<PAGE> 1
Kemper Technology Fund
Semiannual Report to Shareholders
For the Period Ended
April 30, 1995
Seeking growth of capital
(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
Managers.
=============================
PERFORMANCE REVIEW
- ----------------------------------------------------------
Total Return Performance*
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1995
(UNADJUSTED FOR ANY SALES CHARGE)
<TABLE>
<S> <C>
Kemper Technology Fund A 13.17%
Kemper Technology Fund B 12.45%
Kemper Technology Fund C 12.74%
Lipper Science & Technology Funds
Category Average 10.39%
- ----------------------------------------------------------
</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 Technology Fund A to all other Technology 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
11 of 30 12 of 15 5 of 10 2 of 4
</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
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 an 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
AN INTERVIEW
WITH PORTFOLIO
MANAGERS
DICK GOERS &
FRANK KORTH
- -------- Richard Goers is Senior Vice President of Kemper Financial Services,
Inc., and Vice President and Co-Portfolio Manager of Kemper
[PHOTO] Technology Fund. Mr. Goers began his career with Kemper in 1968.
He received his B.S. degree in Industrial Business Administration
from Iowa State University and went on to receive his MBA at
- -------- Northwestern University.
- -------- Frank Korth is Senior Vice President of Kemper Financial
Services, Inc., and Vice President and Co-Portfolio Manager of Kemper
[PHOTO] Technology Fund. Mr. Korth received his B.A. degree from Mankato
State University of Minnesota in mathematics and his masters of
- -------- business in finance from Bernard M. Baruch College.
Q: THE MARKET HAS RISEN TO RECORD HIGHS IN RECENT MONTHS, WITH THE GAINS
WIDELY ATTRIBUTED TO TECHNOLOGY STOCKS. WHAT'S BEHIND THIS RALLY?
A: Despite six interest rate hikes, the U.S. economy continued to grow at
a very robust pace through 1994. Meanwhile, Europe and Japan were also
beginning to show signs of economic recovery. This, combined with the weakening
dollar relative to the yen and the major European currencies, contributed to
strong sales and profits for companies with multi-national exposure. As a
result, earnings were quite favorable in the third and fourth quarters of 1994
and have remained strong through the first quarter of this year. Now, with the
U.S. economy showing signs of a gradual slowdown and inflation not an immediate
threat, investors seem to be more confident that the economy is headed for a
"soft landing" rather than a recession.
Q: WERE ANY SECTORS PARTICULARLY STRONG OR WEAK? HOW WAS THE FUND
REPRESENTED?
A: Semiconductors, which currently comprise approximately 22% of the
portfolio, remained quite strong despite concerns that this sector was nearing
its peak. We believe that demand should remain strong relative to supply
through 1995 and into 1996. The fund holds a variety of stocks in this sector
including Texas Instruments and Intel, maker of the Pentium microprocessor,
which has posted exceptional gains.
Computer systems and software companies have also been strong. IBM, currently
one of the fund's top holdings, reported record first quarter earnings.
However, as these areas become increasingly competitive, we're monitoring
fundamentals very closely. In computer systems, we own market leaders like
Compaq, Dell, Hewlett Packard and Silicon Graphics. In software, companies like
Microsoft, Adobe and Oracle have been very strong performers. Together,
computer systems and software account for about 25% of the portfolio.
Networking and data communications are still fairly attractive, although we're
beginning to see some weakening fundamentals here as well. Our positions are in
large, multinational companies like Cisco Systems and Motorola which should be
able to weather any short-term volatility and be less vulnerable to a downturn.
The fund currently has about 12% invested in this area.
Q: THE FUND'S INVESTMENT PORTFOLIO INCLUDES GENERAL MOTORS. ISN'T GM
CONSIDERED A VALUE STOCK AS OPPOSED TO GROWTH? HOW DOES IT FIT THE
TECHNOLOGY FUND'S OBJECTIVE?
