<PAGE> 1
KEMPER
QUANTITATIVE EQUITY FUND
ANNUAL REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED NOVEMBER 30, 1996
Seeking growth of capital and reduction of risk
" . . . our research and stock-picking
capabilities, coupled with disciplined adherence to
the 'growth at a reasonable price' philosophy, gave us an edge."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
2
At a Glance
2
Terms to Know
3
Economic Overview
5
Performance Update
8
Industry Sectors
9
Largest Holdings
10
Portfolio of Investments
12
Report of Independent Auditors
13
Financial Statements
15
Notes to Financial Statements
19
Financial Highlights
AT A GLANCE
- -------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY FUND
TOTAL RETURNS
- -------------------------------------------------------------------------------
FOR THE NINE-MONTH PERIOD ENDED NOVEMBER 30, 1996
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 17.18%
CLASS B 16.33%
CLASS C 16.44%
LIPPER
GROWTH FUNDS
CATEGORY AVERAGE* 15.71%
- -------------------------------------------------------------------------------
</TABLE>
Returns are historical and do not represent future performance results. Returns
and net asset value fluctuate. Shares are redeemable at current net asset value,
which may be more or less than original cost.
* Lipper Analytical Services, Inc. returns 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
11/30/96 2/15/96
- -------------------------------------------------------------------------------
<S> <C> <C>
KEMPER QUANTITATIVE EQUITY
FUND CLASS A $11.12 $ 9.50
- -------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY
FUND CLASS B $11.04 $ 9.50
- -------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY
FUND CLASS C $11.05 $ 9.50
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
TERMS TO KNOW
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.
GROWTH STOCK The stock of a company whose earnings growth has consistently
exceeded the growth rate of the overall market and whose growth is expected to
continue or accelerate.
INDEX An unmanaged group of stocks that is considered representative of the
stock or bond markets. An index does not take into account any fees or expenses
related to the individual securities that it tracks. However, for performance
comparisons, the index is adjusted to reflect reinvestment of dividends of the
securities in the index.
INTRINSIC VALUE Valuation determined by applying data inputs to a valuation
theory or model. The resulting value is compared to the prevailing market price.
QUANTITATIVE Analysis dealing with measurable factors as distinguished from such
qualitative considerations 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.
SECTOR A specific industry group.
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 $79 BILLION IN ASSETS, INCLUDING $44 BILLION IN RETAIL
MUTUAL FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR SHAREHOLDER:
As we begin a new year, it's remarkable how eventful 1996 was and yet,
economically, we are essentially where we were one year ago.
The fundamentals of the economy are remarkably similar. Long-term interest
rates are approximately 6.5% compared to the 6.5% to 7% range they were in
during the first half of 1996. We believe the economy is growing at a rate of
approximately 2.5%. Inflation continues to be well under control, at about 3.0%.
One significant difference between today and one year ago is that prices of
the stocks are on average up 20%. While price movements were more volatile in
1996 than in the past few years, the patient investor was amply rewarded. The
prime element sending the stock market higher was strong positive cash flows.
This liquidity in an environment of modestly increasing corporate profits and
relatively stable interest rates pushed stocks higher for most of the year.
This higher stock market has caused many market observers to worry. While
we cannot ignore what has happened, we find no reason to be bearish over the
long term. The environment is benign to favorable for financial assets. Given
steady interest rates, moderate economic growth and continued moderate corporate
earnings growth, there are few excesses in the system. In fact, real interest
rates are probably too high considering our outlook for inflation, and we may
see them decline over time.
Naturally, we cannot rule out the possibility of a market correction. But,
in our belief, the downside would appear to be limited to 5% to 8%, which is the
size of a typical correction based on historical data. As we have said in
previous outlooks, three elements tend to move the market:
- EARNINGS. We forecast corporate earnings to range between 0% and 5% on
average for the Standard & Poor's 500* in 1997 -- not as high as in
recent years but positive nonetheless.
- INTEREST RATES. Rates should remain stable, and short-term interest rates
may even decline.
