<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED JANUARY 31, 2000
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
Seeks to provide a guaranteed return of investment on the designated maturity
date to investors who reinvest all dividends and hold their shares to the
maturity date, and seeks to provide a total return, a combination of capital
growth and income
KEMPER TARGET EQUITY FUND
KEMPER WORLDWIDE
2004 FUND
"... As we uncover opportunities in several niches, the
fund is more diversified across sector and market
cap than it was last year at this time. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
7
LARGEST HOLDINGS
8
PORTFOLIO OF INVESTMENTS
15
FINANCIAL STATEMENTS
18
FINANCIAL HIGHLIGHTS
19
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
KEMPER WORLDWIDE 2004 FUND
TOTAL RETURN*
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31, 2000
(UNADJUSTED FOR ANY SALES CHARGE)
<TABLE>
<CAPTION>
........................................................
<S> <C>
KEMPER WORLDWIDE 2004 FUND 9.88%
........................................................
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE, SO THAT SHARES, WHEN
REDEEMED (BEFORE MATURITY DATE), MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
INVESTMENT IN FOREIGN SECURITIES PRESENTS SPECIAL RISK CONSIDERATIONS INCLUDING
FLUCTUATING CURRENCY EXCHANGE RATES, GOVERNMENT REGULATION AND DIFFERENCES IN
LIQUIDITY.
*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.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
1/31/00 7/31/99
.........................................................
<S> <C> <C>
KEMPER WORLDWIDE 2004 FUND $10.19 $10.32
.........................................................
</TABLE>
KEMPER WORLDWIDE 2004
FUND RANKINGS AS OF 1/31/00
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER BALANCED TARGET MATURITY CATEGORY*
<TABLE>
<S> <C>
....................................................................
1-YEAR #5 of 12 funds
....................................................................
3-YEAR #8 of 11 funds
....................................................................
5-YEAR #8 of 9 funds
....................................................................
</TABLE>
*LIPPER ANALYTICAL SERVICES, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES IN
NET ASSET VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF
SALES CHARGES; IF SALES CHARGES HAD BEEN INCLUDED, RESULTS MAY HAVE BEEN LESS
FAVORABLE.
DIVIDEND REVIEW
DURING THE PERIOD, KEMPER WORLDWIDE 2004 FUND MADE THE FOLLOWING DISTRIBUTIONS
PER SHARE:
<TABLE>
<CAPTION>
INCOME SHORT-TERM LONG-TERM
DIVIDEND CAPITAL GAIN CAPITAL GAIN
..........................................................
<S> <C> <C> <C>
KEMPER
WORLDWIDE
2004 FUND $0.39 $0.19 $0.58
..........................................................
</TABLE>
TERMS TO KNOW
BOTTOM-UP INVESTMENT STYLE An investment style that assesses the performance of
individual companies before considering the impact of economic trends. The
companies may be identified from research reports, stock screens or personal
knowledge of the products and services. This approach, which is the opposite of
"top-down" investing, assumes that individual companies can do well even if the
industry as a whole may not be performing well.
CYCLICAL STOCK A stock within an industry whose earnings tend to rise quickly
when the economy strengthens and fall quickly when the economy weakens. Examples
are automobiles, housing, paper and steel. Noncyclical industries, such as food,
insurance and drugs, are normally not as directly affected by economic changes.
RESTRUCTURING Implementation of major corporate changes aimed at greater
efficiency and adaptation to changing markets. Cost-cutting initiatives, debt
retirement, management realignments and the sale of noncore businesses are all
developments frequently associated with corporate restructuring.
<PAGE> 3
ECONOMIC OVERVIEW
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $290 BILLION IN ASSETS FOR INSTITUTIONAL AND CORPORATE
CLIENTS, RETIREMENT AND PENSION PLANS, INSURANCE COMPANIES, MUTUAL FUND
INVESTORS AND INDIVIDUALS. SCUDDER KEMPER INVESTMENTS OFFERS A FULL RANGE OF
INVESTMENT COUNSEL AND ASSET MANAGEMENT CAPABILITIES BASED ON A COMBINATION OF
PROPRIETARY RESEARCH AND DISCIPLINED, LONG-TERM INVESTMENT STRATEGIES.
DEAR KEMPER FUNDS SHAREHOLDER:
The end of the metaphorical millennium, it turns out, was not a disaster.
Instead, it was an excuse to party. And why not? As our technological revolution
gained critical mass, its vast potential came into better focus. Capital
spending on information technology didn't slow down; it accelerated. Inflation
remained dormant. The budget surplus nearly doubled, with the promise of oceans
of black ink yet to come. Even the government delivered good news: Its
statisticians toyed with the national accounts to reveal a more productive
economy. It's no wonder the prevailing sentiment could be summed up with the
quintessentially American yelp of glee: Yahoo!
With the potential Y2K crisis seemingly behind us, the main question hanging
over the economy has been how much the Federal Reserve Board will boost interest
rates to soak up extra liquidity caused by its pre-Y2K infusion of cash into the
economy. The Fed began that process on Feb. 2. Fearing that "increases in
demand" would foster "inflationary imbalances," the policymakers raised interest
rates by a quarter of a percentage point (0.25%). Later, in his Feb. 17
Humphrey-Hawkins testimony before the House of Representatives, Fed Chairman
Alan Greenspan made it clear that he was still concerned about the economy's
imbalances. We thus expect a quarter-point rate hike at the March 21 Fed
meeting, and another quarter-point increase in May.
Although some investors have expressed fear that the Fed's sucking cash out of
banks will jolt the financial system, we're more likely to see a slow winding
down, thanks to persistent low inflation. Yes, some prices are higher: Filling
up the SUV's gas tank definitely costs more. But the rate of inflation for
non-energy goods and services has actually slowed during the past year. Although
most analysts are worried that the reprieve won't last -- assuming that higher
commodity prices, a softer dollar and the scarcity of skilled workers will show
up as higher prices at the checkout counter -- we'd turn that worry on its head.
If inflation hasn't accelerated after three years of over 4-percent gross
domestic product (GDP) growth and an unprecedented credit explosion, prices
aren't likely to increase if growth slows and lenders get stingier.
More good news stems from the technological investment boom. While executives
have pared capital budgets in traditional areas such as industrial machinery and
buildings, they've boosted outlays on computers and software. Thanks to the
sheer force of technology spending, overall business investment has grown two to
four times as fast as GDP in every year since 1993. And that expansion should
continue, with more than 20 percent growth likely in high-tech through 2000 and
even beyond. And technology hurts inflation. It saves on labor and inventory,
increases capacity, creates new competitors, cuts out middlemen, gives shoppers
comparative price information and enables global auctions.
Our outlook is for inflation to stay centered around 2 percent, and we expect
a gentle slowing of growth from 4 percent in 1999 to around 3.5 percent in 2000
and just under 2.5 percent in 2001.