A: General Motors itself is a value stock and wouldn't fit our
growth-style criteria. However, what we own is "Class E" GM stock which tracks
the fortunes of Electronic Data Systems, a GM subsidiary. Also, EDS, a division
of GM, is doing very well providing computer "outsourcing" for a variety of
customers.
Q: DO YOU BELIEVE TECHNOLOGY STOCKS WILL MAINTAIN THEIR STRENGTH GOING
FORWARD?
A: Generally speaking, earnings projections and valuations are still
reasonably good, so we don't anticipate a sharp correction in the near term. Of
course, there are no guarantees. We're entering the traditional slow period for
technology stocks, when spending tends to soften in the summer and investors
get nervous about the autumn. Therefore, it wouldn't be surprising to see
things slow down a bit. We continue to like the long-term trends.
3
<PAGE> 5
Q: HAVE YOU TAKEN STEPS TO PROTECT THE FUND IN THE EVENT A CORRECTION
DOES OCCUR?
A: We prefer to stay as fully invested as possible, so we generally don't
carry large cash positions for that purpose. However, in recent months we've
tilted the portfolio toward larger companies with strong multinational
exposure. We've also added to our positions in life sciences such as Pfizer, a
large multinational pharmaceutical company; Johnson & Johnson, a major
manufacturer of medical supplies; Medtronic, the leading producer of cardiac
pacemakers; and Amgen, a leader in the biotechnology arena. We believe these
companies can serve as a defensive position if we do experience an economic
downturn. Of course, we're continually monitoring the portfolio to identify
companies where fundamentals may be weakening. We will sell any stock that no
longer meets our standard for reasonable valuations and sustainable earnings
growth. Also, we recently "hedged" against a technology stock downturn with
some custom options baskets.
Q: WHAT IS YOUR OUTLOOK FOR THE BALANCE OF THE YEAR?
A: Positive, but cautious. While we could see some short-term volatility
and some profit taking, the long-term prospects for growth are still very
compelling. Meanwhile, the gradual slowdown of the U.S. economy should bring
growth stocks back to favor. In this environment, our outstanding research
capabilities and disciplined adherence to our "growth at the right price"
philosophy should serve us well.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS April 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
COMMON STOCKS of Shares Value
--------- --------
<S> <C> <C> <C>
BUSINESS SERVICES-3.0%
-----------------------------------------------------------
Automatic Data Processing 60,000 $ 3,855
-----------------------------------------------------------
First Data Corporation 200,000 11,250
-----------------------------------------------------------
First Financial Management 50,000 3,656
-----------------------------------------------------------
(a)(b)GEO Capital III,
5.0% limited partnership interest -- 2,111
-----------------------------------------------------------
Getronics NV 53,000 2,172
-----------------------------------------------------------
23,044
COMMUNICATIONS-11.8%
-----------------------------------------------------------
(b)ADC Telecommunications 50,000 1,650
-----------------------------------------------------------
Allen Group 33,500 758
-----------------------------------------------------------
(b)AirTouch Communications 100,000 2,687
-----------------------------------------------------------
(b)Applied Digital Access 65,000 926
-----------------------------------------------------------
(b)Cisco Systems, Inc. 420,000 16,747
-----------------------------------------------------------
DDI Corp. 110 969
-----------------------------------------------------------
(b)DSC Communications 235,000 8,695
-----------------------------------------------------------
(b)General Instrument Corporation 100,000 3,413
-----------------------------------------------------------
(b)LM Ericsson "B", ADR 40,000 2,682
-----------------------------------------------------------
Motorola, Inc. 150,000 8,531
-----------------------------------------------------------
MRV Communications 110,000 1,581
-----------------------------------------------------------
Oy Nokia, AB
A Shares 100,000 4,087
-----------------------------------------------------------
ADRs 20,000 820
-----------------------------------------------------------
(b)Paging Network, Inc. 193,500 5,321
-----------------------------------------------------------
Technology Resources Industries 597,000 1,523
-----------------------------------------------------------
(b)Telewest Communications 750,000 1,859
-----------------------------------------------------------
(b)Tellabs, Inc. 100,000 6,900
-----------------------------------------------------------
(b)3Com Corp. 175,000 9,800
-----------------------------------------------------------