- LIQUIDITY. Investors, through mutual funds, 401(k)s and qualified
contribution plans in particular, will continue to create strong demand
for securities.
In order to move the market more than would be expected in a typical
decline, one or more of these elements will have to turn negative in 1997, and,
while future market conditions cannot be predicted with certainty, we fail to
see what would materially change our outlook. Our outlook going forward is that
1997 should be a lot like 1996.
While the economy continued along a relatively consistent path, the United
States took some politically significant steps in 1996. First, of course,
President Bill Clinton and a Republican Congress were re-elected by the voters.
In the first few days after the general election, especially, investors
demonstrated their support for such a balance in our leadership. But of much
greater long-term significance is the expressed commitment by both parties to
balance the federal budget and address certain entitlement programs. The first
year after an election can be a fertile time to accomplish major initiatives,
and we are hopeful that progress can be made.
The future of the Social Security system, which many experts believe will
run out of money about 20 years from now, will be a subject in which you can
expect Zurich Kemper Investments, Inc. to play a leadership role. The possible
solutions for "fixing Social Security" are finite: raise Social Security taxes,
reduce benefits, raise the retirement age, change inflation assumptions or
pursue a higher rate of return on assets contributed by workers. We believe that
a bipartisan solution will be worked out, which will include giving individuals
the option of investing a portion of their Social Security contributions in an
account earmarked for them. This change is needed to return credibility to the
system, which many Americans have lost faith in.
What to do with Social Security is a debate that spans generations and
promises to occupy much attention in the coming years. As we hope to help
advance constructive debate, we'll be advocating partial privatization for this
federal program while maintaining a safety net for many low-wage earners and
providing a seamless transition for seniors near or in retirement.
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 (12/31/96) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 6.30 6.87 5.65 7.78
PRIME RATE (2) 8.25 8.25 8.50 8.50
INFLATION RATE(3)* 3.19 2.75 2.60 2.61
THE U.S. DOLLAR (4) 4.36 8.55 -0.57 -5.29
CAPITAL GOODS ORDERS (5)* 2.69 1.85 13.09 3.68
INDUSTRIAL PRODUCTION (5)* 4.40 4.12 1.08 6.43
EMPLOYMENT GROWTH (6) 2.17 2.19 1.57 3.52
</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,
inflations 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 November 30, 1996.
SOURCE: ECONOMICS DEPARTMENT, ZURICH KEMPER INVESTMENTS, INC.
With this letter 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.
January 9, 1997
*THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET.
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.
DETAILED ANALYSIS WITH AN EMPHASIS ON VALUATION HELPED KEMPER QUANTITATIVE
EQUITY FUND ACHIEVE EXCEPTIONAL RETURNS DURING 1996. PORTFOLIO MANAGER
DAN BUKOWSKI DISCUSSES THE STRATEGIES THAT BOOSTED PERFORMANCE AND HIS OUTLOOK
FOR 1997.
Q KEMPER QUANTITATIVE EQUITY FUND HAS ENJOYED RELATIVELY STRONG
PERFORMANCE, WITH CLASS A SHARES (UNADJUSTED FOR SALES CHARGE) GAINING 17.18%
DURING THE PERIOD ENDED NOVEMBER 30, 1996, COMPARED TO THE 15.71% AVERAGE FOR
THE LIPPER GROWTH FUND CATEGORY.
A That's right. Amid a very good year for stocks in general, our research and
stock-picking capabilities -- coupled with disciplined adherence to the "growth
at a reasonable price" philosophy -- gave us an edge.
Q ALAN GREENSPAN, CHAIRMAN OF THE FEDERAL RESERVE BOARD, RECENTLY MADE A
COMMENT ABOUT "IRRATIONAL EXUBERANCE" IN THE MARKET. WITH THE DOW JONES
INDUSTRIAL AVERAGE WELL OVER THE 6,000 MARK, DO YOU FIND THAT STOCK VALUES HAVE
BECOME OVEREXTENDED?
