<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MAY 31, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[MORNINGSTAR RATINGS LOGO]
Seeks growth of capital
KEMPER
VALUE+GROWTH FUND
"... Thanks to a balanced approach, the fund was well positioned when the market
favored value in the second quarter of 1999. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
Contents
3
Economic Overview
5
Performance Update
8
Terms to Know
9
Industry Sectors
10
Largest Holdings
11
Portfolio of Investments
17
Financial Statements
19
Notes to Financial Statements
22
Financial Highlights
24
Shareholders' Meeting
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER VALUE+GROWTH FUND
TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER VALUE+
GROWTH FUND
-------------
<S> <C>
CLASS A 8.18
CLASS B 7.82
CLASS C 7.82
LIPPER GROWTH & INCOME FUNDS 11.05
CATEGORY AVERAGE*
- --------------------------------------------------------------------------------
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
* LIPPER ANALYTICAL SERVICES, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES
IN NET ASSET VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT
OF SALES CHARGES AND, IF THEY HAD, RESULTS MAY HAVE BEEN LESS FAVORABLE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
05/31/99 11/30/98
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER VALUE+GROWTH FUND CLASS A $16.87 $15.82
- --------------------------------------------------------------------------------
KEMPER VALUE+GROWTH FUND CLASS B $16.36 $15.40
- --------------------------------------------------------------------------------
KEMPER VALUE+GROWTH FUND CLASS C $16.36 $15.40
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER VALUE+GROWTH FUND
RANKINGS AS OF 5/31/99
- --------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER GROWTH AND INCOME FUNDS CATEGORY*
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #558 of #591 of #584 of
828 funds 828 funds 828 funds
- --------------------------------------------------------------------------------
3-YEAR #342 of #373 of #375 of
510 funds 510 funds 510 funds
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
DURING THE SIX-MONTH PERIOD, KEMPER VALUE+GROWTH FUND MADE THE FOLLOWING
DISTRIBUTIONS PER SHARE:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM
CAPITAL GAIN $0.23 $0.23 $0.23
- --------------------------------------------------------------------------------
</TABLE>
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[Style-size Box]
Source: Morningstar, Inc. Chicago, IL. (312)696-6000. The Equity Style Box
placement is based on two variables: a fund's market capitalization relative to
the movements of the market and a fund's valuation, which is calculated by
comparing the stocks in the fund's portfolio with the most relevant of the three
market-cap groups. THE STYLEBOX REPRESENTS A SNAPSHOT OF THE FUND'S PORTFOLIO ON
A SINGLE DAY. IT IS NOT AN EXACT ASSESSMENT OF RISK AND DOES NOT REPRESENT
FUTURE PERFORMANCE. THE FUND'S PORTFOLIO CHANGES FROM DAY-TO-DAY. A LONGER-TERM
VIEW IS REPRESENTED BY THE FUND'S MORNINGSTAR CATEGORY, WHICH IS BASED ON ITS
ACTUAL INVESTMENT STYLE AS MEASURED BY ITS UNDERLYING PORTFOLIO HOLDINGS OVER
THE PAST THREE YEARS. MORNINGSTAR HAS PLACED KEMPER VALUE+GROWTH FUND IN THE
LARGE BLEND CATEGORY. PLEASE CONSULT THE PROSPECTUS FOR A DESCRIPTION OF
INVESTMENT POLICIES.
<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 PH.D. IN ECONOMICS FROM NORTHEASTERN UNIVERSITY IN BOSTON, MASS.
HE IS A MEMBER OF BOTH THE BLUE CHIP ECONOMIC AND FINANCIAL SURVEYS, AND SERVES
ON THE POLICY ADVISORY COMMITTEES OF THE FEDERAL RESERVE BOARDS OF CHICAGO AND
CLEVELAND.
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:
As expected, the Federal Reserve Board raised its federal funds interest rate
(the rate at which banks lend to each other overnight) by one-fourth of a
percentage point in June. Although higher interest rates tend to have a
dampening effect on the market, investors rallied in response to this move. The
Dow Jones Industrial Average, which was down 50 points before the Fed's
statement on June 30, reversed course and ended the day at its highest closing
level in six weeks. The Dow went on to close at a record-setting high of 11,187
on July 7.
What led to the interest rate hike, and why does the market reaction suggest
that investors are happy about it?
It is generally recognized that a modest rate hike by the Fed may be effective
in slowing the economy sufficiently to suppress any simmering inflationary
pressures. Although the economy has been strong, there are concerns that it will
be unable to maintain its current rate of growth without prompting inflationary
pressures -- which is at the heart of the Fed's decision to raise interest
rates. The Fed is acting now to be proactive. In the past, Fed policy has been
reactive, which meant that the Fed tended to respond to inflation only when it
picked up. A rate hike now is intended to halt any future buildup in inflation.
Moreover, by hinting at an increase well in advance -- then by limiting the
increase to 25 basis points -- the Fed relieved worried investors and gave a
boost to the financial markets.
Despite the minor rate increase, the long-term economic situation 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. Prior to its strong close in the second
quarter, 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., is expected to rise at an annual rate of 4
percent in the first half of 1999, 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 earlier and more drastically, 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 half of 1999, 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.
But don't forget that international crises have the potential to affect the
U.S. markets dramatically. Although the Kosovo crisis seems to be waning, past
increases 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 (especially Italy) have small economies and
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 (6/30/99) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Ten Year Treasury Rate 5.90 4.81 5.65 6.69
Prime Rate 7.75 8.49 8.50 8.30
Inflation* 2.03 1.62 1.44 3.03
The U.S. Dollar* -2.4 4.31 4.88 8.58
Capital goods orders* 7.73 11.44 8.10 5.52
Industrial production * 1.72 3.58 5.05 5.86
Employment growth* 2.15 2.48 2.61 2.51
</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 MAY 31, 1999.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
little leeway in their budgets. Consequently, those countries financed 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
[TYMOCZKO PHOTO]
LEAD PORTFOLIO MANAGER ROBERT TYMOCZKO IS A MEMBER OF SCUDDER KEMPER
INVESTMENTS' QUANTITATIVE GROUP. HE RECEIVED A BACHELOR'S DEGREE IN QUANTITATIVE
ECONOMICS FROM STANFORD UNIVERSITY AND AN M.B.A. FROM THE UNIVERSITY OF CHICAGO
WITH CONCENTRATIONS IN FINANCE AND ECONOMETRICS.
PORTFOLIO MANAGER SHAHRAM TAJBAKHSH ALSO CONTRIBUTES 7 YEARS OF QUANTITATIVE
INVESTMENT EXPERIENCE TO THE FUND.
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.
