<PAGE> 1
The Growth Fund
of Spain, Inc.
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED NOVEMBER 30, 1995
"...a combination of market weighting and stock selection...helped the
fund perform well against its peers."
<PAGE> 2
Table of Contents
3
General
Economic Overview
5
Performance Update
7
Terms to Know
8
Largest Holdings
9
Portfolio Statistics
10
Portfolio of
Investments
12
Report of
Independent Auditors
13
Financial Statements
15
Notes to
Financial Statements
18
Financial Highlights
19
Description of
Dividend
Reinvestment Plan
At A Glance
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TOTAL RETURNS
FOR THE YEAR ENDED NOVEMBER 30, 1995
- -------------------------------------------------------------------------------
BASED ON BASED ON
NET ASSET MARKET
VALUE PRICE
- -------------------------------------------------------------------------------
<S> <C> <C>
THE GROWTH FUND
OF SPAIN, INC. 11.62% 13.83%
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NET ASSET VALUE AND MARKET PRICE
- -------------------------------------------------------------------------------
AS OF AS OF
11/30/95 11/30/94
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE $13.33 $12.40
MARKET PRICE $10.88 $10.00
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
DIVIDEND REVIEW
- -------------------------------------------------------------------------------
DURING THE FISCAL YEAR, THE GROWTH FUND OF SPAIN PAID THE FOLLOWING DIVIDEND
PER SHARE.
<TABLE>
<S> <C>
1 Year Income: $0.45
- -------------------------------------------------------------------------------
</TABLE>
Statistical Note: Total return measures aggregate change in net asset
value/market value assuming reinvestment of dividends. Returns are historical
and do not represent future performance. Market price, net asset value and
returns fluctuate. Additional information concerning performance is contained
in the Financial Highlights appearing at the end of this report.
About Your Report
Your fund's annual report is one of your best sources for tracking the progress
of your investment. This report includes several changes that have been made in
an effort to provide additional information to you as well as to explain
significant changes to the fund over the last fiscal year. In addition, the
performance update includes commentary from your fund's portfolio manager or
management team on what might be expected in the coming months.
Specifically, your report now includes:
- Terms you need to know related to your fund
- A look at your fund's portfolio composition and its largest
holdings and how they have changed
If you have any comments about the revised format, please
write to:
Kemper Funds
Shareholder Communications
120 South LaSalle Street
Chicago, IL 60603
2
<PAGE> 3
General Economic Overview
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS CHIEF EXECUTIVE AND CHIEF INVESTMENT OFFICER OF KEMPER
FINANCIAL SERVICES, INC. (KFS). KFS AND ITS AFFILIATES MANAGE APPROXIMATELY $63
BILLION IN ASSETS, INCLUDING $44 BILLION IN RETAIL MUTUAL FUNDS. TIMBERS IS A
GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM HARVARD UNIVERSITY.
DEAR SHAREHOLDER,
Investors enjoyed very positive performance in both the fixed income and stock
markets in 1995. The returns of most leading securities markets worldwide were
significantly higher than they were in 1994.
We have an excellent environment for financial assets. After several
quarters of robust growth, the United States economy seems to be growing at a
pace that investors find comfortable. Contrary to isolated reports that caused
some observers to become concerned, we believe the economy is in no jeopardy of
recession. Its health was confirmed with the news that the economy grew (as
measured by real gross domestic product [GDP]) at an annual rate of 4.2 percent
in the third quarter. This follows much lower growth in the first two quarters,
as the economy was adjusting to the Federal Reserve Board's series of interest
rate increases. The slowdown, in fact, was acknowledged by the Fed when it
eased short-term rates by a small but symbolic 25 basis points in July. Now we
know that the economy was rebounding from July through September.
Growth without a corresponding increase in inflation is very encouraging.
Although we are well along in the economic cycle and at a point when prices
often start hiking up, inflationary pressures have actually been reduced
somewhat.
The Fed reduced rates again in December, this time acknowledging
discussions underway to reduce the federal budget deficit. Assuming these
discussions are productive, a third rate cut is possible later this month. Even
with such reducing by the Fed, our forecast calls for lower growth ranging
between 2 percent to 3 percent for the next few quarters, with the momentum
likely to come from exports and nonresidential construction.
MARKET OUTLOOK
Slow growth and low inflation is the optimal combination for investors in the
fixed income markets, and we expect them to continue to perform well.
We believe that the opportunities for common stock investors will be
increasingly concentrated in higher quality investments. After hitting new
highs and showing considerable strength for most of the year, the stock market
has shown some vulnerability and then gone on to set records. However, it's
inevitable -- the current bull market will come to an end some day. In fact,
some sectors may be overextended today.
As we view the new year, companies cannot necessarily count on the economy
to provide above-average earnings support. Rather, stocks that have proven
themselves with a pattern of consistent earnings are likely to attract investor
support. Specifically, sectors that produce more consistent earnings, such as
health care, consumer nondurables, selected technology and selected capital
goods can be expected to do well. Picking the right sectors to invest in will
be the key challenge for equity investors during the next few quarters.
International investing continues to be quite complex. After sinking to its
post-World War II low last year, the value of the U.S. dollar has gained
strength against most foreign currencies. While a stronger dollar favors the
U.S. economy because it reduces the cost of American imports and attracts
foreign capital, a strong dollar in relation to a local currency has the effect
of devaluing a foreign investment. The value of the dollar and the
attractiveness of U.S. investments to foreign investors will be key factors in
the next few months.
