-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NpkllgYn9XcjIFyaoV8mu3WIq5eiPt7FzXkuGd+5PfqnecAgoc8ZTqpGciYZhIkC +QDRX6Fq6GEZec2P+D9WzA== 0000950124-96-003870.txt : 19960906 0000950124-96-003870.hdr.sgml : 19960906 ACCESSION NUMBER: 0000950124-96-003870 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KILICO VARIABLE SEPARATE ACCOUNT/IL CENTRAL INDEX KEY: 0000810369 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 36305975 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05025 FILM NUMBER: 96625945 BUSINESS ADDRESS: STREET 1: 1 KEMPER DRIVE CITY: LONG GROVE STATE: IL ZIP: 60049-0001 BUSINESS PHONE: 7083204982 MAIL ADDRESS: STREET 1: C/O KEMPER LIFE INSURANCE COMPANIES STREET 2: 1 KEMPER DRIVE CITY: LONG GROVE STATE: IL ZIP: 60049-0001 N-30D 1 SEMI-ANNUAL REPORT - SELECT FUND 1 DEAR KEMPER SELECT POLICY OWNER: - ------------------------------------------ GENERAL ECONOMIC OVERVIEW We have just completed a period of some discomfort for bond and stock market traders. Concerns about rising interest rates, the possibility of higher price inflation and Federal Reserve tightening of credit contributed to considerable market volatility. But while the professional investors tend to fret over every economic release, individuals who invest in variable insurance for the long term were wise to stay the course -- at least until the direction of the economy became clearer. Indeed, several recent economic measures are quite reassuring and argue in favor of a continued healthy economy with low inflation. The economy expanded at a 4.2% annual rate in the second quarter, the fastest pace since the second quarter of 1994. This robust growth is welcome in general but has tended to roil markets, which fear strong growth will lead to overheating and inflationary pressures. So far, however, such fears have been largely unwarranted. With the exception of food prices, whose increases were weather-related, there have been no significant signs of inflationary pressures. The economy, as it has done so recently, is in the process of slowing itself down. While the Federal Reserve Board stands ready to attempt to moderate economic growth with either interest rate cuts or increases, such intervention can run the risk of going too far in one direction. It appears that our economy today is self-regulating. MARKET OUTLOOK Based on these snapshots of the economy, we look for a relatively calmer second half of 1996. Our forecast calls for growth to slow down in the third and fourth quarters, resulting in an advance of about 2.5% for the entire year. Assuming that bond and stock market investors concur that there is no chance of an overheating economy or significantly rising interest rates, the markets should also relax. The market volatility that we experienced in May, June and July was caused by investors who were nervous about the broad economy and some disappointing earnings reports which made them pessimistic. Yet, the markets performed the way that history suggests they should: an overall correction in the stock market was accentuated in technology and small capitalization stocks--the industry sectors which performance tends to be the most volatile. Once the stock market corrected, the bond market rallied. Finally, while not producing spectacular results, international markets provided a stabilizing influence when compared to U.S. markets. Our market forecast eight months into the year is not much different from what we forecasted in January. The bond market, which is climbing back from a decline this year, may provide a 5% total return in 1996. The stock market, after the correction is completed, may advance 5% to 10% for the year. However, future market conditions can not be predicted with assurance. In addition, we are projecting that long-term (30-year) interest rates will hover in the 6.5% to 7.5% range, while short-term interest rates may drop below their current levels. Finally, we would be surprised if the Federal Reserve Board moved to adjust interest rates more than 25 basis points either way for the remainder of the year. Given the economic environment, we do not look for an upset in the upcoming presidential election. Much more interesting will be which party wins the most congressional seats. If the Democrats regain control of Congress, a bond market selloff could be expected. While U.S. markets are expected to provide modest returns, we continue to advocate the benefits of diversification into alternate markets. Many overseas markets are forecasted to grow at a rate well above our 2.5% growth expectation for the U.S., and there are many equity and fixed-income opportunities abroad. The value of the U.S. dollar, always a concern to international investors, will probably not strengthen much against other currencies for the foreseeable future. We would like now to direct your attention to the performance of the Subaccounts which are invest- 1 2 ment options available through your life insurance policy. Also, please take a moment to review the market summaries prepared by the Kemper Investors Fund (KINF) portfolio managers.