A Not necessarily. It's been a great year for large cap, blue chip companies
and many of those stocks do appear to be fully valued. However, the market still
offers some compelling valuations, particularly among mid-cap growth stocks. In
recent months we've added to the fund's exposure in mid-caps with purchases of
Auto Zone, Consolidated Stores Corp. and Heilig-Meyers. While a modest
correction may occur, our research indicates that fundamentals are still fairly
strong and should support additional growth. We're in a stock picker's market
right now, which plays into our research capabilities.
Q SINCE KEMPER QUANTITATIVE EQUITY FUND IS STILL A RELATIVELY NEW MEMBER OF
THE KEMPER FAMILY, WOULD YOU BRIEFLY REVIEW THE PROCESS YOU FOLLOW IN CHOOSING A
STOCK FOR THE PORTFOLIO?
A I work with our team of analysts who attempt to identify stocks that, from
a purely quantitative perspective, offer the most attractive "upside" potential.
Using a fairly sophisticated computer model, we compare different combinations
of these stocks to identify the "optimal" combination of risk and return.
This process allows us to balance any overweighting in a particular stock
by underweighting another stock that has a similar risk profile, or
overweighting a stock with complementary risk characteristics. By staying
disciplined regarding this process, we arrive at a portfolio of classic growth
stocks that attempts to track the characteristics of our benchmark -- the
Russell 1000 Growth Index. By staying in line with the index, we seek to
control risk relative to the overall market for growth stocks.
Our emphasis on valuation gives the fund a somewhat "contrarian" profile.
That is, we concentrate on stocks that are selling below their intrinsic
value. These are stocks whose prices have been driven below what their
underlying fundamentals would
5
<PAGE> 6
PERFORMANCE UPDATE
warrant because the market has overreacted to something like an earnings
disappointment or a delay in bringing a new product to market.
Q ARE THERE ANY PARTICULAR MARKET SECTORS YOU FAVOR?
A The fund is overweighted relative to the benchmark in financial and
technology stocks. Financials have been strong performers all year, and our
overweighting has certainly boosted our relative performance. We like banking
stocks such as First Chicago NBD Corp., First USA and NationsBank.
Technology has been a difficult sector this year, moving up then down and,
more recently, back up again. Success in this area has been very stock-specific,
requiring a watchful eye on valuations. Using our proprietary models, we turned
the sector's volatility to our advantage, taking profits when stocks reached our
established price targets and purchasing quality companies on temporary
setbacks. As of November 30, 1996, Compaq Computer Corp. and 3Com Corporation
were among the fund's largest positions.
We also like consumer non-durable stocks, which account for the fund's
biggest sector play as of November 30. The fund held a fairly sizable position
in Procter & Gamble for a short period, and it did well for us. But
instead of such traditional names, we've tended to favor a diverse selection of
leisure (Brunswick Corp., Mattel, Inc.), entertainment (Walt Disney Company,
Carnival Corp., Viacom International) and retail (Consolidated Stores Corp.,
Circuit City Stores) stocks. During the summer we added a few restaurant stocks
(Outback Steakhouse and Lone Star Steakhouse & Saloon) that had been beaten up
and offered compelling valuations. We also like Philip Morris Companies and
UST, Inc., both of which are among the fund's top 10 holdings.
Q TOBACCO STOCKS STIR UP STRONG FEELINGS FOR A LOT OF INVESTORS. HAVE YOU
CONSIDERED TRIMMING OR ELIMINATING THE FUND'S POSITIONS IN THESE COMPANIES?
A Not due to the nature of their business. My job as a money manager is to
reduce emotional and personal biases from the investment process. On a
fundamental basis, these companies have contributed significantly to the fund's
performance and continue to offer outstanding value. In the case of Philip
Morris, the strength of the Kraft Foods and Miller Brewing divisions are reason
enough to own the stock. If we were to see these stocks become fully valued, or
if a problem were to arise regarding the companies' fundamentals, we would
certainly look at selling.