DURING THE SEMIANNUAL PERIOD, THE MARKETS SHIFTED DIRECTION, WITH GROWTH STOCKS
GIVING WAY TO VALUE STOCKS. LEAD PORTFOLIO MANAGER ROBERT TYMOCZKO DISCUSSES HOW
THE FUND PERFORMED IN THIS CHANGING MARKET CLIMATE.
Q HOW MUCH DID THE FUND EARN DURING THE SEMIANNUAL PERIOD?
A For the six months ending May 31, 1999, Kemper Value+Growth Fund gained
8.18 percent (Class A shares, unadjusted for any sales charges). In comparison,
the Russell 1000 Growth Index climbed 12.53 percent, and the average for the
Lipper Growth and Income Category was 11.05 percent.
While we know that some shareholders may be disappointed if the fund
doesn't outperform its benchmarks -- even over shorter time periods -- we
encourage a long-term focus.
Q BEFORE YOU DISCUSS THE FUND IN GREATER DETAIL, COULD YOU PROVIDE US WITH AN
OVERVIEW OF THE MARKET CLIMATE?
A The market shifted considerably during the semiannual period. When the
fund's fiscal year began on December 1, 1998, there was a general climate of
optimism surrounding the economy. Inflation, unemployment, and interest rates
were low, and consumer confidence was high.
Because the stock market had experienced a great deal of volatility in the
previous months, many investors were reluctant to stray far from the perceived
stability of mega-cap, household-name growth stocks. As a result, for the first
four months of the fiscal year, the markets continued to be very narrow. (See
Terms To Know on page 8.) People were willing to pay extraordinarily high prices
for a few favored growth stocks. Meanwhile, although many value-style and
smaller-cap stocks provided excellent fundamentals at more attractive prices,
they enjoyed scant attention.
Enthusiasm about the Internet also drove the market during the
VALUE STOCKS GAINED GROUND ON GROWTH STOCKS
AS THE SEMIANNUAL PERIOD PROGRESSED
TOTAL RETURNS FOR THE SIX MONTHS ENDING MAY 31, 1999
[BAR GRAPH]
<TABLE>
<CAPTION>
12/1/98-2/28/99 2/28/99-5/31/99
--------------- ---------------
<S> <C> <C>
Growth 10.37 2.16
Value 3.04 10.38
</TABLE>
As the chart above shows, value stocks came back strong during the second half
of the semiannual period, to close the gap -- and even surpass -- growth stocks.
GROWTH STOCKS ARE REPRESENTED BY THE RUSSELL 1000 GROWTH INDEX. VALUE STOCKS ARE
REPRESENTED BY THE RUSSELL 1000 VALUE INDEX. INDEXES ARE UNMANAGED POOLS OF
STOCKS THAT ARE NOT AVAILABLE FOR DIRECT INVESTMENT, AND DO NOT REPRESENT THE
PERFORMANCE OF ANY KEMPER FUND. PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE
FUTURE RESULTS.
5
<PAGE> 6
PERFORMANCE UPDATE
first months of the semiannual period. Technology stocks plowed forward, often
propelled by the speculation of inexperienced investors. Here, too, there was
minimal focus on valuations.
Then, in April, the tide began to turn. The rosy domestic economic climate
began to fade, due to concerns about rising rates and potentially higher
inflation. Investors began to pull back from highly priced, mega-cap growth
names and returned to value stocks. Mid-caps and more-cyclically-oriented stocks
gained ground. Investors displayed greater rationality, and company fundamentals
became a more important factor in stock prices. Consistent with the market's
change of direction, many of the highest-priced Internet stocks also corrected.
Q WHAT WORKED OUT WELL FOR THE FUND?
A We're pleased to report that our disciplined approach to valuations
translated into gains for the shareholders. As we noted last winter in the
previous shareholder report, although growth stocks were dominating the market,
we felt that it would be prudent to hold fairly equal growth and value
allocations. Thanks to a balanced approach, the fund was well positioned when
the market favored value in the second quarter of 1999. In fact, while many of
the fund's value holdings suffered during the first portion of the semiannual
period, they rebounded dramatically in the final months, contributing positive
performance for the period as a whole.
Technology stocks also enhanced returns. Because our stock-selection
process led us to many attractive technology companies, we had a higher degree
of exposure to technology stocks than our benchmark, the Russell 1000 Index.
This helped bolster our relative performance.
Among our individual holdings, standout performers included Sun
Microsystems, PSINet, and CMGI, Inc. Each has been a beneficiary of Internet
expansion. Sun Microsystems, a dominant provider of network software, is playing
a leading role in building the Internet's infrastructure. PSINet offers Internet
data connectivity, and CMGI is a venture capital firm that invests in Internet
companies.
Q DO YOU STILL HOLD THOSE STOCKS?
A We continue to hold both Sun Microsystems and PSINet, but have sold CMGI.
Our buying and selling of that stock does a nice job highlighting where our
quantitative approach can add value. We purchased the stock in September, 1998,
before its stock price shot up. As its price rose, our models signaled that we
should pare our exposure and capture profits. This proved profitable -- CMGI's
price was not sustainable, and the stock corrected sharply. We, however, had
already eliminated it from the portfolio.
Q WHAT ABOUT OTHER INTERNET STOCKS?
A In general terms, we don't carry a lot of exposure to pure-play Internet
stocks. That's because our quantitative discipline requires a stock to satisfy
exacting criteria. Simply put, the majority of Internet stocks haven't yet
delivered the numbers we'd need to see. Also, even when it comes to growth
stocks, we pay close attention to valuations. During the semiannual period, many
Internet stocks were trading at valuations that we believed were dangerously
high.
Q WHAT FACTORS CAUSED THE FUND TO LAG?
A Our decision to favor mid-cap stocks over the largest-of-the-large-caps
hindered performance. We believed that the valuations of many of the mega-cap
growth stocks were unsustainably and unreasonably high, and that there were more
attractive opportunities among mid-caps. And although the market has begun to
broaden out to include more mid- and small-cap leaders, this broadening did not
occur soon enough in the semiannual period.
Relative to our benchmark, we invested a greater percentage of assets in
financial-service stocks, and a lesser amount in telecommunications stocks.
These decisions caused the fund to lag. As a group, financial-service stocks
faltered when rising interest rates began to loom. Meanwhile, telecommunications
stocks have generally enjoyed impressive gains. Many are beneficiaries to the
growth of the Internet and electronic commerce. But, many of the leading
telecommunications companies also carried high price tags. Consistent with our
valuation-conscious strategy, we were cautious about adding overly large
positions.
