May 1, 1997 and
its initial fiscal year end was June 30.
Subsequently, the Trust changed its fiscal year end
to July 31. As a result, financial statements for
the two month period ended June 30, 1997 and the
one month period 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 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 are sold to the
public during a limited offering period, which may
be extended or shortened at the option of the Fund.
Fund shares are redeemed on a continuous basis and
are sold and redeemed at net asset value (plus a
commission on most sales). On each day the New York
Stock Exchange is open for trading, the net asset
value per share is determined as of the earlier of
3:00 p.m. Chicago time or the close of the Exchange
by dividing the total value of the Fund's
investments and other assets, less liabilities, by
the number of shares outstanding.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies and therefore no
federal income tax provision is required. The
accumulated net realized loss on sales of
investments for federal income tax purposes at July
31, 1997, amounting to approximately $3,000, is
available to offset future taxable gains. If not
applied, the loss carryover expires during the
period 2004 through 2005.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
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 Fund pays a management
fee at an annual rate of .50% of average daily net
assets. The Fund incurred a management fee of
$1,000 for the one month ended July 31, 1997 and
$1,000 for the period ended June 30, 1997. Zurich
Investment Management Limited, an affiliate of ZKI,
serves as sub-adviser with respect to foreign
securities investments in the Fund, and is paid by
ZKI for its services.
UNDERWRITING AGREEMENT. The Trust has an
underwriting agreement with Zurich Kemper
Distributors, Inc. (ZKDI). Underwriting commissions
paid in connection with the distribution of the
Fund's shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS COMMISSIONS ALLOWED
RETAINED BY ZKDI BY ZKDI TO FIRMS
---------------- -------------------
<S> <C> <C>
One month ended July 31, 1997 $8,000 71,000
Period ended June 30, 1997 8,000 71,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Trust has an
administrative services agreement with ZKDI. For
providing information and administrative services
to shareholders, the Fund pays 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 TO FIRMS
-------------
<S> <C>
One month ended July 31, 1997 $1,000
Period ended June 30, 1997 1,000
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Trust's transfer agent,
Zurich Kemper Service Company (ZKSvC) is the
shareholder service agent for the Fund.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Trust are also officers or directors of ZKI.
For the one month ended July 31, 1997 and the
period ended June 30, 1997, the Fund made no
payments to its officers or trustees.
- --------------------------------------------------------------------------------
4 TRANSACTIONS INVESTMENT Investment transactions (excluding short-term
instruments) are as follows:
<TABLE>
<CAPTION>
ONE MONTH ENDED MAY 1 TO
JULY 31, 1997 JUNE 30, 1997
--------------- -------------
<S> <C> <C>
Purchases $2,112,000 1,577,000
Proceeds from sales 13,000 14,000
</TABLE>
- --------------------------------------------------------------------------------
5 CAPITAL SHARE The following table summarizes the activity in
TRANSACTIONS capital shares of the Fund:
<TABLE>
<CAPTION>
ONE MONTH ENDED MAY 1 TO
JULY 31, 1997 JUNE 30, 1997
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 253,000 $2,422,000 212,000 $1,930,000
-----------------------------------------------------------------------------
Shares redeemed (9,000) (85,000) (2,000) (14,000)
-----------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE
TRANSACTIONS 244,000 $2,337,000 210,000 $1,916,000
-----------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
ONE MONTH
ENDED MAY 1(A) TO
JULY 31, JUNE 30,
1997 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $9.23 9.00
- ---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .01 .02
- ---------------------------------------------------------------------------------------------------
Net realized and unrealized gain .54 .21
- ---------------------------------------------------------------------------------------------------
Total from investment operations .55 .23
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $9.78 9.23
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 5.96% 2.56
- ---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------
Expenses .95% 1.17
- ---------------------------------------------------------------------------------------------------
Net investment income 3.45% 3.16
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------
Net assets at end of period $4,550,000 2,043,000
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 6% 12
- ---------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions were $.0602 and $.0597 for the one
month ended July 31, 1997 and the period ended June 30, 1997, respectively.
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTES: Total return does not reflect the effect of any sales charges.
(a) Commencement of operations.
19
<PAGE> 20
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
[RECYCLED LOGO]
Printed on recycled paper.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Retirement Fund Series VII prospectus.
KRF7 - 3 (8/97) 1036860
Printed in the U.S.A. [KEMPER FUNDS LOGO]