Q WHAT IS YOUR OUTLOOK FOR 1997?
A At this point (mid-December, 1996) we anticipate a slower economy but not a
recession. Industrial production appears to be neutral, inflation should stay in
check and interest rates should remain relatively flat, although we may see a
slight decline. This is a good environment for growth stocks, although we
probably won't see the double-digit returns we've had over the past two years.
We intend to remain fully invested and stay the course.
6
<PAGE> 7
PERFORMANCE UPDATE
- ------------------------------------------------------------------------------
TOTAL RETURNS*
- ------------------------------------------------------------------------------
FOR THE PERIOD ENDED NOVEMBER 30, 1996 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
CLASS
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
KEMPER QUANTITATIVE EQUITY FUND CLASS A 10.32% (since 2/15/96)
- --------------------------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY FUND CLASS B 12.21% (since 2/15/96)
- --------------------------------------------------------------------------------------------------
KEMPER QUANTITATIVE EQUITY FUND CLASS C 15.32% (since 2/15/96)
- --------------------------------------------------------------------------------------------------
</TABLE>
[LINE GRAPH]
- -----------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Quantitative Equity Fund Class A FROM 2/29/96 THROUGH 11/30/96
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
2/29/96 6/30/96 11/30/96
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Kemper Quantitative Equity Fund Class A(1) 10000 9692 11043
Russell 1000 Growth Index+ 10000 10587 11933
Standard & Poor's 500 Stock Index++ 10000 10026 12018
</TABLE>
[LINE GRAPH]
- ----------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Quantitative Equity Fund Class B FROM 2/29/96 THROUGH 11/30/96
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
2/29/96 6/30/96 11/30/96
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Kemper Quantitative Equity Fund Class B(1) 10000 10242 11633
Russell 1000 Growth Index+ 10000 10026 11933
Standard & Poor's 500 Stock Index++ 10000 10587 12018
</TABLE>
[LINE GRAPH]
- -----------------------------------------------------------------------------
Growth of an assumed $10,000 investment in
Kemper Quantitative Equity Fund Class C FROM 2/29/96 THROUGH 11/30/96
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
2/29/96 6/30/96 11/30/96
<S> <C> <C> <C>
Kemper Quantitative Equity Fund Class C 10000 10253 11644
Russell 1000 Growth Index+ 10000 10026 11933
Standard & Poor's 500 Stock Index 10000 10587 12018
</TABLE>
Returns are historical and do not represent future performance. Returns and
net asset value fluctuate. Shares are redeemable at current net asset value,
which may be more or less than original cost.
* Total return measures net investment income and capital gain or loss
from portfolio investments, assuming reinvestment of all dividends and for
Class A shares adjustment for the maximum sales charge of 5.75% and for
Class B shares adjustment for the applicable contingent deferred sales
charge (CDSC) of 3%. The maximum Class B share CDSC is 4%. For Class C
shares purchased on or after April 1, 1996, there is a 1% CDSC on certain
redemptions within the first year of purchase. During the periods noted,
securities prices fluctuated. For additional information, see the
Prospectus and Statement of Additional Information and the Financial
Highlights at the end of this report.
(1) Performance includes reinvestment of dividends and adjustment for
the maximum sales charge for Class A shares and the contingent deferred
sales charge in effect at the end of the period for Class B shares. In
comparing Kemper Quantitative Equity Fund to the indices, you should also
note that the fund's performance reflects the maximum sales charge, while
no such charges are reflected in the performance of the indices.
+ 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.
++ The Standard & Poor's 500 Stock Index is an unmanaged index
generally representative of the U.S. stock market. Source is Towers Data
Systems.
