<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 2000
Seeking growth of capital
KEMPER TECHNOLOGY FUND
"... We maintain a focus on quality, established companies. As such, our
participation in pure-play Internet stocks was limited to only the fundamentally
strong names. And during this period, our more modest investment in Internet
stocks worked to our advantage as most experienced deep declines in March and
April. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
INDUSTRY SECTORS
9
LARGEST HOLDINGS
10
PORTFOLIO OF INVESTMENTS
15
FINANCIAL STATEMENTS
18
FINANCIAL HIGHLIGHTS
20
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
KEMPER TECHNOLOGY FUND TOTAL RETURNS
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2000 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
LIPPER SCIENCE &
KEMPER TECHNOLOGY FUND KEMPER TECHNOLOGY FUND TECHNOLOGY FUNDS
KEMPER TECHNOLOGY FUND CLASS A CLASS B CLASS C CATEGORY AVERAGE*
------------------------------ ---------------------- ---------------------- -----------------
<S> <C> <C> <C>
53.31 52.53 52.70 51.91
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
* LIPPER ANALYTICAL SERVICES, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES
IN NET ASSET VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT
OF SALES CHARGES; IF SALES CHARGES HAD BEEN INCLUDED, RESULTS MIGHT HAVE BEEN
LESS FAVORABLE.
INVESTMENT BY THE FUND IN EMERGING TECHNOLOGY COMPANIES PRESENTS GREATER RISK
THAN INVESTMENT IN MORE ESTABLISHED COMPANIES.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
4/30/00 10/31/99
.........................................................
<S> <C> <C> <C> <C>
KEMPER TECHNOLOGY FUND CLASS
A $30.43 $21.29
.........................................................
KEMPER TECHNOLOGY FUND CLASS
B $27.74 $19.62
.........................................................
KEMPER TECHNOLOGY FUND CLASS
C $28.20 $19.91
.........................................................
</TABLE>
KEMPER TECHNOLOGY FUND
LIPPER RANKINGS AS OF 4/30/00
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER SCIENCE & TECHNOLOGY FUNDS
CATEGORY*
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
....................................................................................
<S> <C> <C> <C> <C> <C>
1-YEAR #49 of 107 funds #53 of 107 funds #52 of 107 funds
....................................................................................
5-YEAR #14 of 31 funds #18 of 31 funds #17 of 31 funds
....................................................................................
10-YEAR #10 of 12 funds N/A N/A
....................................................................................
15-YEAR #6 of 8 funds N/A N/A
....................................................................................
20-YEAR #2 of 3 funds N/A N/A
....................................................................................
</TABLE>
DIVIDEND REVIEW
DURING THE SIX-MONTH PERIOD, KEMPER TECHNOLOGY FUND PAID THE FOLLOWING
DIVIDENDS PER SHARE:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
.........................................................
<S> <C> <C> <C> <C> <C>
LONG-TERM CAPITAL GAIN $1.54 $1.54 $1.54
.........................................................
SHORT-TERM CAPITAL
GAIN $0.40 $0.40 $0.40
.........................................................
</TABLE>
TERMS TO KNOW
YOUR FUND'S STYLE
MORNINGSTAR EQUITY STYLE BOX
<TABLE>
<S> <C>
[MORNINGSTAR EQUITY STYLE Source: Data by Morningstar, Inc. Chicago, IL.
BOX] (312) 696-6000. The Morningstar Equity Style Box
placement is based on two variables: a fund's
market capitalization relative to the movements
of the market and a fund's valuation, which is
calculated by comparing the stocks in the fund's
portfolio with the most relevant of the three
market-cap groups.
THE STYLE BOX REPRESENTS A SNAPSHOT OF THE FUND'S
PORTFOLIO ON A SINGLE DAY. IT IS NOT AN EXACT
ASSESSMENT OF RISK AND DOES NOT REPRESENT FUTURE
PERFORMANCE. THE FUND'S PORTFOLIO CHANGES FROM
DAY TO DAY. PLEASE CONSULT THE PROSPECTUS FOR A
DESCRIPTION OF INVESTMENT POLICIES.
</TABLE>
BALANCE SHEET A condensed financial statement showing what a company owns, what
it owes and the ownership interest in the company of its stockholders, at a
certain time.
CAPITALIZATION/MARKET CAPITALIZATION A measure of the size of a company that
offers publicly traded stock, as determined by multiplying the current share
price by the number of shares outstanding.
SEMICONDUCTOR The essential parts that make it possible to build small,
inexpensive electronic systems.
VOLATILITY The characteristic of a security, commodity or market to rise or fall
sharply in price within a short period of time. A stock may be volatile due to
uncertainty in a company, industry, market or economy. Compared with many other
types of stocks, technology stocks are subject to a higher degree of volatility.
<PAGE> 3
ECONOMIC OVERVIEW
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $290 BILLION IN ASSETS FOR INSTITUTIONAL AND CORPORATE
CLIENTS, RETIREMENT AND PENSION PLANS, INSURANCE COMPANIES, MUTUAL FUND
INVESTORS AND INDIVIDUALS. SCUDDER KEMPER INVESTMENTS OFFERS A FULL RANGE OF
INVESTMENT COUNSEL AND ASSET MANAGEMENT CAPABILITIES BASED ON A COMBINATION OF
PROPRIETARY RESEARCH AND DISCIPLINED, LONG-TERM INVESTMENT STRATEGIES.
DEAR KEMPER FUNDS SHAREHOLDER,
As we enter summer, there isn't much to complain about. For all the yammering
about the "new" economy, the old economy is doing pretty well. Consumers may
hanker for a new GPS handset or a Palm Pilot, but they lust after a suburban
mansion with a garage big enough to hold their luxury car and SUV -- and state
and local governments are laying old-fashioned asphalt almost as fast as
businesses are building the information superhighway. Satisfying both old and
new desires got the economy off to a fast start in the new century -- GDP growth
rose at an annual rate of more than 5 percent in the first quarter. Even with a
modest slowdown possible in the second half, growth for the year 2000 is likely
to be close to 5 percent.
So everyone is happy, right? Well, almost everyone. Consumers seldom have felt
so confident; businesspeople seldom have behaved so expansively. But there's
still one grump: Federal Reserve Board Chairman Alan Greenspan, who's become
increasingly worried that rapid growth will bring on inflation, and raised
interest rates by half a percentage point (0.50%) accordingly on May 16. The
Fed's move puts the benchmark federal funds rate at 6.5 percent, its highest
level since February 1991, and the more symbolic discount rate at 6.0 percent.
Despite Greenspan's attempt to slow spending by raising interest rates,
consumers are still splurging, and they show few signs of stopping. We know this
because shoppers are buying the big-ticket items they usually purchase early in
a cycle -- items such as personal computers, mobile phones, jewelry, fancy
kitchen appliances, exercise equipment and big boats. Why are consumers still
buying despite Greenspan's attempts to slow their splurging? There are three
answers: deflation, wealth and easy credit.
Falling prices have made big-ticket items almost irresistible. Since 1997,
prices of kitchen appliances have fallen 4.5 percent, TVs and VCRs 16 percent
and sporting equipment 6.5 percent. Even auto showrooms no longer produce
sticker shock, and drivers have responded with gusto, buying a record 16.9
million cars and light trucks in 1999. 2000 is likely to be the first year in
which automotive sales top 17 million.