MONEY MARKET PERCENT CHANGE IN SUBACCOUNT ACCUMULATION UNIT VALUE+ - ----------------------------------------------------------- Six Months Ended 6/30/96 2.05% - ----------------------------------------------------------- - ------------------------------------------------------------ CURRENT NET YIELDS++ For Week Ended 6/30/96 Current Annualized Yield 3.97% Compounded Effective Yield 4.05% - ------------------------------------------------------------
The current annualized yield was 3.90% for the week ended July 31, 1996; the compounded effective yield was 3.97%. In the last six-months the economy and expectations have completely shifted. The period began with sluggish economic growth and a moderate decrease in the Federal Funds Rate by the Federal Reserve (Fed). However, the strong first quarter Gross Domestic Product number surprised many given the obstacles faced at the end of 1995 and beginning of 1996, including a temporary government shutdown, brutal weather in the East and the General Motors strike. Now, at the end of June with strong economic growth, it appears that it's just a matter of time before the Fed increases rates. Along with the market's swift change, we have switched from extending to shortening the KINF Money Market Portfolio's average maturity. This should allow us to benefit from any rise in interest rates. Frank Rachwalski Portfolio Manager June 30, 1996
TOTAL RETURN PERCENT CHANGE IN SUBACCOUNT ACCUMULATION UNIT VALUE+ - ----------------------------------------------------------- Six Months Ended 6/30/96 5.07% - ----------------------------------------------------------- - --------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++ For Period Ended 6/30/96 1 YEAR 5 YEAR INCEPTION (9/3/87) TO DATE ------- ------- -------------------------- 5.47% 8.57% 7.34% - ---------------------------------------------------------------
Average annual total return performance reflects surrender charges as follows: one year (9%) and five year (5%). The returns represent past performance only; the investment return and principal value will fluctuate so that unit values, when redeemed, may be worth more or less than their original cost. The first six months of 1996 were characterized by volatility in the stock market and depressed performance from an apprehensive bond market. Concerns about the direction of interest rates, the pace of economic growth and the return of price inflation dominated during the period. In response, we took advantage of the significant flexibility afforded by KINF Total Return Portfolio's investment strategy and made several adjustments. Within the equity portion, weakness in the technology sector and mixed performance in capital goods companies negatively impacted the overall results. During this period, we maintained a commitment to the technology sector. Still believers in the earnings potential of technology providers, we have reoriented the Portfolio's exposure toward companies that provide technology services, as well as buying selected component providers at depressed prices. In the fixed-income sector, only high yield bonds showed strength. Early in the year, we increased the Portfolio's exposure to high yield and high-grade corporate bonds while reducing its U.S. Treasuries holdings. We continue to expect high quality technology companies to do well. Additionally, we look for the Portfolio's interest rate-sensitive and consumer nondurable stocks to enhance performance in what we expect to be a weakening economy. The bond market should react well to a slowdown. Gary Langbaum Portfolio Manager June 30, 1996
HIGH YIELD PERCENT CHANGE IN SUBACCOUNT ACCUMULATION UNIT VALUE+ - ------------------------------------------------------------- Six Months Ended 6/30/96 4.05% - ------------------------------------------------------------- - ----------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++ For Period Ended 6/30/96 1 YEAR 5 YEAR INCEPTION TO DATE ----------------- ----------------- ----------------- 1.53% 12.07% 8.18% - -----------------------------------------------------------------
Average annual total return performance reflects surrender charges as follows: one year (9%) and five year (5%). The 2 3 returns represent past performance only; the investment return and principal value will fluctuate so that unit values, when redeemed, may be worth more or less than their original cost. High yield bonds performed positively despite a turbulent six months for the overall bond market. During the period, economic growth began gaining momentum. Although this upturn in the economy hurt returns in the government and high grade corporate markets, it did not have the same impact in the high yield bond market. When the economy is growing, credit quality becomes less of a concern to investors in high yield corporate bonds. A stronger economy assumes that more growth in corporate earnings will occur. Solid earnings are essential for companies to continue paying the interest on their outstanding bond issues. Over the past six months, we maintained an even balance between "cyclical" and "defensive" investments. During this time, our "cyclical" investments included issues from the energy sector and "gaming" industry, while we purchased media investments to fulfill our "defensive" position. The Portfolio experienced relatively few credit concerns and the quality of issues remained relatively stable. Lower B-rated bonds represented approximately two-thirds of the investments, while higher quality BB-rated bonds comprised about one quarter. This positioning provided a good level of income for the Portfolio, while mitigating some potential risk. As Treasuries and higher quality bonds rallied late in June this positioning inhibited the Portfolio's performance slightly. We look for more positive high yield market performance. However, we don't anticipate that corporate earnings will keep pace with their 1994 and 1995 levels. Our investment focus will continue to be on healthy companies that are positioned to perform well in the current moderate growth economy. Michael McNamara Harry Resis Portfolio Co-Managers June 30, 1996