Despite this positive outlook, pre-Y2K fears were sufficient to show many
investors that risks still exist in today's markets and remind them that they
could be in for a serious hangover.
The prospect of sparkling growth with no inflation has excited equity
investors, but there's a catch: declining corporate pricing power. If companies
don't have the ability to increase prices, profit growth will decline -- and
it's already happening. For the five years ending in June 1999, S&P 500
operating earnings averaged 9 percent, two and a half percentage points per year
slower than analysts had predicted. Profits did recover strongly in the second
half of 1999, but we suspect that they will soon sputter again. And the
economy's newfound productivity won't change the rules and allow companies to
make money even if they can't raise prices. Productivity gains do produce a
windfall, but historically customers and employees have grabbed the lion's
share. Web sites and dot.coms haven't changed this one iota. As a result, we
expect profits to be virtually flat in all of 2000 and to decline as the economy
slows in 2001.
Debt is another drink that could bring on future headaches. America has been
swigging it in prodigious amounts. Companies have borrowed heavily to fund
mergers, share buybacks and new investments. Homeowners have increased their
debt with new home equity loans and bigger mortgages. Financial institutions
have issued record amounts of new paper to fund aggressive growth. There's no
hard and fast rule for determining if the debt America is
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 (1/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.70 5.80 4.70 5.50
Prime rate (2) 8.50 7.75 7.75 8.50
Inflation rate (3)* 2.70 2.00 1.60 1.70
The U.S. dollar (4) 1.50 -2.2 -4.2 9.40
Capital goods orders (5)* 18.30 -0.2 10.60 6.50
Industrial production (5)* 5.00 3.90 2.40 6.70
Employment growth (6) 2.30 2.40 2.20 2.80
</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 12/31/99.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
taking on is too much, but warning bells should sound when debt grows by orders
of magnitude faster than necessary to fund economic activity. That happened in
1985 and 1986, when excess credit created a commercial real estate bubble and
funded dubious leveraged buyouts with suspect junk bonds, and it's happening
again now. Both the commercial real estate and the high yield markets took years
to recover. Today, the sheer size of the excesses could make the "morning after"
even more painful.
The end result: Given the continuing thrust of growth from the technological
revolution, an improving world economy and the Fed's experience and skill, 2000
could turn out to be a good year. But it's highly unlikely to be as good a year
as 1999.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
Scudder Kemper Investments Economics Group
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF MARCH 1, 2000, AND MAY NOT ACTUALLY COME TO PASS. THIS
INFORMATION IS SUBJECT TO CHANGE. NO PART OF THIS MATERIAL IS INTENDED AS AN
INVESTMENT RECOMMENDATION.
TO OBTAIN A KEMPER FUNDS PROSPECTUS, DOWNLOAD ONE FROM WWW.KEMPER.COM, TALK TO
YOUR FINANCIAL REPRESENTATIVE OR CALL SHAREHOLDER SERVICES AT (800) 621-1048.
THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING MANAGEMENT FEES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
4
<PAGE> 5
PERFORMANCE UPDATE
[CHENG PHOTO]
LEAD PORTFOLIO MANAGER IRENE CHENG IS A MEMBER OF THE FIRM'S GLOBAL EQUITY
GROUP, FOCUSING ON PORTFOLIO MANAGEMENT AND RESEARCH FOR INTERNATIONAL EQUITY
ACCOUNTS. IN ADDITION TO SEVERAL YEARS OF EXPERIENCE IN THE INDUSTRY, CHENG
HOLDS A BACHELOR'S DEGREE SUMMA CUM LAUDE FROM HARVARD/RADCLIFFE COLLEGE, A
MASTER'S DEGREE FROM THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY AND AN M.B.A.
FROM HARVARD BUSINESS SCHOOL.
[SLENDEBROEK PHOTO]
PORTFOLIO MANAGER MARC SLENDEBROEK JOINED THE COMPANY IN 1994. HE IS A MEMBER OF
THE FIRM'S GLOBAL EQUITY GROUP, FOCUSING ON PORTFOLIO MANAGEMENT AND RESEARCH
FOR INTERNATIONAL EQUITY ACCOUNTS. SLENDEBROEK HOLDS A MASTER'S DEGREE IN CIVIL
LAW FROM THE UNIVERSITY OF LEIDEN IN THE NETHERLANDS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
OVER THE PAST SIX MONTHS ENDING JANUARY 31, 2000, DEVELOPED INTERNATIONAL EQUITY
MARKETS HAVE BEEN NOTICEABLY STRENGTHENING. JAPANESE EQUITIES EXPERIENCED A
LONG-AWAITED REBOUND, ALBEIT QUESTIONABLY SUSTAINABLE, AND EUROPE HAS CLEARLY
EMBARKED ON AN ECONOMIC RECOVERY. CHALLENGES CERTAINLY REMAIN; PORTFOLIO
MANAGERS IRENE CHENG AND MARC SLENDEBROEK REVIEW THE SEMIANNUAL PERIOD AND SHARE
THEIR OUTLOOK FOR INTERNATIONAL EQUITY MARKETS.
Q WHAT ARE SOME OF THE MAJOR EVENTS THAT SHAPED INTERNATIONAL EQUITY MARKETS
OVER THE PAST SIX MONTHS?
A The recovery in the global economy has generally fueled a rally in stock
prices in virtually all areas of the world. In recent months, though, the fear
that stronger growth leads to higher interest rates continued to generate
volatility. Throughout the summer, market participants weighed the impact of
higher interest rates and stronger corporate-earnings growth. In August, the
markets absorbed the impact of a U.S. interest-rate increase, then rallied on
the belief that no further rate hikes would be forthcoming. By the turn of the
century, however, investors once again focused on the potential for another
increase, and the last remnants of Y2K concerns surfaced briefly.
Despite the volatility, the overall economic backdrop has been quite
positive, particularly in Europe. Higher corporate earnings, modest deficits and
the prolonged run in merger activity continue to draw attention to this region.
Although the pickup in growth appears to have put the wind at the back of
European businesses, high multiples in the technology and telecommunications
sectors, as well as the potential for further rate tightening from the European
Central Bank, remain a cause for concern over the next six months.
Following a broad-based rebound during the first half of 1999, Japanese
equities have retracted somewhat, particularly among cyclicals as concerns about
economic stability have resurfaced. It remains to be seen how much of Japan's
nascent recovery has been driven by government stimulus programs, which cannot
be sustained at current levels without harmful increases to the country's debt
load. These concerns are reflected in the region's volatility. Nonetheless, the
overall shift in Japan's corporate focus to shareholder value and profitability
remains promising.
