<PAGE> 1
Kemper Total Return Fund
Semiannual Report to Shareholders
For the Period Ended
April 30, 1995
Seeking the highest total return,
a combination of income and capital appreciation,
consistent with reasonable risk
[KEMPER MUTUAL FUNDS 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 April 30, 1995. In addition, following the
economic overview is a question and answer interview with your fund's Portfolio
Manager.
- - ----------------------------
PERFORMANCE REVIEW
<TABLE>
- - ----------------------------------------------------------
Total Return Performance*
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1995
(UNADJUSTED FOR ANY SALES CHARGE)
<S> <C>
Kemper Total Return Fund A 5.95%
Kemper Total Return Fund B 5.47%
Kemper Total Return Fund C 5.73%
Lipper Balanced Funds
Category Average** 6.31%
- - ----------------------------------------------------------
</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 Total Return Fund A to all other Balanced funds in its
Lipper** category for the following time periods ended April 30, 1995, this fund
ranked:
<TABLE>
<S> <C> <C> <C>
1-YEAR 5-YEAR 10-YEAR 15-YEAR
151 of 167 20 of 60 15 of 28 13 of 25
</TABLE>
- - --------------------------------------
GENERAL ECONOMIC OVERVIEW
Comfortable with the pace of economic growth and the level of interest rates,
investors enjoyed generally positive performance in both the fixed-income and
stock markets in the first five months of 1995. But as we enter the summer
months, we are seeing a decided weakening in the economy and heightened
uncertainty.
What effect has the recent economic growth had on price inflation? Have higher
interest rates slowed the economy so much that a recession is now a true
threat--and will the Federal Reserve Board now reverse itself and start to ease
rates? Of course, these are the questions that only time will answer. At Kemper,
we believe that economic growth in the second quarter will be flat or possibly
even negative. Such a scenario is more severe than the press-heralded "soft
landing" and could conceivably set the scene for lower interest rates. At this
point--before the release of second quarter data--we believe we have seen only
signs of a slowdown, not a recession. We think that the Fed is not likely to
alter direction quickly.
Against this backdrop, we believe that the opportunities for investors will be
concentrated in high quality investments. Companies can no longer count on the
economy to provide an above average earnings boost. Rather, stocks that have
proven themselves with a pattern of consistent earnings are likely to attract
investor support. Specifically, industries that produce more consistent
earnings, such as consumer nondurables, technology and selected capital goods
can be expected to do well. Picking the right sectors to invest in will be the
key challenge for equity investors during the next few quarters.
We look for the fixed-income markets to continue their strong performance as
they tend to do well during periods of slow growth and low inflation.
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 Democratic President, however, we do
not consider this a foregone conclusion as we move closer to 1996.
1
<PAGE> 3
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including an interview with your fund's portfolio
manager. Thank you for your continued support. We appreciate the opportunity to
serve your investment needs.
Sincerely,
Stephen B. Timbers
Chief Investment and Executive Officer
June 13, 1995
<TABLE>
<S> <C>
Stephen Timbers is Chief Executive Officer and
is also Chief Investment Officer of Kemper
Financial Services, Inc. (KFS). KFS and its
[PHOTO] affiliates manage approximately $60 billion in
assets, including $42 billion in retail mutual
funds. Timbers is a graduate of Yale
University and holds an M.B.A. from Harvard
University.
</TABLE>
* 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
AN INTERVIEW
WITH PORTFOLIO
MANAGER
GARY LANGBAUM
Gary Langbaum has been with Kemper Financial Service, Inc. (KFS) since
1988. He is now a Senior Vice President of KFS and Vice President and
Portfolio Manager of Kemper Total Return Fund. Prior to his new
[PHOTO] position, Mr. Langbaum was Kemper's director of equity research and a
chartered financial analyst with 25 years of experience in equity
research and securities analysis. He received his bachelor's degree
and completed his master's of business administration coursework from
the University of Maryland.
Q: GARY, YOU'VE BEEN MANAGING THE PORTFOLIO SINCE FEBRUARY. WHAT DO
SHAREHOLDERS NEED TO KNOW ABOUT YOUR PORTFOLIO MANAGEMENT STYLE AND
HOW IT MIGHT AFFECT THE FUND?
A: We believe that investors are in the Kemper Total Return Fund because
they're relatively conservative. They want a fund that gives them exposure to
the equity market but which will be less aggressive than a pure equity fund. At
the same time, they want a reasonable yield and growth in the dividend income
they're earning.
Our six-month return of 5.95 percent represents a good short-term performance,
but I'd like to stress that it's not because we swung for the fences. We
accomplished it by investing in conservative growth companies that are familiar
to many consumers. Also, the bond market rally contributed to performance.
Q: WHAT SPECIFIC CHANGES WERE MADE IN THE LAST SIX MONTHS?
A: As we explained in a special communication that was mailed to
shareholders in April, we have adopted a target asset allocation. The fund is
not required to maintain any specific allocation. However, from February to the
end of April, our goal was to invest approximately 60 percent of the portfolio
in stocks and 40 percent in bonds. Within those two basic allocations are
several attractive investment opportunities that helped the fund achieve
diversification and reduce volatility. As a general guide, our stock holdings
included 55 percent U.S. growth stocks and 5 percent international stocks. Our
total bond holdings were comprised of government bonds (15 percent), corporate
bonds (10 percent), high yield bonds (10 percent) and international bonds (5
percent).
We review the target allocation on an ongoing basis, and it will change as
opportunities arise.
Q: BOTH THE BOND AND EQUITY MARKETS HAVE BEEN UP SINCE FEBRUARY. WHAT
OPPORTUNITIES DID THAT KIND OF ENVIRONMENT PRESENT FOR A
BALANCED FUND LIKE KEMPER TOTAL RETURN FUND?
A: When the markets are linked, as they have been, the bond portion of
the portfolio is going to result in less volatility than you'd have in an
all-stock portfolio and, of course, there's a higher income payout. Considering
what we got with that exposure to bonds -- less volatility and more income --
our year-to-date performance was only modestly less than a pure equity fund.
