<PAGE> 1
SEMI ANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED JANUARY 31, 1998
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
Provides a guaranteed return of investment on the designated maturity date to
investors who reinvest all dividends and hold their shares to maturity date,
and seeks to provide a total return, a combination of capital growth and income
KEMPER TARGET EQUITY FUND
KEMPER WORLDWIDE
2004 FUND
"... We have developed a proprietary risk model for
countries and regions which helps us monitor the
risks that we take in the portfolio and alerts us
to the areas of developing higher risk. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
13
FINANCIAL STATEMENTS
15
NOTES TO FINANCIAL STATEMENTS
18
FINANCIAL HIGHLIGHTS
19
SHAREHOLDERS' MEETING
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER WORLDWIDE
2004 FUND TOTAL RETURN*
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31, 1998
(UNADJUSTED FOR ANY SALES CHARGE)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
KEMPER WORLDWIDE 2004 FUND 3.81%
</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
1/31/98 7/31/97
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER WORLDWIDE 2004 FUND $10.99 $11.60
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
DURING THE PERIOD, KEMPER WORLDWIDE 2004 FUND MADE THE FOLLOWING DISTRIBUTIONS
PER SHARE:
<TABLE>
<CAPTION>
SHORT- LONG-
TERM TERM
INCOME CAPITAL CAPITAL
DIVIDEND GAIN GAIN
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER
WORLDWIDE
2004 FUND $.49 $.07 $.46
- --------------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[MATURITY/QUALITY DIAGRAM]
Source: Morningstar, Inc., Chicago, IL (312) 696-6000. (Morningstar
Style Box is based on a portfolio date as of January 31, 1998.) The Equity
Style Box placement is based on a 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.
EUROPEAN MONETARY UNION An economic and monetary unification of European
countries to ultimately introduce a single currency and create a more
economically competitive region.
HEDGING A strategy used to help protect an investment. Financial managers can
use any number of technical and nontechnical procedures to hedge or reduce the
possibility of a loss on an investment.
<PAGE> 3
ECONOMIC OVERVIEW
[SILVIA PHOTO]
DR. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS. HE IS ALSO A MEMBER OF THE INVESTMENT POLICY AND STRATEGY COMMITTEE
FOR KEMPER FUNDS.
SILVIA HOLDS A BACHELOR OF ARTS AND PH.D. IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND HAS A MASTER'S DEGREE IN ECONOMICS FROM BROWN
UNIVERSITY IN PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER, HE WAS
WITH THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, INC. IS THE INVESTMENT ADVISOR FOR KEMPER FUNDS. IT
IS ONE OF THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS
WORLDWIDE, MANAGING MORE THAN $200 BILLION IN ASSETS GLOBALLY FOR MUTUAL FUND
INVESTORS, RETIREMENT AND PENSION PLANS, INSTITUTIONAL AND CORPORATE CLIENTS,
INSURANCE COMPANIES AND PRIVATE, FAMILY AND INDIVIDUAL ACCOUNTS. IT IS ONE OF
THE 10 LARGEST MUTUAL FUND COMPLEXES IN THE UNITED STATES.
DEAR SHAREHOLDERS,
Despite ongoing stock market volatility, the economic climate for mutual fund
investors has been fairly positive in the first quarter of 1998. Steady U.S.
economic growth bolstered by stable interest rates has created a positive
environment for both equity and fixed-income investing -- and we expect this to
continue.
The U.S. economy, as measured by the gross domestic product (GDP) growth
rate, in the fourth quarter of 1997 grew 3.9 percent. With 3.8 percent GDP
growth for all of 1997, the economy produced $7.19 trillion of output. For the
first quarter of 1998, we estimate the economy to grow at a 3.4 percent rate,
representing a modest slowdown. Momentum for the year, in fact, should slip to a
rate of 2.5 percent.
Although the economy will continue to slow in the months ahead, the outlook
is still positive. Employment growth is expected to remain steady. Both bonds
and equities have continued to perform well, thereby boosting consumer
confidence and spending. The housing market has been noteworthy, with new home
sales reaching an all-time high for this point in the economic cycle and housing
starts remain high relative to demographic trends.
Output prices, as measured by the Consumer Price Index (CPI), remain stable
at 1.5 to 2 percent year over year. When the rate of inflation remains stable
and as low as it has, the risk of higher interest rates is reduced and the real
return on financial assets grows. It is unlikely that the Fed will raise
interest rates in the second quarter.
Seemingly in defiance of our diplomatic struggles with Iraq, political
scandal at home and a few major earnings disappointments particularly in the
technology sector, the market managed to hit several new heights in the first
quarter. U.S. corporate profit growth and earnings continued to boost stock
prices, making the market all the more attractive to investors.
Much of the market activity in the first quarter can be attributed to
today's service-based economy. With the arrival of annual and holiday bonuses
at the end of the fourth quarter -- compensation for a good year's work -- the
first quarter has established itself as a time for American employees to either
spend or stash away these lump sum earnings in Individual Retirement Accounts
(IRAs) and other investments.