Q WHEN YOU ARE LOOKING FOR STOCKS THAT WILL SUCCEED IN THIS ENVIRONMENT,
WHAT ARE YOU CONCENTRATING ON, AND WHERE HAVE YOU FOUND MOST OPPORTUNITIES?
A First and foremost, we focus on an industry's long-term prospects for
change, because change can create opportunities. The change itself can take many
forms. It can mean old companies that are restructuring to meet the needs of the
marketplace or operate more efficiently. Or it can be great new growth companies
that are supporting a change in the technology industry. These can be both
growth and value companies, and we're not restricting ourselves to purely
large-cap companies, either. As we uncover opportunities in several niches, the
fund is more diversified across sector and market cap than it was last year at
this time. Of course, after a stock catches our eye, we look carefully at its
specific fundamentals and valuation.
At January end, about one-third of the equity portfolio, or close to
5
<PAGE> 6
PERFORMANCE UPDATE
15 percent of total assets, was invested in technology and tech-related stocks,
including everything from semiconductor stocks to stakes in telecommunication
companies that offer alternative ways to deliver voice and data. We're very
interested in Internet stocks as well. On the other hand, we have exposure to
the older industries of Europe and Japan that are restructuring to become more
competitive. We also have a solid stake in the Japanese financial sector, both
banking and brokerage firms, where we've seen a lot of reform. We are light on
European banks, though we have recently increased our European insurance
holdings.
Keep in mind that because we follow a bottom-up investment style (see Terms
To Know on page 2), the global economic background isn't the first step to our
process. Our country weightings reflect where we find interesting investment
opportunities, rather than a deliberate attempt to invest in or avoid a
particular region.
Q KEMPER WORLDWIDE 2004 FUND IS UP 9.88 PERCENT (UNADJUSTED FOR A SALES
CHARGE) FOR THE SIX MONTHS ENDED JANUARY 31, 2000. HOW DOES THAT COMPARE WITH
THE FUND'S BENCHMARK, THE MSCI EAFE INDEX?
A Both the Japanese and European markets were strong during the last quarter
of 1999, and thanks to good sector exposure and strong stock picking, the equity
portion of the fund performed well, though as a whole, it underperformed the
benchmark; the MSCI EAFE index* gained 11.19 percent over the six months ended
January 31, 2000. Keep in mind, however, that the fund has a bond component
while the benchmark does not. That income cushion has served its purpose lately.
In January, bonds generally responded negatively to interest-rate concerns, but
they were not nearly as volatile as global equities. Not surprisingly, the
fund's equity stake had a tough ride at the beginning of the new year. Our stake
in cyclicals (see Terms to Know on page 2), a sector that retreated somewhat
after a rally in December, did not help matters. We remain committed to this
sector, especially in Europe, where growth prospects appear better than ever.
Recently, select Japanese holdings have underperformed, reflecting concerns over
the sustainability of that country's economic recovery. Finally, the fund's
equity stake is light in media, the only sector in the benchmark with a positive
January return. By month end, the fund proved more resilient than the index due
to the bond component.
* MSCI EAFE INDEX (MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE AUSTRALASIA, FAR
EAST INDEX) IS AN UNMANAGED INDEX GENERALLY ACCEPTED AS A BENCHMARK FOR MAJOR
OVERSEAS MARKETS. SOURCE IS WIESENBERGER. INVESTORS CANNOT ACTUALLY INVEST IN
THE INDEX.
Q WHAT ARE SOME OF THE THEMES DRIVING INTERNATIONAL EQUITIES TODAY, AND WHAT
OPPORTUNITIES HAVE YOU UNCOVERED? ANY DISAPPOINTMENTS?
A Kemper Worldwide 2004 Fund was boosted by many holdings that were the
subject of takeover bids, and from many that were lifted when other companies in
similar industries announced deals. A case in point is the September
announcement of a proposed three-way merger in the Japanese financial industry
among Fuji Bank, Industrial Bank of Japan and Dai-Ichi Kangyo Bank. Although
Fuji is the only one of the three we owned directly, our other holdings in the
Japanese financial sector responded strongly based on hopes that meaningful
reform has begun.
In Europe, consolidation continues to accelerate, and we have benefited
from many sides of the deals. This was particularly the case with the fund's
exposure to mobile telephone operators in Europe. For example, in late October,
one of the fund's top 10 holdings at that time, British cellular operator
Orange, agreed to be acquired by Mannesmann, the large German telecommunications
firm. Subsequently, Mannesmann itself was the target of a successful hostile
takeover bid by Vodafone of the United Kingdom. The newly created entity is the
undisputed market leader in the fast-growing European mobile telephone market
and currently represents the single largest equity investment of the fund.
Stocks benefiting from the convergence among technology, communication and
media stocks have been strong for us in both Europe and Japan. Our favorite
names include NTT Mobile Communications Network in Japan (a leading cellular and
Internet portal operator) and Italy's Seat Pagine Gialle, a publisher and
leading Internet operator. We haven't experienced many disappointments since we
repositioned the portfolio over the past six months or so. The recent weakening
trend in the Japanese economy is impacting a number of our cyclical holdings in
this region, such as Nissan Motor Company.
Q WHAT IS YOUR OUTLOOK FOR WORLD MARKETS, AND WHAT MIGHT POSE THREATS TO
THIS OUTLOOK?
A We are optimistic about the restructuring and consolidation themes we
discussed earlier. These should continue to provide a strong underpinning for
the foreign markets and should give bottom-up investors the opportunity to take
advantage of the positive performance of the many individual companies that are
poised to benefit from the ongoing process of secular change. That said, we
believe some caution is warranted; global stock markets have come a long way,
but they remain vulnerable to price corrections and inflationary concerns.
