<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
THE GROWTH FUND OF SPAIN
"...We do believe that the major cash flow issues are now behind us. Moving
forward, we expect that managing the fund with a more stable asset base will
improve the fund's relative performance. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
Economic Overview
5
Performance Update
7
Largest Holdings
8
Portfolio Statistics
9
Portfolio Of Investments
11
Financial Statements
13
Notes To Financial Statements
17
Financial Highlights
AT A GLANCE
- --------------------------------------------------------------------------------
ABOUT YOUR REPORT
THE FUND IS THE SUCCESSOR ENTITY TO THE GROWTH FUND OF SPAIN, INC. A CLOSED-END
FUND WHOSE SHARES WERE EXCHANGED FOR CLASS A SHARES OF THE FUND IN CONNECTION
WITH A REORGANIZATION TRANSACTION COMPLETED ON DECEMBER 11, 1998.
- --------------------------------------------------------------------------------
GROWTH FUND OF SPAIN TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A -0.52%
CLASS B -6.65%
CLASS C -6.61%
- --------------------------------------------------------------------------------
</TABLE>
RETURNS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE OF
CLASS A SHARES PRIOR TO THE FUND'S CONVERSION REFLECTS THAT OF THE CLOSED-END
FUND. THE CLASS B AND CLASS C SHARE PERFORMANCE IS FOR THE TIME PERIOD OF
12/14/98 TO 4/30/99. INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE SO
THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
GROWTH FUND OF SPAIN
CLASS A $21.57 $23.42
- --------------------------------------------------------------------------------
GROWTH FUND OF SPAIN
CLASS B $21.48 --
- --------------------------------------------------------------------------------
GROWTH FUND OF SPAIN
CLASS C $21.49 --
- --------------------------------------------------------------------------------
</TABLE>
STATISTICAL NOTE: TOTAL RETURN MEASURES AGGREGATE CHANGE IN NET ASSET
VALUE/MARKET PRICE ASSUMING REINVESTMENT OF DIVIDENDS. ADDITIONAL INFORMATION
CONCERNING PERFORMANCE IS CONTAINED IN THE FINANCIAL HIGHLIGHTS APPEARING AT THE
END OF THIS REPORT.
INVESTMENT IN FOREIGN SECURITIES PRESENTS SPECIAL RISK CONSIDERATIONS INCLUDING
FLUCTUATING CURRENCY EXCHANGE RATES, GOVERNMENT REGULATION AND DIFFERENCES IN
LIQUIDITY.
TERMS TO KNOW
EUROPEAN MONETARY UNION An economic and monetary unification of European
countries whose goal is to ultimately introduce a single European currency and
create a more economically competitive region.
LIQUIDITY A characteristic of an investment or an asset referring to the ease of
its convertibility into cash within a reasonably short period of time.
VOLATILITY The tendency of a security, commodity, or market to rise and fall in
price over time. Volatility is inherent in almost all investments but differs in
degree from investment to investment and from market to market. For example, in
the United States, money-market mutual funds strive to maintain a fixed price
and thus experience very little volatility, if any. By comparison, stocks can be
very volatile.
<PAGE> 3
ECONOMIC OVERVIEW
[SILVIA PHOTO]
DR. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS.
SILVIA HOLDS A BACHELOR'S DEGREE AND PH.D. IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND A MASTER'S DEGREE IN ECONOMICS FROM BROWN UNIVERSITY IN
PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER INVESTMENTS, HE WAS WITH
THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
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 $280 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:
In April, investor enthusiasm drove the market to its second milestone in a
year -- the Dow Jones Industrial Average rose to 11,000 just a month after it
broke 10,000 for the first time. In May, expectations of rising inflation and
higher short-term interest rates led to a slowdown. But in early June, the
market rallied again. What drove the market rallies, and what, at the same time,
led to investor anxiety?
Inflation worries have been seeping into the market for months. The growing
conviction that Asian and Latin American economies are recovering is raising
commodity prices, particularly oil. The price of West Texas Intermediate oil
surged from less than $12 in February to almost $19 in early May. That alone
almost guarantees a rise in the "headline" inflation rate this year, which is
the rate of inflation as measured by the entire CPI. But it's important to note
that the Federal Reserve Board looks primarily at the core inflation rate, which
is the CPI minus food and energy -- and the core inflation rate looks at if it
will remain low at about 2 percent this year. Investors should note, however,
that the Federal Reserve Board also considers what will happen to inflation next
year -- and all indications are that the Fed expects inflation to increase in
2000.