Some of that spending has been made possible by stock market gains: Wall
Street has handed out windfalls to almost anyone holding equities in the past
few years. But consumers who don't own stocks are also spending, thanks to a
decade of debt. Young, poor or new to America? In the 1990s, it didn't matter;
lenders still loved you. While high-income families have been borrowing less,
those lower on the income scale have been borrowing more.
But it's not just consumers that Greenspan is concerned about; businesses are
splurging as well. During 1999, businesses increased spending on computers and
peripherals by 35 percent and spending on communications equipment by 25 percent
(both after adjusting for price declines). Far from slowing down this year, we
expect investment in these two categories to accelerate -- to 40 percent growth
for computers and 30 percent growth for communications equipment.
And just like consumers, businesses are borrowing to buy. You may think that
with booming sales, entrepreneurs are cash-rich and can afford it. But while
1999 saw economy-wide earnings jump 10 percent and profits of Standard and
Poor's (S&P) 500 companies leap nearly 14 percent, internal cash covered less
than 84 percent of capital spending. With the exception of 1998, that's the
lowest on record. Last year alone, corporate debt shot up by more than 11
percent to $560 billion. And new economy companies are no exception; they have
more debt than most people realize, issuing more than half of all convertible
bonds.
All this debt could cause problems. Although we've increased our 2001
inflation outlook to nearly 3 percent -- an entire percentage point higher than
our prediction three months ago -- we're not particularly worried about
inflation. It's the heavy borrowing we're concerned about. Debt continues to
exceed income growth, and when Greenspan succeeds in slowing the economy with
higher interest rates (which he will succeed in doing), all of the debt American
consumers and businesses are taking on could be tricky to handle. Private
financial obligations must be paid with personal income and corporate profits.
When the economy slows, personal income stagnates and corporate profits often
fall -- which makes it harder to pay off those debts. Consumers and businesses
may have to sell their assets to pay off the debt, and they may risk going into
default.
That being the case, a gradual economic slowdown may be in everyone's best
interest. But "gradual" is the key. Both the old and new economy have a lot
riding on the Fed's ability to rein in growth softly and smoothly, because
abrupt slowdowns encourage consumers and businesses to sell assets -- and
perhaps risk bankruptcy -- to pay off debt, as described above.
A gradual slowdown seems to be what the Fed is seeking, but for all of
Greenspan's semi-tough talk, some indicators suggest that monetary policy has
actually been lax. Broad money and credit creation have vastly exceeded
economic activity since 1995, and no central bank can allow that to continue
indefinitely without creating
3
<PAGE> 4
ECONOMIC OVERVIEW
ECONOMIC GUIDEPOSTS
ECONOMIC ACTIVITY IS A KEY INFLUENCE ON INVESTMENT PERFORMANCE AND
SHAREHOLDER DECISION-MAKING. PERIODS OF RECESSION OR BOOM, INFLATION OR
DEFLATION, CREDIT EXPANSION OR CREDIT CRUNCH HAVE A SIGNIFICANT IMPACT ON
MUTUAL FUND PERFORMANCE.
THE FOLLOWING ARE SOME SIGNIFICANT ECONOMIC GUIDEPOSTS AND THEIR
INVESTMENT RATIONALE THAT MAY HELP YOUR INVESTMENT DECISION-MAKING. THE
10-YEAR TREASURY RATE AND THE PRIME RATE ARE PREVAILING INTEREST RATES.
THE OTHER DATA REPORT YEAR-TO-YEAR PERCENTAGE CHANGES.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (5/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.40 6.00 5.50 5.60
Prime rate (2) 9.50 8.50 7.75 8.50
Inflation rate (3)* 3.00 2.60 2.30 1.50
The U.S. dollar (4) 4.30 -0.70 -0.90 6.40
Capital goods orders (5)* 17.00 12.30 2.50 14.50
Industrial production (5)* 6.10 3.70 2.90 5.20
Employment growth (6) 2.60 2.20 2.30 2.60
</TABLE>
(1) FALLING INTEREST RATES IN RECENT YEARS HAVE BEEN A BIG PLUS FOR FINANCIAL
ASSETS.
(2) THE INTEREST RATE THAT COMMERCIAL LENDERS CHARGE THEIR BEST BORROWERS.
(3) INFLATION REDUCES AN INVESTOR'S REAL RETURN. IN THE LAST FIVE YEARS,
INFLATION HAS BEEN AS HIGH AS 6 PERCENT. THE LOW, MODERATE INFLATION OF THE
LAST FEW YEARS HAS MEANT HIGH REAL RETURNS.
(4) CHANGES IN THE EXCHANGE VALUE OF THE DOLLAR IMPACT U.S. EXPORTERS AND THE
VALUE OF U.S. FIRMS' FOREIGN PROFITS.
(5) THESE INFLUENCE CORPORATE PROFITS AND EQUITY PERFORMANCE.
(6) AN INFLUENCE ON FAMILY INCOME AND RETAIL SALES.
*DATA AS OF 4/30/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
inflation. If we begin to see higher core inflation, the Fed will have to deal
with all that money it's created in a less gradualist manner -- and that could
get tricky. Financial turmoil accompanied each of the Fed's last two efforts to
slow the economy down. In 1994, there was a bond market meltdown that resulted
in a Mexican debt crisis. After a more timid Fed tightening in 1997, crises in
Asia were followed by problems with Russian debt, Brazilian debt and a large
American hedge fund. We don't think this is a coincidence: The global debt
market is so vast and interconnected that it's highly vulnerable to a rise in
the cost of its basic raw material -- short-term funds.
Let's hope, then, that the Fed can slow the economy without upsetting the
financial applecart, because that could affect everyone. After all, the old
economy and the new economy are wedded in many ways. Much of the money that
flows to IPOs is available because mature industries have borrowed to carry out
mergers and share buybacks. Old economy companies are the biggest customers of
new economy products. And e-commerce sites are all about moving traditional
goods over old-fashioned highways. Despite a lot of talk about old and new,
we're all in this economy together.
Happily, financial markets got some better news along that front in late May
and early June. A range of economic data, from retail sales to mortgage
applications to the all-important employment report, began to point to somewhat
softer economic growth. If the Fed believes that the economy is finally slowing
in response to its tightening, the end of the rate hikes could be in sight.
Markets certainly were willing to believe, and they staged a strong relief rally
in late May and early June. While we don't expect a quick end to market
volatility, a slowdown in growth would be most welcome, and would make the
outlook for both stocks and bonds better for the remainder of the year.
Sincerely,
Scudder Kemper Investments Economics Group
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF JUNE 6, 2000, AND MAY NOT ACTUALLY COME TO PASS. THIS
INFORMATION IS SUBJECT TO CHANGE. NO PART OF THIS MATERIAL IS INTENDED AS AN
INVESTMENT RECOMMENDATION.
TO OBTAIN A KEMPER FUNDS PROSPECTUS, DOWNLOAD ONE FROM WWW.KEMPER.COM, TALK TO
YOUR FINANCIAL REPRESENTATIVE OR CALL SHAREHOLDER SERVICES AT (800) 621-1048.
THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING MANAGEMENT FEES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
4
<PAGE> 5
PERFORMANCE UPDATE
[BURKART PHOTO]
JIM BURKART IS LEAD PORTFOLIO MANAGER OF KEMPER TECHNOLOGY FUND. HE IS A VICE
PRESIDENT OF SCUDDER KEMPER INVESTMENTS, INC. AND A MEMBER OF THE FIRM'S GLOBAL
EQUITY GROUP. LEADING A TEAM OF FIVE PORTFOLIO MANAGERS, BURKART BRINGS MORE
THAN 25 YEARS OF INVESTMENT INDUSTRY EXPERIENCE TO THE FUND. BURKART'S TEAM
DRAWS ON THE RESOURCES OF SCUDDER KEMPER INVESTMENTS' LARGE STAFF OF ANALYSTS,
RESEARCHERS, TRADERS AND ECONOMISTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
KEMPER TECHNOLOGY FUND'S SEMIANNUAL PERIOD -- NOVEMBER 1, 1999 THROUGH APRIL
30, 2000 -- WAS CHARACTERIZED BY VOLATILITY BROUGHT ABOUT BY A MOMENTUM MARKET
PROPELLED BY THE EXPLOSIVE GROWTH OF TECHNOLOGY STOCKS, PARTICULARLY THOSE OF
INTERNET-RELATED COMPANIES. DESPITE THIS VOLATILE MARKET ENVIRONMENT, THE FUND
POSTED STRONG RETURNS FOR THE PERIOD. BELOW, LEAD PORTFOLIO MANAGER JIM BURKART
DISCUSSES HOW HE MANAGED THE FUND IN THIS CHOPPY ENVIRONMENT AND HIS APPROACH TO
TECHNOLOGY INVESTING.
Q HOW DID KEMPER TECHNOLOGY FUND PERFORM DURING THE SEMIANNUAL PERIOD?
A Despite sustained stock market volatility, the fund posted strong gains
for the six months ended April 30, 2000. The fund gained 53.31 percent (Class A
shares, unadjusted for any sales charges), while the Hambrecht & Quist
technology index gained 49.05 percent and the S&P 500 gained 7.18 percent.
While we're pleased with the fund's overall gain, the figure does not reflect
the degree of volatility present during the period. The fund's return for the
three-month period ended April 30 was much more modest at 9.70 percent
(unadjusted for sales charges). This swing in performance illustrates the
powerful ups and downs of technology stocks. It's always important to keep a
long-term perspective when investing -- particularly when investing in
technology stocks. Over the long term, Kemper Technology Fund has performed
quite well but has not posted gains as strong as those in recent periods. The
fund's average return (unadjusted for sales charges) for the 10-year period
ended April 30 was 26.85 percent -- still an admirable return and one that is
much more realistic over time.
Q YOU MENTIONED THAT THE MARKET WAS QUITE VOLATILE. WHAT CAUSED THE
VOLATILITY?
A Since 1998, technology stocks have enjoyed tremendous gains. As momentum
in the technology sector increased, investors seemingly turned a blind eye to
company fundamentals. New, smaller high-flying stocks -- many of them the
untested, trendy "dot-com" stocks that we stay away from for the most
part -- were grabbing headlines with strong performance. Investors eagerly
awaited each new initial public offering (IPO) of anything Internet-related and
propelled the valuations of these new companies to extraordinary levels. This
excitement buoyed the entire technology sector even amid a backdrop of
considerable volatility.
By March, however, it was clear that these dot-com companies were not entirely
invincible. Many began to struggle, and investors realized that a "com" at the
end of a company name did not ensure an indiscriminate gain. Investors began to
scrutinize new Internet-related IPOs more thoroughly and debated whether the
high valuations in this group of companies were justified. As this happened,
there was panic selling for about a week, pushing technology stocks into
market--
5
<PAGE> 6
PERFORMANCE UPDATE
correction territory. After the correction, investors returned to the technology
market with renewed enthusiasm.
The confidence was short-lived, however, and in April a more dramatic and
sustained downturn took place. This downturn came on the heels of rulings
against Microsoft by the federal government in its antitrust case. The ruling
and subsequent decline in Microsoft's stock price gave investors pause to wonder
whether the extreme valuations in the rest of the sector were justified.
Although the entire technology sector suffered, it was (other than Microsoft)
the Internet-related companies that declined most dramatically. Larger, more
established technology companies, like those held by this fund, declined less.
Q HOW DO YOU MANAGE THE FUND THROUGH PERIODS OF EXTREME VOLATILITY SUCH AS
THIS ONE?
A When it comes to technology stocks, there can be plenty of buzz. Our job
is to look beyond the trends and the noise and seek quality companies that have
the ability to generate sustainable, powerful growth. Using rigorous,
proprietary research, we target companies with:
- Sustainable, above-average earnings-per-share momentum
- Large, growing markets for their products or services
- Innovative management and products
- Excellent balance sheets
Q HOW WAS THE FUND IMPACTED BY THE DECLINE IN MICROSOFT'S STOCK?
A We hold a sizable position in Microsoft, so its legal troubles and decline
in market value hurt the fund. Microsoft's antitrust fight created anxiety for
investors and short-term stock price volatility because the court battle raises
questions with no immediate answers. However, our fundamental analysis of
Microsoft's business prospects shows that the company and its technology-sector
peers are well positioned to expand sales and earnings in the coming months. We
share management's view that Microsoft is worth more as one company than as two.
We also believe Microsoft will prevail on appeal because of shortcomings in the
government's case as well as a lack of evidence that consumers have been harmed.
We believe the company's new Office 2000 product line will win wide
marketplace acceptance this year. Microsoft is also well positioned to expand
market share in computer servers, where it currently runs second to Sun
Microsystems/ IBM's Unix platform and faces stiff competition from the Linux
platform. In our view, a favorable product cycle should boost Microsoft's growth
rate.
We think that as the Microsoft court case moves to the time-consuming appeal
stage, investors will begin to focus on the company's operations rather than the
legal battle. Legal issues may become secondary to the company's improving
fundamentals. Microsoft also appears to have the financial means to fight a
breakup plan, and the litigation shouldn't adversely impact the company's bottom
line. We think that there is a good chance that the breakup plan will be
overturned on appeal.
Based on our outlook for the company and its weakened stock price, we added to
the fund's position in Microsoft.
Q WHAT WORKED WELL FOR KEMPER TECHNOLOGY FUND?
A Diversification among technology names and adherence to a strict
investment discipline were key. Most technology stocks experienced wild swings.
Anticipating rotations and trading issues is tough in any market, but it was
almost impossible in this one.
Overall, we enjoyed strong performance from our investments in semiconductors
and component-based technology companies. These companies produce computer
chips: the building blocks for cellular and wireless telecommunications,
computers, calculators and a host of other goods. Top-performing semiconductor
stocks included Xilinx and Applied Materials.
Data-communications and telecommunications companies also provided strong
returns. Cisco Systems and JDS Uniphase were some of the fund's top performers.
These types of companies were propelled by their strong business results, which
were much better than anticipated by the market.
Q WAS THE FUND INVESTED IN INTERNET-RELATED COMPANIES?
A We maintain a focus on quality, established companies. As such, our
participation in pure-play Internet stocks was limited to only the fundamentally
strong names. And during this period, our more modest investment in Internet
stocks worked to our advantage as most experienced deep declines in March and
April.