3
<PAGE> 4
GENERAL ECONOMIC OVERVIEW
ECONOMIC GUIDEPOSTS
Economic activity is a key influence on investment performance and
shareholder decision-making. Periods of recession or boom, inflation or
deflation, credit expansion or credit crunch have a significant impact on
mutual fund performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The 10-
year Treasury rate and the prime rate are prevailing interest rates. The other
data report year-to-year percentage changes.
(BAR GRAPH)
<TABLE>
<CAPTION>
Now (12/31/95) 6 months ago 1 year ago 2 years ago
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 5.71 6.28 7.78 5.75
Prime rate (2) 8.65 8.80 8.50 6.00
Inflation rate (3) 2.60 2.97 2.60 2.74
The U.S. Dollar (4) -1.57 -9.31 -4.52 1.71
Capital goods orders (5)** 7.60 17.84 13.53 23.75
Industrial production (6)* 1.88 2.80 6.43 3.76
Employment growth (7)* 1.50 2.29 3.15 2.58
</TABLE>
1 Falling interest rates in recent years have been a big plus for financial
assets.
2 The interest rate that commercial lenders charge their best borrowers.
3 Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
4 Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
5 These influence corporate profits and equity performance.
6 An influence on corporate profits and equity performance.
7 An influence on family income and retail sales.
* Data as of November 30, 1995
** Data as of October 31, 1995
SOURCE: ECONOMICS DEPARTMENT, KEMPER FINANCIAL SERVICES, INC.
We are in the midst of a global recovery, and the same fundamentals
that have driven markets higher in the U.S. can be found in many foreign
countries currently. However, leading international economies continue to lag
the U.S. Japan and Germany, whose economies typically follow U.S. growth, are
not as robust as in past cycles. Moreover, conditions in emerging market
countries underline the importance of careful research and experience in
understanding how these markets work.
Political leadership also has some bearing on the progress of the
economy and the state of the financial markets. In the months preceding
a presidential election year, it has been common for incumbents to attempt to
stimulate growth. Given our Republican Congress and Democratic President,
however, we do not consider this as likely this time.
With the rest of the country, we are closely following political
initiatives to produce a balanced federal budget. This is a political wild
card, but we would expect both the stock and fixed-income markets to react with
enthusiasm if progress can be made.
With that as an economic backdrop, we encourage you to read the
following detailed report of your fund, including a question-and-answer
interview with your fund's portfolio managers. Thank you for your continued
support. We appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen B. Timbers
STEPHEN B. TIMBERS
CHIEF INVESTMENT AND EXECUTIVE OFFICER
January 9, 1996
4
<PAGE> 5
Performance Update
[FERRO PHOTO]
Dennis Ferro became portfolio co-manager of the fund in March, 1994 when he
joined Kemper Financial Services, Inc. (KFS). Prior to Kemper, he was
president, managing director and chief investment officer for Cigna
International. Ferro is an executive vice-president of KFS and director of
international equities.
Eduardo Suarez has been a portfolio co-manager of the fund since its inception
in February, 1990. He is the chief executive officer of BSN Gestion de
Patrimonios, S.A., S.G.C. (BSN Gestion). Suarez received a law degree from
Deusto University in 1977 and a business administration degree from ICADE in
1978.
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.
THE SPANISH STOCK MARKET RALLIED DURING MUCH OF 1995, SURPASSING 1994 LEVELS.
DENNIS FERRO, PORTFOLIO CO-MANAGER FOR THE GROWTH FUND OF SPAIN, INC. DISCUSSES
THE YEAR AND THE PERFORMANCE OF THE FUND.
Q. POLITICALLY, IT HAS BEEN AN EVENTFUL YEAR IN SPAIN -- ALLEGATIONS OF A
SECRET WAR, THE DEMISE OF THE SOCIALIST-CATALAN COALITION, THE SOCIALIST BUDGET
DEFEAT AND SUBSEQUENT ROLLOVER OF THE 1995 BUDGET. WHAT IMPACT, IF ANY, HAVE
THESE EVENTS HAD ON THE MARKET?
A. True, it has been an eventful year, yet these events have had little
negative impact on the market, except for the first quarter when the market
performed poorly, following initial allegations of corruption implicating
members of the ruling Socialist Party. When Prime Minister Felipe Gonzalez
announced in July that he would call for a general election in Spring 1996 (a
year ahead of schedule), the market started to discount further political
developments. Now, with the general election on the horizon, the current
Socialist government is generally viewed as something of a "lame duck." Change
appears inevitable and since the market has already taken this into account,
political turmoil should have little effect on the market.
The defeat of the Socialists' proposed 1996 budget had very little impact
on the market since it had been widely anticipated, and the prospect of
elections in March diminished the impact as well, since a new government would
undoubtedly draft a new budget. As for the upcoming election, the center-right
Partido Popular (PP) appears likely to gain the most seats in parliament,
thereby ending the Socialists' 13-year reign. This should bode well for the
market since the PP is intent on reducing government spending. It remains to be
seen if this is anything more than pre-election rhetoric.
Q. IN 1994, CYCLICAL STOCKS WERE FAVORED OVER DEFENSIVE ISSUES LIKE ELECTRIC
UTILITIES. HOWEVER, DURING 1995 YOU SHIFTED MORE WEIGHT TO BANKS AND UTILITIES,
AWAY FROM CYCLICALS. WHY THIS CHANGE? WAS IT BENEFICIAL?
