<PAGE> 1
KEMPER
QUANTITATIVE
EQUITY FUND
SEMIANNUAL REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED MAY 31, 1997
Seeking growth of capital and reduction of risk
" . . . Any little thing ... could
have sent stock prices plummeting as momentum
investors headed for the exits. This created some
opportunities for us."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
Economic Overview
5
Performance Update
8
Industry Sectors
9
Largest Holdings
10
Portfolio of Investments
12
Financial Statements
14
Notes to Financial Statements
18
Financial Highlights
AT A GLANCE
- -------------------------------------------------------------------------------
KEMPER QUANTITATIVE
EQUITY FUND TOTAL RETURNS
- -------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 1997
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 7.99%
CLASS B 7.49%
CLASS C 7.49%
LIPPER GROWTH
FUNDS CATEGORY
AVERAGE* 8.36%
- --------------------------------------------------------------------------------
</TABLE>
Returns and rankings are historical and do not represent future results. Returns
and net asset value fluctuate. Shares are redeemable at current net asset value,
which may be more or less than original cost.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
5/31/97 11/30/96
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER QUANTITATIVE EQUITY
FUND CLASS A $11.80 $11.12
- --------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY
FUND CLASS B $11.66 $11.04
- --------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY
FUND CLASS C $11.67 $11.05
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY
FUND LIPPER RANKINGS*
- --------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER GROWTH FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #362 OF 750 FUNDS #403 OF 750 FUNDS #405 OF 750 FUNDS
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
DURING THE PERIOD, THE KEMPER QUANTITATIVE EQUITY FUND MADE THE FOLLOWING
DISTRIBUTIONS:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM CAPITAL
GAIN $ 0.19 $ 0.19 $ 0.19
- --------------------------------------------------------------------------------
</TABLE>
*Lipper Analytical Services, Inc. returns and rankings are based upon changes in
net asset value with all dividends reinvested and do not include the effect of
sales charges and, if they had, results may have been less favorable.
TERMS TO KNOW
KEMPER FUND'S STYLE
MORNINGSTAR EQUITY STYLE BOX
Style Source: Morningstar, Inc., Chicago, IL
Value Blend Growth Size (312) 696-6000. (Morningstar Style Box
is based on a portfolio date as of May
/ / /X/ / / Large 31, 1997.) The Equity Style Box
/ / / / / / Medium placement is based on a fund's
/ / / / / / Small price-to-earnings and price-to-book
ratio relative to the S&P 500, as well
as the size of the companies in which it
invests, or median market
capitalization.
Please note that style boxes do not represent an exact assessment of risk and do
not represent future performance. Please consult the prospectus for a
description of investment policies.
FUNDAMENTAL RESEARCH This research includes analysis of the balance sheets and
income statements of companies used to forecast their future stock price
movements. Fundamental analysis considers past records of assets, earnings,
sales, products, management and markets in helping predict future trends in
these indicators and of a company's success or failure. By appraising a firm's
prospects, this analysis may be used to help assess whether a particular stock
or group of stocks is undervalued or overvalued at its current market price.
INTRINSIC VALUE Valuation determined by applying data inputs to a valuation
theory or model. The resulting value is compared to the prevailing market price.
NETWORK A set of computers connected to allow them to share information. A local
area network (LAN) connects computers physically near each other. A wide area
network (WAN) is a set of computers separated by a distance, such as the
worldwide airline reservation system. The Internet is a series of interconnected
wide area networks.
QUANTITATIVE ANALYSIS Research based on measurable factors, versus qualitative
considerations such as the character of management or the state of employee
morale. Examples of quantitative analysis include the value of assets; the cost
of capital; the historical and projected patterns of sales, costs and
profitability; and a wide range of considerations in the areas of economics.
2
<PAGE> 3
ECONOMIC OVERVIEW
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER OF
ZURICH KEMPER INVESTMENTS, INC. (ZKI). ZKI AND ITS AFFILIATES MANAGE
APPROXIMATELY $80 BILLION IN ASSETS, INCLUDING $45 BILLION IN RETAIL MUTUAL
FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM HARVARD
UNIVERSITY.
DEAR SHAREHOLDER,
The consistently good news on the domestic economy and the recent agreement
between the White House and Republican leaders in Congress to balance the
federal budget has provided the basis for strong stock and bond markets. This
progress on balancing the budget, an initiative that the bond market was
anticipating resolution of more than one year ago, has very positive long term
implications for financial markets.
The next several weeks will find Congress and the Clinton administration
negotiating toward a final agreement. Unlike previous failed proposals that
sought to balance the budget principally by increasing income taxes, the current
plan -- which starts from the base of a relatively small deficit -- proposes to
slow the growth of federal spending. As such, its prospects are promising.