One factor that affected the U.S. market in 1997 appears to be having a
diminished influence in the new year. The East Asian market crisis now appears
for most Asian countries to be subsiding. East Asia's economic difficulties did
not affect global production or employment nearly as much as the markets had
anticipated. Consequently, most investors did not feel the serious repercussions
that had been feared. Obviously, investors with heavy concentrations in the
region suffered the largest losses. But the markets were anticipating a greater
global impact -- and this has not yet come to pass. Further impacts may occur or
orders on shipments already made may find no ultimate buyer. Then again, as we
move into the second quarter of 1998, many East Asian countries appear to have
already recovered from the crisis. Some Asian currencies have stabilized and
several Asian stock markets have rebounded. Korea and Malaysia are two countries
where this has happened. The perception of an Asian "contagion" or flu
throughout the region is fading fast -- and investors in general seem to be
staying in the game.
At the end of February, the U.S. federal budget deficit essentially
vanished. Recent efforts to reduce the deficit, combined with higher federal
revenues due to the robust economy, have left us with a budget surplus for
fiscal 1998. This stable fiscal environment is characterized by a reduction
in Treasury financing, which tends to have a downward effect on interest rates.
Lower interest rates fuel consumer spending, which clearly benefits the
marketplace in the form of higher corporate revenues and earnings. One result
of higher earnings is higher stock prices, which can ultimately benefit
investors.
The last time the U.S. enjoyed a budget surplus was 1969. After nearly 30
years of being in the red, we very well may notice a new shift in psychology
about the Treasury market and the issuance of Treasury securities. In the past,
investors worried about deficits that were out of control and expected higher
interest rates on Treasuries. High interest rates are the bane of fixed-income
investing, so a balanced budget can be expected to have a positive effect.
3
<PAGE> 4
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
- --------------------------------------------------------------------------------
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund
performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The
10-year Treasury rate and the prime rate are prevailing interest rates. The
other data report year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (2/28/98) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 5.57 6.21 6.69 6.27
PRIME RATE(2) 8.5 8.5 8.3 8.25
INFLATION RATE(3)* 1.57 2.72 3.03 2.72
THE U.S. DOLLAR(4)* 9.32 10.1 7.67 0.82
CAPITAL GOODS ORDERS(5)* 13.77 11.53 5.8 11.19
INDUSTRIAL PRODUCTION(5)* 5.47 5.03 4.57 2.93
EMPLOYMENT GROWTH(6) 2.6 2.31 2.14 1.83
</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 PERCENT. 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 January 31, 1998.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
On the global front, current economic fundamentals tend to favor the U.S.,
with the dollar continuing to be a safe haven for investors. International
investors want to participate in U.S. economic growth, which, at 3.8 percent for
1997, was better than the economic growth in both Europe and Japan. Europe's
1997 growth rate remained fairly steady at 2 to 3 percent. Japan experienced a
growth rate last year of 1 percent. U.S. real interest rates have also been more
attractive than those of most other countries, enticing foreign investors to buy
U.S. Treasuries.
We anticipate the positive economic environment to continue into the second
quarter of 1998. The budget surplus should hold for at least the near term.
President Clinton's initiatives for increased spending and more tax credits
haven't come to fruition. In fact, proponents of spending control have continued
to squelch spending programs on Capitol Hill. All the while, fiscal policy has
remained steady.
With solid economic growth, lower interest rates, low inflation and a
record-setting stock market, it is no wonder that investor expectations are
high. But, are investors expecting too much?
It is important to recognize that although from a macroeconomic perspective
the economy is strong, there are some microeconomic challenges that could
threaten in the months to come. These include health care reform and shifts in
the political landscape at home and continuing conflicts or new developments
abroad. For example, the European Monetary Union (EMU) appears to be proceeding
as we would expect. But within six months to a year after the EMU is
established, tensions may indeed mount as countries try to adapt to the new
structure. Each of these issues could affect our strong, yet reactive
marketplace. Be sure to stay tuned.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
/s/ JOHN E. SILVIA
JOHN E. SILVIA
March 12, 1998
4
<PAGE> 5
PERFORMANCE UPDATE
[FERRO PHOTO]
DENNIS FERRO JOINED ZURICH INVESTMENT MANAGEMENT LIMITED (ZIML), A LONDON-BASED
AFFILIATE OF SCUDDER KEMPER INVESTMENTS, INC., IN 1994 AND IS MANAGING DIRECTOR
OF ZIML AND PORTFOLIO MANAGER OF KEMPER WORLDWIDE 2004 FUND. FERRO HOLDS AN
M.B.A. IN FINANCE FROM ST. JOHN'S UNIVERSITY IN NEW YORK AND A BACHELOR'S DEGREE
FROM VILLANOVA UNIVERSITY IN PENNSYLVANIA. HE IS A CHARTERED FINANCIAL ANALYST.
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.
DURING A VERY VOLATILE PERIOD IN WORLD MARKETS, KEMPER WORLDWIDE 2004
FUND OUTPERFORMED BOTH THE EAFE* INDEX AND THE STANDARD & POOR'S 500 INDEX**.