6
<PAGE> 7
PERFORMANCE UPDATE
Q THE FUND'S TOP 10 HOLDINGS INCLUDE SEVEN OF THE SAME NAMES THAT WERE
INCLUDED AT THE BEGINNING OF THE SEMIANNUAL PERIOD. IS IT PART OF YOUR STRATEGY
TO BUY AND HOLD?
A Absolutely. Before we buy a stock, we must believe in its long-term
merits. We evaluate each stock, using rigorous proprietary fundamental research
supplemented by quantitative measures. Once we've purchased a stock, we're not
going to sell it because of short-term nonfundamental price changes. Also, we're
very conscious of turnover, and we don't believe that constantly shifting the
portfolio serves our shareholders.
Q GIVEN THE CHALLENGES OF THE RECENT MARKET, WHAT IS YOUR OUTLOOK FOR
TECHNOLOGY INVESTING IN THE NEAR TERM?
A It's important to remember that no one can predict with certainty how the
markets or any sector will perform. However, we believe that the recent
correction in technology stocks was normal and healthy. As mentioned before,
this sector is always quite volatile. The run-up in valuations that had
occurred, in our opinion, was not entirely justified.
If the Federal Reserve Board is successful at dramatically slowing the current
economic growth, we believe the tech sector will grow at a slower pace. We will
continue to look for the companies with the strongest fundamentals and take
advantage of price weaknesses to "nibble away" at those we want over the long
term but didn't buy at higher prices. We'll look particularly at the
semiconductor subsector. As the demand for better, faster data transmission
continues to grow, many manufacturers are seeing orders accelerate and business
fundamentals improve.
Despite the market's recent challenges, we believe that over time, companies
with strong franchises, skilled management and sustainable, consistent earnings
growth can produce superior long-term returns. Especially in times of market
turbulence, it's important to maintain a long-term outlook. We continue to
believe that quality technology stocks offer excellent prospects for fund
investors.
7
<PAGE> 8
INDUSTRY SECTORS
A SIX-MONTH COMPARISON*
DATA SHOWS THE PERCENTAGE OF THE STOCK HOLDINGS IN THE PORTFOLIO THAT EACH
SECTOR REPRESENTED ON APRIL 30, 2000, AND ON OCTOBER 31, 1999.
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER TECHNOLOGY FUND AS OF KEMPER TECHNOLOGY FUND AS OF
4/30/00 10/31/99
---------------------------- ----------------------------
<S> <C> <C>
Technology+ 67.60 69.70
Other 9.40 5.50
Consumer nondurables 9.30 8.50
Communication services 7.50 7.20
Capital goods 4.00 6.90
Health care 1.60 0.70
Financials 0.60 1.50
</TABLE>
+TECHNOLOGY SECTOR COMPARISON
DATA SHOWS THE PERCENTAGE OF TECHNOLOGY STOCKS IN FURTHER DETAIL IN THE
PORTFOLIOS ON APRIL 30, 2000 AND OCTOBER 31, 1999.
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER TECHNOLOGY FUND AS OF KEMPER TECHNOLOGY FUND AS OF
4/30/00 10/31/99
---------------------------- ----------------------------
<S> <C> <C>
Computer software 19.8 23.1
Semiconductors 17.9 18.2
Diverse electronic products 11.5 11.1
Electronic components/distributions 9.5 7.4
Electronic data processing 5.6 4.4
Edp peripherals 3.3 4.8
Office/plant automation 0 0.7
</TABLE>
* Portfolio composition is subject to change.
8
<PAGE> 9
LARGEST HOLDINGS
THE FUND'S 10 LARGEST HOLDINGS
Representing 29.4 percent of the fund's total common stock holdings on April 30,
2000.
<TABLE>
<CAPTION>
HOLDINGS PERCENT
<S> <C> <C> <C>
--------------------------------------------------------------------------------------
1. CISCO SYSTEMS Large, comprehensive supplier of 4.2%
routing software and related
systems that direct the flow of
data between local networks.
--------------------------------------------------------------------------------------
2. ORACLE A leading global provider of 3.6%
database management software.
--------------------------------------------------------------------------------------
3. INTEL Engaged in the design, 3.5%
development, manufacture and sale
of advanced semiconductors and
integrated circuits.
--------------------------------------------------------------------------------------
4. XILINX Designs, develops and markets 3.0%
computer circuits and software
design tools, and provides field
engineering support.
--------------------------------------------------------------------------------------
5. MOTOROLA Manufactures components, notably 2.9%
semiconductors and electronic
communications equipment.
--------------------------------------------------------------------------------------
6. MICROSOFT Develops, markets and supports a 2.6%
variety of software, operating
systems and, language and
application programs.
--------------------------------------------------------------------------------------
7. DELL COMPUTER Dell Computer is a leading PC 2.6%
maker and the world's #1
direct-sale computer vendor. Its
products include notebooks, PCs
and network servers. Dell also
markets a variety of peripherals
and software for other
manufacturers.
--------------------------------------------------------------------------------------
8. JDS UNIPHASE JDS Uniphase makes laser 2.5%
subsystems and equipment for
fiber-optic telecommunications,
signal processing, and
laser-based semiconductor wafer
inspection and analysis.
--------------------------------------------------------------------------------------
9. APPLIED MATERIALS A leading maker of the complex 2.4%
manufacturing equipment used in
semiconductor factories.
--------------------------------------------------------------------------------------
10. NOKIA Nokia is the world's #1 mobile 2.1%
phone maker, and its strength is
in the fast-growing market for
digital cell phones. Its products
are divided among three
divisions: networks, mobile
phones, and other operations.