Natural skeptics are waiting to see specific legislation to see if the
agreement has teeth. While we are optimistic, we need to temper our enthusiasm.
Much of the good news associated with a balanced budget has been discounted in
the higher prices in the stock and bond markets.
Of particular interest to equity investors is the agreement to reduce the
maximum tax rate on capital gains. Although details of the reduction are yet to
be known, the prospect of more favorable tax treatment on gains will have the
short-term effect of supporting stocks -- investors can be expected to postpone
selling until they can qualify for the lower tax rate. With equity sales
essentially "frozen" until the effective date is known, the stock market should
have a considerable underpinning. Once an effective date is determined, we would
expect the pent-up selling to occur. However, then we shall enjoy the long-term
positive effect of the lower tax rate on gains.
Talk of a balanced budget has shifted the spotlight away from the Federal
Reserve Board's upward pressure on interest rates. Having declined to raise
rates in May, the Fed may still act again at a later date. However, this action
may be the last for a while because the economy seems to be slowing down in the
second quarter, after the rapid 5.6 percent annualized growth in the first
quarter of the year. A slower economy would reduce the threat of inflation and
reduce the need for further rate hikes by the Fed.
In fact, a review of the standard measures of the economy shows little to
be concerned about and much to be encouraged by. As has been the pattern for
more than five years, a few strong quarters followed by a few weak quarters have
produced an overall 2 to 3 percent rate of growth in gross domestic product
(GDP). Job creation and the unemployment rate are consistent with a moderately
expanding economy. Corporate profits continue to grow at an expected 4 to 5
percent rate in 1997. The Consumer Price Index continues to track at a 2.5 to
3.0 percent rate.
Leadership in the stock market has been quite narrow and concentrated in
the first half of 1997 in large, multinational companies with familiar consumer
brand names. The recent rally after the announcement of a balanced budget
agreement suggests that valuations of smaller capitalization stocks are
compelling and the market is broadening.
A natural response to increased volatility in the U.S. equity market is to
look abroad. In fact, the valuations of many international markets are more
attractive than the U.S. However, the weak German and Japanese economies make it
difficult to identify many exciting near-term opportunities without careful
research.
3
<PAGE> 4
ECONOMIC OVERVIEW
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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 (6/30/97) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 6.49 6.58 6.87 6.28
PRIME RATE(2) 8.5 8.25 8.25 8.8
INFLATION RATE(3) 2.3 3.04 2.95 2.76
THE U.S. DOLLAR(4) 5.52 4.59 8.35 -7.04
CAPITAL GOODS ORDERS(5)* 8.17 2.23 2.44 8.24
INDUSTRIAL PRODUCTION(5) 3.84 4.84 3.38 2.36
EMPLOYMENT GROWTH(6) 2.12 2.41 2.18 2.46
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on family income and retail sales.
* Data as of May 31, 1997.
SOURCE: ECONOMICS DEPARTMENT, ZURICH KEMPER INVESTMENTS, INC.
Our recommendation to shareholders is to stay the course and to fight the
temptation to try to time when and where you should be invested without help.
Financial assets react much quicker today to events. Volatility has returned to
the market and with it heightened uncertainty. Now is the time to rely on your
financial representative for the expertise and the long-term investing
discipline that he or she can provide.
With this commentary as an economic backdrop, we encourage you to read the
following detailed report of your fund, including an interview with your fund's
portfolio management. Thank you for your continued support. We appreciate the
opportunity to serve your investment needs.
Sincerely,
/s/ Stephen B. Timbers
STEPHEN B. TIMBERS
PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER
Zurich Kemper Investments, Inc.
July 11, 1997
4
<PAGE> 5
PERFORMANCE UPDATE
[BUKOWSKI PHOTO]
DANIEL J. BUKOWSKI IS A SENIOR VICE PRESIDENT AND DIRECTOR OF QUANTITATIVE
RESEARCH FOR ZURICH KEMPER INVESTMENTS, INC. (ZKI). BUKOWSKI ALSO MANAGES KEMPER
QUANTITATIVE EQUITY FUND. HE HAS MORE THAN 10 YEARS OF EXPERIENCE IN THE CAPITAL
MARKETS AND HOLDS A BACHELOR'S DEGREE AND AN M.B.A. FROM THE UNIVERSITY OF
CHICAGO.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
IN A MARKET WHERE INVESTORS APPEARED WILLING TO PAY ANY PRICE FOR LARGE COMPANY
GROWTH STOCKS, THE FUND PERFORMED IN LINE WITH ITS GROWTH FUND PEER GROUP.
Q DAN, COULD YOU GIVE US AN OVERVIEW OF THE FUND'S PERFORMANCE OVER THE LAST
SIX MONTHS?