FOLLOWING, PORTFOLIO MANAGER DENNIS FERRO DISCUSSES THE MARKETS AND HIS TEAM'S
APPROACH TO MANAGING THE FUND.
Q HOW DID INTERNATIONAL MARKETS PERFORM DURING THE SIX-MONTH PERIOD?
A In general, European markets provided the best performance while the Asian
markets, including Japan, performed very poorly. In Latin America, Mexico had
strong performance until January when the market was finally hit with the ripple
effects of what is being dubbed the "Asian Contagion." The following chart gives
total returns for some of the markets we invested in for the six-month period,
shown in U.S. dollar terms.
Q UP 3.81 PERCENT (CLASS A SHARES, UNADJUSTED FOR ANY SALES CHARGE) FOR THE
PERIOD, THE FUND OUTPERFORMED THE EAFE INDEX*, DOWN 5.69 PERCENT, AND THE
STANDARD & POOR'S 500**, UP 3.56 PERCENT. HOW DID YOU AND YOUR TEAM ACHIEVE THIS
OUTPERFORMANCE?
A We have developed a proprietary risk model for countries and regions which
helps us monitor the risks that we take in the portfolio and alerts us to areas
of developing higher risk. Following this process, we moved out of Asia and into
Europe, avoiding much of the downturn that occurred in that
- --------------------------------------------------------------------------------
EUROPE LEADS WORLD MARKET PERFORMANCE
- --------------------------------------------------------------------------------
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDED 1/31/98
[BAR GRAPH]
<TABLE>
<S> <C>
ITALY 28.32%
SPAIN 18.39%
IRELAND 13.14%
SWITZERLAND 12.14%
UK 10.48%
FRANCE 4.76%
GERMANY -1.00%
NETHERLANDS -3.32%
CANADA -6.29%
MEXICO -15.22%
JAPAN -22.46%
HONG KONG -46.79%
</TABLE>
Source: FT/S&P World Indices. Returns given in U.S. dollars
5
<PAGE> 6
PERFORMANCE UPDATE
region. Our process doesn't allow us to be totally excluded from the Asian
region so we maintained exposure to what we feel are the best companies in the
market. We had a 15 percent exposure to Japan and less than 2 percent invested
in Hong Kong.
The fund had a 74 percent exposure in Europe, based on total common
stock, at the end of the period. With this being the strongest performing
region, it was definitely a boost to the fund. In Canada, the fund had about a
4 percent position. Our exposure to Mexico was roughly 3 percent of the
fund's total common stock and while the final six-month performance paints a
somewhat bleak picture of this market, it is worth noting that at the end of
December, Mexico was up around 13.39 percent for the six-month period.
*THE EAFE INDEX IS AN UNMANAGED INDEX THAT IS A GENERALLY ACCEPTED BENCHMARK FOR
MAJOR OVERSEAS MARKETS.
**THE STANDARD & POOR'S 500 IS GENERALLY REPRESENTATIVE OF THE U.S. STOCK MARKET
PERFORMANCE.
Q WHAT INDUSTRIES DID YOU FOCUS ON IN EUROPE AND IN JAPAN?
A The focus in Europe was on four primary areas. The first was the
pharmaceutical sector which is benefiting from restructuring activity as well as
new product development. Our holdings in this industry included Roche, Novartis
and Glaxo Wellcome.
Financial services were the second focus with names like Barclays Bank,
Prudential Corp., Aegon, Banco Bilbao Vizcaya and Banco Santander included in
the portfolio. The market is growing for financial services in Europe as pension
requirements are expanded and significant merger and acquisition activity is
being viewed quite favorably by shareholders.
Technology was the third theme in Europe. As companies move towards
operating more efficiently, technology is playing a larger role. Europe,
which has been underresourced in this area in the past, is developing new
products to keep up with the times. We held Getronics in this industry.
The fourth and final focus was corporate services or companies that
provide services to businesses that want to outplace certain functions.
Holdings in this sector included Rentokil, Prosegur and Unique International.
This sector is also benefiting from restructuring efforts and the focus on
improved efficiency.
In Japan and Hong Kong, our holdings were mainly exporters and companies
that benefited from a decline in the value of their currency relative to the
dollar. We also focused on those companies that have proven themselves to
be competitive in the global marketplace. These companies are not dependent
purely on market share but develop competitive products that are professionally
marketed. Using this criteria, we selected names like Sony, Honda and RICOH.
The only domestically-oriented companies that we owned in Japan were some
specialty retailers such as Circle K, and a specialty finance company called
Shohkoh Fund.
In Hong Kong the holdings were HSBC Holdings, a global banking
organization with a majority of its business in Hong Kong. We believe it
is the strongest bank financially and one of the best managed in the
region. We also held CITIC Pacific, a diversified company with strong
activities both in Hong Kong and the Peoples Republic of China.
Q HOW DID THE ZERO COUPON COMPONENT OF THE FUND AFFECT FUND PERFORMANCE
DURING THIS VOLATILE PERIOD?