Overall, it was an excellent environment for five out of the six components of
the portfolio: The domestic equity portion of the fund benefited from the
performance of individual large capitalization stocks in our leading sectors of
technology and consumer nondurables. The domestic bond portion, which includes
governments, corporates and high yields, benefited from the bond market rally,
and the global bond component benefited from favorable currency gains as well
as appreciation. Only the 5 percent of the portfolio in international equities
did not contribute, and by April international markets were rebounding as well.
Our decision in the spring to move away from high yield bonds in favor of
increased exposure to government and corporate bonds helped reduce volatility.
Q: IN ADDITION TO COMMITTING TO A BROADER INVESTMENT ACROSS SEVERAL BASIC
ASSET CLASSES, YOU'VE ALSO MADE SEVERAL ADJUSTMENTS TO THE INDIVIDUAL
HOLDINGS IN THE DOMESTIC STOCK PORTFOLIO. WOULD YOU EXPLAIN SOME OF
THESE CHANGES?
A: Yes, we have taken steps to reduce the number of small positions we
held as well as the number of stocks that were
3
<PAGE> 5
difficult to trade. Proceeds from these sales were reinvested into larger
capitalization stocks, which tend to be less volatile.
For example, technology stocks have performed well and certainly contributed to
performance. Within that industry, we eliminated our position in Compuware, a
less known computer software company with fundamental issues yet to resolve,
and expanded our position in Microsoft. Microsoft, of course, is a software
provider that's a household name. We bought a large block of the stock in
February in the mid-60s and as of early May it was trading in the high 80s.
We are probably one of the most conservative balanced funds in the industry
today. If you look at the balanced fund overview published by Morningstar
Mutual Funds and dated April 14, 1995, you'll see that 24 percent of the
average fund's portfolio is invested in mid- and small capitalization stocks
and 7 percent is invested in foreign stocks. The remaining 69 percent is
invested in stocks in the Standard & Poor's 500+, which are larger companies.
By contrast, 90 percent of Kemper Total Return Fund's equity portfolio is
invested in S&P 500 stocks, 5 percent in mid- and small cap and 5 percent in
international. So, this fund should be exposed to less volatility.
Q: DO YOU HAVE ANY REGRETS ABOUT DECISIONS MADE IN THE LAST SEVERAL
MONTHS?
A: Sure. Retailing and health care were two industries in which we scaled
back our smaller cap positions initially. In retrospect, we might have been
better off eliminating them -- and a few larger cap companies -- altogether.
Q: WHAT ARE YOU EXPECTING OF THE NEXT SEVERAL MONTHS?
A: We are positive. We think we may be in an extended period without any
sizable correction in the stock market. Remember that good corporate earnings
and slow economic growth is the best of both worlds for growth stocks. Such
stability assures the bond markets, too.
With the exception of those periods when we have taken profits and have yet to
reinvest, we expect the fund to be fully invested. With our flexibility to
invest in a range of asset types, we should always be able to find investments
we'll prefer to cash.
+ The Standard & Poor's 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS April 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount or
Number
of Shares Value
------------- ----------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS
----------------------------------------------------------------
U.S. Treasury Notes
4.38%, 1996 $ 164,000 $ 158,977
7.75%, 2001 77,500 80,564
6.25%, 2003 12,500 11,916
U.S. Treasury Strip
zero coupon, 2015 463,000 100,619
U.S. Treasury Bonds
7.25%, 2016 83,000 81,392
----------------------------------------------------------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS-15.7%
(Cost: $418,546) 433,468
----------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS
----------------------------------------------------------------
Government of Canada
8.25%, 1997 CAD 7,100 5,263
6.50%, 2004 10,800 7,010
----------------------------------------------------------------
Kingdom of Denmark
6.00%, 1999 DKK 30,000 5,116
9.00%, 2000 32,000 6,082
8.00%, 2003 9,000 1,603
----------------------------------------------------------------
Dutch State Loan
6.50%, 2003 NLG 23,100 14,535
8.25%, 2007 4,500 3,124
----------------------------------------------------------------
Republic of Finland
11.00%, 1999 FIM 55,000 14,111
----------------------------------------------------------------
French Treasury
8.50%, 2000 FRF 25,000 5,321
9.50%, 2001 55,000 12,216
6.75%, 2003 60,000 11,488
8.50%, 2008 25,000 5,319
----------------------------------------------------------------
Government of Ireland
6.25%, 1999 IEP 2,500 3,724
6.25%, 2004 7,300 9,935
----------------------------------------------------------------
New Zealand Government
8.00%, 1998 NZD 5,000 3,359
6.50%, 2000 7,500 4,759
8.00%, 2004 10,000 6,829
----------------------------------------------------------------
Portugal
11.88%, 2001 PTE 100,000 6,838
----------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS-4.6%
(Cost: $117,283) 126,632
----------------------------------------------------------------
COMMON STOCKS
BASIC INDUSTRY-1.3%
----------------------------------------------------------------
Georgia-Pacific Corporation 200,000 15,875
----------------------------------------------------------------
Monsanto Co. 175,000 14,568
----------------------------------------------------------------
Nucor Corporation 119,400 5,731
----------------------------------------------------------------
36,174
BROADCASTING, PUBLISHING AND TELECOMMUNICATIONS-2.7%
----------------------------------------------------------------
(c)Airtouch Communications 300,000shs. 8,062
----------------------------------------------------------------
American Telephone & Telegraph
Company 896,200 45,482
----------------------------------------------------------------
DDI Corp. 406 3,576
----------------------------------------------------------------
Gillett Holdings, Inc. 11,779 240
----------------------------------------------------------------
<CAPTION>
Number
of Shares Value
------------- ----------
<S> <C> <C>
----------------------------------------------------------------
Polygram N.V. 44,991 $ 2,544
----------------------------------------------------------------
Reed International PLC 280,000 3,605
----------------------------------------------------------------
Singapore Press Holdings 90,000 1,550
----------------------------------------------------------------
(c) Technology Resources Ltd. 362,100 924
----------------------------------------------------------------
(c) Tele-Communications Inc. 500,000 9,562
----------------------------------------------------------------
(c) Telewest Communications 146,000 362
----------------------------------------------------------------
75,907
COMMUNICATIONS EQUIPMENT-1.1%
----------------------------------------------------------------
(c) DSC Communications Corp. 219,900 8,136
----------------------------------------------------------------
LM Ericsson "B" 100,229 6,634
----------------------------------------------------------------
Nokia Corp. 120,628 4,931
----------------------------------------------------------------
(c) Tellabs, Inc. 150,600 10,391
----------------------------------------------------------------
30,092
COMPUTER HARDWARE, COMPONENTS AND SEMICONDUCTORS-4.3%