(b)U.S. Robotics 120,000 9,510
-----------------------------------------------------------
Vodafone Group 504,098 1,578
-----------------------------------------------------------
90,037
COMPUTER SOFTWARE-13.5%
-----------------------------------------------------------
Adobe Systems Incorporated 175,000 10,194
-----------------------------------------------------------
Autodesk, Inc. 80,000 2,725
-----------------------------------------------------------
(b)Broderbund Software 25,000 1,238
-----------------------------------------------------------
(b)Cadence Design Systems 100,000 3,225
-----------------------------------------------------------
Computer Associates International,
Inc. 80,000 5,150
-----------------------------------------------------------
(b)Compuware Corp. 180,000 4,725
-----------------------------------------------------------
(b)Data Translation 75,000 1,959
-----------------------------------------------------------
(b)Epic Design Technology 50,000 1,325
-----------------------------------------------------------
(b)Frame Technology Corp. 60,000 1,260
-----------------------------------------------------------
General Motors Corporation, "E" 160,000 6,920
-----------------------------------------------------------
(b)Informix Corp. 220,000 8,662
-----------------------------------------------------------
(b)Learning Company 40,000 1,050
-----------------------------------------------------------
(b)Microsoft Corporation 325,000 26,569
-----------------------------------------------------------
(b)Network General Corp. 65,000 1,698
-----------------------------------------------------------
(b)Novell 50,000 1,088
-----------------------------------------------------------
(b)Oracle Systems Corporation 350,000 10,675
-----------------------------------------------------------
(b)Parametric Technology Corporation 150,000 7,125
-----------------------------------------------------------
(b)PeopleSoft, Inc. 50,000 2,563
-----------------------------------------------------------
(b)Rational Software 85,652 353
-----------------------------------------------------------
(b)7th Level, Inc. 325,000 2,803
-----------------------------------------------------------
(b)Symantec Corp. 75,000 1,744
-----------------------------------------------------------
103,051
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
COMPUTER SYSTEMS AND PERIPHERALS-11.4%
-----------------------------------------------------------
(a)(b)Advanced Technology Ventures II,
17.9% limited partnership interest -- $ 2,345
-----------------------------------------------------------
Apple Computer 100,000 3,825
-----------------------------------------------------------
(b)COMPAQ Computer Corp. 165,000 6,270
-----------------------------------------------------------
(a)(b)Crosspoint Venture Partners 1993,
3.1% limited partnership interest -- 1,097
-----------------------------------------------------------
(a)Dell Computer Corp. 290,263 15,892
-----------------------------------------------------------
(b)Digital Equipment Corp. 255,000 11,762
-----------------------------------------------------------
(b)EMC Corporation 450,000 8,887
-----------------------------------------------------------
(b)Gateway 2000, Inc. 40,000 757
-----------------------------------------------------------
International Business Machines Corp. 180,000 17,055
-----------------------------------------------------------
(b)Seagate Technology 100,000 3,188
-----------------------------------------------------------
(a)(b)Silicon Graphics, Inc. 300,000 11,250
-----------------------------------------------------------
(b)Sun Microsystems 100,000 3,988
-----------------------------------------------------------
86,316
ELECTRONIC COMPONENTS AND RELATED-21.6%
-----------------------------------------------------------
(b)Adaptec Inc. 100,000 3,200
-----------------------------------------------------------
Advanced Micro Devices 100,000 3,600
-----------------------------------------------------------
(b)Cypress Semiconductor Corp. 145,000 4,386
-----------------------------------------------------------
(b)DSP Group 100,000 2,150
-----------------------------------------------------------
Diamond Multimedia System 50,000 1,000
-----------------------------------------------------------
(b)Electroglas Inc. 100,000 4,350
-----------------------------------------------------------
(b)Integrated Device Technology Inc. 160,000 6,100
-----------------------------------------------------------
Intel Corporation 275,000 28,153
-----------------------------------------------------------
(b)Lam Research Corp. 75,000 3,787
-----------------------------------------------------------
Linear Technology Corporation 190,000 11,353
-----------------------------------------------------------
(b)LSI Logic Corp. 120,000 7,995