6
<PAGE> 7
LARGEST HOLDINGS
THE FUND'S 20 LARGEST STOCK HOLDINGS*
Representing 34.6 percent of the fund's total common stock on January 31, 2000
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
HOLDINGS PERCENTAGE
- -----------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------
1. ORANGE PLC 2.7%
UNITED KINGDOM
- -----------------------------------------------------------------------------
2. VIVENDI 2.1%
FRANCE
- -----------------------------------------------------------------------------
3. TOTAL FINA S.A. 2.0%
FRANCE
- -----------------------------------------------------------------------------
4. SIEMENS AG 2.0%
GERMANY
- -----------------------------------------------------------------------------
5. SAMSUNG ELECTRONICS 1.8%
KOREA
- -----------------------------------------------------------------------------
6. REUTERS GROUP PLC 1.8%
UNITED KINGDOM
- -----------------------------------------------------------------------------
7. NTT MOBILE COMMUNICATIONS NETWORK 1.8%
JAPAN
- -----------------------------------------------------------------------------
8. MURATA MANUFACTURING 1.8%
JAPAN
- -----------------------------------------------------------------------------
9. SAP AG 1.7%
GERMANY
- -----------------------------------------------------------------------------
10. DAIWA SECURITIES 1.7%
JAPAN
- -----------------------------------------------------------------------------
11. AVENTIS SA 1.7%
FRANCE
- -----------------------------------------------------------------------------
12. RIO TINTO PLC 1.7%
UNITED KINGDOM
- -----------------------------------------------------------------------------
13. SONY CORP. 1.5%
JAPAN
- -----------------------------------------------------------------------------
14. EPCOS AG 1.5%
GERMANY
- -----------------------------------------------------------------------------
15. SEAT PAGINE GIALLE SPA 1.5%
ITALY
- -----------------------------------------------------------------------------
16. KYOCERA CORP. 1.5%
JAPAN
- -----------------------------------------------------------------------------
17. NOKIA OYI 1.5%
FINLAND
- -----------------------------------------------------------------------------
18. NIKKO SECURITIES 1.5%
JAPAN
- -----------------------------------------------------------------------------
19. STMICROELECTRONICS 1.4%
FRANCE
- -----------------------------------------------------------------------------
20. HITACHI LTD 1.4%
JAPAN
- -----------------------------------------------------------------------------
</TABLE>
*The fund's holdings are subject to change.
7
<PAGE> 8
PORTFOLIO OF INVESTMENTS
KEMPER WORLDWIDE 2004 FUND
Portfolio of Investments at January 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
REPURCHASE AGREEMENT--4.1% PRINCIPAL AMOUNT VALUE
<S> <C> <C> <C> <C> <C> <C>
Chase Manhattan Bank, 5.625%, 2/1/2000,
to be repurchased at $1,098,172**,
(Cost: $1,098,000) $ 1,098,000 $ 1,098,000
<CAPTION>
BONDS--53.6%
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--53.6%
U.S. Treasury Strip, 11/15/2004 750,000 536,925
U.S. Treasury STRIP, Principal only,
11/15/2004 19,300,000 13,975,516
-------------------------------------------------------------------------------
14,512,441
- --------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS--0.0%
British Aerospace PLC, 7.450%, 11/30/03
(Producer of military aircrafts) 1,400 2,217
-------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $13,944,022) 14,514,658
-------------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS--42.3% NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
EUROPE
- --------------------------------------------------------------------------------------------------------------------------
FINLAND--.6%
Nokia Oyi
(MANUFACTURER OF TELECOMMUNICATIONS
NETWORKS AND EQUIPMENT) 930 167,291
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
FRANCE--7.6%
AXA SA
(INSURANCE GROUP PROVIDING INSURANCE,
FINANCE AND REAL ESTATE SERVICES) 675 84,419
Aventis SA
(PHARMACEUTICAL COMPANY) 3,669 192,588
Carrefour SA
(SUPERMARKET OPERATOR AND FOOD RETAILER) 520 82,188
Christian Dior
(FASHION HOUSE) 541 120,623
Club Mediterranee SA*
(OPERATOR OF VACATION RESORTS) 200 21,811
Dassault Systemes S.A.
(COMPUTER AIDED DESIGN, MANUFACTURING AND
ENGINEERING SOFTWARE) 789 55,003
Etablissements Economiques du Casino
Guichard-Perrachon S.A.
(OPERATOR OF SUPERMARKETS AND CONVENIENCE
STORES) 1,200 77,426
Eurotunnel SA (Bearer)
(CHANNEL TUNNEL CONSORTIUM) 96,022 107,140
LVMH (Louis Vuitton Moet Hennessy)*
(PRODUCER OF WINES, SPIRITS AND LUXURY
PRODUCTS) 190 75,767
Lafarge SA*
(PRODUCER OF CEMENT, CONCRETE AND
AGGREGATES) 1,015 89,026
Pinault-Printemps-Redoute SA
(OPERATOR OF DEPARTMENT STORES) 496 98,222
Renault SA
(MANUFACTURER OF AUTOMOBILES, BUSES,
INDUSTRIAL AND AGRICULTURAL VEHICLES) 1,180 61,710
Rhodia SA
(DRUG MANUFACTURER AND CHEMICALS
SPECIALIST) 5,383 114,381
</TABLE>
8 The accompanying notes are an integral part of the financial statements.
<PAGE> 9
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
STMicroelectronics
(MANUFACTURER OF SEMICONDUCTOR INTEGRATED
CIRCUITS)
Schneider SA 1,006 $ 163,492
(MANUFACTURER OF ELECTRONIC COMPONENTS AND
AUTOMATED MANUFACTURING SYSTEMS) 845 59,440
Societe BIC SA
(MANUFACTURER OF OFFICE SUPPLIES) 1,826 86,812
Total Fina S.A. "B"
(EXPLORER, DEVELOPER AND PRODUCER OF OIL
AND GAS) 1,875 231,405
Union des Assurances Federales
(INSURANCE GROUP) 457 48,331
Usinor Sacilor
(PRODUCER OF FLAT STEEL AND STAINLESS
STEEL) 3,118 51,883
Vivendi
(INDUSTRIAL SERVICES) 2,331 237,474
-------------------------------------------------------------------------------
2,059,141
- --------------------------------------------------------------------------------------------------------------------------
GERMANY--6.3% Allianz AG
(MULTI-LINE INSURANCE COMPANY) 283 92,534
BASF AG
(INTERNATIONAL CHEMICAL PRODUCER) 2,533 107,768
Bayer AG
(CHEMICAL PRODUCER) 2,341 90,127
Celanese AG*
(MANUFACTURER AND DISTRIBUTOR OF
INDUSTRIAL CHEMICALS) 272 5,542
Commerzbank AG*
(PROVIDER OF BANKING SERVICES) 1,600 49,910
Deutsche Telekom AG*
(TELECOMMUNICATION SERVICES) 955 63,379
Dresdner Bank AG
(PROVIDER OF BANKING SERVICES) 1,687 80,695
Epcos AG*
(PRODUCER OF ELECTRONIC COMPONENTS AND
INTEGRATED CIRCUITS) 1,949 173,974
HypoVereinsbank AG
(BANK) 1,233 73,215
Mannesmann AG
(MANUFACTURER OF PRODUCTION MACHINERY AND
ASSEMBLY SYSTEMS) 534 143,777
Muenchener Rueckversicherungs-Gesellschaft
AG (Registered)
(INSURANCE COMPANY) 358 94,479
SAP AG (pfd.)