A. In the third quarter, we began favoring more defensive stocks in the
banking and utilities sectors. This adjustment was made in the wake of revised
economic data, forecasting slower growth in 1996, and had little effect on the
fund's NAV performance. Our position was more conservative than the market
consensus which favored cyclicals over interest rate sensitive stocks. Although
we significantly reduced exposure to cyclicals in favor of more defensive
equities, we did not eliminate them from the portfolio. We maintained some
exposure to quality cyclicals like Acerinox in the metals and machinery sector
and FCC in the construction sector.
5
<PAGE> 6
Performance Update
Q. GROWTH APPEARS TO BE SLOWING. HOW WILL THIS AFFECT THE MARKET AND THE FUND?
A. Slower growth has helped inflation and the Spanish peseta perform well
against other European currencies. In fact, stagnating consumption and a weaker
U.S. dollar have improved the inflation picture throughout Europe. Within the
Spanish economy, the weaker dollar has helped control inflation since many
costs are U.S. dollar based, like oil. Despite weak consumption figures and
slower growth we are not anticipating a recession. We expect GDP growth in
Spain to be around 2.3 percent in 1996.
This scenario -- low inflation with sustained growth -- is positive for
Spanish equities since the market consists mostly of interest rate sensitive
stocks like utilities, motor toll ways and telecommunications. These stocks
tend to benefit from lower interest rates. Therefore, we believe that Spain
could be one of the best performing markets in Europe if growth does not fall
below 2 percent in 1996.
We continue to favor interest rate sensitive stocks yet maintain some
exposure to quality cyclicals. As growth resumes, which we expect to occur by
the second quarter of 1996, we will re-evaluate our position.
Q. THE STOCK MARKET RALLIED DURING THE SECOND QUARTER AND THE EARLY PART OF
THE THIRD QUARTER, SURPASSING 1994 LEVELS. DID THE MARKET RALLY ACROSS THE
BOARD, OR ONLY IN A FEW SECTORS? HOW DID YOU POSITION THE FUND?
A. The rally during the second quarter of 1995 and the early part of the third
quarter was across the board. During the first quarter, a sell-off of utility
stocks followed a sell-off in Spanish bonds. This created some good buying
opportunities. With the recent economic slowdown, these equities have been
performing well.
During the first half of the year, the banking sector tended to lag other
sectors. This was due primarily to the weakness of Argentaria and Santander,
two banks whose stocks were sensitive to the weakness of bonds. Fortunately,
strong performances by Banco Popular and Banco Bilbao Viscaya helped offset
these two issues. In the third quarter we saw a swift sell off of cyclical
companies following a correction that took the IBEX down nearly 400 points
during September. The fund was well positioned and, overall, it stayed ahead of
the Madrid Stock Exchange General Index towards the end of the quarter.
Q. THE STOCK MARKET RALLY TAPERED OFF DURING THE LATTER PART OF THE THIRD
QUARTER OF 1995. HOW DID YOU POSITION THE FUND IN RESPONSE? WAS IT BENEFICIAL?
A. After the market rally, and given the strength of bonds, the market rallied
again, this time boosting performance in the electric utilities and motorways
sectors. Banco Santander and Argentaria in the banking sector have joined the
latest rally. Fortunately we had increased our position in Argentaria,
Iberdrola, Endesa and ACESA and were in a position to benefit from the rally.
However, we had to sell holdings in some cyclical companies at bottom prices in
order to finance this buying. Nevertheless, these changes have helped
performance.
Q. AS THE STOCK MARKET SLOWED, ACTIVITY INCREASED IN THE BOND MARKET. WHAT
IMPACT DID THIS HAVE ON THE FUND?
A. The bond and equity markets are strongly linked in Spain. The only
implication involves defensive stocks over cyclicals. We anticipated a bond
rally and therefore factored it into our strategy. As the stock market slowed
and bonds picked up, we shifted away from cyclicals and increased our position
in utilities, and telecommunications and motorways, whose performance tends to
follow the bond market.
6
<PAGE> 7
Performance Update
Q. WHY WAS THE FUND ABLE TO OUTPERFORM ITS SPANISH PEERS DURING THE YEAR?
A. Although the fund followed a conservative investment policy and was not
fully invested for most of 1995, a combination of market weighting and stock
selection focused on high quality companies helped the fund perform well
against it peers. Being underweighted in cyclicals as growth started to slow in
the second half of 1995 and a subsequent emphasis on banks and utilities
boosted performance. In addition, we avoided undue exposure to companies that
had disappointing earnings and were not afraid to be overweighted in stocks of
companies where we felt confident in earnings potential and in the managements'
capabilities.
Q. WHAT LESSONS DID YOU LEARN OVER THE YEAR THAT YOU WILL TAKE WITH YOU GOING
FORWARD?
A. We confirmed our knowledge that the Spanish stock market is prone to
exaggeration. For example, during the month of September, a sell-off took the
IBEX down more than 400 points in two weeks. Afterwards, the market rallied and
climbed above 3600 from 3150. In this sell-off, cyclicals were particularly
affected and the prices of some of the fund's holdings, like Acerinox (a
stainless steel manufacturer) and ENCE (a pulp producer), suffered.
The year has reminded us that we must be cautious when considering the
short-term volatility of the Spanish market. While it's important not to be
left holding the bag when everyone is selling, it's equally important not to
panic and be swept away in the tide when a big sell-off occurs.
As for the sell-off late in the third quarter of 1995, it remains to be
seen whether this was the start of a long-term trend or if the market simply
over-reacted. We will have to wait and see.