GROWTH PERCENT CHANGE IN SUBACCOUNT ACCUMULATION UNIT VALUE+ - ------------------------------------------------------------- Six Months Ended 6/30/96 10.01% - ------------------------------------------------------------- - ----------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++ For Period Ended 6/30/96 1 YEAR 5 YEAR INCEPTION TO DATE ----------------- ----------------- ----------------- 15.44% 15.59% 10.97% - -----------------------------------------------------------------
Average annual total return performance reflects surrender charges as follows: one year (9%) and five year (5%). The returns represent past performance only; the investment return and principal value will fluctuate so that unit values, when redeemed, may be worth more or less than their original cost. In late 1995, we had broadened the Portfolio to include exposure to more economically-sensitive issues such as retail, oil, housing-related stocks and selected industrial cyclical issues. These are sectors one would expect to outperform in a period of strong economic growth and our positions did contribute positive returns. In March we added a small "basket" of international stocks that are managed with the help of Zurich Kemper's international investment team based in London. In light of accelerating growth in foreign economies, we believe the international markets offer potential for good relative performance going forward. More recently, we've seen increased concerns about a slowdown in earnings growth and the potential for a general market correction. In this environment, the challenge is to recognize where the new opportunities are, and our research and valuation models have been effective in doing that. Looking ahead, we see an upward bias for the market as a whole. Gains will probably be achieved with additional sector rotation and a much greater level of volatility than we saw last year. Policy owners can expect more rotation of the Portfolio based on where our research suggests the new opportunities will be. Overall, we see good potential for growth stocks, which aren't as dependent on prevailing economic conditions to maintain and expand earnings. Steven H. Reynolds Portfolio Manager, Chief Investment Officer--Equities June 30, 1996 3 4
GOVERNMENT SECURITIES PERCENT CHANGE IN SUBACCOUNT ACCUMULATION UNIT VALUE+ - ------------------------------------------------------------- Six Months Ended 6/30/96 (2.46)% - ------------------------------------------------------------- - ----------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURN PERFORMANCE++ For Period Ended 6/30/96 INCEPTION TO DATE 1 YEAR 5 YEAR 9/3/87 ----------------- ----------------- ----------------- (5.57%) 5.72% 6.61% - -----------------------------------------------------------------
Average annual total return performance reflects surrender charges as follows: one year (9%) and five year (5%). The returns represent past performance only; the investment return and principal value will fluctuate so that unit values, when redeemed, may be worth more or less than their original cost. The last six months was a difficult period for the government market. After 1995's slow economic growth and declining interest rates, the economic environment began to change in January. Federal budget negotiations stalled, and an impasse developed, which effectively eliminated the chances for a balanced budget in the first half of 1996. In addition, economic data released throughout the period showed stronger than anticipated economic growth and strong employment figures. These events caused a sell-off in the market, which resulted in higher market yields. It wasn't until late in June that the market rallied as indicators of inflation remained tame and technical conditions improved. Although positive, the rally occurred too late to make a material impact in KINF Government Securities Portfolio's six-month performance. At the start of the year, the Portfolio was positioned with a longer than average duration to take advantage of the then declining interest rate environment. Duration is a measurement of a portfolio's sensitivity to interest rates. The longer the duration, the more sensitive it is to interest rate changes. As rates rose unexpectedly, the Portfolio's longer duration hurt performance. We shortened duration to a defensive position and added mortgage-backed investments to the Portfolio. Mortgage-backed investments were added because they tend to outperform Treasuries as interest rates rise. The poor overall performance of the market, however, continued to inhibit performance until June, when the government market and Treasuries in particular, rallied. We plan to maintain the Portfolio's defensive position until interest rates stabilize and the direction of the economy becomes more clear. J. Patrick Beimford, Chief Investment Officer--Fixed Income Richard Vandenberg Portfolio Co-Managers June 30, 1996 We appreciate the opportunity to serve your insurance needs. Sincerely, John B. Scott Stephen B. Timbers John B. Scott Stephen B. Timbers President President Chief Executive Chief Investment and Officer Executive Officer Kemper Investors Life Zurich Kemper Insurance Company Investments, Inc. [Scott Photo] [Timber Photo] August 2, 1996
+ The percent change in accumulation unit value is net of mortality and expense risk charges. No adjustment has been made for the cost of insurance charge or surrender charges. No withdrawals are assumed. ++ In determining performance for Kemper SELECT, the Fund expenses include the deduction of management fees of .50% for the Money Market Portfolio, .55% for the Total Return Portfolio, .60% for the High Yield Portfolio, .60% for the Growth Portfolio, and .55% for the Government Securities Portfolio. Kemper SELECT assesses a daily asset charge that amounts to .90% per annum for mortality and expense risk. The monthly cost of insurance for Kemper SELECT which varies by age, gender and classification, however, is not deducted and thus is not reflected in total return and average annual total return performance figures. If the performance data reflected the cost of insurance, the performance would be significantly lower. Hypothetical illustrations of performance showing the 4 5 effect on performance of various assumptions regarding the cost of insurance are set forth in the prospectus. A