7
<PAGE> 8
INDUSTRY SECTORS
A COMPARISON WITH THE RUSSELL 1000 GROWTH INDEX*
Data show the percentage of the common stocks in the portfolio that each sector
of Kemper Quantitative Equity Fund represented on November 30, 1996, 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 FUND RUSSELL 1000 GROWTH
ON 11/30/96 INDEX ON 11/30/96
<S> <C> <C>
CONSUMER NONDURABLES 31.3% 32.5%
TECHNOLOGY 24.2% 23.4%
HEALTH CARE 13.1% 18.8%
FINANCE 9.3% 4.7%
UTILITIES 5.4% 3.5%
CONSUMER DURABLES 5.0% 0.5%
CAPITAL GOODS 4.9% 10.3%
ENERGY 3.6% 2.5%
BASIC INDUSTRIES 1.7% 3.5%
TRANSPORTATION 1.5% 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 23.6% OF THE FUND'S TOTAL NET ASSETS ON NOVEMBER 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Holdings Percent
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. COMPAQ Designs, develops, manufactures and markets personal 2.9%
COMPUTER computers for business and professional users.
CORP.
2. WALT Develops and produces family entertainment such as 2.6%
DISNEY theme parks and resorts, film, television and consumer
COMPANY products.
3. PHILIP The largest cigarette maker in the U.S. Through its 2.5%
MORRIS Miller Brewing subsidiary, it is also the country's
COMPANIES second-largest brewer. This company is also a major
branded food producer through its Kraft and General
Foods subsidiaries.
4. U.S. Designs, markets and supports high performance data 2.4%
ROBOTICS communications products and systems targeted to
business and professional users. Product line includes
dial-up modems, network management systems and data
communications software.
5. UST, Manufactures and sells moist snuff, wine and other 2.3%
INC. products.
6. 3COM Established in 1979, 3Com pioneered the data 2.3%
CORPORATION networking industry. Today, 3Com offers a broad range
of global data networking solutions that include
routers, hubs, LAN switches and adapters.
7. GENERAL A broadly diversified company with major businesses in 2.3%
ELECTRIC power generators, appliances, lighting, plastics,
CO. medical systems, aircraft engines, financial services
and broadcasting.
8. VIACOM Operates four business units: Entertainment (produces 2.2%
INTERNATIONAL and distributes movies and television shows through
Paramount Studios); Networking and Broadcasting
(Showtime, Nickelodeon, MTV, VH1 and The Movie
Channel); Publishing (Simon & Schuster); and Video and
Music/Theme Parks (Blockbuster video rentals).
9. EMC Designs, manufactures and markets enhancement products 2.1%
CORP. for minicomputers and other computer systems.
10. MERCK & A leading research-driven pharmaceutical products and 2.0%
CO., services company. Merck discovers, develops,
INC. manufactures and markets a broad range of innovative
products to improve human and animal health.
</TABLE>
* The fund's holdings are subject to change.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER QUANTITATIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS AT NOVEMBER 30, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--1.7% (a)FMC Corp. 1,000 $ 77,000
- ------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--4.9% Emerson Electric Co. 700 69,000
General Electric Co. 1,000 104,000
York International Corp. 1,000 53,000
---------------------------------------------------------------------------
226,000
- ------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--24.5% (a)AutoZone 2,600 64,000
Brunswick Corp. 3,300 84,000
Carnival Corp. 2,600 82,000
Circuit City Stores 2,000 67,000
(a)Consolidated Stores Corp. 2,100 78,000
(a)Cox Communications Inc. 2,000 41,000
Walt Disney Company 1,600 118,000
(a)Liberty Media Group, "A" 2,200 55,000
(a)Lone Star Steakhouse & Saloon 3,000 86,000
Mattel, Inc. 2,800 86,000
(a)Outback Steakhouse 2,600 75,000
(a)Tele-Communications, Inc. 4,000 54,000
(a)Toys R Us 1,700 59,000
(a)Viacom International, "B" 2,700 102,000
Wendy's International 3,600 77,000
---------------------------------------------------------------------------
1,128,000