--------------------------------------------------------------------------------------
</TABLE>
*Portfolio composition and holdings are subject to change.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER TECHNOLOGY FUND
Portfolio of Investments at April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
REPURCHASE AGREEMENTS--0.2% AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
State Street Bank and Trust
Company, 5.680%, to be
repurchased at $11,180,290 on
05/01/2000 (a) (Cost $11,175,000) $11,175,000 $ 11,175,000
--------------------------------------------------------------------------
<CAPTION>
COMMERCIAL PAPER--9.2%
<S> <C> <C> <C> <C> <C>
Barton Capital Corp., 6.040%,
05/23/2000 21,000,000 20,922,487
Bell Atlantic Network Funding
Corp.:
6.000%, 05/03/2000 4,500,000 4,498,500
6.010%, 05/22/2000 50,000,000 49,824,708
6.040%, 06/05/2000 50,000,000 49,706,389
6.100%, 05/31/2000 3,000,000 2,984,750
Colgate-Palmolive Co., 6.040%,
06/15/2000 10,000,000 9,924,500
DaimlerChrysler NA, 6.020%,
05/18/2000 50,000,000 49,857,861
Deutsche Bank Financial, Inc.:
5.970%, 05/12/2000 20,000,000 19,963,517
6.010%, 05/26/2000 30,000,000 29,874,792
6.100%, 05/31/2000 20,000,000 19,888,167
Finova Capital Corp., Discount
Note, 5.930%, 05/18/2000 20,000,000 19,941,444
MCI WorldCom, Inc.:
6.070%, 05/08/2000 20,000,000 19,976,394
6.070%, 05/12/2000 30,000,000 29,944,358
6.070%, 05/15/2000 25,000,000 24,940,986
6.070%, 05/16/2000 25,000,000 24,936,771
6.070%, 05/18/2000 2,500,000 2,492,834
6.140%, 05/30/2000 15,000,000 14,925,808
Private Export Funding Corp.:
5.910%, 06/05/2000 20,000,000 19,885,083
5.940%, 06/20/2000 25,000,000 24,793,750
6.100%, 07/06/2000 10,000,000 9,888,167
6.380%, 07/25/2000 30,000,000 29,548,083
Wal-Mart Stores, Inc., 6.050%,
05/03/2000 18,689,000 18,682,718
--------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $497,402,067) 497,402,067
--------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS--90.6% NUMBER OF SHARES
<S> <C> <C> <C> <C> <C>
HEALTH--1.6%
BIOTECHNOLOGY--1.6%
Diversa Corp.* 365,000 9,855,000
Genentech, Inc.* 95,600 11,185,200
PE Corp-PE Biosystems Group 1,045,000 62,700,000
--------------------------------------------------------------------------
83,740,200
HOSPITAL MANAGEMENT--0.0%
FPA Medical Management, Inc. * 6,935 1
--------------------------------------------------------------------------
</TABLE>
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C>
MEDICAL SUPPLY & SPECIALTY--0.0%
Fusion Medical Technologies, Inc.* 8,070 $ 141,225
Survivalink Corp.*(b) 150,000 450,000
Survivalink Corp., Warrants*(b) 110,000 495,000
Trex Medical Corp.* 60,000 165,000
--------------------------------------------------------------------------
1,251,225
PHARMACEUTICALS--0.0%
Pharmos Corp.* 411,349 1,799,652
--------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS--6.3
CELLULAR TELEPHONE--2.5%
Nextel Communications, Inc. "A"* 200,000 21,887,500
Nokia Oyj (ADR) 1,967,000 111,873,125
--------------------------------------------------------------------------
133,760,625
TELEPHONE/ COMMUNICATIONS--3.8%
Efficient Networks, Inc.* 20,597 1,354,253
ICG Communications, Inc.* 7,270 216,283
JDS Uniphase Corp.* 1,280,000 132,720,000
Nortel Networks Corp. 600,000 67,950,000
--------------------------------------------------------------------------
202,240,536
-----------------------------------------------------------------------------------------------------------------------
FINANCIAL--0.6%
CONSUMER FINANCE--0.0%
Onyx Acceptance Corp.* 14,905 70,799
--------------------------------------------------------------------------
OTHER FINANCIAL COMPANIES--0.6%
Adams Capital Management, L.P, 3.6%
limited partnership interest*(b) 1,724,000 3,536,386
Alloy Ventures 2000, L.P., 3.1%
limited partnership interest*(b) 500,000 500,000
Asset Management Association 1996,
L.P., 2.5% limited partnership
interest*(b) 1,900,000 2,388,462
Asset Management Association 1998,
L.P., 3.5% limited partnership
interest*(b) 2,400,000 2,945,910
Crosspoint Venture Partners 1993,
L.P., 3.1% limited partnership
interest*(b) 1,500,000 5,169,894
GeoCapital III. L.P., 5.0% limited
partnership interest*(b) 2,000,000 786,793
GeoCapital IV, L.P., 2.9% limited
partnership interest*(b) 3,000,000 5,036,810
Med Venture Associates II, L.P.,
6.1% limited partnership
interest*(b) 1,800,000 1,927,628
Med Venture Associates III, L.P.,
2.7% limited partnership
interest*(b) 950,000 1,014,656
Sevin Rosen Fund V, L.P., 2.8%
limited partnership interest*(b) 2,865,000 4,080,723
W.R. Hambrecht* 140,000 7,000,000
--------------------------------------------------------------------------
34,387,262
-----------------------------------------------------------------------------------------------------------------------
MEDIA--1.2%
CABLE TELEVISION
AT&T Corp. -- Liberty Media Group
"A"* 600,000 29,962,500
EchoStar Communications Corp. "A"* 533,600 33,983,650
--------------------------------------------------------------------------
63,946,150
-----------------------------------------------------------------------------------------------------------------------
SERVICE INDUSTRIES--9.3%
EDP SERVICES--3.8%
Electronic Data Systems Corp. 900,000 61,875,000
First Data Corp. 520,000 25,317,500
Sapient Corp.* 700,000 55,431,250
VeriSign, Inc.* 459,600 64,056,750
--------------------------------------------------------------------------
206,680,500
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C>
MISCELLANEOUS COMMERCIAL
SERVICES--1.9%
Diamond Technology Partners Inc.* 350,000 $ 27,693,750
Siebel Systems, Inc. * 600,000 73,725,000
--------------------------------------------------------------------------
101,418,750
MISCELLANEOUS CONSUMER SERVICES--3.6%
Infospace.com, Inc.* 800,000 57,450,000
Yahoo!, Inc.* 800,000 104,200,000
eBay, Inc. * 200,000 31,837,500
--------------------------------------------------------------------------
193,487,500
-----------------------------------------------------------------------------------------------------------------------
DURABLES--2.0%
TELECOMMUNICATIONS EQUIPMENT
Com21, Inc.* 28,824 807,072
Tellabs, Inc. * 2,000,000 109,625,000
--------------------------------------------------------------------------
110,432,072
-----------------------------------------------------------------------------------------------------------------------
MANUFACTURING--2.0%
ELECTRICAL PRODUCTS--0.0%
Conductus, Inc.* 18,493 295,888
--------------------------------------------------------------------------
INDUSTRIAL SPECIALTY--1.1%
Corning, Inc. 300,000 59,250,000
--------------------------------------------------------------------------
OFFICE EQUIPMENT/ SUPPLIES--0.9%
Lexmark International Group, Inc.