----------------------------------------------------------------
Alco Standard 225,000 15,947
----------------------------------------------------------------
AMP, Inc. 200,000 8,550
----------------------------------------------------------------
(c) Applied Materials Inc. 200,000 12,325
----------------------------------------------------------------
Intel Corp. 418,000 42,793
----------------------------------------------------------------
Kyocera Corporation 75,700 5,856
----------------------------------------------------------------
Omron Corp. 112,000 2,200
----------------------------------------------------------------
Sharp Corp. 100,000 1,643
----------------------------------------------------------------
(c) Silicon Graphics Inc. 686,600 25,747
----------------------------------------------------------------
Tokyo Electron 144,000 4,490
----------------------------------------------------------------
119,551
COMPUTER SOFTWARE-4.0%
----------------------------------------------------------------
(c) Cisco Systems, Inc. 325,000 12,959
----------------------------------------------------------------
Computer Associates
International, Inc. 300,000 19,312
----------------------------------------------------------------
First Data Corporation 252,000 14,175
----------------------------------------------------------------
General Motors Corporation, "E" 334,400 14,463
----------------------------------------------------------------
(c) Microsoft Corporation 410,000 33,517
----------------------------------------------------------------
(c) Oracle Systems Corporation 525,000 16,012
----------------------------------------------------------------
110,438
CONSUMER PRODUCTS AND SERVICES-11.4%
----------------------------------------------------------------
Aalberts Industries N.V. 35,243 1,888
----------------------------------------------------------------
Coca-Cola Company 900,000 52,312
----------------------------------------------------------------
ConAgra Inc. 500,000 16,625
----------------------------------------------------------------
CPC International Inc. 450,500 26,410
----------------------------------------------------------------
(c) CUC International Inc. 392,700 16,002
----------------------------------------------------------------
Duracell International Inc. 175,000 7,700
----------------------------------------------------------------
Gillette Company 115,000 9,430
----------------------------------------------------------------
Greencore Group PLC 235,000 1,666
----------------------------------------------------------------
Harley Davidson Inc. 210,000 5,014
----------------------------------------------------------------
Koninklijke Ahold 43,000 1,482
----------------------------------------------------------------
L'Oreal S.A. 3,430 904
----------------------------------------------------------------
Manpower Inc. 150,000 5,006
----------------------------------------------------------------
Nestle S.A. 2,300 2,254
----------------------------------------------------------------
</TABLE>
5
<PAGE> 7
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
------------- ----------
<S> <C> <C>
----------------------------------------------------------------
Newell Co. 574,000 $ 13,561
----------------------------------------------------------------
PepsiCo 825,000 34,341
----------------------------------------------------------------
Philip Morris Companies Inc. 682,200 46,219
----------------------------------------------------------------
Proctor & Gamble Company 495,900 34,651
----------------------------------------------------------------
Reader's Digest Association, Inc. 100,000 3,937
----------------------------------------------------------------
Rubbermaid 225,000 6,637
----------------------------------------------------------------
Sara Lee Corporation 750,000 20,906
----------------------------------------------------------------
Shaw Industries 500,000 6,562
----------------------------------------------------------------
Unilever N.V. 22,400 3,003
----------------------------------------------------------------
Universal Robina Corp. 85,000 47
----------------------------------------------------------------
316,557
DRUGS AND HEALTH CARE-9.3%
----------------------------------------------------------------
Abbott Laboratories 604,800 23,814
----------------------------------------------------------------
Astra "A" 110,000 3,209
----------------------------------------------------------------
Columbia/HCA Healthcare 439,200 18,446
----------------------------------------------------------------
Eli Lilly & Company 400,000 29,900
----------------------------------------------------------------
(c)Forest Laboratories, Inc. 326,100 14,674
----------------------------------------------------------------
(c)Foundation Health Corp 280,000 7,770
----------------------------------------------------------------
Gambro "B" 140,000 1,821
----------------------------------------------------------------
Glaxo Wellcome PLC 225,000 2,660
----------------------------------------------------------------
Johnson & Johnson 500,600 32,539
----------------------------------------------------------------
Merck & Co. 800,000 34,300
----------------------------------------------------------------
(c)Mid-Atlantic Medical Services 189,900 3,276
----------------------------------------------------------------
Pfizer Inc. 450,000 38,981
----------------------------------------------------------------
Roche Holding AG 917 5,528
----------------------------------------------------------------
SmithKline Beecham PLC 700,000 27,213
----------------------------------------------------------------
United Healthcare Corporation 150,000 5,437
----------------------------------------------------------------
U.S. Healthcare Inc. 256,300 6,856
----------------------------------------------------------------
256,424
ENERGY AND RELATED SERVICES-2.7%
----------------------------------------------------------------
Atlas Copco AB 230,000 3,165
----------------------------------------------------------------
British Petroleum Co., PLC 429,374 3,092
----------------------------------------------------------------
Enron Corp. 713,400 24,256
----------------------------------------------------------------
Mobil Corporation 300,000 28,463
----------------------------------------------------------------
Noble Affiliates 500,000 13,500
----------------------------------------------------------------
Repsol S.A. 108,483 3,455
----------------------------------------------------------------
75,931
ENTERTAINMENT AND RESTAURANTS-3.5%
----------------------------------------------------------------
Genting Berhad 135,000 1,230
----------------------------------------------------------------
McDonald's Corporation 510,000 17,850
----------------------------------------------------------------
(a)(c)President Casinos,
warrants expiring 1999 12,000 12
----------------------------------------------------------------
(c)Promus Companies, Inc. 800,900 30,835
----------------------------------------------------------------
Tabcorp Holdings, Ltd. 669,900 1,536
----------------------------------------------------------------
(c)Viacom International 378,238 17,434
----------------------------------------------------------------
<CAPTION>
Number
of Shares Value
------------- ----------
<S> <C> <C>
Walt Disney Company 500,000 $ 27,688
----------------------------------------------------------------
96,585
FINANCIAL SERVICES-7.2%
----------------------------------------------------------------