personal illustration reflecting the cost of insurance is available upon request. A $1,000 payment is used to calculate average annual total return. Performance figures for Kemper SELECT assume no policy loans and no additional payments (100% guideline premium plan). Average annual total return measures the change in the value of an investment in the Subaccount. Average annual total return figures reflect all fees and charges, including early withdrawal and surrender charges as follows: one year (9%) and five year (5%). The Money Market Subaccount's current annualized yield is the seven-day annualized net investment income per share as of the date specified. Gains or losses are not included. The effective yield reflects compounding of income. There can be no assurance that the Money Market Portfolio will be able to maintain a stable net asset value of $1.00 per share. The Money Market Portfolio is not insured or guaranteed by the U.S. Government. The returns are based upon historical results and are not representative of future results. Factors affecting performance include portfolio management; general market, economic and fiscal conditions; and operating expenses. Investment return and principal value will fluctuate so that unit values, when redeemed, may be worth more or less than their original cost. With respect to the High Yield Portfolio investment in lower-rated and non-rated securities present greater risk of loss to principal and interest than higher-rated securities. 5 6 KILICO VARIABLE SEPARATE ACCOUNT COMBINED STATEMENT OF ASSETS AND LIABILITIES AND POLICY OWNERS' EQUITY JUNE 30, 1996 (UNAUDITED) (IN THOUSANDS)
Money Government Market Total Return High Yield Growth Securities Combined Subaccount Subaccount Subaccount Subaccount Subaccount -------- ---------- ------------ ---------- ---------- ---------- ASSETS Investments, at current value.............. $11,866 1,085 2,587 1,993 2,251 3,950 Dividends and other receivables............ 41 2 39 -- -- -- ------- ----- ----- ----- ----- ----- Total assets......................... 11,907 1,087 2,626 1,993 2,251 3,950 ------- ----- ----- ----- ----- ----- LIABILITIES AND POLICY OWNERS' EQUITY Liabilities: Mortality and expense risk charges....... 9 1 2 1 2 3 Other.................................... 40 -- -- 39 -- 1 ------- ----- ----- ----- ----- ----- Total liabilities.................... 49 1 2 40 2 4 ------- ----- ----- ----- ----- ----- Policy owners' equity...................... $11,858 1,086 2,624 1,953 2,249 3,946 ======= ===== ===== ===== ===== ===== ANALYSIS OF POLICY OWNERS' EQUITY Excess of proceeds from units sold over payments for units redeemed.............. $ 6,302 590 1,108 1,244 1,180 2,180 Accumulated net investment income.......... 3,937 496 830 753 490 1,368 Accumulated net realized gain on sales of investments.............................. 1,133 -- 353 59 455 266 Unrealized appreciation (depreciation) of investments.............................. 486 -- 333 (103) 124 132 ------- ----- ----- ----- ----- ----- Policy owners' equity...................... $11,858 1,086 2,624 1,953 2,249 3,946 ======= ===== ===== ===== ===== =====
See accompanying notes to combined financial statements. 6 7 KILICO VARIABLE SEPARATE ACCOUNT COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) (IN THOUSANDS)
Money Government Market Total Return High Yield Growth Securities Combined Subaccount Subaccount Subaccount Subaccount Subaccount -------- ---------- ------------ ---------- ---------- ---------- Dividends and capital gains distributions........................ $ 929 29 164 171 280 285 Mortality and expense risk charges..... 51 5 11 9 8 18 ------ ---- --- --- --- --- Net investment income.................. 878 24 153 162 272 267 ------ ---- --- --- --- --- Net realized and unrealized gain (loss) on investments: Net realized gain on sales of investments........................ 323 -- 24 56 235 8 Change in depreciation of investments........................ (868) -- (49) (151) (291) (377) ------ ---- --- --- --- --- Net realized and unrealized loss on investments.......................... (545) -- (25) (95) (56) (369) ------ ---- --- --- --- --- Net increase (decrease) in policy owners' equity resulting from operations........................... $ 333 24 128 67 216 (102) ====== ==== === === === ===
See accompanying notes to combined financial statements. 7 8 KILICO VARIABLE SEPARATE ACCOUNT COMBINED STATEMENTS OF CHANGES IN POLICY OWNERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS)
Money Market Combined Subaccount ------------------------------ ------------------------------ Six months Six months ended Year ended ended Year ended June 30, December June 30, December 1996 31, 1995 1996 31, 1995 ---------- ---------- ---------- ---------- Operations: Net investment income................................ $ 878 506 24 68 Net realized gain on sales of investments............ 323 144 -- -- Change in unrealized appreciation (depreciation) of investments..................................... (868) 1,253 -- -- ------- ------ ----- ----- Net increase (decrease) in policy owners' equity resulting from operations........................ 333 1,903 24 68 ------- ------ ----- ----- Account unit transactions: Proceeds from units sold............................. 119 108 15 76 Net transfers (to) from subaccounts.................. -- -- 141 (348) Payments for units redeemed.......................... (258) (791) (96) (104) ------- ------ ----- ----- Net increase (decrease) in policy owners' equity from account unit transactions................... (139) (683) 60 (376) ------- ------ ----- ----- Total increase (decrease) in policy owners' equity..... 194 1,220 84 (308) Policy owners' equity: Beginning of period.................................. 11,664 10,444 1,002 1,310 ------- ------ ----- ----- End of period........................................ $ 11,858 11,664 1,086 1,002 ======= ====== ===== =====
See accompanying notes to combined financial statements. 8 9
