<PAGE> 1
Kemper Growth Fund
Semiannual Report to Shareholders
For the Period Ended
March 31, 1995
Seeking growth of capital through diversification
of investment securities having potential
for capital appreciation
(KEMPER LOGO)
<PAGE> 2
DEAR SHAREHOLDER:
We are pleased to provide you with an overview of the performance of your fund
for the six-month period ended March 31, 1995. In addition, following the over-
view is a question and answer interview with your fund's Portfolio Manager.
- ----------------------------
PERFORMANCE REVIEW
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Total Return Performance*
For the Six-Month Period Ended March 31, 1995
(unadjusted for any sales charge)
<S> <C>
Kemper Growth Fund A 7.47%
Kemper Growth Fund B 6.96%
Kemper Growth Fund C 7.03%
Lipper Growth Funds
Category Average 6.00%
- ----------------------------------------------------------
</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.
When comparing Kemper Growth Fund A to all other Growth funds in its Lipper**
category for the following time periods ended March 31, 1995, this fund ranked:
1-year, 389 of 498; 5-year, 59 of 229; 10-year, 47 of 136; 15-year, 44 of 98.
- ---------------------------------------
GENERAL ECONOMIC OVERVIEW
Throughout 1994, rising interest rates dominated most economic discussion and
served to dampen the performance of both the fixed-income and stock markets.
However, rates have now stabilized and the markets rebounded in the first
quarter of 1995, suggesting a growing comfort with the health of the economy.
Specifically, we believe that the economy is now growing at a moderate pace that
can be sustained. Higher interest rates--and we expect rates to continue to
creep up as the year progresses--appear to be having the effect of keeping
inflation under control. At the same time, rates have not risen so high or so
quickly to suggest a disruption of economic growth.
As long as long-term fixed-income markets are assured of low inflation,
increases in short-term rates should not hurt the performance of the bond
market. In fact, with inflation running at 3 percent or below, real (adjusted
for inflation) rates of return are attractive. In April, for example, a
five-year Treasury note offered a 3.98 percent real rate of
return--significantly higher than the post-World War II average real rate of
return of 1.40 percent. This relationship is a strong positive for fixed-income
investors.
------------------------------------------------------------
MOST MARKETS REBOUNDED IN THE FIRST QUARTER
Data show the 1994 and first-quarter 1995 comparative total returns for the
domestic and international equity and U.S. and non-U.S. bond markets.
------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1st Quarter 1995
---- ----------------
<S> <C>
1.31% 9.73%
8.06% 1.94%
-3.37% 4.68%
5.99% 14.44%
</TABLE>
1 Standard & Poor's 500, an unmanaged index of common stocks that is generally
considered representative of the U.S. stock market.
2 Morgan Stanley Capital International EAFE Index, an unmanaged index that is
generally considered a measure of international equities in 15 major world
markets excluding the U.S. and Canada.
3 Salomon Brothers U.S. Treasury Bond Index, a composite index of treasuries
with various maturities (unmanaged).
4 Salomon Brothers Non-U.S. Dollar World Government Bond Index, including the
performance of leading government bond markets excluding the U.S. (unmanaged).
While there are continuing opportunities for investors, it is important to
recognize that the economic expansion is several months into its cycle.
Industries such as housing and steel, which led the economy out of the
recession, cannot be expected to repeat the strong double-digit growth they
enjoyed in 1994. Now that such cyclical industries have experienced most of
their outperformance, we believe that investors' sights will shift to the
industries that produce more consistent earnings, such as consumer nondurables,
technology and selected capital goods.
Picking the right sectors to invest in will be the key challenge for equity
investors during the next few quarters.
Leading international economies are lagging the U.S. economy. Japan and Germany,
whose economies typically follow U.S. growth, are not as robust as in past
cycles. This phenomenon makes international investing very complex currently.
Moreover, conditions in emerging market countries underline the importance of
careful research and experience in understanding how these markets work.
We are calm about what has been described as a dollar crisis. While it's true
that the dollar has depreciated against the Japanese yen and many European
currencies, we note that the dollar has appreciated in value against the
currency of Canada and Mexico, two of our largest trading partners.
Political leadership also has some bearing on the progress of the economy
and the state of the financial markets. In the months preceding a presidential
election year, it has not been uncommon for incumbents to attempt to stimulate
growth. Given our Republican Congress and Demo-
1
<PAGE> 3
cratic President, however, we do not consider this a foregone conclusion as we
move closer to 1996.
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including a question-and-answer with your fund's
portfolio manager. Thank you for your continued support. We appreciate the
opportunity to serve your investment needs.
Sincerely,
/s/ Stephen B. Timbers
Stephen B. Timbers
Chief Investment and Executive Officer
April 10, 1995
Stephen Timbers is Chief Executive Officer and
is also Chief Investment Officer of Kemper
Financial Services, Inc. (KFS). KFS and its
affiliates manage approximately $60 billion in
[PHOTO] assets, including $42 billion in retail mutual
funds. Timbers is a graduate of Yale
University and holds a M.B.A. from Harvard
University.