A The zero coupon bond component had a positive effect on the fund because
long-term interest rates did come down during the period causing the zero
coupons to react favorably. The two sides of the fund have to be looked upon as
complementing each other over an extended period of time.
Q WHAT EFFECT DID CURRENCY ACTIVITY HAVE ON THE FUND AND WAS IT HEDGED AT
ALL?
A The fund was partially hedged early in the period. We reduced the hedged
position in Japan and Asia down to 25 percent in August and then further reduced
it to 12 percent in September and finally closed it out altogether in October.
We felt most of the dollar move against foreign currencies had occurred over the
summer months and that the dollar would subsequently trade in a fairly tight
range and that is indeed what has happened. The fund was not hedged during the
last three months.
Q WERE THERE ANY "MISSES" DURING THE PERIOD?
A We were surprised by the strength of the United Kingdom's financial sector
and although we had a meaningful weight there, having even more exposure would
have been beneficial. We were also underweighted in some of the restructuring
activity occurring in the chemical and automotive industries in Europe.
6
<PAGE> 7
PERFORMANCE UPDATE
Q WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
A I think this could be a year when international markets outperform the S&P
500 due largely to the strength of Europe. The economic cycle is at an earlier
phase in Europe than in the U.S. and is still in the recovery mode. The factors
that have generated strong returns in the U.S. market are beginning to be more
prevalent in Europe. These factors include: declining inflation, falling
interest rates, improvements in corporate profitability due to restructuring,
and supportive monetary policy. The period leading up to and including the
implementation of the European Monetary Union promises to be a positive one for
capital markets. It should also support current monetary policies and a
continued environment of low interest rates.
Elsewhere in the world we continue to be concerned, in a low inflation
environment, about the ability for commodity-oriented companies to develop any
pricing power. These companies are part of the forestry, mining and chemical
industries. We believe the developments in Asia are very serious and that
corporate profitability in Asia will be very negatively affected over the next
12 to 24 months. We are not looking to quickly go back into Asia but to identify
those companies and markets that will recover the fastest because of revised
economic policies. We will focus on the companies within those markets that have
a strong balance sheet, competitive advantage and attractive growth prospects.
In Latin America we continue to focus on companies selling at very
attractive prices in Brazil and Mexico. Our bias is with Mexico where we
believe appropriate economic programs have been put into place, since the
problems of three years ago, to ensure the economic stability of the country
and market.
We continue to believe that the dollar will fluctuate in a fairly tight
range against foreign currencies with the possible exception of the yen. The
yen's exchange rate will be determined by policies announced by the Japanese
minister of finance and the Bank of Japan in the coming months.
7
<PAGE> 8
LARGEST HOLDINGS
THE FUND'S 20 LARGEST STOCK HOLDINGS*
REPRESENTING 70.7 PERCENT OF THE FUND'S TOTAL COMMON STOCKS ON JANUARY 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
HOLDINGS PERCENT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
1. AEGON, N.V. 6.4%
Netherlands
2. NOVARTIS 6.2%
Switzerland
3. CIBA SPECIALTY CHEMICALS 5.7%
Switzerland
4. BARCLAYS, PLC 5.6%
United Kingdom
5. ELF AQUITAINE 4.6%
France
6. RENTOKIL INITIAL, PLC 4.2%
United Kingdom
7. ROCHE HOLDINGS 4.2%
Switzerland
8. TELECOM ITALIA MOBILE 3.9%
Italy
9. GLAXO WELLCOME, PLC 3.9%
United Kingdom
10. INDEPENDENT NEWSPAPERS PLC 3.4%
Ireland
11. BANK OF IRELAND 3.1%
Ireland
12. PRUDENTIAL CORP. PLC 2.4%
United Kingdom
13. SONY CORP. 2.4%
Japan
14. FOMENTO ECONOMICO MEXICANO S.A. 2.4%
Mexico
15. FUJI PHOTO FILM CO. LTD. 2.3%
Japan
16. KONINKLIJKE AHOLD N.V 2.3%
Netherlands
17. CARREFOUR S.A. 2.2%
France
18. SHOHKOH FUND & CO., LTD. 1.9%
Japan
19. ROYAL DUTCH PETROLEUM 1.8%
Netherlands
20. AXA-UAP, S.A. 1.8%
France
</TABLE>
*The fund's holdings are subject to change.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER WORLDWIDE 2004 FUND
PORTFOLIO OF INVESTMENTS AT JANUARY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT U.S. Treasury, zero coupon, 2004
OBLIGATIONS--63.0% (Cost: $18,729) $ 30,600 $21,086
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
EUROPE SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--6.3% Barclays, PLC
BANKING 20,553 620
Rentokil Initial, PLC
SERVICES COMPANY 100,000 469
Glaxo Wellcome, PLC
PHARMACEUTICAL COMPANY 15,919 428
Prudential Corp., PLC
FINANCIAL SERVICES 20,000 268
BBA Group, PLC
DIVERSIFIED ENGINEERING COMPANY 31,152 183
(a)British Bio-Tech Group
PHARMACEUTICAL COMPANY 56,250 126
---------------------------------------------------------------------------
2,094
- --------------------------------------------------------------------------------------------------------------------
SWITZERLAND--5.3% Novartis
PHARMACEUTICAL COMPANY 400 686
Ciba Specialty Chemicals
CHEMICAL PRODUCER 5,544 637
Roche Holdings, A.G.