Terms To Know
CYCLICAL ISSUES Cyclical issues are securities within industries whose
earnings tend to rise quickly when the economy strengthens and fall quickly
when the economy weakens. Examples are housing, automobiles and paper
companies. The performance of noncyclical industries such as food, insurance
and pharmaceuticals are normally not as directly affected by economic changes.
IBEX The IBEX-35 Index is based on the 35 most heavily traded stocks on the
Spanish market, weighted by market capitalization. Consequently, the index is a
good indicator of the average share performance of the largest quoted Spanish
companies.
INTEREST RATE SENSITIVE Referring to a security whose performance is closely
linked to movements in interest rates.
MADRID STOCK EXCHANGE (MSE) GENERAL INDEX Based on the 96 most frequently
traded stocks on the Madrid Stock Exchange and represents 85% of the total
Madrid market capitalization. The MSE General Index is comprised of the
following nine sectors: banks and financials, telecommunications and motorways,
construction, utilities, food, investment companies, metals and machinery, oil
and chemicals and miscellaneous.
TOTAL RETURN A fund's total return figure measures both the net investment
income and any realized and unrealized appreciation or depreciation of the
underlying investments in its portfolio for the period, assuming the
reinvestment of all dividends. It represents the aggregate percentage or
dollar value change over the period.
7
<PAGE> 8
Largest Holdings
THE FUND'S 5 LARGEST HOLDINGS
REPRESENTING 29.5% OF THE FUND'S TOTAL NET ASSETS ON NOVEMBER 30, 1995
- -------------------------------------------------------------------
Holdings Percent
- -------------------------------------------------------------------
1. Telefonica de Espana (Telecommunications) 7.27%
2. Endesa (Utilities) 6.49%
3. Iberdrola (Utilities) 5.75%
4. Banco Bilbao Viscaya (Banking) 5.00%
5. Repsol S.A. (Oil & Chemicals) 4.99%
8
<PAGE> 9
Portfolio Statistics
PORTFOLIO COMPOSITION
<TABLE>
- -------------------------------------------------------------------------
On 11/30/95 On 11/30/94
- -------------------------------------------------------------------------
<S> <C> <C>
Spanish equities 85% 83%
Spanish pesta time deposits 13 13
U.S. cash equivalents 2 2
Governments -- 2
100% 100%
</TABLE>
[PIE CHART] [PIE CHART]
ON 11/30/95 ON 11/30/94
- - SPANISH EQUITIES
- - SPANISH PESTA TIME DEPOSITS
- - U.S. CASH EQUIVALENTS
- - GOVERNMENTS
9
<PAGE> 10
Portfolio of Investments
THE GROWTH FUND OF SPAIN, INC.
PORTFOLIO OF INVESTMENTS AT NOVEMBER 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- ------------- ---------------- -----
<S> <C> <C> <C>
BANKING--22.8%
Argentaria 275,000 $ 10,785
Banco Bilbao-Vizcaya 345,000 11,400
Banco Central Hispano 200,000 4,105
Banco de Andalucia 35,130 4,854
Banco Popular Espanol 64,000 10,769
Bankinter 105,000 9,977
===========================================================================
51,890
- ------------------------------------------------------------------------------------------------------------
CHEMICALS
AND ENERGY--5.0%
Repsol 360,000 11,368
- ------------------------------------------------------------------------------------------------------------
CONSTRUCTION
AND PROPERTY
DEVELOPMENT--9.0%
Fomento de Construcciones y Contratas (FCC) 84,700 6,444
Inmobiliaria Metropolitana Vasco Central,
(Metrovacesa) 135,441 4,448
Uralita 305,000 3,099
Vallehermoso 363,049 6,433
===========================================================================
20,424
- ------------------------------------------------------------------------------------------------------------
CONSUMER GOODS--2.0%
Centros Commerciales Pryca 150,000 2,926
Cortefiel 59,500 1,630
===========================================================================
4,556
- ------------------------------------------------------------------------------------------------------------
ELECTRIC AND
OTHER UTILITIES--21.8%
Cantabrico 253,074 8,146
Compania Sevillana de Electricidad 373,080 2,650
Empresa Nacional de Electricidad (ENDESA) 275,000 14,798
Fuerzas Electricas de Cataluna (FECSA) 450,000 2,934
Gas Natural 31,952 4,545
Gas y Electricidad (GESA) 67,723 3,485
Iberdrola I, ordinary shares 1,550,000 13,103
===========================================================================
49,661
- ------------------------------------------------------------------------------------------------------------
FOOD AND
TOBACCO--1.6%
(a) El Aguila 348,858 2,237
Tabacalera Espanola 40,000 1,505
===========================================================================
3,742
- ------------------------------------------------------------------------------------------------------------
INVESTMENT
COMPANIES--2.3%
Alba 50,000 2,825
Corp Fin Reunida Cofir 744,139 2,559
===========================================================================
5,384
- ------------------------------------------------------------------------------------------------------------
METALS AND
ENGINEERING--7.4%
Aceronix 29,990 3,011
(a) Amper 170,000 2,163
Azcoyen 75,000 4,158
Zardoya Otis 73,041 7,599
===========================================================================
16,931
- ------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
Portfolio of Investments
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS NUMBER OF SHARES VALUE
AND MOTORWAYS--12.7% Aumar 514,163 $ 6,624
Autopistas Concesionarios (ACESA) 520,000 5,727
Compania Telefonica Nacional de Espana 1,200,000 16,582
===========================================================================
28,933
===========================================================================
TOTAL COMMON STOCKS--84.6%
(Cost: $164,632) 192,889
===========================================================================
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET INSTRUMENTS PRINCIPAL AMOUNT VALUE
Yield--9.30% to 9.48%
Due--December 1995
(Principal amount in Spanish Pesetas)
Banco Exterior Internacional 1,243,032,000 10,104
Banque Bruxelles Lambert 523,907,000 4,259
Caixa D Estalvis de Catalunya 1,240,139,000 10,080
J.P. Morgan & Company Inc. 657,576,000 5,345
===========================================================================
TOTAL MONEY MARKET INSTRUMENTS--13.1%
(Cost: $29,993) 29,788
===========================================================================
TOTAL INVESTMENTS--97.7%
(Cost: $194,625) 222,677
===========================================================================
CASH AND OTHER ASSETS, LESS
LIABILITIES--2.3% 5,320
===========================================================================
NET ASSETS--100% $227,997
===========================================================================
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $194,625,000 for federal income tax purposes
at November 30, 1995, the aggregate gross unrealized appreciation was
$31,300,000, the aggregate gross unrealized depreciation was $3,248,000 and the
net unrealized appreciation on investments was $28,052,000.