- ------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES--4.9% Heilig-Meyers 6,000 83,000
Leggett & Platt Incorporated 2,500 77,000
Singer Company N.V. 3,000 67,000
---------------------------------------------------------------------------
227,000
- ------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--6.7% American Greetings Corp. 3,000 85,000
Philip Morris Companies 1,100 113,000
UST, Inc. 3,300 108,000
---------------------------------------------------------------------------
306,000
- ------------------------------------------------------------------------------------------------------------
ENERGY--3.6% Amerada Hess Corp. 1,300 77,000
Union Texas Petroleum Holdings 4,000 89,000
---------------------------------------------------------------------------
166,000
- ------------------------------------------------------------------------------------------------------------
FINANCE--9.3% First Chicago NBD Corp. 1,500 88,000
First USA 2,500 82,000
First Union Corp. 700 53,000
ITT Hartford Group 400 27,000
Jefferson-Pilot Corp. 800 47,000
MGIC Investment Corp. 500 37,000
Merrill Lynch & Co. 400 32,000
NationsBank 600 62,000
---------------------------------------------------------------------------
428,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE--13.1% Abbott Laboratories 1,600 $ 89,000
Astra AB, ADR 1,400 68,000
(a)Forest Laboratories 1,800 70,000
(a)Foundation Health Corp. 2,500 73,000
Mallinckrodt Group 1,100 48,000
Merck & Co., Inc. 1,100 91,000
Sandoz, Ltd. 1,300 75,000
United Healthcare Corp. 2,000 86,000
-----------------------------------------------------------------------------
600,000
- --------------------------------------------------------------------------------------------------------------
TECHNOLOGY--24.1% (a)Applied Materials, Inc. 1,900 72,000
(a)Atmel Corporation 2,100 69,000
(a)Bay Networks 1,300 35,000
(a)Compaq Computer Corp. 1,700 135,000
(a)DSC Communications Corp. 3,000 54,000
(a)EMC Corp. 3,000 97,000
(a)Gateway 2000 400 21,000
International Business Machines 400 64,000
(a)Learning Company 3,700 63,000
Linear Technology Corp. 1,400 66,000
(a)Maxim Integrated Products 1,200 56,000
(a)Novellus Systems 1,000 58,000
(a)Seagate Technology 1,000 40,000
(a)Silicon Graphics Inc. 3,200 64,000
(a)3Com Corporation 1,400 105,000
(a)U.S. Robotics 1,400 110,000
-----------------------------------------------------------------------------
1,109,000
- --------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.5% (a)Lear Corporation 1,100 39,000
Ryder System Inc. 1,000 30,000
-----------------------------------------------------------------------------
69,000
- --------------------------------------------------------------------------------------------------------------
UTILITIES--5.4% (a)AirTouch Communications 2,000 51,000
Ameritech Corp. 500 29,000
(a)Paging Network, Inc. 5,200 85,000
(a)WorldCom 3,500 81,000
-----------------------------------------------------------------------------
246,000
-----------------------------------------------------------------------------
TOTAL COMMON STOCKS--99.7%
(Cost: $4,150,000) 4,582,000
-----------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
-----------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.22%
INSTRUMENTS--2.2% Due--December 1996
(Cost: $100,000) $100,000 100,000
-----------------------------------------------------------------------------
TOTAL INVESTMENTS--101.9%
(Cost: $4,250,000) 4,682,000
-----------------------------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(1.9)% (86,000)
-----------------------------------------------------------------------------
NET ASSETS--100% $4,596,000
-----------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $4,250,000 for federal income tax purposes
at November 30, 1996, the gross unrealized appreciation was $556,000, the gross
unrealized depreciation was $124,000 and the net unrealized appreciation on
investments was $432,000.
See accompanying Notes to Financial Statements.