* Total return measures net investment income and capital gain or loss from
portfolio investments, assuming reinvestment of all dividends. During the
period 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.
** Lipper Analytical Services, Inc. performance 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. Performance and rankings are historical and do not reflect future
performance.
2
<PAGE> 4
Q
&A
A PERFORMANCE REVIEW AND
AN INTERVIEW
WITH PORTFOLIO
MANAGER
BETH COTNER
Beth Cotner has been with Kemper Financial Services, Inc. (KFS) since 1984. She
is now a Senior Vice President of KFS and the Portfolio Manager of Kemper
Growth Fund. Mrs. Cotner graduated Phi Beta Kappa from Ohio State University and
earned her M.B.A. degree from George Washington University.
Q: The stock market appears to be stronger than six months ago. What has
changed?
A: During the second half of 1994, the U.S. economy continued to grow at a
faster pace than the Federal Reserve Board's target of 3.0%. This fueled
concerns about rising inflation and prompted the Fed to raise short-term
interest rates in November, the sixth rate hike of the year. The bond market
reacted negatively to the increase in rates and the stock market remained
nervous. However, when the Fed raised rates again in February, analysts and
investors were much more confident that the economy was indeed slowing,
inflation was not an immediate threat and interest rates would be substantially
more stable than they had been in 1994. As a result, we've seen strong rallies
in both the bond and stock markets.
Q: What sectors of the market performed the best during the period? Which
were the weakest?
A: Technology, although somewhat volatile, was very strong.
Telecommunication stocks such as ADC Telecommunications and Nokia Telecom, and
semiconductor stocks like Intel benefitted from strong sales in the U.S. and
abroad. Health care has been strong. In this sector, the Growth Fund is
primarily invested in large pharmaceutical and health care product companies
like Merck, Abbott Laboratories and Johnson & Johnson. Consumer product
companies like Coca-Cola, Philip Morris and Procter & Gamble have also done
well in recent months.
The weakest sectors during the past six months were cyclical stocks such as
home builders, paper, machine tools, retail and consumer electronics -- areas
that are more sensitive to higher interest rates. In the Growth Fund, hospital
management and specialty retail stocks were the poorest performers.
Q: Several adjustments were made to the fund's portfolio when you began
managing it last summer. How have these changes helped the fund?
A: Essentially, we've refined the "growth at the right price" strategy that
has been Kemper's hallmark for equity investing. The change has been a greater
emphasis on fundamental research and specific stock selection, as opposed to
sector allocation. Research has always been one of Kemper's strengths. But as
the market becomes increasingly global in nature, and more competitive, it will
become even more important. During the past six months we've improved the
overall quality of the portfolio, emphasizing large companies that are leaders
in their respective fields, and continued to broaden our diversification with
exposure to more industries.
The fund's performance relative to its peers has certainly improved. During the
first half of 1994, the fund underperformed its peer group, as tracked by
Lipper Analytical Services.* In contrast, the fund outperformed its Lipper peer
group average, as well as the S&P 500,** during the second half of the year.
This turnaround has continued into 1995, with the Growth Fund rising over 7%
during the first quarter. Class A shares rose by more than a dollar in net
asset value during the first quarter, more than offsetting the decline
experienced during all of 1994. While some of this turnaround is clearly a
reflection of changing market conditions, there is no question that our
emphasis on quality and broader diversification helped to reduce the downside
of market volatility. More importantly, we're confident that our revised
strategy can help contribute to more consistent performance over the long-term.
3
<PAGE> 5
Q: What kinds of stocks have you purchased during the past six months? What
stocks have been sold, and why?
A: We've been somewhat defensive, buying consumer products and financial
stocks that should do well in a slow growth environment. More recently, we've
also added to our retail holdings. This sector has generally underperformed
during the past year and valuation levels have once again become attractive.
Meanwhile, we've reduced or eliminated positions in several companies where the
ability to maintain earnings growth or compete in a slower economy have become
questionable. The greatest reductions have been in technology. After several
strong months, many of these stocks appear to be fully valued, and one has to
wonder how long earnings growth can continue. The Growth Fund still has about
18% of its assets in technology, but these positions are based on thorough
research, strong balance sheets and a belief that they have an advantage over
their competitors going forward.
Q: How has the falling value of the dollar relative to other currencies
affected the fund's investment portfolio?
A: Although the Growth Fund's investment in international stocks is limited,
many of the companies in the portfolio have multinational exposure. With a
number of European countries and Japan recovering from recessions, the
increased affordability of American products has boosted sales. Multinational
companies, such as Coca-Cola, Johnson & Johnson and Microsoft, should benefit
from a weak dollar in terms of foreign currency translations in 1995. So we've
actually been able to participate in the upside of this situation.