PHARMACEUTICAL COMPANY 45 468
---------------------------------------------------------------------------
1,791
- --------------------------------------------------------------------------------------------------------------------
NETHERLANDS--4.2% Aegon, N.V.
INSURANCE COMPANY 7,420 708
Koninklijke Ahold, N.V.
FOOD RETAILER 9,071 250
Royal Dutch Petroleum
PETROLEUM PRODUCER 3,880 203
Unique International, N.V.
TEMPORARY EMPLOYMENT 5,865 125
De Boer Unigro, N.V.
FOOD RETAILER 3,100 104
Getronics, N.V.
INFORMATION AND COMMUNICATION SERVICES 400 14
---------------------------------------------------------------------------
1,404
- --------------------------------------------------------------------------------------------------------------------
FRANCE--3.4% Elf Aquitaine
OIL AND GAS PRODUCER 4,500 509
Carrefour, S.A.
FOOD RETAILER 450 243
AXA-UAP, S.A.
INSURANCE COMPANY 2,400 200
Technip, S.A.
ENGINEERING COMPANY 1,741 181
---------------------------------------------------------------------------
1,133
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
IRELAND--2.1% Independent Newspapers, PLC
PUBLISHER 60,436 $ 377
Bank of Ireland
BANKING 21,917 340
---------------------------------------------------------------------------
717
- --------------------------------------------------------------------------------------------------------------------
ITALY--1.3% Telecom Italia Mobile
MOBILE TELECOMMUNICATIONS PROVIDER 90,000 429
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
GERMANY--1.1% Veba, A.G.
ELECTRIC UTILITY 2,250 156
Viag, A.G.
DIVERSIFIED MANUFACTURING COMPANY 200 115
Mannesmann A. G.
CAPITAL GOODS PRODUCER 170 97
---------------------------------------------------------------------------
368
- --------------------------------------------------------------------------------------------------------------------
SPAIN--.9% Repsol, S.A.
OIL COMPANY 2,800 120
Banco Bilbao Vizcaya, S.A.
BANKING 3,094 108
Banco Santander, S.A.
BANKING 1,950 69
---------------------------------------------------------------------------
297
---------------------------------------------------------------------------
TOTAL EUROPEAN COUNTRIES--24.6% 8,233
- --------------------------------------------------------------------------------------------------------------------
PACIFIC REGION
- --------------------------------------------------------------------------------------------------------------------
JAPAN--5.1% Sony Corp.
ELECTRONICS MANUFACTURER 2,900 268
Fuji Photo Film Co., Ltd.
PRECISION INSTRUMENTS MANUFACTURER 6,000 251
Shohkoh Fund & Co., Ltd.
FINANCING COMPANY 600 210
Ricoh Co., Ltd.
PRECISION INSTRUMENTS MANUFACTURER 14,000 166
Toray Industries
TEXTILE MANUFACTURER 31,000 152
Honda Motor Co., Ltd.
AUTOMOBILE MANUFACTURER 4,000 145
Noritsu Koki Co., Ltd.
PRECISION INSTRUMENTS MANUFACTURER 4,000 142
Bellsystem 24, Inc.
TELEMARKETING FIRM 1,000 142
Circle K Japan
CONVENIENCE RETAILER 2,400 118
Canon, Inc.
PRECISION INSTRUMENTS MANUFACTURER 3,000 73
Murata Manufacturing
ELECTRONICS COMPONENTS MANUFACTURER 1,000 29
---------------------------------------------------------------------------
1,696
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HONG KONG--.6% HSBC Holdings, PLC
BANKING 5,399 $ 120
CITIC Pacific, Ltd.
CONGLOMERATE 31,000 89
---------------------------------------------------------------------------
209
---------------------------------------------------------------------------
TOTAL PACIFIC REGION--5.7% 1,905
- --------------------------------------------------------------------------------------------------------------------
COMMONWEALTH COUNTRIES
- --------------------------------------------------------------------------------------------------------------------
CANADA--1.2% (a)Boardwalk Equities, Inc.
REAL ESTATE COMPANY 14,500 182
Petro-Canada
OIL AND GAS COMPANY 8,000 142
Hudson's Bay Co.
DEPARTMENT STORE RETAILER 3,650 65
---------------------------------------------------------------------------
389
- --------------------------------------------------------------------------------------------------------------------
LATIN AMERICA
- --------------------------------------------------------------------------------------------------------------------
MEXICO--1.1.% Fomento Economico Mexicano,
S.A. de C.V., "B," ADR 42,000 262
BEER AND SOFT DRINK MANUFACTURER
Kimberly-Clark de Mexico, S.A. de C.V.