Government Total Return High Yield Growth Securities Subaccount Subaccount Subaccount Subaccount - --------------------------- --------------------------- --------------------------- --------------------------- Six months Year Six months Year Six months Year Six months Year ended ended ended ended ended ended ended ended June 30, December 31, June 30, December 31, June 30, December 31, June 30, December 31, 1996 1995 1996 1995 1996 1995 1996 1995 - ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ 153 47 162 75 272 102 267 214 24 14 56 54 235 31 8 45 (49) 442 (151) 106 (291) 301 (377) 404 ----- ----- ---- ----- ----- ----- ----- ----- 128 503 67 235 216 434 (102) 663 ----- ----- ---- ----- ----- ----- ----- ----- -- -- 6 17 97 3 1 12 6 72 (194) 270 75 508 (28) (502) (63) (146) (15) (147) (62) (143) (22) (251) ----- ----- ---- ----- ----- ----- ----- ----- (57) (74) (203) 140 110 368 (49) (741) ----- ----- ---- ----- ----- ----- ----- ----- 71 429 (136) 375 326 802 (151) (78) 2,553 2,124 2,089 1,714 1,923 1,121 4,097 4,175 ----- ----- ---- ----- ----- ----- ----- ----- 2,624 2,553 1,953 2,089 2,249 1,923 3,946 4,097 ===== ===== ==== ===== ===== ===== ===== =====
9 10 KILICO VARIABLE SEPARATE ACCOUNT NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED) (1) GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION KILICO Variable Separate Account (the "Separate Account") is a unit investment trust registered under the Investment Company Act of 1940, as amended, established by Kemper Investors Life Insurance Company ("KILICO"). KILICO is owned by Kemper Corporation which was acquired by an investor group led by Zurich Insurance Company ("Zurich") on January 4, 1996. The Separate Account receives and invests premiums under a variable life insurance policy ("Policy"). The Separate Account is divided into five Subaccounts and each Subaccount invests exclusively in a corresponding Portfolio of the Kemper Investors Fund (The "Fund"), an open-end diversified management investment company. The Fund has additional Subaccounts, which are not available investment vehicles to policy owners of the Separate Account. SECURITY VALUATION The investments are stated at current value which is based on the closing bid price, net asset value, at June 30, 1996. SECURITY TRANSACTIONS AND INVESTMENT INCOME Security transactions are accounted for on the trade date (date when KILICO accepts risks of providing insurance coverage to the insured). Dividends and capital gains distributions are recorded as income on the ex-dividend date. Realized gains and losses from security transactions are reported on an identified cost basis. ACCOUNT UNIT TRANSACTIONS Proceeds from a Policy are automatically allocated to the Money Market Subaccount on the trade date for a 15 day period. At the end of this period, the Separate Account value (cash value) may be allocated to other Subaccounts as designated by the owner of the Policy. ACCUMULATION UNIT VALUATION On each day the New York Stock Exchange (the "Exchange") is open for trading, the accumulation unit value is determined as of the earlier of 3:00 p.m. (Chicago time) or the close of the Exchange by dividing the total value of each Subaccount's investments and other assets, less liabilities, by the number of accumulation units outstanding in the respective Subaccount. FEDERAL INCOME TAXES The operations of the Separate Account are included in the Federal income tax return of KILICO. Under existing Federal income tax law, investment income and realized capital gains and losses of the Separate Account increase liabilities under the policy and are, therefore, not taxed. Thus the Separate Account may realize net investment income and capital gains and losses without Federal income tax consequences. 10 11 NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED) (2) SUMMARY OF INVESTMENTS Investments, at cost, at June 30, 1996, are as follows (in thousands):
Shares Owned Cost ----- ------- INVESTMENT PORTFOLIO Kemper Investors Fund Money Market Portfolio...................................................... 1,085 $ 1,085 Kemper Investors Fund Total Return Portfolio...................................................... 1,017 2,254 Kemper Investors Fund High Yield Portfolio........................................................ 1,698 2,096 Kemper Investors Fund Growth Portfolio............................................................ 735 2,127 Kemper Investors Fund Government Securities Portfolio............................................. 3,424 3,818 ------- TOTAL INVESTMENTS............................................................................. $11,380 =======
The underlying investments and significant industry concentrations are summarized below. MONEY MARKET PORTFOLIO: This Portfolio invests primarily in short-term obligations of the U.S. Government, major banks and corporations. At June 30, 1996, the Portfolio had 20.6% of its assets invested in the captive business finance industry. No other industry exceeded 20% of the Portfolio's assets. TOTAL RETURN PORTFOLIO: This Portfolio's investments will normally consist of fixed-income and equity securities. Fixed-income securities will include bonds and other debt securities and preferred stocks. Equity investments normally will consist of common stocks and securities convertible into or exchangeable for common stocks, however, the Portfolio may also make private placement investments (which are normally restricted securities). The Portfolio may also engage in options and financial future transactions. At June 30, 1996, no industry exceeded 20% of the Portfolio's assets. HIGH YIELD PORTFOLIO: This Portfolio invests in fixed-income securities, a substantial portion of which are high yielding fixed-income securities. These securities ordinarily will be in the lower rating categories of recognized rating agencies or will be non-rated, and generally will involve more risk than securities in the higher rating categories. The Portfolio may also engage in options and financial future transactions. At June 30, 1996, 20.7% of the Portfolio's assets were invested in the broadcasting, cable systems and publishing industry. No other industry exceeded 20% of the Portfolio's assets. GROWTH PORTFOLIO: This Portfolio's investments normally will consist of common stocks and securities convertible into or exchangeable for common stocks, however, it may also make private placement investments (which are normally restricted securities). The Portfolio may also engage in options and financial future transactions. At June 30, 1996, the Portfolio had 23.6% of its assets invested in the health care industry. No other industry exceeded 20% of the Portfolio's assets. GOVERNMENT SECURITIES PORTFOLIO: This Portfolio invests primarily in U.S. Government Securities. The Portfolio will also invest in fixed-income securities other than U.S. Government securities and will engage in options and financial futures transactions. At June 30, 1996, the Portfolio had 96.4% of its assets invested in U.S. Government obligations. No other industry exceeded 20% of the Portfolio's assets. 