See accompanying Notes to Financial Statements.
11
<PAGE> 12
Report of Independent Auditors
THE BOARD OF DIRECTORS AND SHAREHOLDERS
THE GROWTH FUND OF SPAIN, INC.
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The Growth Fund of Spain, Inc. as of
November 30, 1995, the related statements of operations for the year then ended
and changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the fiscal periods since 1991. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Growth Fund of Spain, Inc. at November 30, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the fiscal
periods since 1991, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 12, 1996
12
<PAGE> 13
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $194,625) $222,677
- -------------------------------------------------------------------------------------------------
Cash (including foreign currency of $6,621 with a cost of $6,662) 6,936
- -------------------------------------------------------------------------------------------------
Receivable for:
Investments sold 3,043
- -------------------------------------------------------------------------------------------------
Dividends and interest 437
- -------------------------------------------------------------------------------------------------
TOTAL ASSETS 233,093
=================================================================================================
- -------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------
Payable for:
Investments purchased 4,844
- -------------------------------------------------------------------------------------------------
Management fee 184
- -------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 60
- -------------------------------------------------------------------------------------------------
Other 8
- -------------------------------------------------------------------------------------------------
Total liabilities 5,096
=================================================================================================
NET ASSETS APPLICABLE TO 17,099 SHARES OUTSTANDING,
$.01 PAR VALUE, EQUIVALENT TO $13.33 PER SHARE $227,997
=================================================================================================
- -------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------
Paid-in capital $190,381
Accumulated net realized gain on investments and foreign currency transactions 3,981
Net unrealized appreciation on investments and assets and liabilities in foreign
currencies 26,620
Undistributed net investment income 7,015
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $227,997
=================================================================================================
NET ASSET VALUE PER SHARE ($227,997 + 17,099 shares outstanding) $13.33
=================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
13
<PAGE> 14
Financial Statements
STATEMENT OF OPERATIONS
Year ended November 30, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------
Dividends $ 7,215
- -------------------------------------------------------------------------------------------------
Interest 2,726
- -------------------------------------------------------------------------------------------------
9,941
- -------------------------------------------------------------------------------------------------
Less foreign taxes withheld 1,152
- -------------------------------------------------------------------------------------------------
Total investment income 8,789
- -------------------------------------------------------------------------------------------------
Expenses:
Management fee 2,139
- -------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 278
- -------------------------------------------------------------------------------------------------
Professional fees 86
- -------------------------------------------------------------------------------------------------
Reports to shareholders 34
- -------------------------------------------------------------------------------------------------
Directors' fees and other 68
- -------------------------------------------------------------------------------------------------
Total expenses 2,605
=================================================================================================
NET INVESTMENT INCOME 6,184
=================================================================================================
- -------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- -------------------------------------------------------------------------------------------------
Net realized gain on sales of investments and foreign currency transactions 7,448
- -------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on investments and assets and liabilities in
foreign currencies 9,656
- -------------------------------------------------------------------------------------------------
Net gain on investments 17,104
- -------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $23,288
=================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- --------------------------------------------------------------------------------------------------
Net investment income $ 6,184 5,487
- --------------------------------------------------------------------------------------------------
Net realized gain 7,448 18,312
- --------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 9,656 6,006
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 23,288 29,805
- --------------------------------------------------------------------------------------------------
Distribution from net investment income (7,767) --
- --------------------------------------------------------------------------------------------------
Payment for shares repurchased (160 shares in 1995 and 71 shares in
1994) (1,496) (717)
- --------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 14,025 29,088
==================================================================================================
- --------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------
Beginning of year 213,972 184,884
- --------------------------------------------------------------------------------------------------
END OF YEAR (including undistributed net investment income of
$7,015 and $7,433, respectively) $227,997 213,972
=================================================================================================
</TABLE>
14
<PAGE> 15
Notes to Financial Statements
- --------------------------------------------------------------------------------
1 SIGNIFICANT ACCOUNTING
POLICIES DESCRIPTION OF FUND. The Fund is registered under
the Investment Company Act of 1940 as a
diversified, closed-end management investment
company.
INVESTMENT VALUATION. Investments are stated at
value. All securities that are traded on a Spanish
securities exchange and for which market quotations
are readily available are valued at the closing
value on the principal exchange on which the
securities are traded on the day of valuation or,
if no such closing price is available, at the last
bid price quoted on such day. If there are no
quotations available for the day of valuation, the
last available closing price will be used. Fixed
income securities are valued by using market
quotations, or independent pricing services that
use prices provided by market makers or estimates
of market values obtained from yield data relating
to instruments or securities with similar
characteristics. Equity options are valued at the
last sale price unless the bid price is higher or
the asked price is lower, in which event such bid
or asked price is used. Exchange traded fixed
income options are valued at the last sale price
unless there is no sale price, in which event
prices provided by market makers are used.