Q: What is your outlook for the rest of 1995?
A: Given the rapid increases seen during the first quarter, a near-term
pullback would not be surprising. But overall, our outlook remains very
positive. We expect the economy to continue its gradual transition from rapid
growth to a "soft landing" -- slower growth, but not a recession. This
environment should be favorable for traditional growth stocks, as investors are
drawn to the consistent earnings these companies provide.
* Lipper Analytical Services, Inc. performance 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. Performance and rankings are historical and do not
reflect future performance.
** The Standard & Poor's 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market.
Source is Towers Data Systems.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS
March 31, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
------------ ----------
<S> <C> <C>
COMMON STOCKS
CHEMICALS-2.7%
- ----------------------------------------------------------------
Air Products & Chemicals 425,000 $ 22,153
- ----------------------------------------------------------------
Monsanto Company 353,000 28,328
- ----------------------------------------------------------------
Morton International, Inc. 335,000 9,715
- ----------------------------------------------------------------
60,196
COMMUNICATIONS AND MEDIA-4.7%
- ----------------------------------------------------------------
American Telephone & Telegraph Company 868,900 44,966
- ----------------------------------------------------------------
Capital Cities/ABC Inc. 169,000 14,914
- ----------------------------------------------------------------
DDI Corp. 212 1,840
- ----------------------------------------------------------------
LM Ericsson "B" 53,000 3,297
- ----------------------------------------------------------------
(a)LDDS Metromedia Communications 300,000 7,013
- ----------------------------------------------------------------
Nokia 16,234 2,379
- ----------------------------------------------------------------
Reed International PLC 150,000 1,891
- ----------------------------------------------------------------
Singapore Press Holdings 48,000 813
- ----------------------------------------------------------------
(a)Technology Resources Industries 215,200 616
- ----------------------------------------------------------------
(a)Telewest Communications 116,000 323
- ----------------------------------------------------------------
(a)Tellabs, Inc. 451,800 26,317
- ----------------------------------------------------------------
Vodafone Group PLC 679,503 2,201
- ----------------------------------------------------------------
Wolters Kluwer N.V. 1,250 97
- ----------------------------------------------------------------
106,667
COMPUTER SOFTWARE-7.4%
- ----------------------------------------------------------------
Adobe Systems, Inc. 315,000 15,593
- ----------------------------------------------------------------
(a)Compuware 596,000 22,052
- ----------------------------------------------------------------
First Data Corporation 348,000 18,052
- ----------------------------------------------------------------
First Financial Management Corporation 550,000 39,737
- ----------------------------------------------------------------
General Motors Corporation, "E" 540,000 20,993
- ----------------------------------------------------------------
(a)Informix Corporation 300,000 10,312
- ----------------------------------------------------------------
(a)Microsoft Corporation 383,000 27,241
- ----------------------------------------------------------------
Reynolds & Reynolds 500,000 13,750
- ----------------------------------------------------------------
167,730
COMPUTER SYSTEMS-2.6%
- ----------------------------------------------------------------
Hewlett-Packard 225,000 27,084
- ----------------------------------------------------------------
(a)Silicon Graphics, Inc. 907,400 32,213
- ----------------------------------------------------------------
59,297
CONSTRUCTION-.5%
- ----------------------------------------------------------------
Fluor Corporation 240,000 11,580
- ----------------------------------------------------------------
Road Builder Holdings 136,800 440
- ----------------------------------------------------------------
Wai Kee Holdings,
with warrants expiring 1996 1,602,000 260
- ----------------------------------------------------------------
12,280
CONSUMER PRODUCTS AND SERVICES-21.8%
- ----------------------------------------------------------------
Campbell Soup Company 600,000 29,025
- ----------------------------------------------------------------
Coca-Cola Co. 840,000 47,460
- ----------------------------------------------------------------
Colgate-Palmolive Company 350,000 23,100
- ----------------------------------------------------------------
ConAgra, Inc. 681,000 22,558
- ----------------------------------------------------------------
CPC International Inc. 270,000 14,614
- ----------------------------------------------------------------
(a)CUC International Inc. 452,200 17,579
- ----------------------------------------------------------------
Duracell International Inc. 259,300 11,604
- ----------------------------------------------------------------
(a)Franklin Quest Inc. 680,000 21,420
- ----------------------------------------------------------------
Gillette Company 305,000 24,896
- ----------------------------------------------------------------
Greencore Group PLC 125,000 866
- ----------------------------------------------------------------
Manpower Inc. 1,080,000 34,695
- ----------------------------------------------------------------
McDonald's Corp. 600,000 20,475
- ----------------------------------------------------------------
Nabisco Holdings 118,900 3,403
- ----------------------------------------------------------------
Nestle S.A. 1,300 1,276
- ----------------------------------------------------------------
<CAPTION>
Number
of Shares Value
------------ ----------
<S> <C> <C>
- ----------------------------------------------------------------
Newell Company 1,350,000 $ 34,425
- ----------------------------------------------------------------
PepsiCo 250,000 9,750
- ----------------------------------------------------------------
Philip Morris Companies Inc. 652,900 42,602
- ----------------------------------------------------------------