ABN Amro Holding N.V. 46,775 1,802
----------------------------------------------------------------
Allied Irish Banks PLC 370,000 1,707
----------------------------------------------------------------
American International Group,
Inc. 300,000 32,025
----------------------------------------------------------------
Banc One Corporation 400,000 11,800
----------------------------------------------------------------
Boatmen's Bancshares, Inc. 650,000 21,613
----------------------------------------------------------------
Conseco Inc. 151,100 6,554
----------------------------------------------------------------
Federal National Mortgage
Association 200,000 17,650
----------------------------------------------------------------
First Financial Management
Corporation 154,000 11,261
----------------------------------------------------------------
First USA Inc. 218,400 9,282
----------------------------------------------------------------
General Re Corporation 75,000 9,553
----------------------------------------------------------------
Lloyds Bank PLC 181,515 1,868
----------------------------------------------------------------
MBNA Corporation 600,650 18,170
----------------------------------------------------------------
MGIC Investment Corporation 336,400 14,255
----------------------------------------------------------------
NationsBank Corporation 400,000 20,000
----------------------------------------------------------------
Providian Corp. 350,000 11,944
----------------------------------------------------------------
Sanyo Shinpan Finance Co., Ltd. 31,900 2,608
----------------------------------------------------------------
Sumitomo Bank Ltd. 165,000 3,574
----------------------------------------------------------------
Sumitomo Corp. 264,000 2,624
----------------------------------------------------------------
198,290
MANUFACTURING AND CAPITAL GOODS-2.6%
----------------------------------------------------------------
Amada Co., Ltd. 198,000 2,116
----------------------------------------------------------------
Boeing Company 170,000 9,350
----------------------------------------------------------------
Emerson Electric Company 250,000 16,812
----------------------------------------------------------------
General Electric Company 675,000 37,800
----------------------------------------------------------------
(c)Interco, warrants expiring
1999 43,006 22
----------------------------------------------------------------
Keppel Corporation Limited 430,000 3,487
----------------------------------------------------------------
Tomkins PLC 450,000 1,695
----------------------------------------------------------------
71,282
RETAILING-3.7%
----------------------------------------------------------------
Albertson's, Inc. 400,000 12,651
----------------------------------------------------------------
(c)Ann Taylor Stores 400,500 10,062
----------------------------------------------------------------
Carrefour S.A. 7,704 3,869
----------------------------------------------------------------
Dixons Group PLC 450,000 1,742
----------------------------------------------------------------
Hagemeyer N.V. 22,094 1,911
----------------------------------------------------------------
Home Depot, Inc. 508,253 21,220
----------------------------------------------------------------
Keiyo Company, Ltd. 119,000 1,380
----------------------------------------------------------------
Marui Company, Ltd. 171,000 2,626
----------------------------------------------------------------
May Department Stores Company 300,000 10,876
----------------------------------------------------------------
Nordstrom 200,000 7,700
----------------------------------------------------------------
(c)Office Depot 30,000 682
----------------------------------------------------------------
Tesco PLC 363,000 1,633
----------------------------------------------------------------
Thrifty Payless Holdings 109,250 437
----------------------------------------------------------------
</TABLE>
6
<PAGE> 8
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount or
Number
of Shares Value
------------- ----------
<S> <C> <C>
----------------------------------------------------------------
Wal-Mart Stores, Inc. 1,081,400 $ 25,684
----------------------------------------------------------------
102,473
TRANSPORTATION-1.3%
----------------------------------------------------------------
Conrail Inc. 250,000 13,656
----------------------------------------------------------------
TNT Ltd. 944,480 1,354
----------------------------------------------------------------
Union Pacific Corporation 200,000 10,975
----------------------------------------------------------------
(c)Wisconsin Central
Transportation Corporation 170,500 9,729
----------------------------------------------------------------
35,714
MISCELLANEOUS-1.6%
----------------------------------------------------------------
DBS Land Ltd. 379,000 1,044
----------------------------------------------------------------
Manweb PLC 193,000 2,093
----------------------------------------------------------------
Road Builders Holdings BHD 335,000 771
----------------------------------------------------------------
US West Inc. 300,000 12,412
----------------------------------------------------------------
Veba AG 15,078 5,628
----------------------------------------------------------------
Wai Kee Holdings,
with warrants expiring 1996 2,042,000 326
----------------------------------------------------------------
WMX Technologies 700,000 19,075
----------------------------------------------------------------
Wolters Kluwer 23,000 1,875
----------------------------------------------------------------
43,224
----------------------------------------------------------------
TOTAL COMMON STOCKS-56.7%
(Cost: $1,356,518) 1,568,642
----------------------------------------------------------------
PREFERRED STOCKS
----------------------------------------------------------------
(a)(c)Cimlinc Incorporated, "D",
convertible 37,716 141
----------------------------------------------------------------
(a)(c)College Construction Loan
Insurance Association, "A",
convertible 534,189 4,975
----------------------------------------------------------------
Conseco Inc., convertible 170,600 7,208
----------------------------------------------------------------
K-III Communications, Inc., PIK 21,424 2,003
----------------------------------------------------------------
Panamsat Corp., PIK 7,000 7,089
----------------------------------------------------------------
TOTAL PREFERRED STOCKS-.8%
(Cost: $23,700) 21,416
----------------------------------------------------------------
CORPORATE OBLIGATIONS
BROADCASTING, CABLESYSTEMS AND PUBLISHING-3.3%
----------------------------------------------------------------
Adelphia Communications Corporation,
12.50%, 2002 $ 3,910 3,812
----------------------------------------------------------------
(b)Bell Cablemedia PLC,
11.95%, 2004 11,450 7,242
----------------------------------------------------------------
CF Cable TV Inc.,
11.625%, 2005 1,060 1,113
----------------------------------------------------------------
Cablevision Industries
Corporation,
10.75%, 2002 6,300 6,709
----------------------------------------------------------------
Cablevision Systems Company,
10.75%, 2004 9,000 9,360
----------------------------------------------------------------
Century Communications Corp.,
9.50%, 2005 7,000 6,807
----------------------------------------------------------------
Continental Cablevision, Inc.