-----------------------------------------------------------
(b)Maxim Integrated Products, Inc. 250,000 9,063
-----------------------------------------------------------
(b)Microchip Technology Incorporated 200,000 5,650
-----------------------------------------------------------
Micron Technology 190,000 15,628
-----------------------------------------------------------
(b)Microtest, Inc. 20,000 420
-----------------------------------------------------------
Molex Incorporated, "A" 250,000 9,000
-----------------------------------------------------------
(b)Novellus Systems, Inc. 105,000 6,379
-----------------------------------------------------------
Omron Corp. 67,000 1,316
-----------------------------------------------------------
(b)OPTi Inc. 100,000 1,513
-----------------------------------------------------------
(b)Quad Systems Corporation 65,000 520
-----------------------------------------------------------
Quality Semiconducter Inc. 75,000 844
-----------------------------------------------------------
(b)S3 Inc. 110,000 2,544
-----------------------------------------------------------
Sharp Corp. 67,000 1,100
-----------------------------------------------------------
(b)Solectron Corp. 250,000 7,344
-----------------------------------------------------------
(b)Tencor Instruments 75,000 5,081
-----------------------------------------------------------
(b)Teradyne Inc. 90,000 4,556
-----------------------------------------------------------
Texas Instruments Inc. 90,000 9,540
-----------------------------------------------------------
Tokyo Electron Ltd. 39,000 1,216
-----------------------------------------------------------
(b)Ultratech Stepper, Inc. 50,000 2,800
-----------------------------------------------------------
(b)VLSI Technology Inc. 25,000 533
-----------------------------------------------------------
(b)Xilinx, Inc. 40,000 3,070
-----------------------------------------------------------
164,191
ENTERTAINMENT-1.1%
-----------------------------------------------------------
(b)Viacom International Inc., "B" 181,845 8,342
-----------------------------------------------------------
ENVIRONMENTAL PRODUCTS-.2%
-----------------------------------------------------------
Ashland Coal, Inc. 35,000 967
-----------------------------------------------------------
(b)Clean Harbors, Inc. 250,000 781
-----------------------------------------------------------
(b)Ecogen Inc. 49,000 98
-----------------------------------------------------------
1,846
</TABLE>
5
<PAGE> 7
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C> <C>
EQUIPMENT AND INSTRUMENTATION-6.1%
-----------------------------------------------------------
Canon Inc. 95,000 $ 1,572
-----------------------------------------------------------
Hewlett-Packard Company 450,000 29,756
-----------------------------------------------------------
(b)Merix Corp. 35,000 796
-----------------------------------------------------------
National Instrument 100,000 1,875
-----------------------------------------------------------
(b)Thermedics Inc. 130,000 2,454
-----------------------------------------------------------
(b)Thermo Electron Corporation 165,000 8,889
-----------------------------------------------------------
Veeco Instruments 100,000 1,438
-----------------------------------------------------------
46,780
INDUSTRIAL TECHNOLOGY AND MANUFACTURING-2.8%
-----------------------------------------------------------
Atmel Corporation 125,000 5,500
-----------------------------------------------------------
Boeing Co. 100,000 5,500
-----------------------------------------------------------
Monsanto Co. 50,000 4,163
-----------------------------------------------------------
(b)Zebra Technologies Corporation 120,000 5,505
-----------------------------------------------------------
20,668
LIFE SCIENCES-21.2%
-----------------------------------------------------------
(b)Amgen, Inc. 225,000 16,355
-----------------------------------------------------------
(b)Angeion Corporation 250,000 1,117
-----------------------------------------------------------
Astra AB, "A", with warrants
expiring 1996 250,000 7,294
-----------------------------------------------------------
(b)Boston Scientific Corp. 273,216 7,445
-----------------------------------------------------------
(b)Centocor Inc. 140,000 1,977
-----------------------------------------------------------
(b)Chiron Corporation 5,311 293
-----------------------------------------------------------
Columbia/HCA Healthcare Corp. 90,000 3,780
-----------------------------------------------------------
(b)Cordis Corp. 128,700 9,234
-----------------------------------------------------------
Eli Lilly & Co. 100,000 7,475
-----------------------------------------------------------
(b)Genentech Inc. 110,000 5,541
-----------------------------------------------------------