As a result, the Fed is considering a change in monetary policy. Recent Fed
policy has been reactive, not proactive, which means that the Fed tends to
respond to inflation only when it picks up. That may change as the Fed tries to
preemptively halt inflation momentum. Such a change in monetary policy would
likely lead to an increase in short-term interest rates before the end of the
year. However, the change is likely to be small. Because we don't see pressure
toward sustained inflation, there's no reason for the Fed to want a sharp
slowdown in the overall economy.
The long-term economic situation, however, appears to be positive. The
federal budget surplus continues to benefit from good revenue gains (which are
based on good income gains, especially for households), good capital gains and
continued restraint in federal spending. The surplus this year is expected to
approach $100 billion.
This positive environment is exactly what sometimes poses risk for
investors, and is key to understanding recent volatility in the market. A strong
economy has the potential to feed inflation fears and drive up interest rates.
Indeed, recent market events illustrate the domino effect of investors reacting
to positive economic news, which they consider troubling at this point, more
than eight years into the economic expansion. In April, the steady stream of
positive economic news led to a sell-off in the financial markets based on fears
that the strong pace of economic growth would eventually lead to higher
inflation. The benchmark 30-year Treasury bond yield rose, which pulled stocks
lower.
Where can we expect to go from here? The fundamentals by which we judge the
health of the economy suggest continued growth as we move into the second half
of 1999. For example, the gross domestic product (GDP), the value of all goods
and services produced in the U.S., rose at an annual rate of 4.5 percent in the
first quarter, following a tremendous fourth-quarter surge of 6 percent. This is
very much in line with what we've grown accustomed to over the past year -- over
the four quarters of 1998, the U.S. economy expanded by 4.3 percent. Some people
aren't surprised at all by strong GDP growth that once would have alarmed them.
That's partially because we've grown accustomed to a strong economy. But it's
also because we've been able to absorb growth without driving up inflation.
That's important for investors. If prices had been rising as the economy was
growing, the Fed would have most likely raised short-term interest rates by now,
and that would have changed the financial market outlook.
However, we do see some vulnerability on the economic front. Trade is a weak
spot in the economy right now. Exports of U.S. goods and services dropped in the
first quarter while imports soared. This reflects the fact that the U.S. is one
of the few countries financially fit enough to buy goods produced elsewhere in
the world. But for as long as less vibrant international economies are unable to
buy U.S. goods, the profitability of U.S. companies trying to export will be
challenged.
When you think about it, vulnerability in regard to the international
economy is nothing new. Globally, the outlook is slightly more positive than it
was a few months ago. For example, the European markets are slowing down, which
has already led to the European Central Bank lowering interest rates in order to
boost domestic spending. In many countries in Europe there are no fixed-rate
mortgages, only adjustable-rate mortgages. When interest rates go down, mortgage
payments are reduced and homeowners can spend money elsewhere. This has a huge
impact on consumer spending, and will help European equities over time.
Additionally, the situation in Japan remains unchanged. And, problems in the
emerging markets haven't had the negative impact many people expected -- both
the Mexican and Brazilian stock markets have actually risen in the past two
months.
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 (5/31/99) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10 Year Treasury Rate(1) 5.54 5.34 5.57 6.42
Prime Rate(2) 7.75 8.5 8.5 8.25
Inflation Rate(3)* 2.28 1.68 1.63 3.04
The U.S. Dollar(4) -1.22 8.17 5.05 7.67
Capital goods orders(5)* 11.67 3.05 12.61 3.93
Industrial production (5)* 2.01 2.71 5.92 6.44
Employment growth(6) 2.14 2.67 2.76 2.44
</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 APRIL 30, 1999.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
But don't forget that international crises have the potential to affect the
U.S. markets dramatically. An increase in military spending on Kosovo by the 11
European Monetary Union (EMU) countries could force them to spend less in other
areas, which could have economic implications, including higher interest rates.
That's because many European countries have small economies and little leeway in
their budgets. Consequently, those countries finance unplanned military
expenditures by selling government bonds -- which, in Europe's small bond
market, typically raises interest rates. As an example, consider Italy, which
recently asked for more leeway on its deficit targets. When leeway was granted,
this led to a further sell-off in the eurodollar.
The international situation alone, however, is by no means an indicator of
a U.S. slowdown -- and without any such indications, complacency may be our
greatest concern. It's easy to look at the current U.S. economic situation and
behave as if no risk exists. But when you see the market soaring and are tempted
to jump in, note that the bull market grew to records on the strength of just a
few dozen stocks, while most other stock prices were flat or actually declined.