"A"* 400,000 47,200,000
--------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--67.6%
COMPUTER SOFTWARE--19.8%
Advanced Digital Information Corp.* 1,000,000 24,562,500
BEA Systems, Inc.* 1,600,000 77,200,000
Brocade Communications Systems,
Inc.* 888,166 110,132,584
Business Objects, S.A.* 300,000 29,362,500
Celera Genomics* 250,000 20,625,000
Computer Associates International,
Inc. 1,400,000 78,137,500
Cysive Inc.* 300,000 16,331,250
I2 Technologies Inc.* 550,200 71,113,350
Intuit, Inc.* 2,030,000 72,953,125
Microsoft Corp.* 1,997,400 139,318,650
Oracle Corp.* 2,400,000 191,850,000
Parametric Technology Corp.* 1,100,000 8,971,875
Rational Software Corp.* 800,000 68,100,000
RealNetworks, Inc.* 300,000 14,287,500
SAP AG (Sponsored ADR) 800,000 39,300,000
Sycamore Networks, Inc.* 722,700 56,731,950
Vignette Corp.* 1,057,000 50,934,188
--------------------------------------------------------------------------
1,069,911,972
DIVERSE ELECTRONIC PRODUCTS--11.5%
Applied Materials, Inc.* 1,280,000 130,320,000
Dell Computer Corp.* 2,750,000 137,843,750
Foundry Networks, Inc.* 275,000 25,025,000
Motorola, Inc. 1,330,000 158,353,125
Solectron Corp.* 1,340,000 62,728,750
Teradyne, Inc.* 943,700 103,807,000
--------------------------------------------------------------------------
618,077,625
EDP PERIPHERALS--3.3%
EMC Corp.* 400,000 55,575,000
Mercury Interactive Corp.* 657,600 59,184,000
VERITAS Software Corp.* 600,000 64,359,375
--------------------------------------------------------------------------
179,118,375
</TABLE>
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C>
ELECTRONIC COMPONENTS/
DISTRIBUTORS--9.5%
Applied Micro Circuits Corp* 350,000 $ 45,106,250
Broadcom Corp.* 200,000 34,475,000
Celestica Inc.* 1,209,700 66,004,256
Cisco Systems, Inc.* 3,270,858 226,762,452
Juniper Networks, Inc.* 297,900 63,359,606
Molex Inc. "A" 1,006,250 40,250,000
PMC-Sierra, Inc.* 200,000 38,375,000
--------------------------------------------------------------------------
514,332,564
ELECTRONIC DATA PROCESSING--5.6%
Compaq Computer Corp. 2,263,600 66,210,300
Hewlett-Packard Co. 205,000 27,675,000
International Business Machines
Corp. 270,000 30,138,750
Seagate Technology, Inc.* 1,500,000 76,218,750
Sun Microsystems, Inc.* 1,128,800 103,779,050
--------------------------------------------------------------------------
304,021,850
SEMICONDUCTORS--17.9%
Conexant Systems, Inc.* 404,000 24,189,500
Intel Corp. 1,501,400 190,396,288
KLA Tencor Corp.* 1,200,000 89,850,000
Linear Technology Corp. 1,400,000 79,975,000
Maxim Integrated Products Inc.* 1,250,000 81,015,625
Micron Technology, Inc.* 550,000 76,587,500
STMicroelectronics N.V. (New York
shares) 400,000 75,875,000
Sanmina Corp.* 1,200,000 72,075,000
Texas Instruments, Inc. 664,800 108,279,300
Transwitch Corp.* 30,201 2,659,576
Xilinx, Inc.* 2,238,800 163,992,100
--------------------------------------------------------------------------
964,894,889
--------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $2,705,150,436) 4,890,318,435
--------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $3,213,727,503)(c) $5,398,895,502
--------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Non-income producing.
(a) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
(b) 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.
These securities are valued at fair value as determined in good faith by the
Board of Trustees of the Fund. At April 30, 2000, the value of the Fund's
restricted securities was $28,332,262 which represented 0.5% of net assets.
<TABLE>
<CAPTION>
DATE OF NUMBER
SECURITY DESCRIPTION ACQUISITION OF SHARES COST
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
September 1997 3.6% limited
Adams Capital Management, L.P. to April 1999 partnership interest $1,477,817
-----------------------------------------------------------------------------------------------------------
3.1% limited
Alloy Ventures 2000, L.P. April 2000 partnership interest 500,000
-----------------------------------------------------------------------------------------------------------
June 1996 2.5% limited
Asset Management Associates 1996, L.P. to March 1998 partnership interest 1,743,204
-----------------------------------------------------------------------------------------------------------
3.5% limited
Asset Management Associates 1998, L.P. May 1998 partnership interest 1,200,000
-----------------------------------------------------------------------------------------------------------
April 1993 3.1% limited
Crosspoint Venture Partners 1993, L.P. to March 1998 partnership interest 727,982
-----------------------------------------------------------------------------------------------------------
December 1993 5.0% limited
GEO Capital III, L.P. to March 1998 partnership interest 1,305,070
-----------------------------------------------------------------------------------------------------------
April 1996 2.9% limited
GEO Capital IV, L.P. to March 1998 partnership interest 2,572,648
-----------------------------------------------------------------------------------------------------------
May 1996 6.1% limited
Med Venture Associates II, L.P. to March 1998 partnership interest 1,413,540
-----------------------------------------------------------------------------------------------------------
2.7% limited
Med Venture Associates III, L.P. September 1998 partnership interest 550,000
-----------------------------------------------------------------------------------------------------------
April 1996 2.8% limited
Sevin Rosen Fund V, L.P. to March 1998 partnership interest 2,155,004
-----------------------------------------------------------------------------------------------------------
Survivalink Corp.
common stock December 1995 150,000 shrs. 3.00 per share
warrants expiring 2001 to October 1996 110,000 shrs. 4.50 per share
-----------------------------------------------------------------------------------------------------------
</TABLE>
(c) The cost for federal income tax purposes was $3,213,727,503. At April 30,
2000, net unrealized appreciation for all securities based on tax cost was
$2,185,167,999. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $2,377,212,024 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$192,044,025.
<TABLE>
<CAPTION>
ACRONYM NAME
------- ---------------------------
<S> <C> <C> <C>
ADR American Depository Receipt
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $3,213,727,503) $5,398,895,502
------------------------------------------------------------------------------
Cash 134
------------------------------------------------------------------------------
Receivable for investments sold 13,441,741
------------------------------------------------------------------------------
Dividend receivable 97,254
------------------------------------------------------------------------------
Interest receivable 5,289
------------------------------------------------------------------------------
Receivable for Fund shares sold 12,622,107
------------------------------------------------------------------------------
Foreign taxes recoverable 6,800
------------------------------------------------------------------------------
TOTAL ASSETS 5,425,068,827
------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased 68,036,166
------------------------------------------------------------------------------
Interest payable 2,840
------------------------------------------------------------------------------
Payable for Fund shares redeemed 11,476,600
------------------------------------------------------------------------------
Accrued management fee 2,261,643
------------------------------------------------------------------------------
Accrued distribution services fee 800,950
------------------------------------------------------------------------------
Accrued administrative services fee 157,576
------------------------------------------------------------------------------
Other accrued expenses 2,717,390
------------------------------------------------------------------------------
TOTAL LIABILITIES 85,453,165
------------------------------------------------------------------------------
NET ASSETS, AT VALUE $5,339,615,662
------------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
Accumulated net investment loss $ (14,450,167)
------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions 2,185,167,999
------------------------------------------------------------------------------
Accumulated net realized gain (loss) 559,654,484
------------------------------------------------------------------------------
Paid-in-capital 2,609,243,346
------------------------------------------------------------------------------
NET ASSETS, AT VALUE $5,339,615,662
------------------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($3,771,756,905 / 123,963,060 shares outstanding
of beneficial interest, $.01 par value,
unlimited number of shares authorized) $30.43
------------------------------------------------------------------------------
Maximum offering price per share
(100/94.25 of $30.43) $32.29
------------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price
(subject to contingent deferred sales charge) per share
($1,269,492,960 / 45,777,555 shares outstanding
of beneficial interest, $.01 par value,
unlimited number of shares authorized) $27.74
------------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price
(subject to contingent deferred sales charge) per share
($229,741,306 / 8,148,996 shares outstanding
of beneficial interest, $.01 par value,
unlimited number of shares authorized) $28.20
------------------------------------------------------------------------------
CLASS I SHARES
Net asset value, offering and redemption price
(subject to contingent deferred sales charge) per share
($68,624,491 / 2,221,532 of beneficial interest,
$.01 par value, unlimited number of shares authorized) $30.90
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $35,147) $ 1,303,846
------------------------------------------------------------------------------
Interest 11,443,450
------------------------------------------------------------------------------
Total income 12,747,296
------------------------------------------------------------------------------
Expenses:
Management fee 12,167,719
------------------------------------------------------------------------------
Services to shareholders 5,046,387
------------------------------------------------------------------------------
Custodian fees 70,492
------------------------------------------------------------------------------
Distribution services fees 4,311,482
------------------------------------------------------------------------------