(b)HealthTrust, Inc. 75,000 2,772
-----------------------------------------------------------
(b)Horizon Healthcare Corp. 150,000 3,131
-----------------------------------------------------------
(b)IDEXX Laboratories 124,700 5,362
-----------------------------------------------------------
Integrated Health Services 87,800 3,040
-----------------------------------------------------------
(a)(b)Isis Pharmaceuticals, Inc. 350,692 2,239
-----------------------------------------------------------
Johnson & Johnson 165,000 10,725
-----------------------------------------------------------
Manor Care, Inc. 85,000 2,497
-----------------------------------------------------------
(b)Matrix Pharmaceutical, Inc. 70,000 1,033
-----------------------------------------------------------
Medtronic, Inc. 250,000 18,594
-----------------------------------------------------------
Merck & Co. 75,000 3,216
-----------------------------------------------------------
(b)Nellcor Inc. 100,000 4,150
-----------------------------------------------------------
Pfizer, Inc. 160,000 13,860
-----------------------------------------------------------
Schering-Plough Corporation 150,000 11,306
-----------------------------------------------------------
SmithKline Beecham plc 125,000 4,859
-----------------------------------------------------------
(b)Stryker Corp. 85,000 3,836
-----------------------------------------------------------
(b)St. Jude Medical, Inc. 60,000 2,580
-----------------------------------------------------------
(b)Tecnol Medical Products, Inc. 160,000 2,980
-----------------------------------------------------------
U.S. Surgical Corp. 150,000 3,338
-----------------------------------------------------------
(b)Vencor Inc. 50,000 1,550
-----------------------------------------------------------
161,579
-----------------------------------------------------------
TOTAL COMMON STOCKS-92.7%
(Cost: $496,341) 705,854
-----------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS
-----------------------------------------------------------
General Motors Corp. 150,000 9,394
-----------------------------------------------------------
(a)Oculon Corp. 728,156 175
-----------------------------------------------------------
(a)(b)Socket Communications 333,392 500
-----------------------------------------------------------
<CAPTION>
Number of
Shares,
Contracts
or Principal
Amount Value
--------- --------
<S> <C> <C>
TOTAL CONVERTIBLE PREFERRED
STOCKS-1.3%
(Cost: $8,750) $ 10,069
-----------------------------------------------------------
CORPORATE OBLIGATIONS
-----------------------------------------------------------
FFM, convertible, 5.00% 2001 $ 3,305 3,941
-----------------------------------------------------------
Silicon Graphics, Inc.,
convertible, zero coupon, 2013 18,400 11,408
-----------------------------------------------------------
TCI Communications, 8.65%, 2004 1,200 1,208
-----------------------------------------------------------
Thermo Electron Corporation,
convertible, 5.00%, 2001 3,200 3,960
-----------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS-2.7%
(Cost: $16,426) 20,517
-----------------------------------------------------------
LONG PUT OPTIONS-.7%
(Cost: $7,156)
-----------------------------------------------------------
Technology Basket
Aug and Oct 100 200 cts. 5,550
-----------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield-6.12% to 6.21%
Due-May to July 1995
-----------------------------------------------------------
Baxter International Inc. $ 1,700 1,699
-----------------------------------------------------------
Finova Capital Corp. 5,000 4,961
-----------------------------------------------------------
Unocal Corp. 2,000 1,993
-----------------------------------------------------------
Whirlpool Financial Corp. 10,000 9,851
-----------------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS-2.4%
(Cost: $18,506) 18,504
-----------------------------------------------------------
TOTAL INVESTMENTS-99.8%
(Cost: $547,179) 760,494
-----------------------------------------------------------
SHORT CALL OPTIONS
-----------------------------------------------------------
Technology Basket
Aug 111 and Oct 113
(Premiums received: $2,481) 200 cts. (3,514)
-----------------------------------------------------------
SHORT PUT OPTIONS
-----------------------------------------------------------
Technology Basket
Aug and Oct 85
(Premiums received: $1,576) 200 (1,237)
-----------------------------------------------------------
TOTAL SHORT OPTIONS-(.6)% (4,751)
-----------------------------------------------------------
OTHER ASSETS,
LESS LIABILITIES-.8% 5,866
-----------------------------------------------------------
NET ASSETS-100% $761,609
===========================================================
</TABLE>
See accompanying Notes to Portfolio of Investments.