PAPER PRODUCTS PRODUCER 22,700 99
---------------------------------------------------------------------------
361
- --------------------------------------------------------------------------------------------------------------------
BRAZIL--.5% Telecommunicoes Brasileiro, S.A.
TELEPHONE COMPANY 1,600 178
---------------------------------------------------------------------------
TOTAL LATIN AMERICAN COUNTRIES--1.6% 539
---------------------------------------------------------------------------
TOTAL COMMON STOCKS--33.1%
(Cost: $7,782) 11,066
---------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.45%
INSTRUMENTS--3.8% Due--February 1998
(Cost: $1,298) $ 1,300 1,298
---------------------------------------------------------------------------
TOTAL INVESTMENTS--99.9%
(Cost: $27,809) 33,450
---------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--.1% 32
---------------------------------------------------------------------------
NET ASSETS--100% $ 33,482
---------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
At January 31, 1998, the Fund's portfolio of investments had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
- --------------------------------------------------------------------------------
<S> <C> <C>
Finance $ 2,914 8.7
- --------------------------------------------------------------------------------
Health Care 1,708 5.1
- --------------------------------------------------------------------------------
Capital Goods 1,332 4.0
- --------------------------------------------------------------------------------
Consumer Cyclicals 1,307 3.9
- --------------------------------------------------------------------------------
Energy 974 2.9
- --------------------------------------------------------------------------------
Basic Industries 789 2.4
- --------------------------------------------------------------------------------
Utilities 763 2.3
- --------------------------------------------------------------------------------
Technology 675 2.0
- --------------------------------------------------------------------------------
Consumer Staples 604 1.8
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS 11,066 33.1
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 21,086 63.0
- --------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS AND OTHER NET ASSETS 1,330 3.9
- --------------------------------------------------------------------------------
NET ASSETS $33,482 100.0
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $27,809,000 for federal income tax
purposes at January 31, 1998, the gross unrealized appreciation was
$5,970,000, the gross unrealized depreciation was $329,000 and the net
unrealized appreciation on investments was $5,641,000.
12
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------
Investments, at value
(Cost: $27,809) $33,450
- -----------------------------------------------------------------------
Cash 64
- -----------------------------------------------------------------------
Dividends and interest receivable 20
- -----------------------------------------------------------------------
TOTAL ASSETS 33,534
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -----------------------------------------------------------------------
Payable for:
Investments purchased 3
- -----------------------------------------------------------------------
Fund shares redeemed 5
- -----------------------------------------------------------------------
Management fee 17
- -----------------------------------------------------------------------
Administrative services fee 6
- -----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 15
- -----------------------------------------------------------------------
Trustees' fees 6
- -----------------------------------------------------------------------
Total liabilities 52
- -----------------------------------------------------------------------
NET ASSETS $33,482
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -----------------------------------------------------------------------
Paid-in capital $27,387
- -----------------------------------------------------------------------
Undistributed net realized gain on investments and foreign
currency transactions 334
- -----------------------------------------------------------------------
Net unrealized appreciation on investments and assets and
liabilities in foreign currencies 5,640
- -----------------------------------------------------------------------
Undistributed net investment income 121
- -----------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $33,482
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
THE PRICING OF SHARES
- -----------------------------------------------------------------------
SHARES OUTSTANDING 3,048
- -----------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
(Net assets / shares outstanding) $10.99
- -----------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<S> <C>
- ----------------------------------------------------------------------
NET INVESTMENT INCOME
- ----------------------------------------------------------------------
Interest $ 728
- ----------------------------------------------------------------------
Dividends (less foreign taxes withheld of $7) 44
- ----------------------------------------------------------------------
Total investment income 772
- ----------------------------------------------------------------------
Expenses:
Management fee 102
- ----------------------------------------------------------------------
Administrative services fee 41
- ----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 19
- ----------------------------------------------------------------------
Professional fees 9
- ----------------------------------------------------------------------
Reports to shareholders 28
- ----------------------------------------------------------------------
Trustees' fees and other 4
- ----------------------------------------------------------------------
Total expenses 203
- ----------------------------------------------------------------------
NET INVESTMENT INCOME 569
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------
Net realized gain on sales of investments and foreign
currency transactions 682
- ----------------------------------------------------------------------
Change in net unrealized appreciation on investments and
assets and liabilities in foreign currencies (26)
- ----------------------------------------------------------------------
Net gain on investments 656
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,225
- ----------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED ONE MONTH YEAR
JANUARY 31, ENDED ENDED
1998 JULY 31, JUNE 30,
(UNAUDITED) 1997 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- --------------------------------------------------------------------------------------------------------
Net investment income $ 569 95 1,303
- --------------------------------------------------------------------------------------------------------
Net realized gain 682 396 1,096
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (26) 944 1,324
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,225 1,435 3,723
- --------------------------------------------------------------------------------------------------------
Distribution from net investment income (1,402) -- (1,451)
- --------------------------------------------------------------------------------------------------------
Distribution from net realized gain (1,517) -- (528)
- --------------------------------------------------------------------------------------------------------
Total dividends to shareholders (2,919) -- (1,979)
- --------------------------------------------------------------------------------------------------------
Net decrease from capital share transactions (549) (476) (4,796)
- --------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (2,243) 959 (3,052)
- --------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------
Beginning of period 35,725 34,766 37,818
- --------------------------------------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment
income of $121, $954 and $737, respectively) $33,482 35,725 34,766
- --------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper Worldwide 2004 Fund (the Fund) is a series
of Kemper Target Equity Fund (the Trust), an
open-end management investment company organized as
a business trust under the laws of Massachusetts.