In summary, there are concerns that the current economy is unsustainable and
we soon could see an abrupt end. In many cases, however, people are looking for
a slowdown because they are fearful growth will drive up inflation these are
particularly older investors who are accustomed to inflation accompanying
growth. But again, sustained inflation seems unlikely, so a sharp slowdown is
not necessary. In the short term, we expect a modest economic slowdown but no
recession. The best approach now, as in any market, is to diversify and invest
for the long term.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
/s/ JOHN E. SILVIA
John E. Silvia
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 DR. JOHN SILVIA AS OF JUNE 9, 1999, 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
[GREGORY PHOTO]
JOAN GREGORY, A VICE PRESIDENT OF SCUDDER KEMPER INVESTMENTS, INC., IS A MEMBER
OF THE GLOBAL EQUITY GROUP, WHERE SHE SERVES AS LEAD PORTFOLIO MANAGER OF GROWTH
FUND OF SPAIN AND SEVERAL INSTITUTIONAL INTERNATIONAL PORTFOLIOS. PRIOR TO
JOINING SCUDDER KEMPER INVESTMENTS IN 1992, GREGORY WORKED IN THE U.S. TRUST'S
INTERNATIONAL INVESTMENT DEPARTMENT.
[BRATT PHOTO]
NICK BRATT, A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, IS THE DIRECTOR
OF THE GLOBAL EQUITY GROUP. WITH OVER 20 YEARS OF EXPERIENCE IN INTERNATIONAL
INVESTMENTS, BRATT IS A MEMBER OF THE PORTFOLIO MANAGEMENT TEAM OF GROWTH FUND
OF SPAIN. PRIOR TO JOINING SCUDDER KEMPER INVESTMENTS IN 1976, BRATT SERVED AS A
FAR EAST SPECIALIST AND INTERNATIONAL FUND MANAGER FOR MORGAN, GRENFELL & CO.,
LTD. IN LONDON.
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 SIX-MONTH PERIOD ENDED APRIL 30, 1999 MARKED A VERY TRANSITIONAL PERIOD FOR
GROWTH FUND OF SPAIN AND THE SPANISH MARKET. FOLLOWING, LEAD PORTFOLIO MANAGER
JOAN GREGORY DISCUSSES THE MARKET AND THE PERFORMANCE OF THE FUND.
Q CAN YOU PROVIDE AN OVERVIEW OF THE EVENTS THAT SHAPED THE SPANISH MARKET
DURING THE PERIOD AND OFFER YOUR THOUGHTS ON WHY SPAIN UNDERPERFORMED EUROPE AS
A WHOLE?
A After several years of excellent performance driven by falling interest
rates and inflation and better control of government finances as Spain prepared
for the European Monetary Union, 1999 saw a slow down in the market for a number
of reasons. A weaker euro, concerns about higher interest rates in the U.S. and
the war in Kosovo put pressure on most European markets and Spain was caught in
the downturn. The Spanish market is a narrow one and suffered from a lack of
liquidity as a large number of domestic investors broadened their portfolios by
investing in other European markets facilitated by the introduction of the euro
which minimized currency risk. The utility sector, representing over 20 percent
of the market, had a further dampening effect when the government unexpectedly
lowered tariffs to offset inflationary fears. The recent global shift to more
cyclical stocks also hurt relative returns as the Spanish market has very few
companies with a cyclical flavor.
Q ON DECEMBER 11, 1998, GROWTH FUND OF SPAIN BEGAN TO OPERATE AS AN OPEN-END
MUTUAL FUND. THE FUND HAD BEEN OPERATING AS A CLOSED-END PRODUCT SINCE ITS
INCEPTION ON FEBRUARY 14, 1990. WHY WAS THIS CHANGE IN STRUCTURE NECESSARY?
A Despite the impressive performance record the fund enjoyed as a closed-end
product, shares traded consistently at a discount from their net asset value.
Open-ending the fund eliminated that discount. Shareholders voted their support
for this conversion as a means to realize the net asset value of their
investment. The fund's investment objective of seeking long-term capital
appreciation by investing primarily in equity securities of Spanish companies is
unchanged. The fund's management team also remains the same. The open-end mutual
fund was made available in Class A, B and C shares.