A Certainly. For the six-month period ended May 31, 1997, the fund's total
return was 7.99% for Class A shares unadjusted for sales charge. For comparison,
the average growth fund was up 8.36%, as measured by the Lipper growth funds
category average. Large-cap growth stocks -- our area of emphasis -- gained
12.70% as measured by the Russell 1000 Growth Index. Over the period, the
largest companies tended to be the best performers, a fact reflected in the
Russell Index's returns. Because the Index is market-cap weighted -- meaning
that the performance of larger companies counts more than that of smaller
companies -- it outgained most growth funds, including ours.
Q WHY HAVE BIG COMPANY STOCKS TENDED TO OUTPERFORM?
A There have been a couple of reasons. First, earnings of blue chip companies
have remained strong, and in fact have often surprised on the upside. Second,
and more importantly, the moderate rise in interest rates over the last several
months has prompted investors to wonder whether the stock market rally can
sustain its torrid pace. During times of uncertainty, the stocks of large
companies tend to outperform small company stocks because they are considered
more reliable performers should the economy slow or earnings growth diminish.
Q KEMPER QUANTITATIVE EQUITY FUND TENDS TO CONCENTRATE ON LARGE GROWTH
COMPANIES, YET ITS RETURN FOR THE LAST SIX MONTHS WAS ABOUT AVERAGE FOR ITS PEER
GROUP. HAS SOMETHING IMPEDED ITS PERFORMANCE?
A We haven't been able to outpace our peer group during the first part of the
year primarily because our style of investing -- "growth at the right price" --
has been out of favor. An apt description of the current trend might be "growth
at ANY price." Investors have been focusing on a very concentrated group of
stocks: large, multinational companies with strong brands such as Coke, Proctor
& Gamble, and General Electric. People seem willing to pay any amount to own
these stocks. This demand stems largely from investors looking to capitalize on
the improving economic environment overseas. To gain exposure to foreign
markets, they're choosing a few big, established, domestic companies with which
they're comfortable. The result has been powerful price gains on a few selected
stocks.
To us, this trend is reminiscent of the so-called "Nifty 50" stocks of the
early 70s. Those were also big, consumer-product companies with strong brand
names that people thought would just keep
5
<PAGE> 6
PERFORMANCE UPDATE
growing unabated. Like today's favored companies, "Nifty 50" stocks sold at
exorbitant multiples. Of course, in the ensuing bear market of 1973-74, the
highest flying stocks suffered the steepest declines.
For our part, we believe these stocks are just too expensive and we see far
more downside than upside to them at this point. But investors have continued to
bid them up regardless. It's been somewhat frustrating for us, because we can
own large-cap stocks with good valuations and still trail the broad market
averages.
Q DO YOU THINK THIS "GROWTH AT ANY PRICE" TREND WILL CONTINUE FOR VERY LONG?
A Actually, the advance has started to broaden of late. Smaller company
stocks have started to come around, and technology stocks led the market in May.
Historically, the market has tended to recognize value, so we plan to stay
disciplined and stick to our guns. The worst thing we could do is to change our
approach and buy "Nifty 50"-type stocks at the top and then get whipsawed.
Q WHAT STRATEGIES HAVE YOU USED TO MANAGE THE FUND IN THIS MARKET?
A Our strategy has always been one of "bottom-up" stock picking -- rather
than trying to predict broad market moves, we looked for individual stocks that
offered multinational exposure but are selling at what we believe were
attractive values. Such stocks include tobacco firms, which have been volatile
but have done well on news of a compromise agreement with federal health
officials. Also, technology stocks rebounded strongly after a difficult first
quarter in 1997.
Overall, we've just tried to be patient and use our quantitative models to
find stocks that we think will perform well when investors decide they don't
want to pay 30 times 1997 earnings for a stock.
Q ANY EXAMPLES OF YOUR QUANTITATIVE APPROACH IN ACTION?
A The performance of technology stocks in the first quarter has been a
textbook case of investor emotion run amok. The stocks of technology companies
are often more sensitive to rising rates than those of other companies, since
they tend to borrow to help finance new ventures and products. When interest
rates rise, borrowing becomes more expensive, which may potentially cut into
profits. So as interest rates edged up through the last six months, investors
became concerned that earnings for technology companies might not be up to
expectations.
Also, the cyclical nature of tech stocks makes them a magnet for timers and
momentum players -- that is, investors who look to jump into a sector when it's
heating up, and who bail out at the first sign of trouble. Many tech companies
have been growing earnings around 30 percent per year, which has been factored
into their prices. Any little thing -- interest rate tremors, a two-cent
shortfall in earnings, or an outlook from management that wasn't as rosy as
analysts expected -- could have sent stock prices plummeting as momentum
investors headed for the exits.
This created some opportunities for us. Despite the beating these stocks
took, we viewed their problems as short-term -- these firms are creating the
technological foundation for the future of health care, entertainment and global
communication -- the demand for their services is not going away. Plus, these
companies continue to grow much faster than the market as a whole. Once people
realized that these firms weren't about to suddenly go out of business, prices
bounced back nicely.