6
<PAGE> 8
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 $25,338,000, which represented 3.3% of net assets.
<TABLE>
<CAPTION>
Number
of Shares
Date of or Principal
Security Description Acquisition Amount Unit Cost
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
17.9% limited
Advanced Technology Ventures II June 1994 partnership interest $2,345,000
--------------------------------------------------------------------------------------------------------------------
April 1993
to 3.1% limited
Crosspoint Venture Partners 1993 March 1995 partnership interest 1,200,000
--------------------------------------------------------------------------------------------------------------------
August 1994
to
Dell Computer Corp., common stock September 1994 105,263 35.88
--------------------------------------------------------------------------------------------------------------------
December 1993
to 5.0% limited
GEO Capital III April 1995 partnership interest 1,300,000
--------------------------------------------------------------------------------------------------------------------
December 1993
to
Isis Pharmaceutical, Inc., common stock March 1995 307,692 6.50
--------------------------------------------------------------------------------------------------------------------
Oculon Corp., convertible preferred stock March 1994 728,156 1.03
--------------------------------------------------------------------------------------------------------------------
October 1993
to
Silicon Graphics, Inc., convertible, zero coupon, 2013 May 1994 $18,400,000 44.82
--------------------------------------------------------------------------------------------------------------------
Socket Communications, convertible preferred stock May 1994 333,392 1.50
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(b) Non-income producing security.
Based on the cost of investments $547,179,000 for federal income tax purposes at
April 30, 1995, the aggregate gross unrealized appreciation was $224,961,000,
the aggregate gross unrealized depreciation was $11,646,000 and the net
unrealized appreciation of investments was $213,315,000.
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
- -------------------------------------------------------
Investments, at value
(Cost: $547,179) $760,494
- -------------------------------------------------------
Receivable for:
Fund shares sold 265
- -------------------------------------------------------
Investments sold 13,101
- -------------------------------------------------------
Dividends and interest 303
- -------------------------------------------------------
Total assets 774,163
- -------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------
Cash overdraft 5,125
- -------------------------------------------------------
Payable for:
Fund shares redeemed 555
- -------------------------------------------------------
Investments purchased 1,420
- -------------------------------------------------------
Management fee 344
- -------------------------------------------------------
Distribution services fee 10
- -------------------------------------------------------
Administrative services fee 100
- -------------------------------------------------------
Custodian and transfer agent
fees and related expenses 148
- -------------------------------------------------------
Other 101
- -------------------------------------------------------
Outstanding short options, at value
(Premiums received: $4,057) 4,751
- -------------------------------------------------------
Total liabilities 12,554
- -------------------------------------------------------
Net assets $761,609
=======================================================
ANALYSIS OF NET ASSETS
- -------------------------------------------------------
Excess of amounts received from
issuance of shares over amounts
paid on redemptions of shares
on account of capital $490,202
- -------------------------------------------------------
Undistributed net realized gain
on sales of investments 53,574
- -------------------------------------------------------
Unrealized appreciation
of investments 212,621
- -------------------------------------------------------
Undistributed net investment
income 5,212
- -------------------------------------------------------
Net assets applicable to shares
outstanding $761,609
=======================================================
THE PRICING OF SHARES
- -------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($744,041,937 / 66,209,753 shares outstanding) $11.24
- -------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of net
asset value or 5.75% of offering price) $11.93
=======================================================
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales
charge) per share
($16,859,439 / 1,517,783 shares
outstanding) $11.11
=======================================================
CLASS C SHARES
Net asset value and redemption price per
share
($707,937 / 63,547 shares outstanding) $11.14
=======================================================
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six months ended April 30, 1995
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
- -------------------------------------------------------
Dividends $ 1,702
- -------------------------------------------------------
Interest 1,265