Administrative services fees 4,584,691
------------------------------------------------------------------------------
Auditing 28,028
------------------------------------------------------------------------------
Legal 4,914
------------------------------------------------------------------------------
Trustees' fees and expenses 17,472
------------------------------------------------------------------------------
Reports to shareholders 842,026
------------------------------------------------------------------------------
Registration fees 268,125
------------------------------------------------------------------------------
Other 22,679
------------------------------------------------------------------------------
Total expenses, before expense reductions 27,364,015
------------------------------------------------------------------------------
Expense reductions (166,552)
------------------------------------------------------------------------------
Total expenses, after expense reductions 27,197,463
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (14,450,167)
------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized (loss) gain from investments 560,810,428
------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on investment transactions 985,836,999
------------------------------------------------------------------------------
Net gain (loss) on investment transactions 1,546,647,427
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $1,532,197,260
------------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, OCTOBER 31,
----------- -----------
2000 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $ (14,450,167) (10,480,844)
-----------------------------------------------------------------------------------------------
Net realized gain (loss) 560,810,428 287,902,266
-----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on investment transactions 985,836,999 945,575,003
-----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 1,532,197,260 1,222,996,425
-----------------------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gains:
Class A (209,002,934) (97,069,394)
-----------------------------------------------------------------------------------------------
Class B (56,592,200) (12,197,350)
-----------------------------------------------------------------------------------------------
Class C (9,101,835) (1,786,861)
-----------------------------------------------------------------------------------------------
Class I (3,494,975) (1,658,273)
-----------------------------------------------------------------------------------------------
(278,191,944) (112,711,878)
-----------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 2,815,718,572 3,245,525,430
-----------------------------------------------------------------------------------------------
Reinvestment of distributions 584,928,560 92,103,833
-----------------------------------------------------------------------------------------------
Cost of shares redeemed (2,120,687,526) (2,890,254,060)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 1,279,959,596 447,375,203
-----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2,533,964,912 1,557,659,750
-----------------------------------------------------------------------------------------------
Net assets at beginning of period 2,805,650,750 1,247,991,000
-----------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including accumulated net
investment loss of $14,450,167 at April 30, 2000) $ 5,339,615,662 2,805,650,750
-----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 17
<PAGE> 18
FINANCIAL HIGHLIGHTS
The following tables include selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
CLASS A
(UNAUDITED)
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------------
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $21.29 11.77 13.13 13.16 14.63 11.50
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (a) (.06) (.06) (.04) (.06) (.08) (.03)
-----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 11.14 10.65 .82 2.14 .74 4.66
-----------------------------------------------------------------------------------------------------------------------
Total from investment operations 11.08 10.59 .78 2.08 .66 4.63
-----------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain on
investment transactions (1.94) (1.07) (2.14) (2.11) (2.13) (1.50)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $30.43 21.29 11.77 13.13 13.16 14.63
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B)(C) 53.31* 94.71 8.21 17.11 7.83 47.30
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) $3,771,757 2,233,116 1,083,864 1,074,848 971,140 957,565
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions
(%) .94** .93 .92 .89 .89 .88
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions
(%) .94** .93 .92 .89 .89 .88
-----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.39)** (.38) (.37) (.42) (.62) (.23)
-----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 75** 59 146 192 121 105
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
(UNAUDITED)
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31,
APRIL 30, -----------------------------------------------------
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $19.62 11.03 12.54 12.77 14.39 11.45
-----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (a) (0.19) (.22) (.14) (.18) (.19) (.15)
-----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 10.25 9.88 .77 2.06 .70 4.59
-----------------------------------------------------------------------------------------------------------------------
Total from investment operations 10.06 9.66 .63 1.88 .51 4.44
-----------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain on
investment transactions (1.94) (1.07) (2.14) (2.11) (2.13) (1.50)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $27.74 19.62 11.03 12.54 12.77 14.39
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B)(C) 52.53* 92.59 7.24 15.91 6.76 45.65
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in thousands) $1,269,493 465,164 127,238 105,299 69,712 41,034
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 1.91** 1.92 1.85 1.85 1.87 1.82
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.91** 1.92 1.85 1.85 1.87 1.82
-----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.36)** (1.37) (1.30) (1.38) (1.60) (1.17)
-----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 75** 59 146 192 121 105
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
(UNAUDITED)
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31,
APRIL 30, --------------------------------------------
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $19.91 11.17 12.64 12.85 14.45 11.45
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (a) (0.18) (.21) (.14) (.17) (.18) (.15)
-----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 10.41 10.02 .81 2.07 .71 4.65
-----------------------------------------------------------------------------------------------------
Total from investment operations 10.23 9.81 .67 1.90 .53 4.50
-----------------------------------------------------------------------------------------------------
Less distribution from net realized gain
on investment transactions (1.94) (1.07) (2.14) (2.11) (2.13) (1.50)
-----------------------------------------------------------------------------------------------------
Net asset value, end of year $28.20 19.91 11.17 12.64 12.85 14.45
-----------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B)(C) 52.70* 92.68 7.57 15.98 6.88 46.23
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in
thousands) $229,741 73,285 17,500 9,572 4,127 1,577
-----------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 1.81** 1.82 1.81 1.82 1.82 1.76
-----------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 1.81** 1.82 1.81 1.82 1.82 1.76
-----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.26)** (1.27) (1.26) (1.35) (1.55) (1.11)
-----------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 75** 59 146 192 121 105
-----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS I
(UNAUDITED)
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31, JULY 3 TO
APRIL 30, ------------------------------------ OCTOBER 31,
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $21.54 11.86 13.19 13.20 14.64 12.72
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (a) (0.01) (.02) (.02) (.04) (.07) (.02)
-----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions 11.31 10.77 .83 2.14 .76 1.94
-----------------------------------------------------------------------------------------------------------
Total from investment operations 11.30 10.75 .81 2.10 .69 1.92
-----------------------------------------------------------------------------------------------------------
Less distribution from net realized gain
on investment transactions (1.94) (1.07) (2.14) (2.11) (2.13) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $30.90 21.54 11.86 13.19 13.20 14.64
-----------------------------------------------------------------------------------------------------------
TOTAL RETURN (%)(B)(C) 53.74* 95.39 8.44 17.23 8.06 15.09*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets, end of period ($ in
thousands) $68,624 34,086 19,389 20,004 17,834 17,779
-----------------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 0.65** .65 .67 .74 .76 .65**
-----------------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 0.65** .64 .67 .74 .76 .65**
-----------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (0.10)** (.09) (.12) (.27) (.49) (.33)**
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 75** 59 196 192 121 105**
-----------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of sales charge.
(c) Total return would have been lower had certain expenses not been waived.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Kemper Technology Fund (the "Fund") is registered
under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end,
non-diversified management investment company
organized as a Massachusetts business trust.
The Fund offers multiple classes of shares. Class A
shares are offered to investors subject to an
initial sales charge. Class B shares are offered
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 offered without an initial sales
charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales
charge payable upon certain redemptions within one
year of purchase. Class C shares do not convert
into another class. Class I shares are offered to a
limited group of investors, are not subject to
initial or contingent deferred sales charges and
have lower ongoing expenses than other classes.