Over-the-counter traded fixed income options are
valued based upon current prices provided by market
makers. Financial futures and options thereon are
valued at the settlement price established each day
by the board of trade or exchange on which they are
traded. Forward foreign currency contracts and
foreign currencies are valued at the forward and
current exchange rates, respectively, prevailing on
the day of valuation. Other securities and assets
are valued at fair value as determined in good
faith by the Board of Directors.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in Spanish pesetas
are converted into U.S. dollar values at the mean
between the bid and offered quotations of that
currency against U.S. dollars as last quoted by a
recognized dealer. If such quotations are not
readily available, the rate of exchange is
determined in good faith by the Board of Directors.
Income and expenses and purchases and sales of
investments are translated into U.S. dollars at the
rate of exchange prevailing on the respective dates
of such transactions. The Fund includes that
portion of the results of operations resulting from
changes in foreign exchange rates with net realized
and unrealized gain (loss) on investments, as
appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, except that certain dividends
from foreign securities are recorded as soon as the
information is available to the Fund. Interest
income is recorded on the accrual basis and
includes amortization of money market instrument
premium and discount. Realized gains and losses
from investment transactions are reported on an
identified cost basis.
15
<PAGE> 16
Notes to Financial Statements
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS.
The Fund has complied with the special provisions
of the Internal Revenue Code available to
investment companies and therefore no federal
income tax provision is required. The Fund may make
an election under the Internal Revenue Code so that
shareholders may claim a tax credit or deduction
for their share of foreign taxes paid by the Fund.
Net realized capital gains, if any, reduced by
capital loss carryovers, will be distributed at
least annually. Dividends payable to its
shareholders are recorded by the Fund on the
ex-dividend date.
Dividends are determined in accordance with income
tax principles which may treat certain
transactions, such as foreign currency
transactions, differently from generally accepted
accounting principles.
On December 7, 1995, the following per share
dividends were declared, payable December 29, 1995,
to shareholders of record on December 14, 1995:
$0.42 income, $0.12 short-term capital gains and
$0.17 long-term capital gains.
- --------------------------------------------------------------------------------
2 TRANSACTIONS WITH
AFFILIATES The Fund has a management agreement with Kemper
Financial Services, Inc. (KFS) and pays a
management fee at an annual rate of 1% of average
weekly net assets. The Fund incurred a management
fee of $2,139,000 for the year ended November 30,
1995.
KFS utilizes the investment management services of
BSN Gestion de Patrimonios, S.A., S.G.C. (the
Spanish Adviser) pursuant to a sub-advisory
agreement entered into between KFS and the Spanish
Adviser. For services provided under the
sub-advisory agreement, KFS pays a fee at an annual
rate of .35% of the Fund's average weekly net
assets to the Spanish Adviser. During the year
ended November 30, 1995, KFS incurred fees of
$749,000 to the Spanish Adviser.
Pursuant to a services agreement with the Fund's
transfer agent, Kemper Service Company (KSvC) is
the shareholder service agent of the Fund. For the
year ended November 30, 1995, the transfer agent
remitted shareholder services fees to KSvC of
$24,000.
The Fund has a custodian agreement with Banco
Santander, an affiliate of the Spanish Adviser, for
custody of the Fund's Spanish securities. For the
year ended November 30, 1995, the Fund incurred
custody fees of $214,000 to Banco Santander.
Brokerage commissions paid on securities
transactions to BSN Sociedad de Valores y Bolsa, an
affiliate of the Spanish Adviser, amounted to
$324,000 for the year ended November 30, 1995.
Certain officers or directors of the Fund are also
officers or directors of KFS. During the year ended
November 30, 1995, the Fund made no payments to its
officers and incurred directors' fees of $15,000 to
independent directors.
16
<PAGE> 17
Notes to Financial Statements
- --------------------------------------------------------------------------------
3 INVESTMENT
TRANSACTIONS For the year ended November 30, 1995, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
Purchases $122,858
Proceeds from sales 127,545
- --------------------------------------------------------------------------------
4 REPURCHASE
OF SHARES The Board of Directors of the Fund has authorized
the open market repurchase and retirement of up to
three million shares (910,000 repurchased to date)
of the Fund's outstanding stock. Shares repurchased
during each of the period's are as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994
------- -------
<S> <C> <C>
Number of shares 160,000 71,000
Weighted average discount to net asset value 14% 14%
</TABLE>
- --------------------------------------------------------------------------------
5 FORWARD FOREIGN
CURRENCY CONTRACTS In order to protect itself against a decline in the
value of the Spanish pesetas against the U.S.