Procter & Gamble Company 720,000 47,700
- ----------------------------------------------------------------
Sara Lee Corporation 975,000 25,472
- ----------------------------------------------------------------
Scott Paper Co. 100,000 8,937
- ----------------------------------------------------------------
Seagram Company Ltd. 365,000 11,589
- ----------------------------------------------------------------
Service Corporation International 840,000 23,520
- ----------------------------------------------------------------
Unilever N.V. 7,700 1,016
- ----------------------------------------------------------------
UST, Incorporated 400,000 12,700
- ----------------------------------------------------------------
490,682
DRUGS AND HEALTHCARE-17.9%
- ----------------------------------------------------------------
Abbott Laboratories 1,300,000 46,313
- ----------------------------------------------------------------
Astra AB 58,000 1,542
- ----------------------------------------------------------------
Columbia/HCA Healthcare 600,000 25,800
- ----------------------------------------------------------------
(a)IDEXX Laboratories 288,900 11,989
- ----------------------------------------------------------------
Gambro AB 76,000 887
- ----------------------------------------------------------------
Glaxo Holdings PLC 124,000 1,426
- ----------------------------------------------------------------
Integrated Health Services 457,000 17,309
- ----------------------------------------------------------------
Johnson & Johnson 879,200 52,312
- ----------------------------------------------------------------
Eli Lilly & Co. 375,000 27,422
- ----------------------------------------------------------------
(a)Mid Atlantic Medical Services 416,200 9,208
- ----------------------------------------------------------------
Medtronic, Inc. 540,000 37,463
- ----------------------------------------------------------------
Merck & Company Inc. 1,000,000 42,625
- ----------------------------------------------------------------
Pfizer, Inc. 166,100 14,243
- ----------------------------------------------------------------
Roche Holding AG 488 2,834
- ----------------------------------------------------------------
(a)R.P. Scherer Corp. 250,000 12,563
- ----------------------------------------------------------------
Schering-Plough Corporation 422,400 31,416
- ----------------------------------------------------------------
United Healthcare Corporation 340,000 15,895
- ----------------------------------------------------------------
U.S. Healthcare Inc. 300,000 13,275
- ----------------------------------------------------------------
(a)Value Health Inc. 445,000 17,021
- ----------------------------------------------------------------
Warner Lambert Co. 290,500 22,732
- ----------------------------------------------------------------
404,275
ENERGY AND RELATED SERVICES-2.1%
- ----------------------------------------------------------------
British Petroleum Co. 345,641 2,410
- ----------------------------------------------------------------
Enron Corp. 902,400 29,779
- ----------------------------------------------------------------
Manweb PLC 105,000 1,096
- ----------------------------------------------------------------
Mobil Corporation 140,000 12,968
- ----------------------------------------------------------------
Repsol S.A. 57,500 1,638
- ----------------------------------------------------------------
47,891
ENTERTAINMENT AND GAMING-3.5%
- ----------------------------------------------------------------
(a)Genting Berhad 72,000 648
- ----------------------------------------------------------------
PolyGram, N.V. 24,100 1,346
- ----------------------------------------------------------------
(a)Promus Companies, Inc. 520,000 19,500
- ----------------------------------------------------------------
Tabcorp Holdings Ltd. 368,600 746
- ----------------------------------------------------------------
Viacom International Inc. "B" 417,593 18,687
- ----------------------------------------------------------------
Walt Disney Company 690,000 36,829
- ----------------------------------------------------------------
77,756
FINANCIAL SERVICES AND REAL
ESTATE-10.8%
- ----------------------------------------------------------------
American International Group Inc. 215,000 22,414
- ----------------------------------------------------------------
Boatmen's Bancshares Inc. 873,900 26,435
- ----------------------------------------------------------------
Conseco, Inc. 115,300 4,598
- ----------------------------------------------------------------
DBS Land Ltd. 199,000 533
- ----------------------------------------------------------------
Equity Residential Properties 365,000 9,490
- ----------------------------------------------------------------
</TABLE>
5
<PAGE> 7
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
------------ ----------
<S> <C> <C>
- ----------------------------------------------------------------
First USA Inc. 672,800 $ 28,258
- ----------------------------------------------------------------
General Re Corp. 252,300 33,304
- ----------------------------------------------------------------
Kansas City Southern Industries 359,700 14,613
- ----------------------------------------------------------------
Keppel Corporation Limited 230,000 1,857
- ----------------------------------------------------------------
Lloyds Bank PLC 96,000 966
- ----------------------------------------------------------------
MBNA Corporation 1,270,100 36,833
- ----------------------------------------------------------------
MGIC Investment Corporation 747,500 30,461
- ----------------------------------------------------------------
NationsBank Corporation 500,000 25,375
- ----------------------------------------------------------------
Sanyo Shinpan Finance Co. 17,900 1,413
- ----------------------------------------------------------------
Sumitomo Bank Ltd. 88,000 1,884
- ----------------------------------------------------------------
Sumitomo Corporation 141,000 1,289
- ----------------------------------------------------------------
Veba, A.G. 7,900 2,872
- ----------------------------------------------------------------
242,595
MANUFACTURING-8.7%
- ----------------------------------------------------------------
Aalberts Industries N.V. 18,900 1,001