In terms of individual stocks, there naturally will be some that falter,
particularly when we're considering shorter time periods, such as this
semiannual one. Positions in Consolidated Graphics (corporate printing
services), LaFarge (construction materials) and Tech Data (hardware and software
distributor) were among those that slowed the fund's pace. However, because we
believe in their longer-term potential, we continue to hold those stocks. In
fact, Tech Data gained considerable ground in the last months of the semiannual
period. We think that this company offers great fundamen-
6
<PAGE> 7
PERFORMANCE UPDATE
tals and still may have plenty of room to move upward. Stocks like LaFarge,
meanwhile, provide us with exposure to cyclicals, at an extremely attractive
price.
Q PLEASE GIVE US A BROAD OVERVIEW OF THE PORTFOLIO.
A We currently hold 242 stocks from a variety of industry sectors. We've
invested approximately half of the portfolio in value stocks and half in growth
stocks. The greatest percentage of our assets are in technology (such as Intel,
Microsoft), consumer nondurable (Wal-Mart Stores, Carnival) and
financial-services stocks (Charles Schwab, NAC Re). Generally, we've preferred
mid-cap stocks to mega-caps or small-caps, though the portfolio includes stocks
with a variety of market caps.
The portfolio's growth potential compares favorably to its benchmark, the
Russell 1000 Index. The fund's price-to-earnings ratio is about three-quarters
that of the index, while its earnings-per-share growth rate is higher than the
benchmark's. In other words, we're paying less than the market for growth
potential that exceeds the market.
Q WHY INCLUDE BOTH GROWTH AND VALUE STOCKS IN ONE PORTFOLIO?
A We provide diversification and balance by investing in both value and
growth stocks. As you may know, diversification is a well-recognized strategy
for managing risk. When you invest in different asset classes -- stocks, bonds,
cash -- you gain one level of diversification. However, as the recent shift in
market direction emphasizes, you should also diversify your stock holdings.
Typically, growth and value stocks have performed countercyclically, rising and
falling at different times. When you have both growth and value stocks in a
portfolio, you have the potential to capture performance in different market
climates.
Q HOW DO YOU DECIDE HOW MUCH TO INVEST IN GROWTH AND VALUE STOCKS?
A In order to determine the growth/value allocation, we consider not only
where the markets are, but also where we believe they are going. We evaluate
economic trends, such as inflation and interest rates, as well as market trends,
such as stock price trends and valuations.
Throughout the semiannual period, we've kept the balance fairly steady. At
points, we increased the fund's growth-stock allocation to about 55 percent.
But, as the economic and market climates changed, our analysis indicated that
the fund would be well served by increasing our value exposure. Accordingly, in
March, we brought the allocation to value stocks back up to about 50 percent.
Q TELL US MORE ABOUT THE FUND'S QUANTITATIVE APPROACH.
A We use sophisticated, proprietary computer-driven models developed by
Scudder Kemper Investments, Inc. Quantitative Products Group. These models
leverage more than a decade of development, testing and real-time
implementation, and organize data on thousands of stocks.
Because different measures are appropriate for growth and value stocks, we
have designed style-specific models. Momentum characteristics, such as
earnings-per-share growth, drive our growth-stock model. Meanwhile, our
value-stock model emphasizes valuation statistics, such as low price-to-earnings
and price-to-book ratios. Of course, both models look at many of the same
factors, but weigh them differently.
Q WHAT ARE THE POTENTIAL BENEFITS OF YOUR QUANTITATIVE STOCK-SELECTION
PROCESS?
A We believe that our quantitative investment strategy offers many potential
advantages. These include:
- DISCIPLINE. Reason, not emotion, drives our stock-selection approach. Far
too often, investors get caught up in trends and lose sight of fundamentals. Our
quantitative approach supports a clear-headed, numbers-driven strategy. In a
volatile market environment, we believe that this rational approach is
particularly important.
KEMPER VALUE+GROWTH FUND: HIGHER GROWTH POTENTIAL
FOR A LOWER PRICE AS OF 5/31/99
<TABLE>
<CAPTION>
KEMPER
VALUE+GROWTH RUSSELL 1000
FUND INDEX
<S> <C> <C>
- -----------------------------------------------------------------------------------
EARNINGS-PER-SHARE GROWTH RATE 17.55% 15.39%
- -----------------------------------------------------------------------------------
WEIGHTED AVERAGE MARKET CAP $31,192 million $78,912 million
- -----------------------------------------------------------------------------------
PRICE-TO-EARNINGS RATIO 21.89 30.83
- -----------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
PERFORMANCE UPDATE
- - IN-DEPTH, INDEPENDENT RESEARCH. We'd rather rely on our own thorough data than
on the uncertain, incomplete rumors that drive many investors. Our
quantitative models allow us to track and organize data on the 1,500 stocks in
the fund's universe, with a very high degree of detail.
- - TEAMWORK. Our models represent the collaborative effort of countless
individuals across Scudder Kemper Investments. Researchers, analysts and
portfolio managers, as well as many others, play an important role in
building, enhancing and maintaining the models.
- - DOWNSIDE RISK MANAGEMENT THROUGH DIVERSIFICATION. For ample diversification,
the fund currently holds close to 250 stocks, more than many other funds. Our
quantitative models provide us with the resources that we need to scrutinize
each stock we hold.
- - MANAGEMENT, AT THE PORTFOLIO LEVEL. Our models don't just evaluate the
risk/reward potential of individual stocks, but also analyze how those stocks
could work together. This gives us an additional tool to manage risk.
Q IN THE PREVIOUS SHAREHOLDER REPORT, YOU NOTED THAT YOU WERE TAKING A
CAUTIOUS APPROACH. DOES YOUR OUTLOOK REMAIN CONSERVATIVE?
A Yes, we remain cautious. We do feel that the recent broadening of the
market and investors' increased attention to valuations and fundamentals are
positive changes. We anticipate that the horizon for value stocks would likely
improve in this less-narrow, more-cyclical environment.
We continue to believe that the prices of many leading growth stocks are
detached from their long-term fundamental strength, and that, overall, the
market continues to be overvalued. We are attuned to the possible impact that
inflation, rising interest rates, and strengthening foreign economies could have
on both overall domestic growth, as well as on the portfolio.
Despite these concerns, we firmly believe that a rational, disciplined
approach to stock-selection offers investors compelling opportunities. As we
move into the second half of the fiscal year, we look forward to applying the
resources of Scudder Kemper Investments to help the fund's shareholders pursue
their long-term investment goals.
TERMS TO KNOW
CYCLICAL STOCKS Cyclical stocks carry a higher degree of economic sensitivity.
In accelerating economies, cyclical stocks tend to rise quickly. In decelerating
economies, cyclicals tend to decline quickly. Cyclical stocks include industrial
machinery, paper and forestry, automobiles and construction.