8.875%, 2005 2,000 1,985
9.50%, 2013 5,000 4,963
----------------------------------------------------------------
<CAPTION>
Principal
Amount Value
------------- ----------
<S> <C> <C>
----------------------------------------------------------------
International CableTel
Incorporated,
zero coupon, 2005 $ 300 $ 166
----------------------------------------------------------------
Paging Network Inc.
11.75%, 2002 6,100 6,458
8.875%, 2006 1,171 1,042
----------------------------------------------------------------
Rogers Cablesystems Limited,
10.00%, 2005 4,900 4,973
----------------------------------------------------------------
Rogers Cantel, 11.125%, 2002 6,990 7,270
----------------------------------------------------------------
Tele-Communications, Inc., 9.80%,
2012 5,725 5,934
----------------------------------------------------------------
Time Warner Entertainment Company, L.P.,
8.375%, 2033 9,500 8,594
----------------------------------------------------------------
TKR Cable I, Inc., 10.50%, 2007 2,275 2,455
----------------------------------------------------------------
Univision TV, 11.75%, 2001 7,000 7,490
----------------------------------------------------------------
Viacom International Inc., 8.00%,
2006 7,000 6,458
----------------------------------------------------------------
92,831
COMMUNICATIONS AND MEDIA-1.7%
----------------------------------------------------------------
Ameritech Capital Funding,
7.50%, 2005 4,000 4,007
----------------------------------------------------------------
Cinemark USA Inc., 12.00%, 2002 3,230 3,408
----------------------------------------------------------------
Comcast Corporation, 10.625%,
2012 7,000 7,263
----------------------------------------------------------------
MCI Communications, 7.50%, 2004 9,500 9,420
----------------------------------------------------------------
News American Holdings, 8.625%,
2003 9,500 9,802
----------------------------------------------------------------
TCI Communications, 8.65%, 2004 9,500 9,562
----------------------------------------------------------------
Webcraft Technologies, Inc.,
9.375%, 2002 2,560 2,266
----------------------------------------------------------------
45,728
CONSUMER PRODUCTS AND SERVICES-1.5%
----------------------------------------------------------------
Bally's Park Place Funding, Inc.,
9.25%, 2004 6,845 6,178
----------------------------------------------------------------
Color Tile Inc., 10.75%, 2001 7,850 5,397
----------------------------------------------------------------
Dominick's Finer Foods,
10.875%, 2005 180 182
----------------------------------------------------------------
Flagstar Corporation
10.75%, 2001 150 142
10.875%, 2002 6,500 6,175
----------------------------------------------------------------
Penn Traffic Company
8.625%, 2003 4,100 3,798
10.65%, 2004 2,100 2,180
9.625%, 2005 800 750
----------------------------------------------------------------
Philip Morris Companies Inc.,
7.25%, 2003 5,000 4,837
----------------------------------------------------------------
RJR Nabisco, 8.75%, 2005 9,500 9,306
----------------------------------------------------------------
Sweetheart Cup Company Inc.,
10.50%, 2003 2,850 2,793
----------------------------------------------------------------
41,738
ENERGY AND RELATED SERVICES-2.2%
----------------------------------------------------------------
Cincinnati Gas and Electric
Company, 7.20%, 2023 9,500 8,440
----------------------------------------------------------------
Commonwealth Edison Co., 8.125%,
2007 9,500 9,240
----------------------------------------------------------------
</TABLE>
7
<PAGE> 9
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- ----------
<S> <C> <C>
----------------------------------------------------------------
Gulf Canada Resources, 9.25%,
2004 $ 7,000 $ 6,720
----------------------------------------------------------------
Philips Electronics N.V.,
8.375%, 2006 9,100 9,495
----------------------------------------------------------------
Texas Utilities Company, 6.75%,
2003 9,500 8,986
----------------------------------------------------------------
UCC Investors Holding, Inc.
10.50%, 2002 2,820 2,891
11.00%, 2003 4,180 4,284
----------------------------------------------------------------
WRT Energy Corp., convertible,
13.875%, 2002 580 596
----------------------------------------------------------------
Westinghouse Electric Corp.
8.875%, 2001 7,000 7,248
8.625%, 2002 2,500 2,444
----------------------------------------------------------------
60,344
FINANCIAL SERVICES-3.4%
----------------------------------------------------------------
ABN-AMRO Bank, 8.25%, 2009 9,500 9,641
----------------------------------------------------------------
Abbey National First Capital,
8.20%, 2004 9,500 9,814
----------------------------------------------------------------
Associates Corp. N.A., 8.25%,
1999 9,500 9,832
----------------------------------------------------------------
Capital One Bank
8.125%, 1998 4,500 4,576
8.125%, 2000 5,000 5,084
----------------------------------------------------------------
Comdata Network, Inc.
12.50%, 1999 3,310 3,575
13.25%, 2002 3,690 4,059
----------------------------------------------------------------
Dean Witter Discover,
6.875%, 2003 9,500 9,049
----------------------------------------------------------------
Export-Import Bank Japan, 4.375%,
2003 YEN 350,000 4,450
----------------------------------------------------------------
First USA Bank, 8.10%, 1997 9,500 9,639
----------------------------------------------------------------
GMAC Medium Term Note,
8.50%, 2000 9,500 9,854
----------------------------------------------------------------
IBRD Japan, 4.75%, 2004 YEN 200,000 2,624
----------------------------------------------------------------
Japan Development Bank, 6.50%,
2001 YEN 500,000 7,053
----------------------------------------------------------------
Lehman Brothers Holdings, 8.375%,
1999 5,000 5,061
----------------------------------------------------------------
94,311
MANUFACTURING-3.7%
----------------------------------------------------------------
Aftermarket Technology, 12.00%,
2004 3,500 3,675
----------------------------------------------------------------
American Standard Inc.