We bought a few hard-disk drive manufacturers. There is still a lot of
strength in personal computers, and while the growth rates of disk-drive
manufacturers have abated somewhat as they've matured and competition has become
stronger, their growth rates are still attractive based on the fundamentals.
6
<PAGE> 7
PERFORMANCE UPDATE
Q ANY STRATEGIES THAT DIDN'T WORK OUT AS WELL AS YOU'D HOPED?
A We would have liked to have committed more to the big consumer non-durable
companies, but they've just been too expensive for our taste. We misjudged the
market's appetite for them, but trying to capture what the market likes isn't
our game. Our philosophy is to look at the numbers. And the numbers for the
select stocks that have driven the Dow and the Standard & Poor's 500 Stock Index
(S&P 500) to all-time highs suggest to us that there is currently more risk than
return potential in those companies.
Q WHAT'S YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A Overall, the outlook for stocks in general appears good. The most important
factors remain positive: solid but not raging economic growth, subdued
inflation, and a relatively benign global climate for interest rates.
In addition, the market has experienced an extended rally over the last
three years or so. At some point, we believe people are going to look for more
upside potential for their investment dollar. Once that happens, we may see more
volatility in the market averages, but improved performance from the
better-valued stocks that we emphasize. Regardless, we'll continue to apply our
quantitative, "growth at the right price" philosophy, and seek large company
growth stocks that offer an attractive combination of attractive return
potential with relatively low risk.
7
<PAGE> 8
INDUSTRY SECTORS
A SIX-MONTH COMPARISON
Data show the percentage of the common stocks in the portfolio that each sector
of the Kemper Quantitative Equity Fund represented on May 31, 1997, and November
30, 1996.
[SIX MONTH COMPARISON BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER QUANTITATIVE KEMPER QUANTITATIVE
EQUITY FUND ON 5/31/97 EQUITY FUND ON 11/30/96
<S> <C> <C>
TECHNOLOGY 36.0% 24.2%
CONSUMER NON-DURABLES 24.0% 31.3%
HEALTH CARE 15.0% 13.1%
FINANCE 13.8% 9.3%
CAPITAL GOODS 6.9% 4.9%
CONSUMER DURABLES 4.3% 5.0%
BASIC INDUSTRIES 0.0% 1.7%
UTILITIES 0.0% 5.4%
ENERGY 0.0% 3.6%
TRANSPORTATION 0.0% 1.5%
</TABLE>
A COMPARISON WITH THE RUSSELL 1000 GROWTH INDEX*
Data show the percentage of the common stocks in the portfolio that each sector
of the Kemper Quantitative Equity Fund represented on May 31, 1997, compared to
the industry sectors that make up the fund's benchmark, the Russell 1000 Growth
Index.
[RUSSELL COMPARISON BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER QUANTITATIVE RUSSELL 1000
EQUITY FUND ON 5/31/97 GROWTH INDEX ON 5/31/97
<S> <C> <C>
TECHNOLOGY 36.0% 22.8%
CONSUMER NON-DURABLES 24.0% 34.0%
HEALTH CARE 15.0% 18.8%
FINANCE 13.8% 5.0%
CAPITAL GOODS 6.9% 9.9%
CONSUMER DURABLES 4.3% 0.5%
BASIC INDUSTRIES 0.0% 3.2%
UTILITIES 0.0% 3.1%
ENERGY 0.0% 2.4%
TRANSPORTATION 0.0% 0.3%
</TABLE>
* The Russell 1000 Growth Index is an unmanaged index comprised of common stocks
of larger U.S. companies with greater than average growth orientation and
represents the universe of stocks from which "earnings/growth" money managers
typically select.
8
<PAGE> 9
LARGEST HOLDINGS
THE FUND'S 10 LARGEST HOLDINGS*
REPRESENTING 27.7% OF THE FUND'S TOTAL NET ASSETS ON MAY 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
HOLDINGS PERCENT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. INTEL Engaged in the design, development, manufacture and 4.2%
sale of advanced microcomputer components, such as
integrated circuits and other related products.
- -----------------------------------------------------------------------------------------------------
2. COMPAQ Designs, develops, manufactures and markets personal 3.7%
COMPUTER computers for business and professional users.
- -----------------------------------------------------------------------------------------------------
3. PHILIP MORRIS Largest cigarette maker in the U.S., and through its 3.6%
Miller Brewing subsidiary, also the country's
second-largest brewer. This company is also a major
branded food producer through its Kraft Foods
subsidiary.
- -----------------------------------------------------------------------------------------------------
4. CISCO SYSTEMS The largest, most comprehensive supplier of routing 2.8%
software and related systems that direct the flow of
data between local area networks, this company is a
play on the explosive growth of the Internet.