(COMPUTER SOFTWARE MANUFACTURER) 260 197,776
Siemens AG
(ELECTRICAL ENGINEERING AND ELECTRONICS
COMPANY) 1,660 226,936
Thyssen Krupp AG*
(MANUFACTURER OF BUILDING AND INDUSTRIAL
STEEL MATERIALS) 4,464 112,828
VEBA AG
(ELECTRIC UTILITY, DISTRIBUTOR OF OIL AND
CHEMICALS) 2,070 86,362
VIAG AG
(PROVIDER OF ELECTRICAL POWER AND NATURAL
GAS SERVICES, ALUMINUM PRODUCTS,
CHEMICALS, CERAMICS AND GLASS) 5,859 98,061
-------------------------------------------------------------------------------
1,697,363
</TABLE>
The accompanying notes are an integral part of the financial statements. 9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
ITALY--1.6% Banca Nazionale del Lavoro
(BANK) 21,800 $ 69,588
Gruppo Editoriale L'Espresso
(PUBLISHER) 8,320 105,588
Mediaset SpA
(BROADCASTING AND TELEVISION NETWORKS) 6,300 98,901
Seat Pagine Gialle SpA
(PUBLISHER OF TELECOMMUNICATION
DIRECTORIES AND PROVIDER OF ADVERTISING
SERVICES) 98,200 169,119
-------------------------------------------------------------------------------
443,196
- --------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--2.1%
ASM Lithography Holding NV
(DEVELOPER OF PHOTOLITHOGRAPHY PROJECTION
SYSTEMS) 530 62,736
Akzo Nobel NV
(PRODUCER AND MARKETER OF HEALTHCARE
PRODUCTS, COATINGS, CHEMICALS AND FIBERS) 1,510 62,324
Equant NV*
(PROVIDER OF INTERNATIONAL DATA NETWORK
SERVICES) 1,277 129,476
Fortis (NL) NVBank
(PROVIDER OF BANKING AND INSURANCE
SERVICES) 1,520 44,199
Gucci Group NV (New York Shares)
(DESIGNER AND PRODUCER OF PERSONAL LUXURY
ACCESSORIES AND APPAREL) 1,000 106,813
Koninklijke KPN NV*
(TELECOMMUNICATIONS SERVICES) 940 79,985
Laurus NV
(INTERNATIONAL FOOD RETAILER) 2,170 30,634
United Pan-Europe Communications NV*
(PROVIDER OF TELEVISION AND
TELECOMMUNICATION SERVICES) 320 40,362
-------------------------------------------------------------------------------
556,529
- --------------------------------------------------------------------------------------------------------------------------
SPAIN--.4%
Telefonica SA
(TELECOMMUNICATION SERVICES) 4,405 110,695
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
SWEDEN--.2%
LM Ericsson Telephone Co. "B"*
(MANUFACTURER TELECOMMUNICATIONS
EQUIPMENT) 900 63,204
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
SWITZERLAND--.8%
Nestle SA (Registered)*
(FOOD MANUFACTURER) 52 84,904
Novartis AG (Registered)
(PHARMACEUTICAL COMPANY) 40 48,971
Roche Holdings AG (PC)
(PRODUCER OF DRUGS AND MEDICINES) 7 75,183
-------------------------------------------------------------------------------
209,058
- --------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--6.9%
BOC Group PLC
(PRODUCER OF INDUSTRIAL GASES) 4,130 88,610
BP Amoco plc
(MAJOR INTEGRATED WORLD OIL COMPANY) 12,200 107,421
Billiton PLC
(RESOURCE GROUP THAT EXPLORES, PRODUCES
AND MARKETS ALUMINUM AND OTHER METAL
PRODUCTS) 11,658 60,365
British Aerospace PLC
(PRODUCER OF MILITARY AIRCRAFT) 15,974 85,359
</TABLE>
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Cable and Wireless PLC
(INTERNATIONAL TELECOMMUNICATION SERVICES
IN THE UNITED KINGDOM AND HONG KONG) 3,478 $ 70,744
Glaxo Wellcome PLC
(PHARMACEUTICAL COMPANY) 3,596 92,026
Orange PLC*
(OPERATOR OF DIGITAL MOBILE TELEPHONE
NETWORK) 8,310 304,762
Prudential Corp. PLC
(PROVIDER OF A BROAD RANGE OF FINANCIAL
SERVICES) 7,620 140,960
Rentokil Initial PLC
(ENVIRONMENTAL SERVICES COMPANY) 26,487 102,060
Reuters Group PLC
(INTERNATIONAL NEWS AND INFORMATION
AGENCY) 13,667 204,685
Rio Tinto PLC
(MINING COMPANY) 10,310 190,721
Royal & Sun Alliance Insurance Group PLC
(INSURANCE COMPANY) 15,546 101,469
Shell Transport & Trading PLC
(PETROLEUM COMPANY) 18,800 135,769
SmithKline Beecham PLC
(MANUFACTURER OF ETHICAL DRUGS AND
HEALTHCARE PRODUCTS) 7,784 93,061
Standard Chartered PLC
(INTERNATIONAL BANKING GROUP) 6,367 79,566
-------------------------------------------------------------------------------
1,857,578
-------------------------------------------------------------------------------
TOTAL EUROPEAN COUNTRIES--26.5% 7,164,055
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PACIFIC REGION
- --------------------------------------------------------------------------------------------------------------------------
HONG KONG--.4%
Cheung Kong Holdings Ltd.
(REAL ESTATE COMPANY) 6,000 75,381
New World China Land Ltd.
(PROPERTY DEVELOPMENT) 110 30
New World Development Co., Ltd.
(PROPERTY INVESTMENT AND DEVELOPMENT
COMPANY) 22,000 42,272
-------------------------------------------------------------------------------
117,683
- --------------------------------------------------------------------------------------------------------------------------
JAPAN--13.1%
Advantest Corp.
(PRODUCER OF MEASURING INSTRUMENTS AND
SEMICONDUCTOR TESTING DEVICES) 500 114,493
Asahi Glass Co., Ltd.
(MANUFACTURER OF GLASS PRODUCTS) 8,000 67,393
Benesse Corp.
(PROVIDER OF EDUCATIONAL SERVICES) 500 91,641
Canon, Inc.
(PRODUCER OF VISUAL IMAGE AND INFORMATION
EQUIPMENT) 2,000 81,728
DDI Corp.
(LONG DISTANCE TELEPHONE AND CELLULAR
OPERATOR) 11 124,919
Daiwa Securities Co., Ltd.
(PROVIDER OF BROKERAGE AND OTHER FINANCIAL
SERVICES) 12,000 194,918
Fanuc, Ltd.
(MANUFACTURER OF NUMERICALLY CONTROLLED
EQUIPMENT FOR MACHINE TOOLS) 500 52,592
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
Fuji Bank, Ltd.
(PROVIDER OF COMMERCIAL BANKING SERVICES) 7,000 $ 69,459
Fujisawa Pharmaceutical Co.
(MANUFACTURER AND MARKETER OF ANTIBIOTICS) 1,000 28,763
Fujitsu, Ltd.