GROWTH STOCK Growth stocks are shares in companies that are expected to
experience rapid growth resulting from strong sales, talented management and
dominant market position. Because these stocks are typically in demand, they
tend to carry relatively high price tags and can also be volatile, based on
changing perceptions of the companies' growth.
NARROW MARKET Describes a stock market environment where only a few stocks
perform strongly, while the majority struggle.
PRICE-TO-EARNINGS (P/E) RATIO A company's stock price divided by its earnings
per share for the past four quarters, also referred to as its multiple.
VALUE STOCK Value stocks are considered to be "bargain stocks" because they are
perceived as undervalued and attractively priced relative to a measure of their
true worth, such as earnings potential, book value, cash flow or dividend yield.
Securities may be undervalued as a result of overreaction by investors to
unfavorable news about a company, industry or the stock market in general, or as
a result of a market decline, poor economic conditions, or actual or anticipated
unfavorable developments impacting the company.
8
<PAGE> 9
INDUSTRY SECTORS
A SIX-MONTH COMPARISON
Data shows the percentage of the common stocks in the portfolio that each sector
represented on May 31, 1999, and November 30, 1998.
[SIX-MONTH COMPARISON BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER VALUE+GROWTH FUND ON KEMPER VALUE+GROWTH FUND ON
5/31/99 11/30/98
<S> <C> <C>
CONSUMER NON-DURABLES 27.60 22.10
TECHNOLOGY 17.80 19.90
FINANCE 17.40 22.80
HEALTH CARE 10.20 11.00
BASIC INDUSTRIES 9.30 5.10
CONSUMER DURABLES 6.30 4.80
UTILITIES 6.00 1.00
TRANSPORTATION 2.30 2.40
ENERGY 2.00 2.80
CAPITAL GOODS 1.10 8.10
</TABLE>
A COMPARISON WITH THE RUSSELL 1000 INDEX*
Data shows the percentage of the common stocks in the portfolio that each sector
of the Kemper Value+Growth Fund represented on May 31, 1999, compared to the
industry sectors that make up the fund's benchmark, the Russell 1000 Index.
[COMPARISON WITH THE RUSSELL 1000 INDEX BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER VALUE+GROWTH FUND ON
5/31/99 RUSSELL 1000 INDEX ON 5/31/9
<S> <C> <C>
CONSUMER NON-DURABLES 27.60 19.50
TECHNOLOGY 17.80 20.10
FINANCE 17.40 17.80
HEALTH CARE 10.20 11.20
BASIC INDUSTRIES 9.30 3.40
CONSUMER DURABLES 6.30 2.00
UTILITIES 6.00 11.30
TRANSPORTATION 2.30 1.10
ENERGY 2.00 5.80
CAPITAL GOODS 1.10 7.80
</TABLE>
* THE RUSSELL 1000 INDEX IS AN UNMANAGED INDEX COMPRISED OF 1000 OF THE LARGEST
CAPITALIZED U.S. COMPANIES WHOSE COMMON STOCKS TRADE IN THE U.S. ON THE NEW
YORK STOCK EXCHANGE, AMERICAN STOCK EXCHANGE AND NASDAQ. THIS LARGE-CAP,
MARKET-ORIENTED INDEX IS HIGHLY CORRELATED WITH THE S&P 500 STOCK INDEX.
9
<PAGE> 10
LARGEST HOLDINGS
THE FUND'S 10 LARGEST HOLDINGS*
Representing 14.8 percent of the fund's total common stocks on May 31, 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
HOLDINGS PERCENT
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
1. WAL-MART STORES Large, global retailer, with 1.8%
operations in the United States,
Asia and Latin America. Wal-Mart
Stores operates Wal-Marts,
Wal-Mart Supercenters, and Sam's
Clubs. Sells branded merchandise
under the Popular Mechanics,
Better Homes & Gardens and Sam's
American Choice labels.
- --------------------------------------------------------------------------------------
2. MICROSOFT Develops, markets and supports a 1.7%
variety of microcomputer software,
operating systems, language and
application programs, related
books and peripheral devices.
- --------------------------------------------------------------------------------------
3. INTEL Engaged in the design, 1.6%
development, manufacture and sale
of advanced microcomputer
components.
- --------------------------------------------------------------------------------------
4. CISCO SYSTEMS Large, comprehensive supplier of 1.6%
routing software and related
systems that direct the flow of
data between local networks.
- --------------------------------------------------------------------------------------
5. CHARLES SCHWAB A holding company engaged in 1.5%
securities brokerage and related
financial services. Subsidiaries
include Charles Schwab & Co., a
discount brokerage firm, Mayer &
Schweitzer; a provider of
trade-execution services to
institutional clients and
broker-dealers; and Charles Schwab
Investment Management, a mutual
fund investment advisor.
- --------------------------------------------------------------------------------------
6. FLORIDA PROGRESS Engaged in the generation, 1.5%
transmission, distribution,
purchase and sale of electrical
power, as well as in coal mining
and transportation.
- --------------------------------------------------------------------------------------
7. NAC RE Engaged in providing treaty and 1.5%
facultative reinsurance to primary
insurers of casualty risks and
commercial and personal property
risks.
- --------------------------------------------------------------------------------------
8. SUN MICROSYSTEMS Provides high performance work 1.4%
stations, servers and networking
software for the engineering,
scientific, commercial and
technical industries.
- --------------------------------------------------------------------------------------
9. CARNIVAL Engaged in the operation of cruise 1.1%
lines; also has resort and casino
complex, hotels, transportation
and tour businesses.
- --------------------------------------------------------------------------------------
10. WESTERN RESOURCES Engaged in the transmission, 1.1%
distribution and sale of electric
energy and natural gas, as well as
in the generation of electric
energy.
- --------------------------------------------------------------------------------------
</TABLE>
*The fund's holdings are subject to change.