- -----------------------------------------------------------------------------------------------------
5. UST Manufactures and sells moist snuff, wine and other 2.6%
products.
- -----------------------------------------------------------------------------------------------------
6. MEDTRONIC Developer, manufacturer and marketer of therapeutic 2.3%
medical devices designed to improve cardiovascular
and neurological health.
- -----------------------------------------------------------------------------------------------------
7. U.S. ROBOTICS Designs, markets and supports high performance data 2.3%
communications products and systems targeted to
business and professional users. Product line
includes dial-up modems, network management systems
and data communications software.
- -----------------------------------------------------------------------------------------------------
8. AMGEN A global biotechnology company that discovers, 2.2%
develops, manufactures and markets human
therapeutics based on advanced cellular and
molecular biology.
- -----------------------------------------------------------------------------------------------------
9. HOME DEPOT Operates retail "warehouse" stores that sell 2.0%
building materials and home improvement products to
homeowners and remodelers.
- -----------------------------------------------------------------------------------------------------
10. NOVARTIS Created by the merger of Ciba and Sandoz, Novartis 2.0%
is a leader in life sciences with core business in
pharmaceuticals, agribusiness and nutrition.
- -----------------------------------------------------------------------------------------------------
</TABLE>
*The fund's holdings are subject to change.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER QUANTITATIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS AT MAY 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL GOODS--6.9% General Electric Co. 2,400 $ 145,000
B.F. Goodrich Co. 2,000 86,000
(a)USA Waste Services 2,800 101,000
(a)U.S. Filter Corp. 4,600 145,000
(a)United Waste Systems 1,400 54,000
-------------------------------------------------------------------------
531,000
- ---------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS--8.5% (a)Ascend Communications, Inc. 2,000 112,000
(a)Cisco Systems 3,200 217,000
(a)3Com Corp. 2,900 141,000
(a)U.S. Robotics 2,100 176,000
-------------------------------------------------------------------------
646,000
- ---------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--14.0% (a)AutoZone 2,600 61,000
(a)Boston Market 4,400 79,000
Brunswick Corp. 4,000 122,000
Carnival Corp. 3,800 144,000
(a)Consolidated Stores Corp. 3,200 122,000
(a)Tommy Hilfiger Corp. 3,400 151,000
Home Depot 2,500 158,000
NIKE 2,600 148,000
Sears, Roebuck & Co. 1,700 84,000
-------------------------------------------------------------------------
1,069,000
- ---------------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES--4.3% Heilig-Meyers 7,000 115,000
(a)Lear Corp. 1,400 54,000
Leggett & Platt Inc. 2,000 75,000
Magna International Inc., "A" 1,500 81,000
-------------------------------------------------------------------------
325,000
- ---------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--10.0% American Greetings Corp. 4,500 154,000
Walt Disney Co. 1,600 131,000
Philip Morris Companies 6,300 277,000
UST, Inc. 7,100 202,000
-------------------------------------------------------------------------
764,000
- ---------------------------------------------------------------------------------------------------------------------
FINANCE--13.8% American General Corp. 2,000 89,000
BB & T Corp. 1,500 60,000
Banc One Corp. 1,000 43,000
Bear Stearns Companies 2,600 84,000
A.G. Edwards & Sons 2,000 74,000
Federal National Mortgage Association 3,100 135,000
First Bank System 700 57,000
First Chicago NBD Corp. 1,500 89,000
ITT Hartford Group 700 55,000
Jefferson-Pilot Corp. 1,200 76,000
MGIC Investment Corp. 900 80,000
Merrill Lynch & Co. 600 64,000
NationsBank 1,500 88,000
Republic NY Corp. 300 30,000
Torchmark Corp. 500 33,000
-------------------------------------------------------------------------
1,057,000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE--15.0% American Home Products Corp. 2,000 $ 153,000
Astra AB, ADR 8,267 135,000
(a)Biogen 4,700 156,000
(a)HealthCare COMPARE Corp. 3,000 148,000
Mallinckrodt Group 2,100 78,000
Medtronic, Inc. 2,400 178,000
Merck & Co. 1,600 144,000
Novartis, ADR 2,300 157,000
------------------------------------------------------------------------
1,149,000
- --------------------------------------------------------------------------------------------------------------------
PERSONAL COMPUTING--7.9% (a)Compaq Computer Corp. 2,600 281,000
(a)Gateway 2000 1,400 93,000
(a)Quantum Corp. 2,600 101,000
(a)Seagate Technology 1,000 41,000
(a)Western Digital Corp. 1,600 87,000
------------------------------------------------------------------------
603,000
- --------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--19.6% Amgen Inc. 2,500 167,000
(a)Applied Materials, Inc. 2,200 144,000
(a)Atmel Corp. 4,400 127,000
(a)Ceridian Corp. 2,500 92,000
Computer Associates International 1,700 93,000
Hewlett-Packard 1,500 77,000
Intel Corp. 2,100 318,000
(a)Microchip Technology 3,800 135,000
(a)Novellus Systems 1,600 131,000
(a)Parametric Technology Corp. 2,200 99,000
(a)Sun Microsystems 3,600 116,000
------------------------------------------------------------------------
1,499,000
------------------------------------------------------------------------
TOTAL INVESTMENTS AND
NET ASSETS--100%
(Cost: $6,741,000) $7,643,000
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $6,741,000 for federal income tax purposes
at May 31, 1997, the gross unrealized appreciation was $1,039,000, the gross
unrealized depreciation was $137,000 and the net unrealized appreciation on
investments was $902,000.