10.875%, 1999 6,150 6,504
11.375%, 2004 230 251
(b) 10.50%, 2005 780 571
----------------------------------------------------------------
Arcadian Partners, LP, 10.75%,
2005 2,040 2,091
----------------------------------------------------------------
Exide Corporation, 10.00%, 2005 6,000 6,105
----------------------------------------------------------------
Foamex L.P, 11.25%, 2002 2,320 2,384
----------------------------------------------------------------
Gaylord Container Corporation
11.50%, 2001 500 529
(b) 12.75%, 2005 7,000 6,729
----------------------------------------------------------------
James River Corp., 8.375%, 2001 4,900 5,043
----------------------------------------------------------------
Lockheed Corp, 6.75%, 2003 8,000 7,602
----------------------------------------------------------------
<CAPTION>
Principal
Amount Value
------------- ----------
<S> <C> <C>
----------------------------------------------------------------
Nortek, Inc., 9.875%, 2004 $ 5,220 $ 4,907
----------------------------------------------------------------
Owens-Illinois, Inc.
11.00%, 2003 13,590 14,711
9.95%, 2004 1,450 1,443
9.75%, 2004 3,160 3,120
----------------------------------------------------------------
Repap New Brunswick, 10.625%,
2005 7,000 7,105
----------------------------------------------------------------
Stone-Consolidated Corporation,
10.25%, 2000 3,700 3,797
----------------------------------------------------------------
Stone Container Corporation,
10.75%, 2002 8,000 8,420
----------------------------------------------------------------
Triangle Pacific Corporation,
10.50%, 2003 6,900 6,900
----------------------------------------------------------------
Unisys Corporation
9.50%, 1998 4,640 4,652
9.750%, 2016 1,850 1,795
----------------------------------------------------------------
S.D. Warren Company, 12.00%, 2004 4,300 4,644
----------------------------------------------------------------
102,978
RETAILING-1.1%
----------------------------------------------------------------
Federated Department Stores,
Inc.,
convertible, 9.72%, 2004 610 611
----------------------------------------------------------------
Food 4 Less Supermarket, 13.75%,
2001 1,000 1,075
----------------------------------------------------------------
Pathmark Stores, Inc.
11.625%, 2002 4,000 4,100
9.625%, 2003 3,000 2,880
----------------------------------------------------------------
Sears Roebuck & Co., 6.25%, 2004 8,000 7,306
----------------------------------------------------------------
Specialty Retailers, Inc.
10.00%, 2000 5,000 4,750
11.00%, 2003 2,000 1,880
----------------------------------------------------------------
Thrifty Payless Inc., 11.75%,
2003 7,750 8,254
----------------------------------------------------------------
30,856
MISCELLANEOUS-1.7%
----------------------------------------------------------------
American Home Products,
7.90%, 2005 9,500 9,712
----------------------------------------------------------------
Amerisource Distribution Corp.,
PIK,
11.25%, 2005 240 265
----------------------------------------------------------------
Browning-Ferris Industries,
7.875%, 2005 4,000 4,077
----------------------------------------------------------------
Burlington Motor Holdings Inc.,
11.50%, 2003 6,440 5,699
----------------------------------------------------------------
Delta Air Lines, 9.75%, 2021 9,500 9,821
----------------------------------------------------------------
National Medical Enterprises
9.625%, 2002 580 600
10.125%, 2005 6,420 6,709
----------------------------------------------------------------
United Air Lines
10.67%, 2004 4,500 4,910
11.21%, 2014 5,000 5,630
----------------------------------------------------------------
47,423
----------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS-18.6%
(Cost: $510,204) 516,209
----------------------------------------------------------------
</TABLE>
8
<PAGE> 10
(Dollars in thousands)
<TABLE>
<CAPTION>
Principal
Amount Value
------------- ----------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield-6.01% to 6.13%
Due-May 1995 through July 1995
- - ----------------------------------------------------------------
Countrywide Funding Corporation $ 7,200 $ 7,181
- - ----------------------------------------------------------------
Dynamic Funding Corporation 2,500 2,461
- - ----------------------------------------------------------------
Finova Capital Corporation 16,000 15,951
- - ----------------------------------------------------------------
Freedom Asset Funding 8,000 7,956
- - ----------------------------------------------------------------
GTE Finance Corporation 3,500 3,485
- - ----------------------------------------------------------------
<CAPTION>
Value
----------
<S> <C> <C>
TOTAL MONEY MARKET INSTRUMENTS-1.3%
(Cost: $37,035) $ 37,034
- - ----------------------------------------------------------------
TOTAL INVESTMENTS-97.7%
(Cost: $2,463,286) 2,703,401
- - ----------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES-2.3% 63,914
- - ----------------------------------------------------------------
NET ASSETS-100% $2,767,315
- - ----------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The following securities may require registration under the Securities Act
of 1933 or an exemption therefrom in order to effect sale in the ordinary
course of business; they were valued at cost on the dates of acquisition. No
market quotations were available for unrestricted securities of the same
class on the dates of acquisition or on April 30, 1995. These securities are
valued at fair value as determined in good faith by the Board of Trustees of
the Fund. At April 30, 1995, the aggregate value of the Fund's restricted
securities was $5,128,000, which represented .19% of net assets.
<TABLE>
<CAPTION>
DATE OF NUMBER COST
SECURITY DESCRIPTION ACQUISITION OF SHARES PER SHARE
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Cimlinc Incorporated, "D", convertible preferred stock December 1983 37,716 $ 8.75
-----------------------------------------------------------------------------------------------------------------
College Construction Loan Insurance Association, "A", convertible
preferred stock September 1991 534,189 9.31
-----------------------------------------------------------------------------------------------------------------
President Casinos, warrants expiring 1999 September 1993 12,000 --
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Deferred interest obligation; currently zero coupon under terms of the
initial offering.
(c) Non-income producing security.
"PIK" denotes that interest or dividends are paid in kind.
Based on the cost of investments of $2,463,286,000 for federal income tax
purposes at April 30, 1995, the aggregate gross unrealized appreciation was
$286,906,000, the aggregate gross unrealized depreciation was $46,791,000 and
the net unrealized appreciation of investments was $240,115,000.