Q FOR THE SIX-MONTH PERIOD, GROWTH FUND OF SPAIN RETURNED -0.52 PERCENT
(CLASS A SHARES, UNADJUSTED FOR ANY SALES CHARGE) WHILE THE IBEX 35* WAS UP 1.72
PERCENT IN U.S. DOLLAR TERMS. WHY DID THE FUND COME UP SHORT?
A This was a very transitional period for Growth Fund Of Spain. The decision
to open-end the fund resulted in heavy cash outflows and that had a significant
impact on performance. We do believe that the major cash flow issues are now
behind us. Moving forward, we expect that managing the fund with a more stable
asset base will improve the fund's relative performance.
* THE IBEX 35 IS AN UNMANAGED INDEX MADE UP OF 35 SPANISH STOCKS AND IS A
GENERALLY ACCEPTED BENCHMARK FOR THE SPANISH MARKET.
5
<PAGE> 6
PERFORMANCE UPDATE
Q CAN YOU DISCUSS THE PORTFOLIO'S STRUCTURE AND YOUR VIEWS ON SOME OF THE
MAIN MARKET SECTORS?
A The structure of the portfolio is really a work in progress. Broadly
stated, we are trying to focus on the best ideas in Spain. Our strategy in
managing a country fund is not to trade too frequently and to strive to buy the
best quality stocks in the market and hold them over a long period of time.
There are some excellent stocks and sectors in which to invest in Spain. Spanish
banks, representing nearly 40 percent of the index, are among the highest
quality banks in Europe. Our focus in the portfolio is on those banks likely to
benefit from consolidation, particularly in the Iberian Peninsula. Banco Popular
is a small niche player with excellent management and a good earnings profile.
Argentaria, a bank with a strong domestic focus, is restructuring and cutting
costs. We maintain Banco Bilbao Viscaya (BBV) and BSCH as core holdings in the
sector. BBV is a high quality institution with a presence in Latin America,
which will make an important contribution to earnings over time. BSCH, the
result of a recent merger between Banco Santander and Banco Central Hispano, is
restructuring its businesses and should be a dominant player in the Spanish
domestic market.
Telefonica de Espana, the incumbent telephone operator, is a Spanish
powerhouse and is our largest holding. In addition to a well-established fixed
line business, the company is benefiting from impressive growth in mobile phones
and has built an important franchise in Latin America.
We plan to maintain our weighting in the utility sector where we feel
there is value. Despite increased competition, we expect to see consolidation in
this area over time.
Q YOU HAVE MENTIONED SEVERAL COMPANIES WITH LATIN AMERICAN EXPOSURE. WHY THE
EXPANSION INTO THAT REGION?
A Spanish corporations are investing in Latin America where the potential
for growth is enormous and scale is more easily achievable than in European
markets. The Spanish market is mature in banking and energy and Latin America
provides additional cultural and linguistic synergies for Spanish managements.
Q WE HAVE TALKED A BIT ABOUT SOME OF THE FUND'S STRONGER NAMES BUT WERE
THERE ANY DISAPPOINTMENTS IN THE PORTFOLIO?
A The utility sector as a whole was down so the positions we held in names
like ENDESA and Iberdrola were a drag on overall performance. Azkoyen, a smaller
cap company in the metals and engineering sector, was also disappointing. It was
extremely illiquid and difficult to sell out of so we ended up holding it longer
than we would have liked. The construction sector was also off dampening the
returns of holdings such as Vallehermoso.
Q WHAT IS YOUR OUTLOOK FOR THE REGION?
A Spain has made tremendous advances in recent years by bringing down
inflation and interest rates, which in turn have resulted in one of the highest
gross domestic product growth rates in Europe. A successful privatization
program by the government has been coupled with restructuring efforts on the
part of the major companies in the market. While the Spanish economy is one of
the most dynamic in Europe today, labor markets, in addition to pension and
welfare systems, need to be reformed. While it may take longer than appropriate,
we expect these issues to be addressed over time.