See accompanying Notes to Financial Statements.
11
<PAGE> 12
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------
Investments, at value
(Cost: $6,741,000) $7,643,000
- --------------------------------------------------------------------------
Cash 152,000
- --------------------------------------------------------------------------
Receivable for:
Fund shares sold 30,000
- --------------------------------------------------------------------------
Investments sold 15,000
- --------------------------------------------------------------------------
Dividends 5,000
- --------------------------------------------------------------------------
TOTAL ASSETS 7,845,000
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- --------------------------------------------------------------------------
Payable for:
Investments purchased 193,000
- --------------------------------------------------------------------------
Management fee 3,000
- --------------------------------------------------------------------------
Distribution services fee 2,000
- --------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1,000
- --------------------------------------------------------------------------
Trustees' fees and other 3,000
- --------------------------------------------------------------------------
Total liabilities 202,000
- --------------------------------------------------------------------------
NET ASSETS $7,643,000
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------------------------------------
Paid-in capital $6,724,000
- --------------------------------------------------------------------------
Undistributed net realized gain on investments 17,000
- --------------------------------------------------------------------------
Net unrealized appreciation on investments 902,000
- --------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $7,643,000
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($2,474,500 / 209,700 shares outstanding) $11.80
- --------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $12.52
- --------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,670,900 / 143,400 shares outstanding) $11.66
- --------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,054,300 / 90,300 shares outstanding) $11.67
- --------------------------------------------------------------------------
CLASS I SHARES
Net asset value and redemption price per share
($2,443,300 / 206,800 shares outstanding) $11.81
- --------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1997
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------
Dividends $ 35,000
- -----------------------------------------------------------------------------------------------
Interest 2,000
- -----------------------------------------------------------------------------------------------
Total investment income 37,000
- -----------------------------------------------------------------------------------------------
Expenses:
Management fee 19,000
- -----------------------------------------------------------------------------------------------
Distribution services fee 8,000
- -----------------------------------------------------------------------------------------------
Administrative services fee 3,000
- -----------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 6,000
- -----------------------------------------------------------------------------------------------
Professional fees 8,000
- -----------------------------------------------------------------------------------------------
Reports to shareholders 1,000
- -----------------------------------------------------------------------------------------------
Trustees' fees and other 4,000
- -----------------------------------------------------------------------------------------------
Total expenses 49,000
- -----------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (12,000)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- -----------------------------------------------------------------------------------------------
Net realized gain on sales of investments 7,000
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation on investments 470,000
- -----------------------------------------------------------------------------------------------
Net gain on investments 477,000
- -----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $465,000
- -----------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FEBRUARY 15 TO
MAY 31, NOVEMBER 30,
1997 1996
- -----------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss $ (12,000) (11,000)
- -----------------------------------------------------------------------------------------------
Net realized gain 7,000 88,000
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation 470,000 432,000
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 465,000 509,000
- -----------------------------------------------------------------------------------------------
Net equalization credits -- 4,000
- -----------------------------------------------------------------------------------------------
Distribution from net realized gain (78,000) --
- -----------------------------------------------------------------------------------------------
Net increase from capital share transactions 2,660,000 3,983,000
- -----------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 3,047,000 4,496,000
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------
Beginning of period 4,596,000 100,000
- -----------------------------------------------------------------------------------------------
END OF PERIOD $7,643,000 4,596,000
- -----------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Kemper Quantitative Equity Fund is an open-end
management investment company organized as a
business trust under the laws of Massachusetts. The
Fund commenced operations on February 15, 1996. 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 are sold to a
limited group of investors, are not subject to
initial or contingent deferred sales charges and
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 that are traded on a
domestic securities exchange or securities listed
on the NASDAQ National Market are valued at the
last sale price on the exchange or market where
primarily traded or listed or, if there is no
recent sale, at the last current bid quotation.