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
KEMPER VALUE+GROWTH FUND
Portfolio of Investments at May 31, 1999 (unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMUNICATIONS--1.0%
(a)AirTouch Communications, Inc. 10,000 $ 1,005
(a)MCI WorldCom, Inc. 4,400 380
(a)Xircom, Inc. 11,800 298
-----------------------------------------------------------------------------
1,683
- -----------------------------------------------------------------------------------------------------------------------
CONSTRUCTION--1.0%
Centex Construction Products, Inc. 6,200 222
Georgia Pacific Timber Group 20,900 560
LaFarge Corp. 10,100 338
Lone Star Industries, Inc. 9,200 328
USG Corp. 4,700 266
------------------------------------------------------------------------------
1,714
- -----------------------------------------------------------------------------------------------------------------------
CONSUMER
DISCRETIONARY--13.6%
(a)American Eagle Outfitters, Inc. 23,800 971
Burlington Coat Factory Warehouse Corp. 33,500 565
Carnival Corp. "A" 43,000 1,763
CBRL Group, Inc. 10,000 173
CKE Restaurants, Inc. 16,940 311
Dillard's, Inc. 30,300 1,064
Family Dollar Stores, Inc. 43,400 968
(a)Federated Department Stores, Inc. 8,700 474
(a)Furniture Brands International, Inc. 10,300 250
GAP, Inc. 7,000 438
Harley-Davidson, Inc. 8,800 449
Home Depot, Inc. 22,000 1,251
Kellwood Co. 22,900 544
(a)Kohl's Corp. 8,300 566
Liz Claiborne, Inc. 6,200 223
Lowe's Companies, Inc. 17,700 919
McDonald's Corp. 10,000 385
(a)Mohawk Industries, Inc. 24,700 720
(a)Neiman Marcus Group, Inc. 6,300 174
Newell Rubbermaid, Inc. 19,600 794
(a)O'Reilly Automotive 9,400 414
(a)Premier Parks, Inc. 27,300 973
Regis Corp. 30,150 728
(a)Saks, Inc. 12,500 345
(a)Scotts Company "A" 4,700 207
(a)ShopKo Stores, Inc. 14,100 501
Sotheby's Holdings, Inc. "A" 17,500 664
(a)Staples, Inc. 7,500 216
TJX Companies, Inc. 8,000 240
(a)Tommy Hilfiger Corp. 21,800 1,636
Wal-Mart Stores, Inc. 66,400 2,830
WestPoint Stevens, Inc. 4,500 142
(a)Williams-Sonoma, Inc. 13,800 412
(a)Zale Corp. 14,600 563
-----------------------------------------------------------------------------
22,873
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER STAPLES--4.3%
American Greeting Corp., "A" 29,000 $ 830
Dexter Group 7,500 291
Great Atlantic & Pacific Tea Company, Inc. 25,900 848
Harman International Industries, Inc. 19,600 870
IMC Global, Inc. 12,000 251
Philip Morris Companies, Inc. 14,500 559
Springs Industries, Inc. "A" 22,600 895
Unilever N.V. 5,357 350
Universal Corp. 46,800 1,223
UST, Inc. 27,600 842
VF Corporation 6,000 276
------------------------------------------------------------------------------
7,235
- -----------------------------------------------------------------------------------------------------------------------
DURABLES--6.0%
Arvin Industries, Inc. 18,000 706
(a)Ascend Communications, Inc. 11,400 1,057
Bandag, Inc. 20,500 706
Borg-Warner Automotive, Inc. 8,700 482
(a)Cisco Systems, Inc. 23,400 2,548
Ford Motor Co. 17,500 999
(a)Jacobs Engineering Group, Inc. 7,400 275
Manitowoc Co., Inc. 14,100 479
NACCO Industries, Inc. "A" 6,300 470
(a)Navistar International Corp. 8,100 400
Northrop Grumman Corp. 6,800 459
Scientific-Atlanta, Inc. 9,900 350
(a)Sundstrand Corp. 10,900 754
Superior Industries International, Inc. 15,000 374
-----------------------------------------------------------------------------
10,059
- -----------------------------------------------------------------------------------------------------------------------
ENERGY--2.0%
Ashland, Inc. 29,600 1,206
(a)BP Amoco, plc. 4,962 532
Fluor Corp. 7,800 291
Helmerich & Payne, Inc. 22,700 529
K. N. Energy, Inc. 6,600 141
Sunoco, Inc. 19,000 578
-----------------------------------------------------------------------------
3,277
- -----------------------------------------------------------------------------------------------------------------------
FINANCIAL--16.7%
Allamerica Financial Corp. 7,900 463
Ambac Financial Group, Inc. 12,700 740
American General Corp. 6,500 470
American National Insurance Co. 23,600 1,682
(a)Amerin Corp. 9,700 261
Associates First Capital Corp. 7,890 323
Banc One Corp. 4,620 261
Bank of America Corp. 8,331 539
(a)BISYS Group, Inc. 24,100 1,323
Capital One Finance Corp. 3,600 542
Chubb Corp. 10,200 715
CMAC Investment Corp. 12,900 652
Commerce Group, Inc. 12,000 278
(a)Delphi Financial Group, Inc. "A" 18,102 628
Doral Financial Corp. 46,600 786
Downey Financial Corp. 16,100 354
Enhance Financial Service Group, Inc. 14,400 282
FBL Financial Group, Inc. 14,700 295
Federal Home Loan Mortgage Corp. 20,000 1,166
Federal National Mortgage Association 24,500 1,666
Financial Security Assurance Holdings, Ltd. 8,100 460
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First American Financial Co. 5,000 $ 82
Fremont General Co. 16,800 356
Harleysville Group, Inc. 15,400 298
Hartford Financial Services Group, Inc. 24,800 1,569
Jefferson-Pilot Corp. 11,300 765
KeyCorp 6,800 236
LandAmerica Financial Group, Inc. 21,100 605
Liberty Financial Companies, Inc. 15,500 405
(a)Markel Corp. 8,800 1,661
MBIA, Inc. 6,400 437
(a)Mercury General Corp. 5,700 206
NAC Re Corp. 42,900 2,341
Ohio Casualty Corp. 23,200 883
Orion Capital Corp. 17,200 502
Providian Financial Corp. 9,650 926
Safeco Corp. 12,200 536
Selective Insurance Group, Inc. 15,900 300
St. Paul Cos., Inc. 9,200 327
Torchmark Corp. 7,000 234
Transatlantic Holdings, Inc. 11,400 854
Waddell & Reed Financial, Inc. 3,551 86
Washington Mutual, Inc. 12,544 9
-----------------------------------------------------------------------------
27,974
- -----------------------------------------------------------------------------------------------------------------------
HEALTH--9.7%
Abbott Laboratories 13,600 615
(a)ALZA Corp. "A" 25,900 924
American Home Products Corp. 4,300 248
(a)Amgen, Inc. 13,400 847
AstraZeneca Group, PLC 6,659 262
(a)Biogen, Inc. 3,400 371
Bristol-Myers Squibb Co. 4,000 275
C.R. Bard, Inc. 9,800 448
Cardinal Health, Inc. 16,387 989
(a)Crescendo Pharmaceuticals Corp. 1,800 27