(MANUFACTURER OF COMPUTERS) 4,000 147,817
Hitachi, Ltd.
(MANUFACTURER OF GENERAL ELECTRONICS) 11,000 155,739
Kyocera Corp.
(MANUFACTURER OF CERAMIC PACKAGING) 1,000 168,575
Matsushita Electric Industrial Co., Ltd.
(MANUFACTURER OF CONSUMER ELECTRONIC
PRODUCTS) 5,000 132,412
Murata Manufacturing Co., Ltd.
(MANUFACTURER OF CERAMIC APPLIED
ELECTRONIC COMPUTERS) 1,000 201,433
NEC Corp.
(MANUFACTURER OF TELECOMMUNICATION AND
COMPUTER EQUIPMENT) 7,000 149,865
NSK Ltd.
(MANUFACTURER OF BEARINGS AND MOTOR
VEHICLE MACHINE PARTS) 9,000 67,858
NTT Mobile Communications Network, Inc.
(PROVIDER OF VARIOUS TELECOMMUNICATION
SERVICES AND EQUIPMENT) 6 203,295
Nikko Securities Co., Ltd.
(SECURITIES BROKER AND DEALER) 12,000 166,434
Nippon Telegraph & Telephone Corp.
(TELECOMMUNICATION SERVICES) 10 150,796
Nissan Motor Co., Ltd.
(MANUFACTURER OF MOTOR VEHICLES) 21,000 99,693
Nomura Securities Co., Ltd.
(FINANCIAL ADVISOR, SECURITIES BROKER AND
UNDERWRITER) 6,000 136,275
SMC Corp.
(MANUFACTURER OF DIRECTIONAL CONTROL
DEVICES) 200 41,664
Sakura Bank, Ltd.
(PROVIDER OF BANKING SERVICES) 16,000 101,275
Sony Corp.
(MANUFACTURER OF CONSUMER ELECTRONIC
PRODUCTS) 700 175,668
Sumitomo Trust & Banking Co., Ltd.
(COMMERCIAL BANK) 13,000 80,713
TDK Corp.
(MANUFACTURER OF MAGNETIC TAPES AND FLOPPY
DISCS) 900 95,253
THK Co., Ltd.
(MANUFACTURER OF LINEAR MOTION SYSTEMS FOR
INDUSTRIAL MACHINERY) 1,100 52,834
Tokyo Electron Ltd.
(MANUFACTURER OF SEMICONDUCTOR PRODUCTION
EQUIPMENT) 1,000 138,788
Toray Industries, Inc.
(MANUFACTURER OF SYNTHETIC FIBERS, LEATHER
AND POLYESTER FILL) 9,000 38,202
Toshiba Corp.
(MANUFACTURER OF ELECTRIC MACHINERY) 15,000 117,146
Yamanouchi Pharmaceutical Co., Ltd.
(MANUFACTURER OF ETHICAL DRUGS) 2,000 87,499
-------------------------------------------------------------------------------
3,535,140
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C> <C>
KOREA--1.3%
SK Telecom Co., Ltd.
(PROVIDER OF MOBILE TELECOMMUNICATION
SERVICES) 40 $ 134,579
Samsung Electronics Co.
(ELECTRONICS MANUFACTURER) 840 208,598
-------------------------------------------------------------------------------
343,177
-------------------------------------------------------------------------------
TOTAL PACIFIC REGION--14.8% 3,996,000
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
COMMONWEALTH COUNTRIES
- --------------------------------------------------------------------------------------------------------------------------
AUSTRALIA--.8%
Broken Hill Proprietary Co., Ltd.
(PETROLEUM, MINERAL AND STEEL EXPLORATION
PRODUCTION) 8,500 101,423
WMC Ltd.
(MINERAL EXPLORATION AND PRODUCTION) 15,700 79,612
Woodside Petroleum, Ltd.
(PRODUCER OF OIL AND GAS) 5,100 37,690
-------------------------------------------------------------------------------
218,725
- --------------------------------------------------------------------------------------------------------------------------
CANADA--.2%
Canadian National Railway Co.
(RAILROAD OPERATOR) 2,800 68,123
-------------------------------------------------------------------------------
TOTAL COMMONWEALTH COUNTRIES--1.0% 286,848
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS--42.3%
(Cost: $8,986,071) 11,446,903
-------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $24,028,093)(a) $27,059,561
-------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Non-income producing securities
** Repurchase agreements are fully collateralized by U.S. Treasury or Government
agency securities.
(a) The cost for federal income tax purposes was $24,028,093. At January 31,
2000, net unrealized appreciation for all securities based on tax cost was
$3,031,468. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$3,543,260, and aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market value of $511,792.
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
At January 31, 2000 the Fund's portfolio of investments had the following
industry diversification:
<TABLE>
<CAPTION>
VALUE PERCENT
- --------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Discretionary $ 322,843 1.2%
- --------------------------------------------------------------------------------------
Consumer Staples 551,212 2.0%
- --------------------------------------------------------------------------------------
Health 425,503 1.6%
- --------------------------------------------------------------------------------------
Communications 1,450,808 5.4%
- --------------------------------------------------------------------------------------
Financial 1,826,122 6.7%
- --------------------------------------------------------------------------------------
Media 98,901 0.4%
- --------------------------------------------------------------------------------------
Service Industries 910,567 3.4%
- --------------------------------------------------------------------------------------
Durables 224,607 0.8%
- --------------------------------------------------------------------------------------
Manufacturing 2,090,269 7.7%
- --------------------------------------------------------------------------------------
Technology 2,199,131 8.1%
- --------------------------------------------------------------------------------------
Energy 512,286 1.9%
- --------------------------------------------------------------------------------------
Metals & Minerals 484,003 1.8%
- --------------------------------------------------------------------------------------
Construction 196,166 0.7%
- --------------------------------------------------------------------------------------
Transportation 68,123 0.3%
- --------------------------------------------------------------------------------------
Utilities 86,362 0.3%
- --------------------------------------------------------------------------------------
Total Common Stocks 11,446,903 42.3%
- --------------------------------------------------------------------------------------
Repurchase Agreement 1,098,000 4.1%
- --------------------------------------------------------------------------------------
Total Bonds 14,514,658 53.6%
- --------------------------------------------------------------------------------------
Total Investment Portfolio $27,059,561 100.0%
- --------------------------------------------------------------------------------------
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF ASSETS & LIABILITIES
as of January 31, 2000 (Unaudited)
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------
Investments in securities, at value
(Cost: $24,028,093) $27,059,561
- ---------------------------------------------------------------------------
Foreign currency, at value
(Cost: $13,681) 13,943
- ---------------------------------------------------------------------------
Receivable for investments sold 18,380
- ---------------------------------------------------------------------------
Dividends receivable 1,587
- ---------------------------------------------------------------------------
Interest receivable 201
- ---------------------------------------------------------------------------
Foreign taxes recoverable 9,877
- ---------------------------------------------------------------------------
TOTAL ASSETS 27,103,549
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------
Due to custodian bank 85,982
- ---------------------------------------------------------------------------
Payable for investments purchased 76,146
- ---------------------------------------------------------------------------
Accrued management fee 13,813
- ---------------------------------------------------------------------------
Other accrued expenses and payables 65,916
- ---------------------------------------------------------------------------
Total liabilities 241,857
- ---------------------------------------------------------------------------
NET ASSETS, AT VALUE $26,861,692
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------
Net assets consist of:
- ---------------------------------------------------------------------------
Undistributed net investment income (loss) $ 40,758
- ---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 3,031,468
- ---------------------------------------------------------------------------
Foreign currency related transactions (793)
- ---------------------------------------------------------------------------
Accumulated net realized gain (loss) 1,167,587
- ---------------------------------------------------------------------------
Paid-in capital 22,622,672
- ---------------------------------------------------------------------------
NET ASSETS, AT VALUE $26,861,692
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
NET ASSETS VALUE