Portfolio securities that are primarily traded on
foreign securities exchanges are generally valued
at the preceding closing values of such securities
on their respective exchanges where primarily
traded. Securities not so traded or listed are
valued at the last current bid quotation if market
quotations are available. Fixed income securities
are valued by using market quotations, or
independent pricing services that use prices
provided by market makers or estimates of market
values obtained from yield data relating to
instruments or securities with similar
characteristics. Equity options are valued at the
last sale price unless the bid price is higher or
the asked price is lower, in which event such bid
or asked price is used. Financial futures and
options thereon are valued at the settlement price
established each day by the board of trade or
exchange on which they are traded. Forward foreign
currency contracts are valued at the forward rates
prevailing on the day of valuation. Other
securities and assets are valued at fair value as
determined in good faith by the Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, 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
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
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 earlier of 3:00 p.m. Chicago
time or 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 has complied with
the special provisions of the Internal Revenue Code
available to investment companies during the six
months ended May 31, 1997.
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.
EQUALIZATION ACCOUNTING. A portion of proceeds from
sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment
income so that income per share available for
distribution is not affected by sales or
redemptions of shares.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Zurich Kemper Investments, Inc.
(ZKI) and pays a management fee at an annual rate
of .58% of the first $250 million of average daily
net assets declining to .42% of average daily net
assets in excess of $12.5 billion. The Fund
incurred a management fee of $19,000 for the six
months ended May 31, 1997. Zurich Investment
Management Limited, an affiliate of ZKI, serves as
sub adviser with respect to foreign securities
investments in the Fund and is paid by ZKI for its
services.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Zurich Kemper Distributors,
Inc. (ZKDI) (formerly known as Kemper Distributors,
Inc.). Underwriting commissions paid in connection
with the distribution of Class A shares are as
follows:
<TABLE>
<CAPTION>
COMMISSIONS
COMMISSIONS ALLOWED BY
RETAINED BY ZKDI ZKDI TO FIRMS
---------------- -------------
<S> <C> <C>
Six months ended
May 31, 1997 $1,000 5,000
</TABLE>
For services under the distribution services
agreement, the Fund pays ZKDI a fee of .75% of
average daily net assets of Class B and Class C
shares. Pursuant to the agreement, ZKDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares. In addition, ZKDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B and Class C shares.
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
Distribution fees and commissions paid in
connection with the sale of Class B and Class C
shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS AND
DISTRIBUTION FEES DISTRIBUTION FEES
RECEIVED BY ZKDI PAID BY ZKDI TO FIRMS
----------------------- ---------------------
<S> <C> <C>
Six months ended
May 31, 1997 $8,000 13,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with ZKDI. For
providing information and administrative services
to Class A, Class B and Class C shareholders, the
Fund pays ZKDI a fee at an annual rate of up to
.25% of average daily net assets of each class.
ZKDI 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 (ASF)
paid are as follows:
<TABLE>
<CAPTION>
ASF PAID BY ASF PAID BY
THE FUND TO ZKDI ZKDI TO FIRMS
----------------- --------------
<S> <C> <C>
Six months ended
May 31, 1997 $3,000 2,000
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Zurich Kemper Service Company (ZKSvC) (formerly
known as Kemper Service Company) is the shareholder
service agent of the Fund. Under the agreement,
ZKSvC received shareholder services fees of $3,000
for the six months ended May 31, 1997.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of ZKI.
During the six months ended May 31, 1997, the Fund
made no payments to its officers and incurred
trustees' fees of $2,000 to independent trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended May 31, 1997, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $7,003,000
Proceeds from sales 4,419,000
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 15 TO
MAY 31, 1997 NOVEMBER 30, 1996
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 52,000 $ 559,000 162,000 $1,584,000
----------------------------------------------------------------------------------------
Class B 44,000 483,000 103,000 1,004,000
----------------------------------------------------------------------------------------
Class C 33,000 359,000 76,000 756,000
----------------------------------------------------------------------------------------
Class I 279,000 3,146,000 139,000 1,428,000
----------------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 3,000 30,000 -- --
----------------------------------------------------------------------------------------
Class B 2,000 19,000 -- --
----------------------------------------------------------------------------------------
Class C 1,000 14,000 -- --
----------------------------------------------------------------------------------------
Class I 1,000 15,000 -- --
----------------------------------------------------------------------------------------
SHARES REDEEMED
Class A (3,000) (29,000) (9,000) (99,000)
----------------------------------------------------------------------------------------
Class B (3,000) (36,000) (4,000) (35,000)
----------------------------------------------------------------------------------------
Class C (24,000) (259,000) -- --