dollar, the Fund has entered into forward contracts
to deliver the foreign currency in exchange for
U.S. dollars as described below. The Fund bears the
market risk that arises from changes in foreign
exchange rates, and accordingly, the unrealized
gain (loss) on these contracts is reflected in the
accompanying financial statements. The Fund also
bears the credit risk if the counterparty fails to
perform under the contract. At November 30, 1995,
the Fund had outstanding forward foreign currency
contracts as follows:
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY AMOUNT IN SETTLEMENT LOSS
TO BE DELIVERED U.S. DOLLARS DATE 11/30/95
-------------------------- -------------- ------------- -----------
<S> <C> <C> <C>
4,478,000 Spanish Peseta $35,000,000 December 1995 $(1,378,000)
</TABLE>
17
<PAGE> 18
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $12.40 10.67 8.99 11.08 10.71
- -----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .37 .32 .40 .54 .37
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.01 1.41 1.28 (2.48) .36
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations 1.38 1.73 1.68 (1.94) .73
- -----------------------------------------------------------------------------------------------------------------
Less distributions from net investment income .45 -- -- .15 .36
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of year 13.33 12.40 10.67 8.99 11.08
- -----------------------------------------------------------------------------------------------------------------
Market value, end of year $10.88 10.00 9.63 7.50 9.88
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN
- -----------------------------------------------------------------------------------------------------------------
Based on net asset value 11.62% 16.21 18.69 (17.73) 7.06
- -----------------------------------------------------------------------------------------------------------------
Based on market value 13.83 3.90 28.33 (22.77) 23.06
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
Expenses 1.22% 1.23 1.22 1.22 1.23
- -----------------------------------------------------------------------------------------------------------------
Net investment income 2.89 2.57 3.97 4.98 3.32
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $227,997 213,972 184,884 156,179 192,986
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 69% 85 50 72 104
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return based on net asset value reflects changes in the Fund's net
asset value during the year. Total return based on market value reflects changes
in market value. Each figure includes reinvestment of dividends. These figures
will differ depending upon the level of any discount from or premium to net
asset value at which the Fund's shares trade during the year.
18
<PAGE> 19
Description of Dividend Reinvestment Plan
- --------------------------------------------------------------------------------
1 PARTICIPATION We invite you to review the description of the
Dividend Reinvestment Plan (the "Plan") which is
available to you as a shareholder of The Growth
Fund of Spain, Inc. (the "Fund"). If you wish to
participate and your shares are held in your own
name, no further action on your part is required;
you are automatically enrolled in the Plan. If your
shares are held in the name of a brokerage firm,
bank, or other nominee, you must instruct that
nominee to re-register your shares in your name so
that you may participate in the Plan, unless your
nominee has made the Plan available on shares held
by them. Shareholders who so elect will be deemed
to have appointed United Missouri Bank, n.a.
("UMB") as their agent for the Fund under the Plan.
- --------------------------------------------------------------------------------
2 DIVIDEND INVESTMENT
ACCOUNT The Fund's transfer agent and dividend disbursing
agent or its delegate ("Agent") will establish a
Dividend Investment Account (the "Account") for
each shareholder participating in the Plan. Agent
will credit to the Account of each participant
funds it receives from the following sources: (a)
cash dividends and capital gains distributions paid
on shares of beneficial interest (the "Shares") of
the Fund registered in the participant's name on
the books of the Fund; and (b) cash dividends and
capital gains distributions paid on Shares
registered in the name of Agent but credited to the
participant's Account. Sources described in clauses
(a) and (b) of the preceding sentence are
hereinafter called "Distributions."
- --------------------------------------------------------------------------------
3 INVESTMENT OF
DISTRIBUTION FUNDS HELD
IN EACH ACCOUNT If on the record date for a Distribution (the
"Record Date"), Shares are trading at a discount
from net asset value per Share (according to the
evaluation most recently made on Shares of the
Fund), funds credited to a participant's Account
will be used to purchase Shares (the "Purchase").
UMB will attempt, commencing five days prior to the
Payment Date and ending at the close of business on
the Payment Date ("Payment Date" as used herein
shall mean the last business day of the month in
which such Record Date occurs), to acquire Shares
in the open market. If and to the extent that UMB
is unable to acquire sufficient Shares to satisfy
the Distribution by the close of business on the
Payment Date, the Fund will issue to UMB Shares
valued at net asset value per Share (according to
the evaluation most recently made on Shares of the
Fund) in the aggregate amount of the remaining
value of the Distribution. If, on the Record Date,
Shares are trading at a premium over net asset
value per Share, the Fund will issue on the Payment
Date, Shares valued at net asset value per Share on
the Record Date to Agent in the aggregate amount of
the funds credited to the participants' accounts.
- --------------------------------------------------------------------------------
4 ADDITIONAL INFORMATION Address all notices, correspondence, questions, or
other communications regarding the Plan to:
KEMPER SERVICE COMPANY
P.O. Box 419066
Kansas City, Missouri 64141-6066
1-800-294-4366
- --------------------------------------------------------------------------------
19
<PAGE> 20
Description of Dividend Reinvestment Plan
5 ADJUSTMENT OF
PURCHASE PRICE The Fund will increase the price at which Shares
may be issued under the Plan to 95% of the fair
market value of the shares on the Record Date if
the net asset value per Share of the Shares on the
Record Date is less than 95% of the fair market
value of the Shares on the Record Date.
- --------------------------------------------------------------------------------
6 DETERMINATION OF
PURCHASE PRICE The cost of Shares and fractional Shares acquired
for each participant's Account in connection with a
Purchase shall be determined by the average cost
per Share, including brokerage commissions as
described in Paragraph 7 hereof, of the Shares
acquired by UMB in connection with that Purchase.
Shareholders will receive a confirmation showing
the average cost and number of Shares acquired as
soon as practicable after Agent has received or UMB
has purchased Shares. Agent may mingle the cash in
a participant's account with similar funds of other
participants of the Fund for whom UMB acts as agent
under the Plan.