- ---------------------------------------------------------------------------
NET ASSET VALUE and redemption price per share
($26,861,692 / 2,636,043 outstanding shares of beneficial
interest,
$.01 par value, unlimited number of shares authorized.) $10.19
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six Months ended January 31, 2000 (Unaudited)
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $3,945) $ 36,665
- --------------------------------------------------------------------------
Interest 581,163
- --------------------------------------------------------------------------
Total income 617,828
- --------------------------------------------------------------------------
Expenses:
Management fee 82,817
- --------------------------------------------------------------------------
Services to shareholders 30,632
- --------------------------------------------------------------------------
Custodian fees 5,534
- --------------------------------------------------------------------------
Administrative services fees 39,872
- --------------------------------------------------------------------------
Auditing 3,409
- --------------------------------------------------------------------------
Legal 3,409
- --------------------------------------------------------------------------
Trustees' fees and expenses 5,014
- --------------------------------------------------------------------------
Reports to shareholders 8,300
- --------------------------------------------------------------------------
Other 2,662
- --------------------------------------------------------------------------
Total expenses, before expense reductions 181,649
- --------------------------------------------------------------------------
Expense reductions (948)
- --------------------------------------------------------------------------
Total expenses, after expense reductions 180,701
- --------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 437,127
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
- --------------------------------------------------------------------------
Net realized gain (loss) from:
Investments 1,461,367
- --------------------------------------------------------------------------
Foreign currency related transactions 1,425
- --------------------------------------------------------------------------
1,462,792
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period on:
Investments 661,902
- --------------------------------------------------------------------------
Foreign currency related transactions (793)
- --------------------------------------------------------------------------
661,109
- --------------------------------------------------------------------------
Net gain (loss) on investment transactions 2,123,901
- --------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $2,561,028
- --------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED
JANUARY 31, 2000 YEAR ENDED
(UNAUDITED) JULY 31, 1999
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Operations:
Net investment income (loss) $ 437,127 994,171
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions 1,462,792 2,007,628
- ----------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period 661,109 (2,703,119)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 2,561,028 298,680
- ----------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (950,434) (1,119,736)
- ----------------------------------------------------------------------------------------------------------
From net realized gains (1,876,497) (3,091,020)
- ----------------------------------------------------------------------------------------------------------
Fund share transactions:
Reinvestment of distributions 2,886,741 4,216,049
- ----------------------------------------------------------------------------------------------------------
Cost of shares redeemed (3,569,475) (5,563,644)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions (682,734) (1,347,595)
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 948,637 (5,259,671)
- ----------------------------------------------------------------------------------------------------------
Net assets at beginning of period 27,810,329 33,070,000
- ----------------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including undistributed net
investment income (loss) of $40,758 and $554,064,
respectively) $26,861,692 $27,810,329
- ----------------------------------------------------------------------------------------------------------
OTHER INFORMATION
- ----------------------------------------------------------------------------------------------------------
Shares outstanding at beginning of period 2,694,309 2,809,229
- ----------------------------------------------------------------------------------------------------------
Shares issued to shareholders in reinvestment of
distributions 278,129 408,007
- ----------------------------------------------------------------------------------------------------------
Shares redeemed (336,395) (522,927)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in Fund Shares (58,266) (114,920)
- ----------------------------------------------------------------------------------------------------------
Shares outstanding at end of period 2,636,043 2,694,309
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 17
<PAGE> 18
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
FOR THE
FOR SIX MONTHS YEAR ENDED ONE MONTH ENDED
ENDED JANUARY 31, JULY 31, JULY 31, YEAR ENDED JUNE 30,
(UNAUDITED) ---------------- --------------- --------------------------
2000 1999 1998 1997 1997 1996 1995
- ---------------------------------------------------------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------- --------------------------
Net assets value, beginning of
period $ 10.32 11.77 11.60 11.13 10.60 9.96 9.02
- ---------------------------------------------------------------------------------------- --------------------------
Income (loss) from investment
operations:
Net investment income (loss) .17(a) .35 .42 .03 .42 .36 .27
- ---------------------------------------------------------------------------------------- --------------------------
Net realized and unrealized
gain (loss) on investment
transactions .86 (.22) .77 .44 .71 .63 .79
- ---------------------------------------------------------------------------------------- --------------------------
Total from investment
operations 1.03 .13 1.19 .47 1.13 .99 1.06
- ---------------------------------------------------------------------------------------- --------------------------
Less distribution from:
Net investment income (.39) (.42) (.49) -- (.44) (.35) (.12)
- ---------------------------------------------------------------------------------------- --------------------------
Net realized gain on
investment transactions (.77) (1.16) (.53) -- (.16) -- --
- ---------------------------------------------------------------------------------------- --------------------------
Total distributions (1.16) (1.58) (1.02) -- (.60) (.35) (.12)
- ---------------------------------------------------------------------------------------- --------------------------
Net asset value, end of period $ 10.19 10.32 11.77 11.60 11.13 10.60 9.96
- ---------------------------------------------------------------------------------------- --------------------------
TOTAL RETURN (%) 9.88** 1.12 11.17 4.22** 11.08 10.05 11.91
- ---------------------------------------------------------------------------------------- --------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------- --------------------------
Net assets, end of period ($
thousands) $26,862 27,810 33,070 35,725 34,766 37,818 30,699
- ---------------------------------------------------------------------------------------- --------------------------
Ratio of expenses before
expense reductions (%) 1.31* 1.30 1.19 1.19* 1.19 1.32 1.29
- ---------------------------------------------------------------------------------------- --------------------------
Ratio of expenses after
expense reductions (%) 1.31* 1.30 1.19 1.19* 1.19 1.32 1.29
- ---------------------------------------------------------------------------------------- --------------------------
Ratio of net investment income
(loss) (%) 3.17* 3.28 3.49 3.20* 3.63 3.60 3.77
- ---------------------------------------------------------------------------------------- --------------------------
Portfolio turnover rate (%) 28* 62 27 30* 25 50 75
- ---------------------------------------------------------------------------------------- --------------------------
</TABLE>
(a) Based on average shares outstanding.