DENTSPLY International, Inc. 10,500 284
Eli Lilly & Co. 12,000 857
(a)Express Scripts, Inc. "A" 5,700 400
(a)Forest Laboratories, Inc. 4,000 191
(a)ICOS Corp. 10,400 456
McKesson HBOC, Inc. 7,400 252
(a)MedImmune, Inc. 16,000 1,018
(a)MedQuist, Inc. 14,100 518
Merck & Co., Inc. 17,400 1,175
(a)MiniMed, Inc. 17,400 1,028
(a)Patterson Dental Co. 9,400 344
Pfizer, Inc. 5,400 578
(a)Quintiles Transnational Corp. 13,300 540
Schering-Plough Corp. 18,600 838
(a)Sepracor, Inc. 7,300 465
(a)Serologicals Corp. 9,800 78
(a)Sierra Health Services, Inc. 20,100 306
(a)Universal Health Services, Inc. 3,800 189
(a)VISX, Inc. 31,000 1,610
Warner-Lambert Co. 3,200 198
-----------------------------------------------------------------------------
16,331
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING--8.5%
(a)Alliant Techsystems, Inc. 17,600 $ 1,496
Arch Chemicals, Inc. 9,650 222
Barnes Group, Inc. 24,200 558
B.F. Goodrich Co., Inc. 3,900 158
Carlisle Companies, Inc. 11,300 528
Cordant Technologies, Inc. 6,200 301
Emerson Electric Co. 5,400 345
General Electric Co. 11,300 1,149
Hughes Supply, Inc. 18,700 504
Kaydon Corp. 5,200 173
Kennametal, Inc. 22,900 651
(a)Lexmark International Group, Inc. "A" 5,000 681
Lubrizol Corp. 18,400 506
Millennium Chemicals, Inc. 6,200 155
Modine Manufacturing Co. 39,700 1,275
(a)Mueller Industries, Inc. 15,300 444
M.A. Hanna Co. 65,500 966
OM Group, Inc. 8,700 325
PE Corp-PE Biosystems Group 2,100 235
Pentair, Inc. 3,300 146
Pitney Bowes, Inc. 12,000 765
Teleflex, Inc. 4,600 201
Thomas & Betts Corp. 5,900 253
Timken Co. 19,900 409
Tyco International, Ltd. 18,108 1,582
(a)UNOVA, Inc. 12,900 187
------------------------------------------------------------------------------
14,215
- -----------------------------------------------------------------------------------------------------------------------
METALS AND MINERALS--.4%
AK Steel Holding Corp. 9,500 228
USX-US Steel Group, Inc. 17,300 466
------------------------------------------------------------------------------
694
- -----------------------------------------------------------------------------------------------------------------------
SERVICES INDUSTRIES--7.5%
ABM Industries, Inc. 13,500 369
(a)Affiliated Computer Services 34,500 1,496
(a)America Online, Inc. 13,000 1,552
Banta Corp. 12,600 309
Charles Schwab Corp. 23,400 2,476
(a)Concord EFS, Inc. 15,600 528
(a)Consolidated Graphics, Inc. 29,500 1,361
(a)DeVry, Inc. 11,400 254
(a)Interim Services, Inc. 6,600 144
John Wiley & Sons, Inc. "A" 13,900 600
Kelly Services, Inc. "A" 23,800 690
Merrill Lynch & Co., Inc. 3,000 252
Paychex, Inc. 6,300 187
SEI Investments Co. 6,500 663
Standard Register Co. 18,400 547
(a)Swift Transportation Co., Inc. 14,400 263
Total System Services, Inc. 6,400 119
Wallace Computer Services, Inc. 19,400 445
Waste Management, Inc. 7,217 382
-----------------------------------------------------------------------------
12,637
</TABLE>
14
<PAGE> 15
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY--17.1%
(a)Applied Materials, Inc. 9,800 $ 538
(a)BMC Software, Inc. 10,100 499
(a)Celera Genomics 1,050 18
(a)Citrix Systems, Inc. 26,800 1,325
Compaq Computer Corp. 19,200 455
(a)Computer Sciences Corp. 26,300 1,701
(a)Compuware Corp. 18,000 559
Dallas Semiconductor Corp. 15,200 661
(a)Dell Computer Corp. 30,000 1,033
(a)EMC Corp. 5,400 538
(a)Gateway 2000, Inc. 8,500 517
(a)Gentex Corp. 11,100 333
Intel Corp. 49,000 2,649
(a)Intuit, Inc. 9,800 798
(a)Jabil Circuit 28,000 1,351
Jack Henry & Associates, Inc. 11,300 399
(a)Legato Systems, Inc. 15,000 821
Mercury Interactive Corp. 16,600 546
(a)Microsoft Corp. 34,600 2,792
National Computer Corp. 8,200 256
(a)Network Appliance, Inc. 6,600 311
(a)Orbital Sciences Corp. 4,600 104
(a)PMC-Sierra, Inc. 7,600 369
(a)PSINet, Inc. 19,700 877
(a)QLogic Corp. 8,400 922
(a)Quantum Corp. 7,000 139
Reynolds and Reynolds Co. 30,400 665
(a)Smart Modular Technologies 14,100 212
(a)Solectron Corp. 21,900 1,199
(a)Sun Microsystems, Inc. 38,200 2,283
Symbol Technologies, Inc. 10,400 520
(a)Tech Data Corp. 31,500 1,159
(a)Teradyne, Inc. 5,000 264
(a)Veritas Software 11,500 1,015
(a)Xilinx, Inc. 17,300 769
-----------------------------------------------------------------------------
28,597
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--2.2%
(a)Alaska Air Group, Inc. 12,400 515
Alexander & Baldwin, Inc. 18,200 412
CSX Corp. 18,800 882
Delta Air Lines, Inc. 15,000 861
Trinity Industries, Inc. 13,900 433
Werner Enterprises, Inc. 30,200 583
-----------------------------------------------------------------------------
3,686
</TABLE>
15
<PAGE> 16
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UTILITIES--5.7%
Carolina Power & Light Co. 35,400 $ 1,549
Consolidated Edison, Inc. 9,600 466
FirstEnergy Corp. 43,700 1,390
Florida Progress Corp. 55,900 2,344
New England Electric System 24,400 1,222
ONEOK, Inc. 28,900 867
Western Resources, Inc. 59,800 1,738
-----------------------------------------------------------------------------
9,576
-----------------------------------------------------------------------------
TOTAL COMMON STOCKS--95.7%
(Cost: $135,684) 160,551
-----------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS--4.3%
(b)Repurchase Agreement
State Street Bank and Trust Company,
dated 5/31/99, 4.80%, due 6/1/99 $ 591 591
Commercial paper
Yield--4.73% to 5.00%
Due--June 1999 6,600 6,596
-----------------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--4.3%
(Cost: $7,187) 7,187
-----------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost: $142,871) $167,738
-----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Repurchase agreements are fully collateralized by U.S. Treasury or
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 $142,871,000 for federal income tax purposes
at May 31, 1999, the gross unrealized appreciation was $32,007,000, the gross
unrealized depreciation was $7,140,000 and the net unrealized appreciation on
investments was $24,867,000.
See accompanying Notes to Financial Statements.