9
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
- - -------------------------------------------------------------
Investments, at value
(Cost: $2,463,286) $2,703,401
- - -------------------------------------------------------------
Receivable for:
Fund shares sold 719
- - -------------------------------------------------------------
Investments sold 138,865
- - -------------------------------------------------------------
Dividends and interest 24,121
- - -------------------------------------------------------------
Total assets 2,867,106
- - -------------------------------------------------------------
LIABILITIES AND NET ASSETS
- - -------------------------------------------------------------
Cash overdraft 23,182
- - -------------------------------------------------------------
Payable for:
Fund shares redeemed 2,963
- - -------------------------------------------------------------
Investments purchased 69,992
- - -------------------------------------------------------------
Management fee 1,240
- - -------------------------------------------------------------
Distribution services fee 682
- - -------------------------------------------------------------
Administrative services fee 569
- - -------------------------------------------------------------
Custodian and transfer agent fees and related
expenses 1,066
- - -------------------------------------------------------------
Other 97
- - -------------------------------------------------------------
Total liabilities 99,791
- - -------------------------------------------------------------
Net assets $2,767,315
- - -------------------------------------------------------------
ANALYSIS OF NET ASSETS
- - -------------------------------------------------------------
Excess of amounts received from issuance of
shares over amounts paid on redemptions of
shares on account of capital $2,502,784
- - -------------------------------------------------------------
Undistributed net realized gain on sales of
investments 2,849
- - -------------------------------------------------------------
Unrealized appreciation of investments 240,115
- - -------------------------------------------------------------
Undistributed net investment income 21,567
- - -------------------------------------------------------------
Net assets applicable to shares outstanding $2,767,315
- - -------------------------------------------------------------
THE PRICING OF SHARES
- - -------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($1,677,667,942 / 176,026,766 shares
outstanding) $9.53
- - -------------------------------------------------------------
Maximum offering price per share (net asset
value, plus 6.10% of net asset value or 5.75%
of offering price) $10.11
- - -------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject
to contingent deferred sales charge) per share
($1,086,151,915 / 114,056,113 shares
outstanding) $9.52
- - -------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price per share
($3,495,305 / 366,558 shares outstanding) $9.54
- - -------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six months ended April 30, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
- - ------------------------------------------------------------
Interest $ 41,241
- - ------------------------------------------------------------
Dividends 16,987
- - ------------------------------------------------------------
Total investment income 58,228
- - ------------------------------------------------------------
EXPENSES
- - ------------------------------------------------------------
Management fee 7,401
- - ------------------------------------------------------------
Distribution services fee 4,098
- - ------------------------------------------------------------
Administrative services fee 3,296
- - ------------------------------------------------------------
Custodian and transfer agent fees and related
expenses 4,891
- - ------------------------------------------------------------
Professional fees 35
- - ------------------------------------------------------------
Reports to shareholders 217
- - ------------------------------------------------------------
Registration fees 532
- - ------------------------------------------------------------
Trustees' fees and other 29
- - ------------------------------------------------------------
Total expenses 20,499
- - ------------------------------------------------------------
Net investment income 37,729
- - ------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
- - ------------------------------------------------------------
Net realized gain on sales of investments 22,347
- - ------------------------------------------------------------
Net change in balance of unrealized appreciation
of investments 92,020
- - ------------------------------------------------------------
Net gain on investments 114,367
- - ------------------------------------------------------------
Net increase in net assets resulting from
operations $152,096
- - ------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
Six months Year ended
ended April October 31,
30, 1995 1994
----------- ------------
<S> <C> <C>
OPERATIONS
- - ----------------------------------------------------------------
Net investment income $ 37,729 45,058
- - ----------------------------------------------------------------
Net realized gain (loss) on
investments 22,347 (22,890)
- - ----------------------------------------------------------------
Net change in unrealized
appreciation 92,020 (162,556)
- - ----------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 152,096 (140,388)
- - ----------------------------------------------------------------
Net equalization (charges) credits (1,567 ) 1,040
- - ----------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
- - ----------------------------------------------------------------
Distribution from net investment
income (26,872 ) (43,250)
- - ----------------------------------------------------------------
Distribution from net realized gain
on investment transactions -- (139,785)
- - ----------------------------------------------------------------
Distribution in excess of net
realized gain on investment
transactions -- (6,033)
- - ----------------------------------------------------------------
Total dividends to shareholders (26,872 ) (189,068)
- - ----------------------------------------------------------------
Net (decrease) increase from capital
share transactions (220,664 ) 1,683,051
- - ----------------------------------------------------------------
Total (decrease) increase in net
assets (97,007 ) 1,354,635
- - ----------------------------------------------------------------
NET ASSETS
- - ----------------------------------------------------------------
Beginning of period 2,864,322 1,509,687
- - ----------------------------------------------------------------
End of period (including
undistributed net investment income
of $21,567 in 1995 and $12,277 in
1994) $2,767,315 2,864,322
- - ----------------------------------------------------------------
</TABLE>
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
The Kemper Total Return 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, to a limited
group of investors, Class I shares (none sold at April 30, 1995) 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. Exchange traded fixed
income options are valued at the last sale price unless there is no sale price,
in which event prices provided by market makers are 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. Interest income includes
premium and discount amortization on money market instruments; it also includes
original issue and market discount amortization on long-term fixed income
securities. Realized gains and losses from investment transactions are reported
on an identified cost basis. 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 April 30, 1995. The
accumulated net realized loss on sales of investments for federal income tax
purposes at April 30, 1995, amounting to approximately $3,163,000, is available
to offset future taxable gains. The loss carryover expires in 2002.
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 $7,401,000 for
the six months ended April 30, 1995.