6
<PAGE> 7
LARGEST HOLDINGS
GROWTH FUND OF SPAIN'S TOP 10 HOLDINGS*
Representing 65.5 percent of the fund's total common stocks on April 30, 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
HOLDING PERCENT
- --------------------------------------------------------------------------------
<S> <C> <C>
1. TELEFONICA DE ESPANA 13.0%
- --------------------------------------------------------------------------------
2. BANCO SANTANDER 12.1%
- --------------------------------------------------------------------------------
3. BANCO BILBAO VIZCAYA 9.7%
- --------------------------------------------------------------------------------
4. ENDESA 8.6%
- --------------------------------------------------------------------------------
5. ARGENTARIA 5.3%
- --------------------------------------------------------------------------------
6. BANCO POPULAR 3.8%
- --------------------------------------------------------------------------------
7. GAS NATURAL 3.6%
- --------------------------------------------------------------------------------
8. SEVILLANA DE ELECTRICIDAD 3.5%
- --------------------------------------------------------------------------------
9. HIDROELECTRICA DEL CANTABRICO 3.0%
- --------------------------------------------------------------------------------
10. MUNDIAL CONFIANCE 2.9%
- --------------------------------------------------------------------------------
</TABLE>
*PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
7
<PAGE> 8
PORTFOLIO STATISTICS
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ON 4/30/99 ON 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
SPANISH EQUITIES 95% 91%
- --------------------------------------------------------------------------------
SPANISH PESETA TIME DEPOSITS 5 1
- --------------------------------------------------------------------------------
CASH AND EQUIVALENTS -- 8
- --------------------------------------------------------------------------------
100% 100%
</TABLE>
[PIE CHART] [PIE CHART]
ON 4/30/99 ON 10/31/98
*Portfolio composition is subject to change.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
GROWTH FUND OF SPAIN
Portfolio of Investments at April 30,1999 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMUNICATIONS--14.7%
Telecel-Comunicacoes Pessoais, S.A. 17,794 $ 2,378
Telefonica de Espana 258,502 12,353
-------------------------------------------------------------------
14,731
- --------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--3.1%
Aldeasa 13,328 407
Modelo Continente 49,000 1,030
(a)TelePizza, S.A. 262,660 1,665
-------------------------------------------------------------------
3,102
- --------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.7%
(a)Jeronimo Martins 33,305 1,092
Tabacalera "A" 134,930 2,645
-------------------------------------------------------------------
3,737
- --------------------------------------------------------------------------------------------------
CONSTRUCTION--6.3%
Autopistas Concesionaria Espanol 73,695 931
Dragados & Construcciones, S.A. 81,119 2,708
Fomento de Construcciones y Contratas 26,061 1,592
Vallehermoso 108,900 1,082
-------------------------------------------------------------------
6,313
- --------------------------------------------------------------------------------------------------
DURABLES--1.5%
SIVA 108,012 1,497
-------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
FINANCIAL--38.6%
Argentaria 216,095 5,082
Banco Bilbao Vizcaya, S.A. 618,776 9,257
Banco Comercial Portugues 46,694 1,317
Banco Intercontinental International 60,534 2,539
Banco Popular Espanol 51,709 3,661
Banco Santander 529,665 11,506
BPI 40,015 1,078
(a)Cia. de Seguros Mundial Confiance, S.A. 97,808 2,759
Corp. Financiera Reunida, S.A. 48,027 565
Corporacion Financiera Al 5,804 890
-------------------------------------------------------------------
38,654
- --------------------------------------------------------------------------------------------------
MANUFACTURING--4.1%
Acerinox 85,870 2,592
Azkoyen 55,329 1,536
-------------------------------------------------------------------
4,128
- --------------------------------------------------------------------------------------------------
UTILITIES--23.0%
Cia. Sevillana de Electricidad 276,764 3,301
Electricidad Reunidas de Zaragoza 13,751 610
Endesa S.A. 368,126 8,183
Gas Natural SDG, S.A. 42,999 3,469
Gas y Electricidad, S.A. 15,037 1,239
General de Aguas de Barcelona, S.A. 20,361 1,151
Hidroelectrica del Cantabrico 66,346 2,901
Union Electrica Fenosa 165,608 2,203
-------------------------------------------------------------------
23,057
-------------------------------------------------------------------
TOTAL COMMON STOCKS--95.0%
(Cost: $75,940) 95,219
-------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRINCIPAL VALUE
AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET
INSTRUMENTS--5.0%
(b)Repurchase Agreement
Chase Manhattan Bank dated
4/30/99, 4.75%, due 5/3/99 $ 414 $ 414
------------------------------------------------------------------------------
Other
Yield--4.90%
Due--May 1999 4,500 4,499
------------------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--5.0%
(Cost: $4,913) 4,913
------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $80,853) $100,132
------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Repurchase agreements are fully collateralized by U.S. Treasury or U.S.
Government agency securities. The collateral is monitored daily by the fund
so that its market value exceeds the carrying value of the repurchase
agreement.