Investment income, realized and unrealized gains
and losses, and certain fund-level expenses and
expense reductions, if any, are borne pro rata on
the basis of relative net assets by the holders of
all classes of shares except that each class bears
certain expenses unique to that class such as
distribution services, shareholder services,
administrative services and certain other class
specific expenses. Differences in class expenses
may result in payment of different per share
dividends by class. All shares of the Fund have
equal rights with respect to voting subject to
class specific arrangements.
The Fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Investments are stated at value
determined as of the close of regular trading on
the New York Stock Exchange. Securities which are
traded on U.S. or foreign stock exchanges are
valued at the most recent sale price reported on
the exchange on which the security is traded most
extensively. If no sale occurred, the security is
then valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation is used. Securities quoted on the Nasdaq
Stock Market ("Nasdaq"), for which there have been
sales, are valued at the most recent sale price
reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are
not quoted on Nasdaq but are traded in another
over-the-counter market are valued at the most
recent sale price, or if no sale occurred, at the
calculated mean between the most recent bid and
asked quotations on such market. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used.
Money market instruments purchased with an original
maturity of sixty days or less are valued at
amortized cost.
All other securities are valued at their fair value
as determined in good faith by the Valuation
Committee of the Board of Trustees.
REPURCHASE AGREEMENTS. The Fund may enter into
repurchase agreements with certain banks and
broker/dealers whereby the Fund, through its
custodian or
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
sub-custodian bank, receives delivery of the
underlying securities, the amount of which at the
time of purchase and each subsequent business day
is required to be maintained at such a level that
the market value is equal to at least the principal
amount of the repurchase price plus accrued
interest.
FEDERAL INCOME TAXES. The Fund's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated investment companies and to distribute
all of its taxable income to is shareholders.
Accordingly, the Fund paid no federal income taxes
and no federal income tax provision was required.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made annually.
Net realized gains from investment transactions, in
excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders
at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the Fund.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Dividend income is recorded on
the ex-dividend date. Realized gains and losses
from investment transactions are recorded on an
identified cost basis.
All discounts are accreted for both tax and
financial reporting purposes.
--------------------------------------------------------------------------------
2 TRANSACTIONS
WITH AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment
management fee of 1/12 of the annual rate of 0.58%
of the first $250 million of average daily net
assets declining to 0.42% of average daily net
assets in excess of $12.5 billion. The Fund
incurred a management fee of $12,167,719 for the
six months ended April 30, 2000.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The Fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (KDI). Underwriting commissions
retained by KDI in connection with the distribution
of Class A shares for the six months ended April
30, 2000 are $878,016.
For services under the distribution services
agreement, the Fund pays KDI a fee of 0.75% of
average daily net assets of the Class B and Class C
shares pursuant to separate Rule 12b-1 plans for
the Class B and Class C shares. Pursuant to the
agreement, KDI enters into related selling group
agreements with various firms at various rates for
sales of Class B and Class C shares. In addition,
KDI receives any contingent deferred sales charges
(CDSC) from redemptions of Class B and Class C
shares. Distribution fees and CDSC received by KDI
for the six months ended April 30, 2000 are
$5,087,942.
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
Class A, Class B and Class C shareholders, the Fund
pays KDI a fee at an annual rate of up to 0.25% of
average daily net assets of each class. KDI in turn
has various agreements with financial services
firms that provide these services and pays these
firms based on assets of Fund accounts the firms
service. Administrative services fees paid by the
Fund to KDI for the six months ended April 30, 2000
are $4,584,691, of which $5,911 was paid by KDI to
affiliates.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the Fund. Under the agreement,
KSvC received shareholder services fees of
$4,190,039 for the six months ended April 30, 2000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. For the six months ended April 30,
2000, the Fund made no payments to its officers and
incurred trustees' fees of $17,472 to independent
trustees.
--------------------------------------------------------------------------------
3 INVESTMENT
TRANSACTIONS For the six months ended April 30, 2000, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $2,271,507,509
Proceeds from sales 1,552,548,726
--------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
2000 1999
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 63,934,329 $ 1,952,158,297 163,261,120 $ 2,717,318,576
------------------------------------------------------------------------------------------
Class B 23,903,589 660,400,356 19,259,308 307,696,447
------------------------------------------------------------------------------------------
Class C 5,979,397 167,568,684 11,890,925 187,902,836
------------------------------------------------------------------------------------------
Class I 1,165,771 35,591,225 1,946,063 32,607,572
------------------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 17,526,410 440,826,661 5,613,804 77,077,534
------------------------------------------------------------------------------------------
Class B 5,229,837 120,934,443 916,082 11,698,363
------------------------------------------------------------------------------------------
Class C 786,559 18,488,176 129,269 1,674,030
------------------------------------------------------------------------------------------
Class I 173,717 4,679,280 19,502 1,653,906
------------------------------------------------------------------------------------------
SHARES REDEEMED
Class A (62,961,522) (1,859,818,782) (156,881,683) (2,591,141,873)
------------------------------------------------------------------------------------------
Class B (6,459,766) (175,901,127) (8,909,496) (110,192,458)
------------------------------------------------------------------------------------------
Class C (2,298,245) (63,279,646) (9,905,701) (154,042,977)
------------------------------------------------------------------------------------------
Class I (700,600) (21,687,971) (2,117,558) (34,876,753)
------------------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 550,563 16,616,511 837,002 13,856,275
------------------------------------------------------------------------------------------
Class B (601,639) (16,616,511) (902,208) (13,856,275)
------------------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE
TRANSACTIONS $ 1,279,959,596 $ 447,375,203
------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
5 EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian whereby credits realized as a result of
uninvested cash balances were used to reduce a
portion of the Fund's expenses. During the six
months ended, the Fund's custodian fees and
transfer agent fees were reduced by $12,731 and
$153,821, respectively, under these arrangements.
--------------------------------------------------------------------------------
6 LINE OF CREDIT The Fund and several Kemper funds (the
"Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The Fund may borrow up to a
maximum of 33 percent of its net assets under the
agreement.
23
<PAGE> 24
TRUSTEES&OFFICERS
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
JOHN W. BALLANTINE MARK S. CASADY MAUREEN E. KANE
Trustee President Assistant Secretary
LEWIS A. BURNHAM PHILIP J. COLLORA CAROLINE PEARSON
Trustee Vice President and Secretary Assistant Secretary
LINDA C. COUGHLIN JOHN R. HEBBLE BRENDA LYONS
Trustee Treasurer Assistant Treasurer
DONALD L. DUNAWAY JAMES BURKHART
Trustee Vice President
ROBERT B. HOFFMAN ANN M. MCCREARY
Trustee Vice President
DONALD R. JONES KATHRYN L. QUIRK
Trustee Vice President
THOMAS W. LITTAUER WILLIAM F. TRUSCOTT
Trustee and Vice President Vice President
SHIRLEY D. PETERSON LINDA J. WONDRACK
Trustee Vice President
WILLIAM P. SOMMERS
Trustee
</TABLE>
<TABLE>
<S> <C>
.............................................................................................
LEGAL COUNSEL VEDDER, PRICE KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
.............................................................................................
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
.............................................................................................
CUSTODIAN AGENT STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110
.............................................................................................
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
.............................................................................................
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
.............................................................................................
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
</TABLE>
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KTF - 3 (6/25/00) 1114130
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