- ----------------------------------------------------------------
Amada Co., Ltd. 209,000 2,228
- ----------------------------------------------------------------
AMP, Inc. 550,000 19,800
- ----------------------------------------------------------------
Atlas Copco AB 115,000 1,389
- ----------------------------------------------------------------
Boeing Co. 185,600 9,999
- ----------------------------------------------------------------
Corning Inc. 700,000 25,200
- ----------------------------------------------------------------
Emerson Electric Co. 453,200 30,138
- ----------------------------------------------------------------
General Electric Company 801,600 43,386
- ----------------------------------------------------------------
W.W. Grainger Inc. 215,000 13,545
- ----------------------------------------------------------------
Honda Motors Co. Ltd. 140,000 2,366
- ----------------------------------------------------------------
Loral Corp. 290,300 12,338
- ----------------------------------------------------------------
Matsushita Electric Industrial Co. Ltd. 117,000 1,896
- ----------------------------------------------------------------
Nucor Corporation 190,000 10,687
- ----------------------------------------------------------------
Omron Corp. 90,000 1,781
- ----------------------------------------------------------------
Sharp Corporation 123,000 2,007
- ----------------------------------------------------------------
Tokyo Electron Ltd. 97,000 2,964
- ----------------------------------------------------------------
TriMas Corporation 147,500 3,282
- ----------------------------------------------------------------
(a)Universal Robina Corporation 63,200 36
- ----------------------------------------------------------------
WMX Technologies 450,000 12,375
- ----------------------------------------------------------------
196,418
RETAILING AND DISTRIBUTION-8.8%
- ----------------------------------------------------------------
Koninklijke Ahold 25,000 869
- ----------------------------------------------------------------
Alco Standard Corporation 440,000 31,900
- ----------------------------------------------------------------
(a)AnnTaylor Stores Corp. 397,900 14,822
- ----------------------------------------------------------------
Carrefour S.A. 4,100 2,071
- ----------------------------------------------------------------
(a)General Nutrition Centers 272,400 7,559
- ----------------------------------------------------------------
Hagemeyer N.V. 12,000 1,012
- ----------------------------------------------------------------
Home Depot, Inc. 1,091,100 48,281
- ----------------------------------------------------------------
Keiyo Company Ltd. 65,000 749
- ----------------------------------------------------------------
<CAPTION>
Number
of Shares
or Principal
Amount Value
------------ ----------
<S> <C> <C>
- ----------------------------------------------------------------
Marui Co., Ltd. 91,000 $ 1,443
- ----------------------------------------------------------------
Office Depot, Inc. 495,300 12,073
- ----------------------------------------------------------------
Starbucks Corporation 605,000 14,520
- ----------------------------------------------------------------
Tesco PLC 95,000 416
- ----------------------------------------------------------------
Viking Office Products 426,200 13,212
- ----------------------------------------------------------------
Wal-Mart Stores Inc. 1,892,700 48,263
- ----------------------------------------------------------------
197,190
SEMICONDUCTORS AND NETWORKING-5.0%
- ----------------------------------------------------------------
(a)Cisco Systems, Inc. 230,000 8,769
- ----------------------------------------------------------------
Intel Corporation 150,000 12,731
- ----------------------------------------------------------------
Kyocera Corporation 45,000 3,365
- ----------------------------------------------------------------
Linear Technology Corp. 375,000 21,000
- ----------------------------------------------------------------
Motorola, Inc. 395,000 21,577
- ----------------------------------------------------------------
(a)Solectron Corporation 336,700 9,848
- ----------------------------------------------------------------
(a)3Com Corporation 608,800 34,473
- ----------------------------------------------------------------
111,763
TRANSPORTATION-1.4%
- ----------------------------------------------------------------
Conrail Inc. 142,000 7,970
- ----------------------------------------------------------------
TNT Ltd. Holdings 512,100 672
- ----------------------------------------------------------------
Wisconsin Central Transportation Corp. 473,400 22,546
- ----------------------------------------------------------------
31,188
- ----------------------------------------------------------------
TOTAL COMMON STOCKS-97.9%
(Cost: $1,906,514) 2,205,928
- ----------------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield-6.08% to 6.27%
Due-April and May 1995
- ----------------------------------------------------------------
ConAgra, Inc. $ 11,000 10,913
- ----------------------------------------------------------------
Cox Enterprises 8,000 7,967
- ----------------------------------------------------------------
Finova Capital Corp. 10,115 10,040
- ----------------------------------------------------------------
International Paper Company 12,000 11,978
- ----------------------------------------------------------------
J.V. Receivables Corporation 5,000 5,945
- ----------------------------------------------------------------
Unocal Corp. 2,800 2,799
- ----------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS-2.2%
(Cost: $49,643) 49,642
- ----------------------------------------------------------------
TOTAL INVESTMENTS-100.1%
(Cost: $1,956,157) 2,255,570
- ----------------------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS-(.1)% (2,966)
- ----------------------------------------------------------------
NET ASSETS-100% $2,252,604
- ----------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security
Based on the cost of investments of $1,956,157,000 for federal income tax
purposes at March 31, 1995, the aggregate gross unrealized appreciation was
$326,980,000, the aggregate gross unrealized depreciation was $27,567,000 and
the net unrealized appreciation of investments was $299,413,000.