Based on the cost of investments of $80,853,000 for federal income tax purposes
at April 30,1999, the gross unrealized appreciation was $28,183,000, the gross
unrealized depreciation was $8,904,000 and the net unrealized appreciation on
investments was $19,279,000.
See accompanying Notes to Financial Statements.
10
<PAGE> 11
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (unaudited)
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------
Investments, at value
(Cost: $80,853) $ 100,132
- -------------------------------------------------------------------------
Cash (including foreign currency of $82) 294
- -------------------------------------------------------------------------
Receivable for:
Investments sold 1,478
- -------------------------------------------------------------------------
Fund shares sold 25
- -------------------------------------------------------------------------
Foreign taxes 627
- -------------------------------------------------------------------------
Unrealized appreciation on forward currency exchange
contracts 4
- -------------------------------------------------------------------------
TOTAL ASSETS 102,560
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------
Payable for:
Investments purchased 2,984
- -------------------------------------------------------------------------
Management fee 58
- -------------------------------------------------------------------------
Administrative services fee 36
- -------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 227
- -------------------------------------------------------------------------
Director's fees and other 416
- -------------------------------------------------------------------------
Unrealized depreciation on forward currency exchange
contracts 19
- -------------------------------------------------------------------------
Total liabilities 3,740
- -------------------------------------------------------------------------
NET ASSETS $ 98,820
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------
Paid-in capital $(103,982)
- -------------------------------------------------------------------------
Undistributed net realized gain on investments and foreign
currency transactions 183,278
- -------------------------------------------------------------------------
Net unrealized appreciation on investments and assets and
liabilities in foreign currency 19,241
- -------------------------------------------------------------------------
Undistributed net investment income 283
- -------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 98,820
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share ($98,608 /
4,571 shares outstanding) $21.57
- -------------------------------------------------------------------------
Maximum offering price per share (net asset value, plus
6.10% of net asset value or 5.75% of offering price) $22.89
- -------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($111 / 5
shares outstanding) $21.48
- -------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($101 / 5
shares outstanding) $21.49
- -------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
11
<PAGE> 12
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended April 30, 1999 (unaudited)
(IN THOUSANDS)
<TABLE>
<S> <C>
- -------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------
Dividends (less foreign taxes withheld of $298) $ 1,714
- ------------------------------------------------------------------------
Interest 288
- ------------------------------------------------------------------------
Total investment income 2,002
- ------------------------------------------------------------------------
Expenses:
Management fee 915
- ------------------------------------------------------------------------
Distribution service fee 1
- ------------------------------------------------------------------------
Administrative services fee 152
- ------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 330
- ------------------------------------------------------------------------
Professional fees 226
- ------------------------------------------------------------------------
Reports to shareholders 57
- ------------------------------------------------------------------------
Director's fees and other 95
- ------------------------------------------------------------------------
Total expenses 1,776
- ------------------------------------------------------------------------
NET INVESTMENT INCOME 226
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------
Net realized gain on sales of investments and foreign
currency transactions 183,663
- ------------------------------------------------------------------------
Change in net unrealized depreciation on investments and
assets and liabilities in foreign currency (154,297)
- ------------------------------------------------------------------------
Net gain on investments 29,366
- ------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 29,592
- ------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED ELEVEN MONTHS
APRIL 30, 1999 ENDED
(UNAUDITED) OCTOBER 31, 1998
- ----------------------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 226 1,876
- ----------------------------------------------------------------------------------------------------------
Net realized gain 183,663 28,911
- ----------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (154,297) 65,579
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 29,592 96,366
- ----------------------------------------------------------------------------------------------------------
Distribution from net investment income (2,232) (1,818)
- ----------------------------------------------------------------------------------------------------------
Distribution from net realized gain (28,432) (22,481)
- ----------------------------------------------------------------------------------------------------------
Total dividends to shareholders (30,664) (24,299)
- ----------------------------------------------------------------------------------------------------------
Net decrease from capital share transactions (287,234) --
- ----------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (288,306) 72,067
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------------------------------------------
Beginning of period 387,126 315,059
- ----------------------------------------------------------------------------------------------------------
END OF PERIOD
(including undistributed net investment income of
$283 and $2,289, respectively) $ 98,820 387,126
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Growth Fund of Spain (the fund) is a
non-diversified series of Kemper
Global/International Series, Inc. (the
corporation), an open-end management investment
company organized as a corporation in the state of
Maryland. Until December 11, 1998, the fund was
organized as a single series of The Growth Fund of
Spain, Inc. ("GSP"), a Maryland corporation and was
registered under the 1940 Act as a diversified,
closed-end management investment company. After
December 11, 1998 all of the common stock of GSP
was exchanged for Class A shares of the fund and
the fund commenced a public offering of its Class
A, Class B and Class C shares.