- -------------------------------------------------------
Total investment income 2,967
- -------------------------------------------------------
EXPENSES
- -------------------------------------------------------
Management fee 1,956
- -------------------------------------------------------
Distribution services fee 46
- -------------------------------------------------------
Administrative services fee 520
- -------------------------------------------------------
Custodian and transfer agent
fees and related expenses 443
- -------------------------------------------------------
Professional fees 40
- -------------------------------------------------------
Reports to shareholders 46
- -------------------------------------------------------
Trustees' fees and other 51
- -------------------------------------------------------
Total expenses 3,102
- -------------------------------------------------------
Net investment loss (135)
- -------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
- -------------------------------------------------------
Net realized gain on sales of investments
(including options purchased) 55,665
- -------------------------------------------------------
Net realized loss from options written (1,327)
- -------------------------------------------------------
Net realized gain 54,338
- -------------------------------------------------------
Net change in balance of unrealized
appreciation of investments 33,901
- -------------------------------------------------------
Net gain on investments 88,239
- -------------------------------------------------------
Net increase in net assets resulting
from operations $88,104
=======================================================
</TABLE>
8
<PAGE> 10
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
Six months
ended Year ended
April 30, October 31,
OPERATIONS 1995 1994
---------- -----------
<S> <C> <C>
- -----------------------------------------------------------
Net investment (loss) income $ (135) 309
- -----------------------------------------------------------
Net realized gain on sales of
investments 54,338 92,337
- -----------------------------------------------------------
Net change in unrealized
appreciation 33,901 (2,709)
- -----------------------------------------------------------
Net increase in net assets
resulting from operations 88,104 89,937
- -----------------------------------------------------------
Net equalization credits 252 123
- -----------------------------------------------------------
Dividends to shareholders from net
realized gain on investments (92,534) (38,179)
- -----------------------------------------------------------
Net increase from capital
share transactions 52,133 49,169
- -----------------------------------------------------------
Total increase in net assets 47,955 101,050
- -----------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------
Beginning of period 713,654 612,604
- -----------------------------------------------------------
End of period (including
undistributed net
investment income of
$5,212 in 1995 and
$5,095 in 1994) $761,609 713,654
===========================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
The Kemper Technology 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. 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. Realized and
unrealized gains and losses on financial futures, options and forward foreign
currency
9
<PAGE> 11
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.
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 $1,956,000 for
the six months ended April 30, 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 $40,000 for the six months ended April 30, 1995 for sales of Class A shares,
after allowing $196,000 as commissions to firms, of which $48,000 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 $46,000, and KDI paid $150,000 for commissions and
distribution fees to firms, including $31,000 to firms affiliated with KDI. In
addition, KDI received $13,000 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
$520,000 and KDI (as successor to KFS) paid $529,000 to firms, including $52,000
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
$353,000 (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 $338,000 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 payments to its
officers and incurred trustees' fees of $10,000 to independent trustees.
10
<PAGE> 12
4. INVESTMENT TRANSACTIONS
For the six months ended April 30, 1995 investment transactions (excluding short
term instruments) are as follows (dollars in thousands):
Purchases $380,617
- ------------------------------------------------------------
Proceeds from sales 396,699
- ------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
--------- --------
<S> <C> <C>
Options written:
Options outstanding at
beginning of period -- --
- ---------------------------------------------------------
Option contracts written 800 $6,901
- ---------------------------------------------------------
Options terminated by repurchases 400 2,844
- ---------------------------------------------------------
Options outstanding at end of
period 400 4,057
- ---------------------------------------------------------
</TABLE>
The aggregate value of cash and securities deposited as collateral on options
outstanding at April 30, 1995 is $65,463,000.