16
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1999 (unaudited)
(IN THOUSANDS)
<TABLE>
<S> <C>
- ------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------
Investments at value
(Cost: $142,871) $167,738
- ------------------------------------------------------------------------
Cash 1
- ------------------------------------------------------------------------
Receivable for:
Fund shares sold 89
- ------------------------------------------------------------------------
Dividends 227
- ------------------------------------------------------------------------
TOTAL ASSETS 168,055
- ------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------
Payable for:
Fund shares redeemed 151
- ------------------------------------------------------------------------
Management fee 88
- ------------------------------------------------------------------------
Distribution services fee 76
- ------------------------------------------------------------------------
Administrative services fee 61
- ------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 131
- ------------------------------------------------------------------------
Trustees' fees 5
- ------------------------------------------------------------------------
Total liabilities 512
- ------------------------------------------------------------------------
NET ASSETS $167,543
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------------------
Paid-in capital $132,796
- ------------------------------------------------------------------------
Undistributed net realized gain on investments 9,880
- ------------------------------------------------------------------------
Net unrealized appreciation on investments 24,867
- ------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $167,543
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share ($88,914 /
5,271 shares outstanding) $16.87
- ------------------------------------------------------------------------
Maximum offering price per share (net asset value, plus
6.10% of net asset value or 5.75% of offering price) $17.90
- ------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($70,852 /
4,333 shares outstanding) $16.36
- ------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($7,777 / 476
shares outstanding) $16.36
- ------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE> 18
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1999 (unaudited)
(IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 861
- -----------------------------------------------------------------------
Interest 161
- -----------------------------------------------------------------------
Total investment income 1,022
- -----------------------------------------------------------------------
Expenses:
Management fee 561
- -----------------------------------------------------------------------
Distribution services fee 281
- -----------------------------------------------------------------------
Administrative services fee 188
- -----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 363
- -----------------------------------------------------------------------
Professional fees 22
- -----------------------------------------------------------------------
Reports to shareholders 73
- -----------------------------------------------------------------------
Registration fees 11
- -----------------------------------------------------------------------
Trustees' fees and other 10
- -----------------------------------------------------------------------
Total expenses before expense waiver 1,509
- -----------------------------------------------------------------------
Less expenses waived and absorbed by investment manager (57)
- -----------------------------------------------------------------------
Total expenses after waiver 1,452
- -----------------------------------------------------------------------
NET INVESTMENT LOSS (430)
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- -----------------------------------------------------------------------
Net realized gain on sales of investments 9,946
- -----------------------------------------------------------------------
Change in net unrealized appreciation on investments 2,367
- -----------------------------------------------------------------------
Net gain on investments 12,313
- -----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $11,883
- -----------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
MAY 31, ENDED
1999 NOVEMBER 30,
(UNAUDITED) 1998
- ---------------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss $ (430) (213)
- ---------------------------------------------------------------------------------------------------
Net realized gain 9,946 2,115
- ---------------------------------------------------------------------------------------------------
Changes in net unrealized appreciation 2,367 10,221
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 11,883 12,123
- ---------------------------------------------------------------------------------------------------
Distribution from net realized gain (2,145) (3,455)
- ---------------------------------------------------------------------------------------------------
Net increase from capital share transactions 13,014 38,382
- ---------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 22,752 47,050
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------
Beginning of period 144,791 97,741
- ---------------------------------------------------------------------------------------------------
END OF PERIOD $167,543 144,791
- ---------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Kemper Value+Growth Fund (the fund) is an open-end
management investment company organized as a
business trust under the laws of Massachusetts. The
fund currently offers four 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. Class I shares (none sold
through May 31, 1999) are offered to a limited
group of investors, are not subject to initial or
contingent deferred sales charges and generally
have lower ongoing expenses than other classes.
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 INVESTMENT 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. 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. Money market instruments
purchased with an original maturity of sixty days
or less on a 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 Trustees.
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 and includes discount
amortization on money market instruments. 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
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
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.
- --------------------------------------------------------------------------------
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 .72%
of the first $250 million of average daily net
assets declining to .54% of average daily net
assets in excess of $12.5 billion. The fund
incurred a management fee of $561,000 for the six
months ended May 31, 1999.
Scudder Kemper has agreed to waive certain
operating expenses of the fund. Under this
arrangement, Scudder Kemper waived expenses of
$57,000 for the six months ended May 31, 1999.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (KDI). Underwriting commissions
retained by KDI in connection with the distribution
of Class A shares for the six months ended May 31,
1999 are $27,000.
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
(CDSC) from redemptions of Class B and Class C
shares. Distribution fees (after an expense waiver
by Scudder Kemper) and CDSC received by KDI for the
six months ended May 31, 1999 are $307,000.
ADMINISTRATIVE SERVICES AGREEMENT. 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 the firms service.