11
<PAGE> 12
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER QUANTITATIVE EQUITY FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Quantitative Equity Fund as of
November 30, 1996, and the related statements of operations and changes in net
assets and the financial highlights for the period from February 15, 1996
(commencement of operations) to November 30, 1996. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
November 30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
Quantitative Equity Fund at November 30, 1996, the results of its operations,
the changes in its net assets and the financial highlights for the period from
February 15, 1996 to November 30, 1996, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
December 20, 1996
12
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $4,250,000) $4,682,000
- -------------------------------------------------------------------------------------------------------
Receivable for:
Fund shares sold 20,000
- -------------------------------------------------------------------------------------------------------
Dividends 4,000
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS 4,706,000
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------------
Cash overdraft 14,000
- -------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased 87,000
- -------------------------------------------------------------------------------------------------------
Management fee 2,000
- -------------------------------------------------------------------------------------------------------
Administrative services fee 1,000
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 2,000
- -------------------------------------------------------------------------------------------------------
Other 4,000
- -------------------------------------------------------------------------------------------------------
Total liabilities 110,000
- -------------------------------------------------------------------------------------------------------
NET ASSETS $4,596,000
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------------
Paid-in capital $4,076,000
- -------------------------------------------------------------------------------------------------------
Undistributed net realized gain on investments 88,000
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 432,000
- -------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $4,596,000
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($1,746,400 / 157,000 shares outstanding) $11.12
- -------------------------------------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $11.80
- -------------------------------------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,121,600 / 101,600 shares outstanding) $11.04
- -------------------------------------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($880,200 / 79,600 shares outstanding) $11.05
- -------------------------------------------------------------------------------------------------------
CLASS I SHARES
Net asset value and redemption price per share
($847,800 / 76,100 shares outstanding) $11.14
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 15, 1996
(COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1996
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS
- -------------------------------------------------------------------------------------------------------
Dividends $ 23,000
- -------------------------------------------------------------------------------------------------------
Interest 2,000
- -------------------------------------------------------------------------------------------------------
Total investment income 25,000
- -------------------------------------------------------------------------------------------------------
Expenses:
Management fee 11,000
- -------------------------------------------------------------------------------------------------------
Distribution services fee 7,000
- -------------------------------------------------------------------------------------------------------
Administrative services fee 3,000
- -------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 7,000
- -------------------------------------------------------------------------------------------------------
Professional fees 23,000
- -------------------------------------------------------------------------------------------------------
Other 1,000
- -------------------------------------------------------------------------------------------------------
Total expenses before expense waiver 52,000
- -------------------------------------------------------------------------------------------------------
Less expenses waived and absorbed by investment manager 16,000
- -------------------------------------------------------------------------------------------------------
Total expenses after expense waiver 36,000
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (11,000)
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------
Net realized gain on sales of investments 92,000
- -------------------------------------------------------------------------------------------------------
Net realized loss from futures transactions (4,000)
- -------------------------------------------------------------------------------------------------------
Net realized gain 88,000
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on investments 432,000
- -------------------------------------------------------------------------------------------------------
Net gain on investments 520,000
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $509,000
- -------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- --------------------------------------------------------------------------------------------------------
Net investment loss $ (11,000)
- --------------------------------------------------------------------------------------------------------
Net realized gain 88,000
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 432,000
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 509,000
- --------------------------------------------------------------------------------------------------------
Net equalization credits 4,000
- --------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 3,983,000
- --------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 4,496,000
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------
Beginning of period 100,000
- --------------------------------------------------------------------------------------------------------
END OF PERIOD $4,596,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
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 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, for shares sold on or
after April 1, 1996, 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
15
<PAGE> 16
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 and therefore no
federal income tax provision is 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.
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 $11,000 for the period
ended November 30, 1996.
ZKI has agreed to temporarily waive or absorb
certain operating expenses of the Fund. Under this
arrangement, ZKI waived and absorbed expenses of
$16,000 for the period ended November 30, 1996.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI). Underwriting commissions paid in connection
with the distribution of Class A shares are as
follows:
<TABLE>
<CAPTION>
COMMISSIONS
COMMISSIONS ALLOWED BY
RETAINED BY KDI KDI TO FIRMS
--------------- ------------
<S> <C> <C>
Period ended
November 30, 1996 $ 1,000 5,000
</TABLE>
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of 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 and
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
commissions paid in connection with the sale of
Class B and Class C shares are as follows:
<TABLE>
<CAPTION>
DISTRIBUTION FEES COMMISSIONS AND
RECEIVED BY KDI DISTRIBUTION FEES
(AFTER EXPENSE WAIVER) PAID BY KDI TO FIRMS
----------------------- ---------------------
<S> <C> <C>
Period ended
November 30, 1996 $ 6,000 4,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to Class A, Class B and Class C 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 (ASF) paid
are as follows:
<TABLE>
<CAPTION>
ASF PAID BY ASF PAID BY
THE FUND TO KDI KDI TO FIRMS
---------------- ------------
<S> <C> <C>
Period ended
November 30, 1996 $3,000 1,000
</TABLE>
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 $1,000
for the period ended November 30, 1996.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of ZKI.