- --------------------------------------------------------------------------------
7 BROKERAGE CHARGES There will be no brokerage charges with respect to
Shares issued directly by the Fund as a result of
Distributions. However, each participant will pay a
pro rata share of brokerage commissions incurred
with respect to UMB's open market purchases in
connection with the reinvestment of Distributions.
Brokerage charges for purchasing small amounts of
Shares for individual Accounts through the Plan can
be expected to be less than the usual brokerage
charges for such transactions, as UMB will be
purchasing Shares for all participants in blocks
and prorating the lower commission thus attainable.
- --------------------------------------------------------------------------------
8 SERVICE CHARGES There is no service charge by Agent or UMB to
shareholders who participate in the Plan other than
service charges specified in Paragraph 12 hereof.
However, the Fund reserves the right to amend the
Plan in the future to include a service charge.
- --------------------------------------------------------------------------------
9 TRANSFER OF SHARES
HELD BY AGENT Agent will maintain the participant's Account, hold
the additional Shares acquired through the Plan in
safekeeping and furnish the participant with
written confirmation of all transactions in the
Account. Shares in the Account are transferable
upon proper written instructions to Agent. Upon
request to Agent, a certificate for any or all full
Shares in a participant's Account will be sent to
the participant.
- --------------------------------------------------------------------------------
10 SHARES NOT HELD IN
SHAREHOLDER'S NAME Beneficial owners of Shares which are held in the
name of a broker or nominee will not be
automatically included in the Plan and will receive
all distributions in cash. Such shareholders should
contact the broker or nominee in whose name their
Shares are held to determine whether and how they
may participate in the Plan.
- --------------------------------------------------------------------------------
11 AMENDMENTS Experience under the Plan may indicate that changes
are desirable. Accordingly, the Fund reserves the
right to amend or terminate the Plan, including
provisions with respect to any Distribution paid
subsequent to
20
<PAGE> 21
Description of Dividend Reinvestment Plan
notice thereof sent to participants in the Plan at
least ninety days before the record date for such
Distribution.
- --------------------------------------------------------------------------------
12 WITHDRAWAL FROM
PLAN Shareholders may withdraw from the Plan at any time
by giving Agent a written notice. If the proceeds
are $25,000 or less and the proceeds are to be
payable to the shareholder of record and mailed to
the address of record, a signature guarantee
normally will not be required for notices by
individual account owners (including joint account
owners), otherwise a signature guarantee will be
required. In addition, if the certificate is to be
sent to anyone other than the registered owner(s)
at the address of record, a signature guarantee
will be required on the notice. A notice of
withdrawal will be effective for the next
Distribution following receipt of the notice by the
Agent provided the notice is received by the Agent
at least ten days prior to the Record Date for the
Distribution. When a participant withdraws from the
Plan, or when the Plan is terminated in accordance
with Paragraph 11 hereof, the participant will
receive a certificate for full Shares in the
Account, plus a check for any fractional Shares
based on market price; or if a Participant so
desires, Agent will notify UMB to sell his Shares
in the Plan and send the proceeds to the
participant, less brokerage commissions and a $2.50
service fee.
- --------------------------------------------------------------------------------
13 TAX IMPLICATIONS Shareholders will receive tax information annually
for personal records and to assist in preparation
of Federal income tax returns. If shares are
purchased at a discount, the amount of the discount
is considered taxable income and is added to the
cost basis of the purchased shares.
21
<PAGE> 22
Shareholders' Meeting
SPECIAL SHAREHOLDERS' MEETING
On September 19, 1995, a special shareholders' meeting was held. The Growth Fund
of Spain, Inc. shareholders were asked to vote on three separate issues:
election of two additional members to the Board of Directors, ratification of
Ernst & Young LLP as independent auditors, approval of a new investment
management agreement with Kemper Financial Services, Inc. or its successor on
the same terms as the current agreement and approval of a new sub-advisory
agreement with BSN Gestion de Patrimonios, S.A., G.S.C. We are pleased to report
that all nominees were elected and all other items were approved. Following are
the results for each issue:
1) Election of Directors
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
James B. Akins (Class III) 8,489,816 299,723
Fred B. Renwick (Class I) 8,489,816 299,723
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the fund
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
8,383,711 340,964 64,863
</TABLE>
3a) Approval of new investment management agreement
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
8,331,961 342,842 114,736
</TABLE>
3b) Approval of new sub-advisory agreement
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
8,308,625 344,045 136,869
</TABLE>
22
<PAGE> 23
NOTES
23
<PAGE> 24
Directors and Officers
DIRECTORS OFFICERS
STEPHEN B. TIMBERS JOHN E. NEAL
President and Director Vice President
JAMES E. AKINS JOHN E. PETERS
Director Vice President
ARTHUR R. GOTTSCHALK STEVEN H. REYNOLDS
Director Vice President
FREDERICK T. KELSEY DENNIS H. FERRO
Director Vice President
FRED B. RENWICK PHILIP J. COLLORA
Director Vice President and
Secretary
JOHN B. TINGLEFF
Director CHARLES F. CUSTER
Vice President and
JOHN G. WEITHERS Assistant Secretary
Director
JEROME L. DUFFY
Treasurer
- ---------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- ---------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419066
Kansas City, MO 64141
- ---------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- ---------------------------------------------------------------------------
FOREIGN CUSTODIAN BANCO SANTANDER
Madrid, Spain
- ---------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- ---------------------------------------------------------------------------
INVESTMENT MANAGER KEMPER FINANCIAL SERVICES, INC.
120 South LaSalle Street
Chicago, IL 60603
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GSP-2 (1/96)