Administrative services fees paid by the fund to
KDI for the six months ended May 31, 1999 are
$188,000.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the fund. Under the agreement,
KSvC received shareholder services fees of $283,000
for the six months ended May 31, 1999.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the fund are also officers or directors of
Scudder Kemper. During the six months ended May 31,
1999, the fund made no payments to its officers and
incurred trustees' fees of $5,000 to independent
trustees.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended May 31, 1999, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
Purchases $51,985
Proceeds from sales 42,389
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the fund (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED MAY 31, 1999 NOVEMBER 30, 1998
--------------------- ---------------------
SHARE AMOUNT SHARE AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 1,378 $ 23,402 2,280 $ 35,097
-------------------------------------------------------------------------------
Class B 947 15,182 1,752 26,217
-------------------------------------------------------------------------------
Class C 189 3,026 262 3,913
-------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 68 1,082 126 1,770
-------------------------------------------------------------------------------
Class B 59 913 105 1,448
-------------------------------------------------------------------------------
Class C 6 90 7 101
-------------------------------------------------------------------------------
SHARES REDEEMED
Class A (1,186) (19,772) (1,317) (20,082)
-------------------------------------------------------------------------------
Class B (552) (9,375) (593) (8,765)
-------------------------------------------------------------------------------
Class C (96) (1,534) (86) (1,317)
-------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 162 2,146 200 3,036
-------------------------------------------------------------------------------
Class B (165) (2,146) (204) (3,036)
-------------------------------------------------------------------------------
NET INCREASE FROM CAPITAL
SHARE TRANSACTIONS $ 13,014 $ 38,382
-------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
--------------------------------------------------
CLASS A
--------------------------------------------------
SIX MONTHS YEAR ENDED NOVEMBER OCTOBER 16
ENDED 30, TO
MAY 31, ---------------------- NOVEMBER 30,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.82 14.62 12.95 10.02 9.50
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.01) .01 .02 .05 .02
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.29 1.69 2.48 2.88 .50
- ---------------------------------------------------------------------------------------------
Total from investment operations 1.28 1.70 2.50 2.93 .52
- ---------------------------------------------------------------------------------------------
Less distribution from net realized gain .23 .50 .83 -- --
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $16.87 15.82 14.62 12.95 10.02
- ---------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 8.18% 12.06 20.83 29.24 5.47
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------
Expenses 1.42% 1.42 1.41 1.47 1.35
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.15)% .22 .35 .43 2.25
- ---------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses 1.42% 1.42 1.41 1.59 1.35
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.15)% .22 .35 .31 2.25
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------
CLASS B
--------------------------------------------------
SIX MONTHS YEAR ENDED NOVEMBER OCTOBER 16
ENDED 30, TO
MAY 31, ---------------------- NOVEMBER 30,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.40 14.37 12.83 10.02 9.50
- ---------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.08) (.07) (.07) (.04) .02
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.27 1.60 2.44 2.85 .50
- ---------------------------------------------------------------------------------------------
Total from investment operations 1.19 1.53 2.37 2.81 .52
- ---------------------------------------------------------------------------------------------
Less distribution from net realized gain .23 .50 .83 -- --
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $16.36 15.40 14.37 12.83 10.02
- ---------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 7.82% 11.06 19.96 28.04 5.47
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ---------------------------------------------------------------------------------------------
Expenses 2.25% 2.27 2.27 2.27 2.10
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (.98)% (.63) (.51) (.37) 1.50
- ---------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses 2.36% 2.38 2.32 2.44 2.10
- ---------------------------------------------------------------------------------------------
Net investment income (loss) (1.09)% (.74) (.56) (.54) 1.50
- ---------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------------------------------------------------
CLASS C
------------------------------------------------------
SIX MONTHS OCTOBER 16
ENDED YEAR ENDED NOVEMBER 30, TO
MAY 31, -------------------------- NOVEMBER 30,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $15.40 14.37 12.84 10.01 9.50
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.07) (.04) (.05) (.04) .01
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.26 1.57 2.41 2.87 .50
- -------------------------------------------------------------------------------------------------
Total from investment operations 1.19 1.53 2.36 2.83 .51
- -------------------------------------------------------------------------------------------------
Less distribution from net realized gain .23 .50 .83 -- --
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $16.36 15.40 14.37 12.84 10.01
- -------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 7.82% 11.06 19.86 28.27 5.37
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------
Expenses 2.17% 2.16 2.15 2.22 2.07
- -------------------------------------------------------------------------------------------------
Net investment income (loss) (.90)% (.52) (.39) (.32) 1.53
- -------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------------------------
Expenses 2.71% 2.70 2.16 2.35 2.07
- -------------------------------------------------------------------------------------------------
Net investment income (loss) (1.44)% 1.06 (.40) (.45) 1.53
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS OCTOBER 16
ENDED YEAR ENDED NOVEMBER 30, TO
MAY 31, -------------------------- NOVEMBER 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $167,543 144,791 97,741 339,092 5,851
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 55% 92 56 82 --
- -------------------------------------------------------------------------------------------------
</TABLE>
NOTES: Total return does not reflect the effect of any sales charges. Per share
data for the period ended May 31, 1999 was determined based on average shares
outstanding. Data for the period ended May 31, 1999 is unaudited.
Scudder Kemper agreed to temporarily waive certain operating expenses of the
fund during the periods ended November 30, 1996 through May 31, 1999. The other
ratios to average net assets are computed without this waiver. Certain amounts
for the fiscal period ended November 30, 1998 have been reclassified to conform
to May 31, 1999 presentation.
23
<PAGE> 24
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 17, 1998, a special shareholders' meeting was held. Kemper
Value+Growth Fund shareholders were asked to vote on two separate issues:
approval of the new Investment Management Agreement between the fund and Scudder
Kemper Investments, Inc., and to modify or eliminate certain policies and to
eliminate the shareholder approval requirements as to certain other matters. The
following are the results.
1) Approval of the new Investment Management Agreement between the fund and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
4,902,763 76,476 192,728
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,619,835 218,367 332,137 1,001,628
</TABLE>
Investment policies
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,620,840 217,362 332,137 1,001,628
</TABLE>
Diversification
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,625,360 212,842 332,137 1,001,628
</TABLE>
Borrowing
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,622,564 215,638 332,137 1,001,628
</TABLE>
Senior securities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,625,356 212,846 332,137 1,001,628
</TABLE>
Concentration
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,625,379 212,823 332,137 1,001,628
</TABLE>
Underwriting of securities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,625,379 212,823 332,137 1,001,628
</TABLE>
Investment in real estate
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,625,379 212,823 332,137 1,001,628
</TABLE>
Purchase of commodities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,624,160 214,042 332,137 1,001,628
</TABLE>
Lending
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,618,929 219,273 332,137 1,001,628
</TABLE>
Margin purchases and short sales
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,615,461 222,741 332,137 1,001,628
</TABLE>
Pledging of assets
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,617,647 220,555 332,137 1,001,628
</TABLE>
Purchases of securities
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,625,419 212,783 332,137 1,001,628
</TABLE>
Purchases of options and warrants
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
3,622,230 215,972 332,137 1,001,628
</TABLE>
24
<PAGE> 25
NOTES
25
<PAGE> 26
NOTES
26
<PAGE> 27
NOTES
27
<PAGE> 28
TRUSTEES&OFFICERS
TRUSTEES OFFICERS
JOHN W. BALLANTINE MARK CASADY
Trustee President
LEWIS A. BURNHAM PHILIP J. COLLORA
Trustee Vice President and
Secretary
DONALD L. DUNAWAY
Trustee JOHN R. HEBBLE
Treasurer
ROBERT B. HOFFMAN
Trustee PHILIP FORTUNA
Vice President
DONALD R. JONES
Trustee ANN M. MCCREARY
Vice President
THOMAS W. LITTAUER
Trustee and Vice President KATHRYN L. QUIRK
Vice President
SHIRLEY D. PETERSON
Trustee LINDA J. WONDRACK
Vice President
CORNELIA SMALL
Trustee and Vice President MAUREEN E. KANE
Assistant Secretary
WILLIAM P. SOMMERS
Trustee CAROLINE PEARSON
Assistant Secretary
ELIZABETH C. WERTH
Assistant Secretary
BRENDA LYONS
Assistant Treasurer
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
- --------------------------------------------------------------------------------
CUSTODIAN STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110
- --------------------------------------------------------------------------------
PRINCIPAL KEMPER DISTRIBUTORS, INC.
UNDERWRITER 222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
[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 Equity Funds/Growth Style prospectus.
KVGF - 3 (7/27/99) 1080090