The objectives of the Fund are to provide a
guaranteed return of investment on the Maturity
Date (November 15, 2004) to investors who reinvest
all dividends and hold their shares to the Maturity
Date, and to provide a total return, a combination
of capital growth and income. The Fund pursues its
objectives by investing a portion of its assets in
zero coupon U.S. Treasury obligations and the
balance of its assets primarily in an
internationally diversified portfolio of foreign
securities. The assurance that investors who
reinvest all dividends and hold their shares until
the Maturity Date will receive at least their
original investment on the Maturity Date is
provided by the principal amount of the zero coupon
U.S. Treasury obligations in the Fund's portfolio,
as well as by a guarantee from Scudder Kemper
Investments, Inc., the Fund's investment manager.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES INVESTMENT VALUATION. Investments are stated at
value. Portfolio securities that are primarily
traded on a domestic securities exchange are valued
at the last sale price on that exchange or, if
there is no recent sale price available, at the
last current bid quotation. Portfolio securities
that are primarily traded on foreign securities
exchanges are generally valued at the preceding
closing values of such securities on their
respective exchanges where primarily traded. A
security that is listed or traded on more than one
exchange is valued at the quotation on the exchange
determined to be the primary market for such
security by the Board of Trustees or its delegates.
All other securities not so traded are valued at
the last current bid quotation if market quotations
are available. Fixed income securities are valued
by using market quotations, or independent pricing
services that use prices provided by market makers
or estimates of market values obtained from yield
data relating to instruments or securities with
similar characteristics. Equity options are valued
at the last sale price unless the bid price is
higher or the asked price is lower, in which event
such bid or asked price is used. Financial futures
and options thereon are valued at the settlement
price established each day by the board of trade or
exchange on which they are traded. Forward foreign
currency contracts and foreign currencies are
valued at the forward and current exchange rates,
respectively, prevailing on the day of valuation.
Other securities and assets are valued at fair
value as determined in good faith by the Board of
Trustees.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency
values are converted into U.S. dollar values at the
mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by a
recognized dealer. If such quotations are not
readily available, the rates of exchange are
determined in good faith by the Board of Trustees.
Income and expenses and purchases and sales of
investments are translated into U.S. dollars at the
rates of exchange prevailing on the respective
dates of such transactions. The Fund includes that
portion of the results of operations resulting from
changes in foreign exchange rates with the net
realized and unrealized gain or loss on
investments, as appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed).
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign
securities are recorded as soon as the information
is available to the Fund. Interest income is
recorded on the accrual basis and includes 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 were sold during
a limited offering period which ended in 1996, 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 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 for the six
months ended January 31, 1998.
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. These
differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES INVESTMENT MANAGER COMBINATION. Effective December
31, 1997, Zurich Insurance Company, the parent of
Zurich Kemper Investments, Inc. (ZKI), acquired a
majority interest in Scudder, Stevens & Clark, Inc.
(Scudder), another major investment manager. As a
result of this transaction, the operations of ZKI
were combined with Scudder to form a new global
investment organization named Scudder Kemper
Investments, Inc. (Scudder Kemper). The transaction
resulted in the termination of the Fund's
investment management agreement with ZKI, however,
a new investment management agreement between the
Fund and Scudder Kemper was approved by the Fund's
Board of Trustees and by the Fund's shareholders.
The new management agreement, which was effective
December 31, 1997, is the same in all material
respects as the previous management agreement,
except that Scudder Kemper is the new investment
adviser to the Fund. In addition, the names of the
Fund's principal underwriter and shareholder
service agent were changed to Kemper Distributors,
Inc. (KDI) and Kemper Service Company (KSvC),
respectively.
MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper and pays a management
fee at an annual rate of .60% of average daily net
assets. The Fund incurred a management fee of
$102,000 for the six months ended January 31, 1998.
ADMINISTRATIVE SERVICES AGREEMENT. The Trust has an
administrative services agreement with KDI. For
providing information and administrative services
to shareholders, the Fund pays KDI a fee at an
annual rate of up to .25% of average daily net
assets. KDI in turn has various agreements with
financial
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
services firms that provide these services and pays
these firms based on assets of Fund accounts the
firms service. For the six months ended January 31,
1998, the Fund paid administrative services fees of
$41,000, all of which KDI remitted to financial
services firms.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Trust's transfer agent,
KSvC is the shareholder service agent for the Fund.