During the period ended November 30, 1996, the Fund
made no payments to its officers or trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the period ended November 30, 1996, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $5,512,000
Proceeds from sales 1,454,000
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
NOVEMBER 30, 1996
------------------------
SHARES AMOUNT
---------------------------------------------------------------------------
<S> <C> <C>
SHARES SOLD
Class A 162,000 $1,584,000
---------------------------------------------------------------------------
Class B 103,000 1,004,000
---------------------------------------------------------------------------
Class C 76,000 756,000
---------------------------------------------------------------------------
Class I 139,000 1,428,000
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SHARES REDEEMED
Class A (9,000) (99,000)
---------------------------------------------------------------------------
Class B (4,000) (35,000)
---------------------------------------------------------------------------
Class I (63,000) (655,000)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 1,000 8,000
---------------------------------------------------------------------------
Class B (1,000) (8,000)
---------------------------------------------------------------------------
NET INCREASE FROM CAPITAL
SHARE TRANSACTIONS $3,983,000
---------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SEPTEMBER 9
FEBRUARY 15, 1996 (COMMENCEMENT OF OPERATIONS) TO
TO NOVEMBER 30, 1996 NOVEMBER 30, 1996
- -------------------------------------------------- --------------- --------------- -------------- -----------------
PER SHARE OPERATING PERFORMANCE CLASS A CLASS B CLASS C CLASS I
- -------------------------------------------------- --------------- --------------- -------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.50 9.50 9.50 9.67
- -------------------------------------------------- --------------- --------------- -------------- -----------------
Income from investment operations:
Net investment income (loss) -- (.04) (.04) --
- -------------------------------------------------- --------------- --------------- -------------- -----------------
Net realized and unrealized gain 1.62 1.58 1.59 1.47
- -------------------------------------------------- --------------- --------------- -------------- -----------------
Total from investment operations 1.62 1.54 1.55 1.47
- -------------------------------------------------- --------------- --------------- -------------- -----------------
Net asset value, end of period $11.12 11.04 11.05 11.14
- -------------------------------------------------- --------------- --------------- -------------- -----------------
TOTAL RETURN (NOT ANNUALIZED) 17.05% 16.21 16.32 15.20
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses absorbed by the Fund 1.48% 2.32 2.33 1.08
- -------------------------------------------------- --------------- --------------- -------------- -----------------
Net investment loss (.16)% (1.00) (1.01) (.05)
- -------------------------------------------------- --------------- --------------- -------------- -----------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses 2.26% 3.15 3.12 2.23
- -------------------------------------------------- --------------- --------------- -------------- -----------------
Net investment loss (.94)% (1.83) (1.80) (1.20)
- -------------------------------------------------- --------------- --------------- -------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net assets at end of period $4,596,000
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 72%
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions for the period ended November 30, 1996 was $.0555.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges. The
investment manager agreed to temporarily waive or absorb certain operating
expenses of the Fund. The Other Ratios to Average Net Assets are computed
without this expense waiver or absorption.
19
<PAGE> 20
TRUSTEES AND 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 KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
1-800-621-1048
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER ZURICH KEMPER INVESTMENTS, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
http://www.kemper.com
[RECYCLED LOGO]
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 - 2 (1/97) 1027550
Printed in the U.S.A. [KEMPER FUNDS LOGO]