The fund currently offers three classes of shares.
Class A shares are sold to investors subject to an
initial sales charge. Class B shares are sold
without an initial sales charge but are subject to
higher ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically
convert to Class A shares six years after issuance.
Class C shares are sold without an initial sales
charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales
charge payable upon certain redemptions within one
year of purchase. Class C shares do not convert
into another class. Differences in class expenses
will result in the payment of different per share
income dividends by class. All shares of the fund
have equal rights with respect to voting, dividends
and assets, subject to class specific preferences.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES SECURITY VALUATION. Investments are stated at
value. Portfolio 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 on such market. 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
shall be used. Forward foreign currency exchange
contracts are valued at the prevailing forward
exchange rate of the underlying currencies on that
day. 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 market value as determined in good
faith by the Valuation Committee of the Board of
Directors.
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
rates of exchange. 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 from sales and maturities of forward
foreign
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
currency exchange contracts, disposition of 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 result from fluctuations in
foreign currency exchange rates is not separately
disclosed.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Dividend income is recorded on
the ex-dividend date, and interest income is
recorded on the accrual basis. Realized gains and
losses from investment transactions are reported on
an identified cost basis.
FUND SHARE VALUATION. Fund shares are sold and
redeemed on a continuous basis at net asset value
(plus an initial sales charge on most sales of
Class A shares). Proceeds payable on redemption of
Class B and Class C shares will be reduced by the
amount of any applicable contingent deferred sales
charge. On each day the New York Stock Exchange is
open for trading, the net asset value per share is
determined as of the close of the Exchange. The net
asset value per share is determined separately for
each class by dividing the fund's net assets
attributable to that class by the number of shares
of the class outstanding.
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.
DIVIDENDS TO SHAREHOLDERS. The fund declares and
pays dividends of net investment income and net
realized capital gains annually, which are recorded
on the ex-dividend date. Dividends are determined
in accordance with income tax principles which may
treat certain transactions differently from
generally accepted accounting principles. These
differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
REDEMPTION FEES. In general, shares of the fund may
be redeemed at net asset value. However, upon the
redemption or exchange of shares held by
shareholders for less than one year, a fee of 2% of
the current net asset value of the shares will be
assessed and retained by the fund for the benefit
of the remaining shareholders. The redemption fee
is accounted for as an addition to paid-in capital.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment
management fee of 1/12 of the annual rate of .75%
of the first $250 million of average daily net
assets, declining to .62% of average daily net
assets in excess of $12.5 billion. The fund
incurred a management fee of $915,000 for the six
months ended April 30, 1999. Prior to December 11,
1998, the fund had a higher management fee
schedule.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. Commencing December 11, 1998, the fund
has an underwriting and distribution services
agreement with Kemper Distributors, Inc. (KDI).
There were no underwriting commissions
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
retained by KDI in connection with the distribution
of Class A shares for the period December 11, 1998
to April 30, 1999.
For services under the distribution services
agreement, the fund pays KDI a fee of .75% of
average daily net assets of the Class B and Class C
shares pursuant to separate Rule 12b-1 plans for
the Class B and Class C shares. Pursuant to the
agreement, KDI enters into related selling group
agreements with various firms at various rates for
sales of Class B and Class C shares. In addition,
KDI receives any contingent deferred sales charges
from redemptions of Class B and Class C shares.
Distribution fees received by KDI for the period
December 11, 1998 to April 30, 1999 are $1,000.
ADMINISTRATIVE SERVICES AGREEMENT. Commencing
December 11, 1998, the fund has an administrative
services agreement with KDI. For providing
information and administrative services to
shareholders, the fund pays KDI a fee at an annual
rate of up to .25% of average daily net assets of
each class. KDI in turn has various agreements with
financial services firms that provide these
services and pays these firms based on assets of
fund accounts that the firms service.
Administrative services fees paid by the fund to
KDI for the period December 11, 1998 to April 30,
1999 are $152,000.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent for the fund. Under the agreement,
KSvC received shareholder services fees of $57,000
for the six months ended April 30, 1999.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation is responsible for determining the
daily net asset value per share and maintaining the
portfolio and general accounting records of the
fund. The fund incurred accounting fees of $26,000
for the period December 11, 1998 to April 30, 1999.