For the six months ended January 31, 1998, KSvC
received shareholder services fees of $17,000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Trust are also officers or directors of
Scudder Kemper. For the six months ended January
31, 1998, the Fund made no payments to its officers
and incurred trustees' fees of $2,000 to
independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended January 31, 1998,
investment transactions (excluding short-term
instruments) are as follows (in thousands):
Purchases $2,396
Proceeds from sales 4,904
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ONE MONTH
ENDED ENDED YEAR ENDED
JANUARY 31, JULY 31, JUNE 30,
1998 1997 1997
---------------- ---------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares issued in
reinvestment of
dividends 266 $2,828 -- $ -- 192 $ 1,997
--------------------------------------------------------------------------------
Shares redeemed (298) (3,377) (42) (476) (637) (6,793)
--------------------------------------------------------------------------------
NET DECREASE
FROM CAPITAL SHARE
TRANSACTIONS (32) $(549) (42) $(476) (445) $(4,796)
--------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED ONE MONTH
JANUARY 31, ENDED YEAR ENDED JUNE 30, MAY 3 TO
1998 JULY 31, ------------------------ JUNE 30,
(UNAUDITED) 1997 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.60 11.13 10.60 9.96 9.02 9.00
- ---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .22 .03 .42 .36 .27 .02
- ---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .19 .44 .71 .63 .79 --
- ---------------------------------------------------------------------------------------------------------
Total from investment operations .41 .47 1.13 .99 1.06 .02
- ---------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .49 -- .44 .35 .12 --
- ---------------------------------------------------------------------------------------------------------
Distribution from net realized gain .53 -- .16 -- -- --
- ---------------------------------------------------------------------------------------------------------
Total dividends 1.02 -- .60 .35 .12 --
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.99 11.60 11.13 10.60 9.96 9.02
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 3.81% 4.22 11.08 10.05 11.91 .22
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------------
Expenses 1.20% 1.12 1.19 1.32 1.29 1.32
- ---------------------------------------------------------------------------------------------------------
Net investment income 3.36% 3.20 3.63 3.60 3.77 2.59
- ---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $33,482 35,725 34,766 37,818 30,699 5,900
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 15% 30 25 50 75 --
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Average commission rates paid per share on stock transactions for the six months
ended January 31, 1998, the one month period ended July 31, 1997 and the years
ended June 30, 1997 and June 30, 1996 were $.0453, $.0385, $.0209 and $.0253,
respectively. Foreign commissions usually are lower than U.S. commissions when
expressed as cents per share due to the lower per share price of many non-U.S.
securities.
- --------------------------------------------------------------------------------
NOTE: Total return does not reflect the effect of any sales charges.
18
<PAGE> 19
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 3, 1997, a special shareholders' meeting was held. Kemper Target
Equity Fund -- Kemper Worldwide 2004 fund shareholders were asked to vote on
four separate issues: election of the eight members to the Board of Trustees,
ratification of Ernst & Young LLP as independent auditors, approval of a new
investment management agreement and approval of a new sub-advisory agreement.
1) Election of Trustees
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
James E. Atkins 39,454,675 591,508
Arthur R. Gottschalk 39,451,750 594,433
Frederick T. Kelsey 39,456,557 589,626
Daniel Pierce 39,458,148 588,035
Fred B. Renwick 39,480,893 565,290
John B. Tingleff 39,483,670 562,512
Edmond D. Villani 39,454,386 591,796
John B. Weithers 39,475,301 570,882
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the fund
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
38,794,530 359,686 891,966
</TABLE>
3) Approval of new investment management agreement with Scudder Kemper
Investments, Inc.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
1,479,603 20,247 46,293 87,502
</TABLE>
4) Approval of new sub-advisory agreement with Zurich Investment Management
Limited
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
1,467,879 28,213 50,050 87,502
</TABLE>
19
<PAGE> 20
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY KATHRYN L. QUIRK
Chairman and Trustee President Vice President
JAMES E. AKINS PHILIP J. COLLORA LINDA J. WONDRACK
Trustee Vice President, Vice President
Secretary and Treasurer
ARTHUR R. GOTTSCHALK JOHN R. HEBBLE
Trustee TRACY M. CHESTER Assistant Treasurer
Vice President
FREDERICK T. KELSEY MAUREEN E. KANE
Trustee JERARD K. HARTMEN Assistant Secretary
Vice President
FRED B. RENWICK CAROLINE PEARSON
Trustee THOMAS W. LITTAUER Assistant Secretary
Vice President
JOHN B. TINGLEFF ELIZABETH C. WERTH
Trustee ANN M. MCCREARY Assistant Secretary
Vice President
EDMOND D. VILLANI
Trustee
JOHN G. WEITHERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania
Kansas City, MO 64105
- --------------------------------------------------------------------------------
FOREIGN CUSTODIAN THE CHASE MANHATTAN BANK
Chase Metro Tech Center
Brooklyn, NY 11245
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
[RECYCLED LOGO]
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by
a Kemper Target Equity prospectus.
KWF-3 (3/98) 1044950
[KEMPER FUNDS LOGO]
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