11 12 NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED) (3) TRANSACTIONS WITH AFFILIATES KILICO assesses a monthly charge to the Subaccounts for the cost of insurance. The cost of insurance charge is allocated among the Subaccounts in the proportion of each Subaccount to the Separate Account value. Cost of insurance charges totaled approximately $68,600 for the six months ended June 30, 1996. Additionally, KILICO assesses a daily charge to the Subaccounts for mortality and expense risk assumed by KILICO at an annual rate of .90% of assets. Proceeds payable on the surrender of a Policy are reduced by the amount of any applicable contingent deferred sales charge. During the six months ended June 30, 1996, KILICO received contingent deferred sales charges of approximately $5,100. Zurich Kemper Investments, Inc. ("ZKI"), an affiliated company, is the investment manager of the Portfolios of the Fund which serve as the underlying investments of the Separate Account. (4) POLICY OWNERS' EQUITY Policy owners' equity at June 30, 1996 is as follows (in thousands, except unit value; differences are due to rounding):
Number Policy of Unit Owners' Units Value Equity ----- ------ ------- Money Market Subaccount.................................................................. 707 $1.536 $ 1,086 Total Return Subaccount.................................................................. 1,381 1.900 2,624 High Yield Subaccount.................................................................... 959 2.036 1,953 Growth Subaccount........................................................................ 884 2.545 2,249 Government Securities Subaccount......................................................... 2,206 1.789 3,946 ------- TOTAL POLICY OWNERS' EQUITY...................................................... $11,858 =======
12 13 KEMPER INVESTORS FUND FINANCIAL STATEMENTS 13 14 KEMPER INVESTORS FUND STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1996 (UNAUDITED) (IN THOUSANDS)
Small Money Total High Government Cap Market Return Yield Growth Securities International Growth Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio --------- --------- --------- --------- ---------- ------------- -------------- ASSETS Investments, at value (Cost: $67,177, $597,889, $253,027, $390,598, $97,260, $137,325, $43,015, $379, $3,437, $3,969, $1,751, $583, $1,295 and $703, respectively):.................. $67,177 671,577 251,850 449,091 96,685 158,640 52,544 Cash.............................. 667 4,376 979 384 788 -- 751 Receivable for: Investments sold................ -- 5,408 1,880 6,430 5,530 3,909 1,769 Interest and dividends.......... 193 5,488 4,604 588 927 482 6 --------- --------- --------- --------- ---------- ------------- ------ Total assets................ 68,037 686,849 259,313 456,493 103,930 163,031 55,070 LIABILITIES AND NET ASSETS Cash overdraft.................... -- -- -- -- -- 2,780 -- Payable for: Investments purchased........... -- 8,807 5,571 4,720 16,510 1,647 2,058 Dividends....................... 99 -- -- -- -- -- -- Management fee.................. 26 311 126 225 40 98 29 Custodian and transfer agent fees and related expenses..... 4 23 13 17 14 31 9 Other........................... 29 66 23 24 22 22 11 --------- --------- --------- --------- ---------- ------------- ------ Total liabilities........... 158 9,207 5,733 4,986 16,586 4,578 2,107 --------- --------- --------- --------- ---------- ------------- ------ Net assets........................ $67,879 677,642 253,580 451,507 87,344 158,453 52,963 ======== ======== ======== ======== =========== =========== ============ ANALYSIS OF NET ASSETS Paid-in capital................... $68,729 554,799 271,864 345,391 79,109 126,792 42,070 Undistributed net realized gain (loss) on investments and foreign currency transactions... (850) 37,870 (22,184) 43,361 (4,140) 7,913 1,030 Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies.............. -- 73,716 (1,177) 58,556 (575) 22,011 9,529 Undistributed net investment income.......................... -- 11,257 5,077 4,199 12,950 1,737 334 --------- --------- --------- --------- ---------- ------------- ------ Net assets applicable to shares outstanding..................... $67,879 677,642 253,580 451,507 87,344 158,453 52,963 ======== ======== ======== ======== =========== =========== ============ THE PRICING OF SHARES Shares outstanding................ 67,879 266,285 216,084 147,416 75,731 106,206 34,921 ======== ======== ======== ======== =========== =========== ============ Net asset value and redemption price per share (Net assets / shares outstanding).... $ 1.00 2.545 1.174 3.063 1.153 1.492 1.517 ======== ======== ======== ======== =========== =========== ============
See accompanying notes to financial statements. 14 15
Investment Small Grade Cap Value+ Bond Value Value Growth Horizon 20+ Horizon 10+ Horizon 5 Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio ---------- --------- --------- --------- ----------- ----------- --------- 379 3,451 3,828 1,726 576 1,283 699 61 70 24 44 54 66 65 -- -- 52 -- -- -- -- -- 6 4 1 1 1 -- ---------- --------- --------- --------- ----------- ----------- --------- 440 3,527 3,908 1,771 631 1,350 764 -- -- -- -- -- -- -- -- 326 16 127 47 38 12 -- -- -- -- -- -- -- -- 2 2 1 -- 1 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ---------- --------- --------- --------- ----------- ----------- --------- -- 328 18 128 47 39 12 ---------- --------- --------- --------- ----------- ----------- --------- 440 3,199 3,890 1,643 584 1,311 752 ========== ======== ======== ======== ============ ============ ========= 437 3,177 4,110 1,664 588 1,317 752 -- (3) (103) -- 1 -- -- -- 14 (141) (25) (7) (12) (4) 3 11 24 4 2 6 4 ---------- --------- --------- --------- ----------- ----------- --------- 440 3,199 3,890 1,643 584 1,311 752 ========== ======== ======== ======== ============ ============ ========= 437 3,143 4,185 1,620 576 1,298 744 ========== ======== ======== ======== ============ ============ ========= 1.006 1.018 .930 1.015 1.013 1.010 1.010 ========== ======== ======== ======== ============ ============ =========