Prior to December 11, 1998, the fund did not pay an
accounting fee.
OFFICERS AND DIRECTORS. Certain officers or
directors of the fund are also officers or
directors of Scudder Kemper. For the six months
ended April 30, 1999, the fund made no direct
payments to its officers and incurred directors'
fees of $43,000 to independent directors.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended April 30, 1999, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
Purchases $ 93,307
Proceeds from sales 379,988
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the fund (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1999
-----------------------
SHARES AMOUNT
----------------------------------------------------------------------------
<S> <C> <C>
SHARES SOLD
Class A 20 $ 498
----------------------------------------------------------------------------
Class B 5 120
----------------------------------------------------------------------------
Class C 5 109
----------------------------------------------------------------------------
SHARES REDEEMED
Class A (11,979) (287,961)
----------------------------------------------------------------------------
NET DECREASE FROM
CAPITAL SHARE TRANSACTIONS $(287,234)
----------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
--------------------------------------------------------
CLASS A
--------------------------------------------------------
SIX MONTHS ELEVEN MONTHS
ENDED ENDED YEAR ENDED NOVEMBER 30,
APRIL 30, OCTOBER 31, ---------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $23.42 19.06 15.67 13.33 12.40
- ---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03 .11 .24 .36 .37
- ---------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (.02) 5.72 4.15 2.69 1.01
- ---------------------------------------------------------------------------------------------------
Total from investment operations .01 5.83 4.39 3.05 1.38
- ---------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .14 .11 .17 .42 .45
- ---------------------------------------------------------------------------------------------------
Distribution from net realized gain 1.72 1.36 .83 .29 --
- ---------------------------------------------------------------------------------------------------
Total dividends 1.86 1.47 1.00 .71 .45
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $21.57 23.42 19.06 15.67 13.33
- ---------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) (.52)% 32.90 29.86 24.12 11.62
- ---------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------------
Expenses 2.36% 1.43 1.22 1.25 1.22
- ---------------------------------------------------------------------------------------------------
Net investment income .30% .58 1.29 2.46 2.89
- ---------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
For the period from December 14, 1998 (commencement of operations) to April 30,
1999.
<TABLE>
<CAPTION>
--------------------------------------
CLASS B CLASS C
--------------------------------------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $23.01 23.01
- -------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.05) (.04)
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss (1.48) (1.48)
- -------------------------------------------------------------------------------------------------------------
Total from investment operations (1.53) (1.52)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.48 21.49
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) (6.65)% (6.61)
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------------------
Expenses 2.15% 2.11
- -------------------------------------------------------------------------------------------------------------
Net investment income .16% .20
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN MONTHS
ENDED ENDED YEAR ENDED NOVEMBER 30,
APRIL 30, OCTOBER 31, -----------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- --------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in thousands) $98,820 387,126 315,059 263,935 227,997
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 91% 10 29 45 69
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges. Per share
data for the six months ended April 30, 1999 was determined based on average
shares outstanding. Data for the six months ended April 30, 1999 is unaudited.
18
<PAGE> 19
NOTES
19
<PAGE> 20
DIRECTORS AND OFFICERS
DIRECTORS OFFICERS
JAMES E. AKINS MARK S. CASADY SHERIDAN REILLY
Director President Vice President
JAMES B. EDGAR PHILIP J. COLLORA ISABEL SALTZMAN
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK CORNELIA SMALL
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY LINDA J. WONDRACK
Director JOYCE E. CORNELL Vice President
Vice President
FRED B. RENWICK CAROLINE PEARSON
Director DIEGO ESPINOSA Assistant Secretary
Vice President
KATHRYN L. QUIRK MAUREEN E. KANE
Director and Vice President JOAN R. GREGORY Assistant Secretary
Vice President
JOHN G. WEITHERS ELIZABETH C. WERTH
Director TARA KENNEY Assistant Secretary
Vice President
BRENDA LYONS
THOMAS W. LITTAUER Assistant Treasurer
Vice President
ANN M. MCCREARY
Vice President
- -------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- -------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419066
Kansas City, MO 64141
- -------------------------------------------------------------------------------
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64185
- -------------------------------------------------------------------------------
CUSTODIAN THE CHASE MANHATTAN BANK
Chase Metro Center
Brooklyn, NY 11245
[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 Global
and International Funds prospectus.
GSP-3(6/25/99) 1076950