See accompanying Notes to Financial Statements.
6
<PAGE> 8
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
- ------------------------------------------------------
Investments, at value
(Cost: $1,956,157) $2,255,570
- ------------------------------------------------------
Cash 279
- ------------------------------------------------------
Receivable for:
Fund shares sold 817
- ------------------------------------------------------
Investments sold 8,859
- ------------------------------------------------------
Dividends and interest 3,799
- ------------------------------------------------------
Total assets 2,269,324
- ------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------
Payable for:
Fund shares redeemed 3,639
- ------------------------------------------------------
Investments purchased 10,318
- ------------------------------------------------------
Management fee 1,015
- ------------------------------------------------------
Distribution services fee 436
- ------------------------------------------------------
Administrative services fee 439
- ------------------------------------------------------
Custodian and transfer agent fees
and related expenses 794
- ------------------------------------------------------
Other 79
- ------------------------------------------------------
Total liabilities 16,720
- ------------------------------------------------------
Net assets $2,252,604
- ------------------------------------------------------
ANALYSIS OF NET ASSETS
- ------------------------------------------------------
Excess of amounts received from
issuance of shares over amounts
paid on redemptions of shares
on account of capital $1,930,990
- ------------------------------------------------------
Accumulated net realized loss on
sales of investments (2,371)
- ------------------------------------------------------
Unrealized appreciation of investments 299,413
- ------------------------------------------------------
Undistributed net investment income 24,572
- ------------------------------------------------------
Net assets applicable to shares
outstanding $2,252,604
- ------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per
share ($1,552,901 divided by 113,352
shares outstanding) $13.70
- ------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of net
asset value or 5.75% of offering price) $14.54
- ------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales
charge) per share ($696,645
divided by 51,300 shares outstanding) $13.58
- ------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price per
share ($3,058 divided by 225
shares outstanding) $13.59
- ------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six months ended March 31, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
- ------------------------------------------------------
Dividends $ 15,387
- ------------------------------------------------------
Interest 2,513
- ------------------------------------------------------
Total investment income 17,900
- ------------------------------------------------------
EXPENSES
- ------------------------------------------------------
Management fee 5,992
- ------------------------------------------------------
Distribution services fee 2,531
- ------------------------------------------------------
Administrative services fee 2,549
- ------------------------------------------------------
Custodian and transfer agent
fees and related expenses 5,122
- ------------------------------------------------------
Professional fees 35
- ------------------------------------------------------
Reports to shareholders 167
- ------------------------------------------------------
Trustees' fees and other 39
- ------------------------------------------------------
Total expenses 16,435
- ------------------------------------------------------
Net investment income 1,465
- ------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
- ------------------------------------------------------
Net realized gain on sales of investments 9,597
- ------------------------------------------------------
Net change in balance of unrealized
appreciation of investments 144,532
- ------------------------------------------------------
Net gain on investments 154,129
- ------------------------------------------------------
Net increase in net assets resulting
from operations $ 155,594
- ------------------------------------------------------
</TABLE>
7
<PAGE> 9
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
Six months
ended Year ended
March 31, September 30,
1995 1994
---------- -------------
<S> <C> <C>
OPERATIONS
- --------------------------------------------------------------
Net investment income $ 1,465 2,123
- --------------------------------------------------------------
Net realized gain on
investments 9,597 42,600
- --------------------------------------------------------------
Net change in unrealized
appreciation 144,532 (221,438)
- --------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 155,594 (176,715)
- --------------------------------------------------------------
Net equalization credits
(charges) 375 (2,595)
- --------------------------------------------------------------
Distribution from net
realized gain on
investment transactions (33,211) (113,892)
- --------------------------------------------------------------
Net (decrease) increase from
capital share transactions (126,131) 722,218
- --------------------------------------------------------------
Total (decrease) increase in
net assets (3,373) 429,016
- --------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------
Beginning of period 2,255,977 1,826,961
- --------------------------------------------------------------
End of period (including
undistributed net investment
income of $24,572 in 1995
and $22,732 in 1994) $2,252,604 2,255,977
- --------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
The Kemper Growth Fund currently offers three classes of shares. Class A shares
are sold to investors subject to an initial sales charge. Class B shares are
sold without an initial sales charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales charge payable upon certain
redemptions. Class B shares automatically convert to Class A shares six years
after issuance. Class C shares are sold without an initial or a contingent
deferred sales charge but are subject to higher ongoing expenses than Class A
shares and do not convert into another class. The Fund may offer Class I shares
(none sold at March 31, 1995) to a limited group of investors which are not
subject to initial or contingent deferred sales charges and have lower ongoing
expenses than other classes. Each share represents an identical interest in
the investments of the Fund and has the same rights.