15 16 KEMPER INVESTORS FUND STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) (IN THOUSANDS)
Small Money Total High Government Cap Market Return Yield Growth Securities International Growth Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio --------- --------- --------- --------- ---------- ------------- --------- Investment income: Interest.......................... $ 1,973 9,537 12,694 1,635 3,390 138 170 Dividends......................... -- 2,947 101 2,306 -- 1,922 38 --------- --------- --------- --------- ---------- ------ --------- 1,973 12,484 12,795 3,941 3,390 2,060 208 Less foreign taxes withheld....... -- -- -- -- -- 233 -- --------- --------- --------- --------- ---------- ------ --------- Total investment income......... 1,973 12,484 12,795 3,941 3,390 1,827 208 Expenses: Management fee.................... 179 1,847 745 1,300 250 558 145 Custodian and transfer agent fees and related expenses............ 8 37 28 39 34 126 19 Professional fees................. 5 36 14 21 5 11 2 Trustees' fees and other.......... 22 33 18 24 12 13 9 --------- --------- --------- --------- ---------- ------ --------- Total expenses.................. 214 1,953 805 1,384 301 708 175 --------- --------- --------- --------- ---------- ------ --------- Net investment income............... 1,759 10,531 11,990 2,557 3,089 1,119 33 Net realized and unrealized gain (loss) on investments: Net realized gain (loss) on sales of investments and foreign currency transactions........... (850) 38,614 (18) 44,333 203 8,070 1,190 Net realized gain (loss) from futures transactions............ -- 143 (4) -- 134 -- -- --------- --------- --------- --------- ---------- ------ --------- Net realized gain (loss)........ (850) 38,757 (22) 44,333 337 8,070 1,190 Change in net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies...................... 850 (13,178) (898) (3,880) (5,241) 6,203 4,866 --------- --------- --------- --------- ---------- ------ --------- Net gain (loss) on investments...... -- 25,579 (920) 40,453 (4,904) 14,273 6,056 --------- --------- --------- --------- ---------- ------ --------- Net increase (decrease) in net assets resulting from operations........................ $ 1,759 36,110 11,070 43,010 (1,815) 15,392 6,089 ======== ======== ======== ======== =========== ============ ========
(a) For the period from May 1, 1996 (commencement of operations) to June 30, 1996. See accompanying notes to financial statements. 16 17
Investment Small Grade Cap Value+ Bond Value Value Growth Horizon 20+ Horizon 10+ Horizon 5 Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a) Portfolio(a) ------------ ------------ ------------ ------------ ------------ ------------ ------------ 2 4 6 1 -- 3 2 -- 10 21 3 2 1 1 ------ ------------ ------ ------ ------ ------ ----- 2 14 27 4 2 4 3 -- -- -- -- -- -- -- ------ ------------ ------ ------ ------ ------ ----- 2 14 27 4 2 4 3 -- 2 3 1 1 1 1 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 1 -- 1 -- -- -- ------ ------------ ------ ------ ------ ------ ----- -- 3 3 2 1 1 1 ------ ------------ ------ ------ ------ ------ ----- 2 11 24 2 1 3 2 -- (3) (103) -- 1 -- -- -- -- -- -- -- -- -- ------ ------------ ------ ------ ------ ------ ----- -- (3) (103) -- 1 -- -- -- 14 (141) (25) (7) (12) (4) ------ ------------ ------ ------ ------ ------ ----- -- 11 (244) (25) (6) (12) (4) ------ ------------ ------ ------ ------ ------ ----- 2 22 (220) (23) (5) (9) (2) =========== =========== =========== =========== =========== =========== ===========
17 18 KEMPER INVESTORS FUND STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND FOR THE YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS)
Money Market Total Return Portfolio Portfolio --------------------- --------------------- 1996 1995 1996 1995 ------- ------- ------- ------- Operations: Net investment income...................................................... $ 1,759 4,123 10,531 22,128 Net realized gain (loss)................................................... (850) -- 38,757 47,119 Change in unrealized appreciation (depreciation)........................... 850 (355) (13,178) 74,735 Capital contribution from investment manager............................... -- 355 -- -- ------- ------- ------- ------- Net increase (decrease) in net assets resulting from operations.......... 1,759 4,123 36,110 143,982 Equalization credits (charges)............................................... -- -- 78 (1,827) Dividends to shareholders: Distribution from net investment income.................................... (1,759) (4,123) (22,873) (18,740) Distribution from net realized gain on investments......................... -- -- (20,332) -- ------- ------- ------- ------- Total dividends to shareholders.............................................. (1,759) (4,123) (43,205) (18,740) Net increase (decrease) from capital share transactions...................... 6,801 (22,743) 24,765 (50,115) ------- ------- ------- ------- Total increase (decrease) in net assets...................................... 6,801 (22,743) 17,748 73,300 Net assets: Beginning of period........................................................ 61,078 83,821 659,894 586,594 ------- ------- ------- ------- End of period.............................................................. $67,879 61,078 677,642 659,894 ======= ======= ======= ======= Undistributed net investment income at end of period......................... $ -- -- 11,257 23,521 ======= ======= ======= =======
See accompanying notes to financial statements. 18 19