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 3,547 $ 36,744 7,279 $ 75,132
- -----------------------------------------------------------
Class B 2,000 20,637 496 5,352
- -----------------------------------------------------------
Class C 56 599 16 150
- -----------------------------------------------------------
Shares issued in
reinvestment
of dividends:
Class A 7,684 73,003 3,032 30,078
- -----------------------------------------------------------
Class B 113 1,064 -- --
- -----------------------------------------------------------
Class C 3 33 -- --
- -----------------------------------------------------------
Shares redeemed:
Class A (6,634) (69,125) (8,355) (85,317)
- -----------------------------------------------------------
Class B (1,032) (10,748) (45) (495)
- -----------------------------------------------------------
Class C (7) (74) (5) (57)
- -----------------------------------------------------------
Conversion of shares:
Class A 12 129 2 20
- -----------------------------------------------------------
Class B (12) (129) (2) (20)
- -----------------------------------------------------------
Shares issued in
acquisition(a):
Class A -- -- 2,294 24,326
- -----------------------------------------------------------
Net increase from
capital share
transactions $ 52,133 $ 49,169
- -----------------------------------------------------------
</TABLE>
(a) On August 26, 1994, the Fund acquired the assets of Kemper Environmental
Services Fund in a tax-free exchange.
11
<PAGE> 13
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 $11.50 10.68 9.95 12.42 9.37
- ----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) -- -- (.01) .01 .13
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.24 1.49 2.03 .04 3.35
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.24 1.49 2.02 .05 3.48
- ----------------------------------------------------------------------------------------------------------------------
Less dividends
Distribution from net investment income -- -- -- .03 .20
- ----------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments 1.50 .67 1.29 2.49 .23
- ----------------------------------------------------------------------------------------------------------------------
Total dividends 1.50 .67 1.29 2.52 .43
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.24 11.50 10.68 9.95 12.42
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 13.17 14.95 21.76 .32 38.58
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses .87 .89 .81 .82 .81
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02) .05 (.06) .07 1.24
- ----------------------------------------------------------------------------------------------------------------------
<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 $11.45 9.99 11.45 9.99
- ----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.05) (.05) (.05) (.05)
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.21 1.51 1.24 1.51
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.16 1.46 1.19 1.46
- ----------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain on investments 1.50 -- 1.50 --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.11 11.45 11.14 11.45
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 12.45 14.61 12.74 14.61
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.81 1.99 1.76 1.83
- ----------------------------------------------------------------------------------------------------------------------
Net investment loss (.96) (1.08) (.91) (.92)
- ----------------------------------------------------------------------------------------------------------------------
<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) $761,609 713,654 612,604 559,279 606,295
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 105 81 95 95 81
======================================================================================================================
</TABLE>
NOTES: Ratios have been determined on an annualized basis. Total return is not
annualized and does not reflect the effect of any sales charges.
12
<PAGE> 14
(LOGO)
KEMPER FINANCIAL SERVICES, INC.
120 South LaSalle Street
Chicago, IL 60603
KEMPER TECHNOLOGY FUND
Trustees Officers
STEPHEN B. TIMBERS C. BETH COTNER
President and Trustee Vice President
DAVID W. BELIN RICHARD A. GOERS
Trustee Vice President
LEWIS A. BURNHAM FRANK D. KORTH
Trustee Vice President
DONALD L. DUNAWAY JOHN E. PETERS
Trustee Vice President
ROBERT B. HOFFMAN PHILIP J. COLLORA
Trustee Vice President and
Secretary
DONALD R. JONES
Trustee
CHARLES F. CUSTER
DAVID B. MATHIS Vice President and
Trustee Assistant Secretary
SHIRLEY D. PETERSON JEROME L. DUFFY
Trustee Treasurer
WILLIAM P. SOMMERS ELIZABETH C. WERTH
Trustee Assistant Secretary
- -----------------------------------------------------------
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 239710
KTF-3 (6/95) Printed in the U.S.A.
or accompanied by a Kemper Equity Funds prospectus.