11
<PAGE> 13
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 $120,000 for the six months ended
April 30, 1995 for sales of Class A shares, after allowing $926,000 as
commissions to firms, of which $134,000 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 April 30,
1995, the Fund incurred a distribution services fee for Class B and Class C
shares of $4,098,000, and KDI paid $1,975,000 for commissions and distribution
fees to firms, including $213,000 to firms affiliated with KDI. In addition, KDI
received $1,915,000 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 April 30, 1995, the Fund incurred an administrative services fee of
$3,296,000 and KDI (as successor to KFS) paid $3,245,000 to firms, including
$538,000 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 April 30, 1995, the Fund incurred custodian and transfer agent fees of
$4,162,000 (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 April 30, 1995, IFTC
remitted shareholder service fees of $4,080,000 to KSvC.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the six months ended April 30, 1995, the Fund made no direct payments to
its officers and incurred trustees' fees of $17,000 to independent trustees.
4. INVESTMENT TRANSACTIONS
For the six months ended April 30, 1995, investment transactions (excluding
short term instruments) are as follows (in thousands):
<TABLE>
<S> <C>
Purchases $2,229,614
- - --------------------------------------------------------------------------------
Proceeds from sales 2,139,083
- - --------------------------------------------------------------------------------
</TABLE>
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
April 30, October 31,
1995 1994
------------------- ----------------------
Shares Amount Shares Amount
------- --------- -------- ----------
<S> <C> <C> <C> <C>
Shares sold:
Class A 8,454 $ 75,401 31,207 $ 297,652
- - -----------------------------------------------------------------
Class B 8,034 72,763 10,573 95,681
- - -----------------------------------------------------------------
Class C 196 1,784 220 1,981
- - -----------------------------------------------------------------
Shares issued in
reinvestment of
dividends:
Class A 1,946 17,521 17,063 165,753
- - -----------------------------------------------------------------
Class B 817 7,331 702 6,454
- - -----------------------------------------------------------------
Class C 2 18 1 9
- - -----------------------------------------------------------------
Shares redeemed:
Class A (27,475) (246,788) (35,399) (330,847)
- - -----------------------------------------------------------------
Class B (16,429) (148,285) (12,294) (110,801)
- - -----------------------------------------------------------------
Class C (45) (409) (7) (68)
- - -----------------------------------------------------------------
Conversion of
shares:
Class A 4,885 44,481 9,282 83,900
- - -----------------------------------------------------------------
Class B (4,889) (44,481) (9,291) (83,900)
- - -----------------------------------------------------------------
Shares issued in
acquisition(a):
Class A -- -- 31,665 292,476
- - -----------------------------------------------------------------
Class B -- -- 136,833 1,264,761
- - -----------------------------------------------------------------
Net (decrease)
increase from
capital share
transactions $(220,664) $1,683,051
- - -----------------------------------------------------------------
</TABLE>
(a) On May 27, 1994, the Fund acquired the assets of Kemper Investment
Portfolios -- Total Return Portfolio in a tax-free exchange.
12
<PAGE> 14
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
Six months
ended
April 30, Year ended October 31,
1995 1994 1993 1992 1991
---------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.10 11.23 10.07 10.07 7.78
- - -------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .14 .19 .30 .22 .36
- - -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .40 (1.01) 1.54 .37 2.42
- - -------------------------------------------------------------------------------------------------------------------------
Total from investment operations .54 (.82) 1.84 .59 2.78
- - -------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .11 .23 .24 .29 .49
- - -------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain
on investments -- 1.04 .44 .30 --
- - -------------------------------------------------------------------------------------------------------------------------
Distribution in excess of net realized gain on investments -- .04 -- -- --
- - -------------------------------------------------------------------------------------------------------------------------
Total dividends .11 1.31 .68 .59 .49
- - -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.53 9.10 11.23 10.07 10.07
- - -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 5.95 (7.92) 19.08 6.09 37.20
- - -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.12 1.13 1.02 1.06 1.03
- - -------------------------------------------------------------------------------------------------------------------------
Net investment income 3.11 2.34 2.94 2.23 3.96
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
---------------------------- ----------------------------
Six months May 31, Six months May 31,
ended 1994 to ended 1994 to
April 30, October 31, April 30, October 31,
1995 1994 1995 1994
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.09 9.24 9.09 9.24
- - ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .09 .06 .12 .06
- - ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .40 (.16) .40 (.16)
- - ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations .49 (.10) .52 (.10)
- - ----------------------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .06 .05 .07 .05
- - ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.52 9.09 9.54 9.09
- - ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 5.47 (1.06) 5.73 (1.05)
- - ----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 2.01 2.03 1.83 2.00
- - ----------------------------------------------------------------------------------------------------------------------------
Net investment income 2.22 1.57 2.40 1.60
- - ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six months
ended
April 30, Year ended October 31,
1995 1994 1993 1992 1991
---------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA FOR ALL CLASSES:
Net assets at end of period (in thousands) $2,767,315 2,864,322 1,509,687 1,212,896 998,465
- - -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 163 121 180 150 157
- - -------------------------------------------------------------------------------------------------------------------------
</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.
13
<PAGE> 15
IJKLM(LOGO)
KEMPER FINANCIAL SERVICES, INC.
120 South LaSalle Street
Chicago, IL 60603
KEMPER TOTAL RETURN FUND
<TABLE>
<CAPTION>
Trustees Officers
<S> <C>
STEPHEN B. TIMBERS C. BETH COTNER
President and Trustee Vice President
DAVID W. BELIN JOHN E. PETERS
Trustee Vice President
LEWIS A. BURNHAM GARY A. LANGBAUM
Trustee Vice President
DONALD L. DUNAWAY PHILIP J. COLLORA
Trustee Vice President and
Secretary
ROBERT B. HOFFMAN
Trustee CHARLES F. CUSTER
Vice President and
DONALD R. JONES Assistant Secretary
Trustee
DAVID B. MATHIS JEROME L. DUFFY
Trustee Treasurer
SHIRLEY D. PETERSON ELIZABETH C. WERTH
Trustee Assistant Secretary
WILLIAM P. SOMMERS
Trustee
</TABLE>
<TABLE>
<S> <C>
- - --------------------------------------------------------
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
</TABLE>
(LOGO)
PRINTED ON RECYCLED PAPER.
This report is not to be distributed unless preceded 239680
KTRF-3 (6/95) Printed in the U.S.A.
or accompanied by a Kemper Equity Funds prospectus.