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 amortization
of money market instrument premium and discount. Realized gains and losses from
investment transactions are reported on an identified cost basis.
8
<PAGE> 10
Realized and unrealized gains and losses on financial futures, options and
forward foreign currency contracts are included in net realized and unrealized
gain (loss) on investments, as appropriate.
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 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 AND DIVIDENDS TO SHAREHOLDERS
The Fund has complied with the special provisions of the Internal Revenue Code
available to investment companies for the six months ended March 31, 1995.
Differences in dividends per share are due to different class expenses.
Dividends payable to its shareholders are recorded by the Fund on the
ex-dividend date.
Distributions 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 Kemper Financial Services, Inc. (KFS)
and pays a management fee at an annual rate of .58% of the first $250 million of
average daily net assets declining gradually to .42% of average daily net assets
in excess of $12.5 billion. The Fund incurred a management fee of $5,992,000 for
the six months ended March 31, 1995.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
The Fund has an underwriting and distribution services agreement with Kemper
Distributors, Inc. (KDI). Before February 1, 1995, KFS was the Fund's principal
underwriter and distributor. As principal underwriter for the Fund, KDI (as
successor to KFS) retained commissions of $57,000 for the six months ended
March 31, 1995 for sales of Class A shares, after allowing $1,188,000 as
commissions to firms of which $124,000 was paid to firms affiliated with KDI.
For distribution services, the Fund pays KDI a fee of .75% of average daily net
assets of the Class B and Class C shares. Pursuant to the agreement, KDI enters
into related selling group agreements with various firms that provide
distribution services to investors. KDI compensates these firms at various
rates for sales of Class B and Class C shares. During the six months ended
March 31, 1995, the Fund incurred a distribution services fee for Class B and
Class C shares of $2,531,000, and KDI paid $1,613,000 for commissions and
distribution fees to firms, including $156,000 to firms affiliated with KDI. In
addition, KDI received $1,109,000 of contingent deferred sales charges.
ADMINISTRATIVE SERVICES AGREEMENT
The Fund has an administrative services agreement with KDI. Before February 1,
1995, KFS was the Fund's administrator. For providing information and
administrative services to shareholders, the Fund pays KDI a fee at an annual
rate of up to .25% of average daily net assets. 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. For the six
months ended March 31, 1995, the Fund incurred an administrative services fee of
$2,549,000 and KDI (as successor to KFS) paid $2,564,000 to firms, including
$344,000 that was paid to firms affiliated with KDI.
CUSTODIAN AND TRANSFER AGENT AGREEMENT
The Fund has a custodian agreement and a transfer agent agreement with Investors
Fiduciary Trust Company (IFTC), which was 50% owned by KFS until January 31,
1995, when KFS completed the sale of IFTC to a third party. For the six months
ended March 31, 1995, the Fund incurred custodian and transfer agent fees of
$3,914,000 (excluding related expenses). Pursuant to a services agreement with
IFTC, Kemper Service Company (KSvC), an affiliate of KFS, is the shareholder
service agent of the Fund. For the six months ended March 31, 1995, IFTC
remitted shareholder service fees of $3,845,000 to KSvC.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the six months ended March 31, 1995, the Fund made no payments to its
officers and incurred trustees' fees of $29,000 to independent trustees.