----------------------------------------------------------------------------------------
Class I (149,000) (1,641,000) (63,000) (655,000)
----------------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 1,000 10,000 1,000 8,000
----------------------------------------------------------------------------------------
Class B (1,000) (10,000) (1,000) (8,000)
----------------------------------------------------------------------------------------
NET INCREASE
FROM CAPITAL SHARE
TRANSACTIONS $ 2,660,000 $3,983,000
----------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION> ------------------------------- -----------------------------------
CLASS A CLASS B
------------------------------- -----------------------------------
FEBRUARY 15 FEBRUARY 15
SIX MONTHS ENDED TO SIX MONTHS ENDED TO
MAY 31, NOVEMBER 30, MAY 31, NOVEMBER 30,
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $11.12 9.50 11.04 9.50
- ----------------------------------------------------------------------------- ----------------------------------
Income from investment operations:
Net investment income (loss) -- -- (.04) (.04)
- ----------------------------------------------------------------------------- ----------------------------------
Net realized and unrealized gain .87 1.62 .85 1.58
- ----------------------------------------------------------------------------- ----------------------------------
Total from investment operations .87 1.62 .81 1.54
- ----------------------------------------------------------------------------- ----------------------------------
Less distribution from net realized gain .19 -- .19 --
- ----------------------------------------------------------------------------- ----------------------------------
Net asset value, end of period $11.80 11.12 11.66 11.04
- ----------------------------------------------------------------------------- ----------------------------------
TOTAL RETURN (NOT ANNUALIZED) 7.99% 17.05 7.49 16.21
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED) (A)
Expenses 1.20% 1.48 2.13 2.32
- ----------------------------------------------------------------------------- ----------------------------------
Net investment loss (.05)% (.16) (.98) (1.00)
- ----------------------------------------------------------------------------- ----------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------ -----------------------------------
CLASS C CLASS I
------------------------------ -----------------------------------
FEBRUARY 15 SEPTEMBER 9
SIX MONTHS ENDED TO SIX MONTHS ENDED TO
MAY 31, NOVEMBER 30, MAY 31, NOVEMBER 30,
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $11.05 9.50 11.14 9.67
- ----------------------------------------------------------------------------- ----------------------------------
Income from investment operations:
Net investment income (loss) (.04) (.04) -- --
- ----------------------------------------------------------------------------- ----------------------------------
Net realized and unrealized gain .85 1.59 .86 1.47
- ----------------------------------------------------------------------------- ----------------------------------
Total from investment operations .81 1.55 .86 1.47
- ----------------------------------------------------------------------------- ----------------------------------
Less distribution from net realized gain .19 -- .19 --
- ----------------------------------------------------------------------------- ----------------------------------
Net asset value, end of period $11.67 11.05 11.81 11.14
- ----------------------------------------------------------------------------- ----------------------------------
TOTAL RETURN (NOT ANNUALIZED) 7.49% 16.32 7.88 15.20
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED) (A)
Expenses 2.01% 2.33 1.29 1.08
- ----------------------------------------------------------------------------- ----------------------------------
Net investment loss (.86)% (1.01) (.14) (.05)
- ----------------------------------------------------------------------------- ----------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -------------------------------------------------------------------------------------------------
FEBRUARY 15
SIX MONTHS ENDED TO
MAY 31, NOVEMBER 30,
1997 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net assets at end of period $7,643,000 4,596,000
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 132% 72
- -------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the six months ended May 31,
1997 and the period ended November 30, 1996 were $.0596 and $.0555, respectively.
- -------------------------------------------------------------------------------------------------
</TABLE>
Notes: Total return does not reflect the effect of any sales charges.
(a) ZKI agreed to temporarily waive its management fee and absorb certain
operating expenses of the Fund for the period ended November 30, 1996.
Absent this waiver, the ratios of expenses to average net assets would have
increased and the ratios of net investment income to average net assets
would have decreased for the period ended November 30, 1996 by the following
amounts: for Class A, 0.78%, for Class B, 0.83%, for Class C, 0.79% and for
Class I, 1.15%.
18
<PAGE> 19
NOTES
19
<PAGE> 20
TRUSTEES & OFFICERS
TRUSTEES OFFICERS
STEPHEN B. TIMBERS DANIEL J. BUKOWSKI
President and Trustee Vice President
DAVID W. BELIN CHARLES R. MANZONI, JR.
Trustee Vice President
LEWIS A. BURNHAM JOHN E. NEAL
Trustee Vice President
DONALD L. DUNAWAY STEVEN H. REYNOLDS
Trustee Vice President
ROBERT B. HOFFMAN PHILIP J. COLLORA
Trustee Vice President
and Secretary
DONALD R. JONES
Trustee JEROME L. DUFFY
Treasurer
DOMINIQUE P. MORAX
Trustee ELIZABETH C. WERTH
Assistant Secretary
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT
ZURICH KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT
INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INVESTMENT MANAGER
ZURICH KEMPER INVESTMENTS, INC.
PRINCIPAL UNDERWRITER
ZURICH KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Equity Fund prospectus.
KQEF - 3 (7/97) 1034760
Printed in the U.S.A. [KEMPER LOGO]