* Annualized.
** Not annualized.
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1
SIGNIFICANT
ACCOUNTING POLICIES Kemper Worldwide 2004 Fund (the "Fund") is a
diversified series of Kemper Target Equity Fund
(the "Trust") which is registered under the
Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management investment
company organized as a Massachusetts business
trust.
Fund shares were sold to the public during an
offering period that ended in 1996, and are
redeemable on a continuous basis. 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 Funds investment
manager.
The Fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Investments are stated at value
determined as of the close of regular trading on
the New York Stock Exchange. Securities which are
traded on U.S. or foreign stock exchanges are
valued at the most recent sale price reported on
the exchange on which the security is traded most
extensively. If no sale occurred, the security is
then valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation is used. Securities quoted on the Nasdaq
Stock Market ("Nasdaq"), for which there have been
sales, are valued at the most recent sale price
reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are
not quoted on Nasdaq but are traded in another
over-the-counter market are valued at the most
recent sale price, or if no sale occurred, at the
calculated mean between the most recent bid and
asked quotations on such market. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used.
Portfolio debt securities purchased with an
original maturity greater than sixty days are
valued by pricing agents approved by the officers
of the Trust, whose quotations reflect
broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents
are unable to provide such quotations, the most
recent bid quotation supplied by a bona fide market
maker shall be used. Money market instruments
purchased with an original maturity of sixty days
or less are valued at amortized cost.
All other securities are valued at their fair value
as determined in good faith by the Valuation
Committee of the Board of Trustees.
FOREIGN CURRENCY TRANSLATIONS. The books and
records of the Fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing
exchange rates at period end. Purchases and sales
of investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rates on the respective dates of the
transactions.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses between trade and settlement dates on
securities transactions, the disposition of forward
foreign currency exchange contracts
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
and foreign currencies, and the difference between
the amount of net investment income accrued and the
U.S. dollar amount actually received. That portion
of both realized and unrealized gains and losses on
investments that results from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with net realized and
unrealized gains and losses on investment
securities.
REPURCHASE AGREEMENTS. The Fund may enter into
repurchase agreements with certain banks and
broker/dealers whereby the Fund, through its
custodian or sub-custodian bank, receives delivery
of the underlying securities, the amount of which
at the time of purchase and each subsequent
business day is required to be maintained at such a
level that the market value is equal to at least
the principal amount of the repurchase price plus
accrued interest.
FEDERAL INCOME TAXES. The Fund's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated investment companies and to distribute
all of its taxable income to its shareholders.
Accordingly, the Fund paid no federal income taxes
and no federal income tax provision was required.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made annually.
Net realized gains from investment transactions, in
excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders
at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the Fund.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Dividend income is recorded on
the ex-dividend date. Certain dividends from
foreign securities may be recorded subsequent to
the ex-dividend date as soon as the Fund is
informed of such dividends. Realized gains and
losses from investment transactions are recorded on
an identified cost basis.
Original issue discounts are accreted for both tax
and financial reporting purposes.
EXPENSES. Expenses arising in connection with a
specific Fund are allocated to that Fund. Other
Trust expenses are allocated between the Funds in
proportion to their relative net assets.
- --------------------------------------------------------------------------------
2
PURCHASES & SALES
OF SECURITIES For the six months ended January 31, 2000,
investment transactions (excluding short-term
instruments) are as follows:
Purchases $3,794,114
Proceeds from sales 8,424,734
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3 TRANSACTIONS
WITH AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper). The Fund pays a monthly
investment management fee of 1/12 of the annual
rate of .60% of average daily net assets. The Fund
incurred a management fee of $82,817 for the six
months ended January 31, 2000. In addition, during
the six months ended January 31, 2000, the Adviser
reimbursed the Fund $81,190 for losses incurred in
connection with certain portfolio transactions.
ADMINISTRATIVE SERVICES AGREEMENT. The Trust has an
administrative services agreement with Kemper
Distributors, Inc. (KDI). For providing information
and administrative services to shareholders, the
Fund pays KDI a fee at an annual rate of up to .25%
of average daily net assets. KDI in turn has
various agreements with financial services firms
that provided these services and pays these firms
based on assets of fund accounts the firms service.
Administrative services fees paid by the Fund to
KDI for the six months ended January 31, 2000 are
$39,872 of which $17,544 is unpaid.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the Fund. Under the agreement,
KSvC received shareholder services fees of $20,965
for the six months ended January 31, 2000, of which
$11,804 is unpaid.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. For the six month ended January 31,
2000, the Fund made no payments to its officers and
incurred trustees' fees of $5,014 to independent
trustees.
- --------------------------------------------------------------------------------
4 EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian whereby credits realized as a result of
uninvested cash balances were to reduce a portion
of the Fund's expenses. During the six months ended
January 31, 2000, the Fund's custodian fees were
reduced by $948 under these arrangements.
- --------------------------------------------------------------------------------
5 LINE OF CREDIT The Fund and several Kemper funds (the
"Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its assets under the
agreement.
21
<PAGE> 22
NOTES
22
<PAGE> 23
NOTES
23
<PAGE> 24
TRUSTEES & OFFICERS
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
JAMES E. AKINS MARK S. CASADY WILLIAM F. TRUSCOTT
Trustee President Vice President
JAMES R. EDGAR PHILIP J. COLLORA LINDA J. WONDRACK
Trustee Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK MAUREEN E. KANE
Trustee JOHN R. HEBBLE Assistant Secretary
Treasurer
FREDERICK T. KELSEY CAROLINE PEARSON
Trustee IRENE CHENG Assistant Secretary
Vice President
THOMAS W. LITTAUER BRENDA LYONS
Chairman, Trustee and TRACY MCCORMICK Assistant Treasurer
Vice President Vice President
FRED B. RENWICK ANN M. MCCREARY
Trustee Vice President
JOHN G. WEITHERS KATHRYN L. QUIRK
Trustee Vice President
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
.............................................................................................
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
.............................................................................................
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
.............................................................................................
CUSTODIAN THE CHASE MANHATTAN BANK
Chase Metro Tech Center
Brooklyn, NY 11245
.............................................................................................
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
.............................................................................................
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
</TABLE>
KEMPER FUNDS LOGO Long-term investing in a short-term world(SM)
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 Fund Prospectus.
KWF - 3(3/25/00) 1105640
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