4. INVESTMENT TRANSACTIONS
For the six months ended March 31, 1995, investment transactions (excluding
short term instruments) are as follows (in thousands):
<TABLE>
<S> <C>
Purchases $616,295
- ------------------------------------------------------------
Proceeds from sales 768,982
- ------------------------------------------------------------
</TABLE>
9
<PAGE> 11
5. CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund (in
thousands):
<TABLE>
<CAPTION>
Six months ended Year ended
March 31, September 30,
1995 1994
------------------- -------------------
Shares Amount Shares Amount
------- --------- ------- ---------
<S> <C> <C> <C> <C>
Shares sold:
Class A 11,104 $ 140,544 20,694 $ 275,869
- -----------------------------------------------------------------
Class B 7,103 91,793 4,577 58,469
- -----------------------------------------------------------------
Class C 135 1,729 105 1,321
- -----------------------------------------------------------------
Shares issued in
reinvestment of
dividends:
Class A 1,642 20,619 8,047 108,304
- -----------------------------------------------------------------
Class B 731 9,131 -- --
- -----------------------------------------------------------------
Class C 2 29 -- --
- -----------------------------------------------------------------
Shares redeemed:
Class A (22,315) (284,201) (41,886) (561,277)
- -----------------------------------------------------------------
Class B (8,188) (105,591) (4,400) (56,293)
- -----------------------------------------------------------------
Class C (14) (184) (2) (30)
- -----------------------------------------------------------------
Conversion of shares:
Class A 1,034 13,341 968 12,303
- -----------------------------------------------------------------
Class B (1,040) (13,341) (970) (12,303)
- -----------------------------------------------------------------
Shares issued in
acquisition(a):
Class A -- -- 14,913 195,154
- -----------------------------------------------------------------
Class B -- -- 53,485 700,701
- -----------------------------------------------------------------
Net (decrease) increase
from capital share
transactions $(126,131) $ 722,218
- -----------------------------------------------------------------
</TABLE>
(a) On May 27, 1994, the Fund acquired the assets of Kemper Investment
Portfolios -- Growth Portfolio in a tax-free exchange.
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------
Six months
ended
March 31, Year ended September 30,
1995 1994 1993 1992 1991
---------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $12.93 15.33 13.09 13.14 9.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .01 .01 .03 .06
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments and foreign currency transactions .91 (1.41) 2.29 .71 4.57
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .95 (1.40) 2.30 .74 4.63
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income -- -- .03 .05 .11
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments .18 1.00 .03 .74 .38
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends .18 1.00 .06 .79 .49
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.70 12.93 15.33 13.09 13.14
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 7.47 (9.39) 17.60 5.55 54.13
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.17 1.09 1.00 1.03 1.04
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .45 .24 .06 .32 .59
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
---------------------------- ----------------------------
May 31, May 31,
Six months 1994 Six months 1994
ended to ended to
March 31, September 30, March 31, September 30,
1995 1994 1995 1994
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $12.88 13.10 12.88 13.09
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.03) (.03) (.02) (.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments and foreign currency transactions .91 (.19) .91 (.19)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .88 (.22) .89 (.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain on investments .18 -- .18 --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.58 12.88 13.59 12.88
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 6.96 (1.68) 7.03 (1.60)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 2.21 2.11 1.98 2.09
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.59) (.76) (.32) (.67)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six months
ended
March 31, Year ended September 30,
1995 1994 1993 1992 1991
---------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA FOR ALL CLASSES:
Net assets at end of period (in thousands) $2,252,604 2,255,977 1,826,961 1,419,292 613,245
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 58 115 139 83 143
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Ratios have been determined on an annualized basis. Total return is not
annualized and does not reflect the effect of any sales charges.
11
<PAGE> 13
(KEMPER LOGO)
KEMPER FINANCIAL SERVICES, INC.
120 South LaSalle Street
Chicago, IL 60603
KEMPER GROWTH FUND
Trustees Officers
STEPHEN B. TIMBERS C. BETH COTNER
President and Trustee Vice President
DAVID W. BELIN JOHN E. PETERS
Trustee Vice President
LEWIS A. BURNHAM PHILIP J. COLLORA
Trustee Vice President and
Secretary
DONALD L. DUNAWAY
Trustee CHARLES F. CUSTER
Vice President and
ROBERT B. HOFFMAN Assistant Secretary
Trustee
JEROME L. DUFFY
DONALD R. JONES Treasurer
Trustee
ELIZABETH C. WERTH
DAVID B. MATHIS Assistant Secretary
Trustee
WILLIAM P. SOMMERS
Trustee
- -----------------------------------------------------------
Legal Counsel Custodian and Transfer Agent
VEDDER, PRICE, KAUFMAN INVESTORS FIDUCIARY
& KAMMHOLZ TRUST COMPANY
222 North LaSalle Street 127 West 10th Street
Chicago, IL 60601 Kansas City, MO 64105
Shareholder Service Agent
KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
800-621-1048
Investment Manager
KEMPER FINANCIAL SERVICES, INC.
Principal Underwriter
KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street
Chicago, IL 60603
(LOGO)
Printed on recycled paper.
This report is not to be distributed unless preceded
KGF-3 (5/95) or accompanied by a Kemper Equity Funds prospectus.
238450
Printed in the U.S.A.