Government High Yield Growth Securities International Small Cap Portfolio Portfolio Portfolio Portfolio Growth Portfolio - ------------------- ------------------- ----------------- ------------------- ------------------ 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995 - ------- ------- ------- ------- ------ ------ ------- ------- ------- ------ 11,990 25,037 2,557 4,087 3,089 6,923 1,119 1,758 33 97 (22) (2,027) 44,333 58,852 337 2,908 8,070 1,344 1,190 1,186 (898) 15,859 (3,880) 36,452 (5,241) 7,318 6,203 12,368 4,866 4,361 -- -- -- -- -- -- -- -- -- -- - ------- ------- ------- ------- ------ ------ ------- ------- ------- ------ 11,070 38,869 43,010 99,391 (1,815) 17,149 15,392 15,470 6,089 5,644 (3,301) 36 472 249 (118) (2,310) 115 (37) 77 97 (24,806) (22,165) (5,021) (1,120) (6,507) (6,202) (2,089) (970) -- (76) -- -- (58,998) (24,649) -- -- (1,044) (1,941) (1,209) -- - ------- ------- ------- ------- ------ ------ ------- ------- ------- ------ (24,806) (22,165) (64,019) (25,769) (6,507) (6,202) (3,133) (2,911) (1,209) (76) 13,240 21,222 57,511 18,954 599 (9,234) 11,598 (751) 12,633 16,799 - ------- ------- ------- ------- ------ ------ ------- ------- ------- ------ (3,797) 37,962 36,974 92,825 (7,841) (597) 23,972 11,771 17,590 22,464 257,377 219,415 414,533 321,708 95,185 95,782 134,481 122,710 35,373 12,909 - ------- ------- ------- ------- ------ ------ ------- ------- ------- ------ 253,580 257,377 451,507 414,533 87,344 95,185 158,453 134,481 52,963 35,373 ======= ======= ======= ======= ====== ====== ======= ======= ======= ====== 5,077 21,194 4,199 6,191 12,950 16,486 1,737 2,592 334 224 ======= ======= ======= ======= ====== ====== ======= ======= ======= ======
19 20 KEMPER INVESTORS FUND STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD FROM MAY 1, 1996 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1996 (UNAUDITED) (IN THOUSANDS)
Investment Small Grade Bond Value Cap Value Portfolio Portfolio Portfolio ---------- --------- --------- Operations: Net investment income............................................................. $ 2 11 24 Net realized gain (loss).......................................................... -- (3) (103) Change in unrealized appreciation (depreciation).................................. -- 14 (141) ----- --------- --------- Net increase (decrease) in net assets resulting from operations................. 2 22 (220) Equalization credits................................................................ 1 -- -- Net increase from capital share transactions........................................ 337 3,077 4,010 ----- --------- --------- Total increase in net assets........................................................ 340 3,099 3,790 Net assets: Beginning of period............................................................... 100 100 100 ----- --------- --------- End of period..................................................................... $440 3,199 3,890 =========== ======== ========= Undistributed net investment income at end of period................................ $ 3 11 24 =========== ======== =========
See accompanying notes to financial statements. 20 21
Value+ Growth Horizon 20+ Horizon 10+ Horizon 5 Portfolio Portfolio Portfolio Portfolio - --------- ----------- ----------- --------- 2 1 3 2 -- 1 -- -- (25) (7) (12) (4) - --------- --- ----- --- (23) (5) (9) (2) 2 1 3 2 1,564 488 1,217 652 - --------- --- ----- --- 1,543 484 1,211 652 100 100 100 100 - --------- --- ----- --- 1,643 584 1,311 752 ======== ============ ============ ========= 4 2 6 4 ======== ============ ============ =========
21 22 KEMPER INVESTORS FUND NOTES TO FINANCIAL STATEMENTS (1) DESCRIPTION OF THE FUND Kemper Investors Fund (the "Fund") is an open-end, diversified management investment company organized as a business trust under the laws of Massachusetts. The Fund offers multiple Portfolios, currently consisting of the Money Market, Total Return, High Yield, Growth, Government Securities, International, Small Cap Growth, Investment Grade Bond, Value, Small Cap Value, Value + Growth, Horizon 20+, Horizon 10+ and Horizon 5 Portfolios. (2) SIGNIFICANT ACCOUNTING POLICIES INVESTMENT VALUATION. Investments are stated at value. The securities of the Portfolios (excluding the Money Market Portfolio) 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. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for that security by the Board of Trustees or its delegates. Securities not so traded or listed are valued at the last current bid quotation if market quotations are available. Fixed income securities are valued by using market quotations, or independent pricing services that use prices provided by market makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics. Equity options are valued at the last sale price unless the bid price is higher or the asked price is lower, in which event such bid or asked price is used. Exchange traded fixed income options are valued at the last sale price unless there is no sale price, in which event prices provided by market makers are used. Over-the-counter traded fixed income options are valued based upon prices provided by market makers. 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 and foreign currencies are valued at the forward and current exchange rates, respectively, 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. The securities of the Money Market Portfolio are stated at amortized cost, which approximates market value. In the event that a deviation of 1/2 of 1% or more exists between the Portfolio's $1.00 per share net asset value, calculated at amortized cost, and the net asset value calculated by reference to market quotations, or if there is any other deviation that the Board of Trustees believes would result in a material dilution to shareholders or purchasers, the Board of Trustees will promptly consider what action, if any, should be initiated. CURRENCY TRANSLATION. The books and records of the Fund are maintained in U.S. Dollars. All assets and liabilities initially expressed in foreign currency values are converted into U.S. Dollars at the mean between the bid and offered quotations of such currencies against the U.S. Dollar as last quoted by a recognized dealer. If such quotations are not readily available, the rate of exchange is determined in good faith by the Board of Trustees. Income and expenses and purchases and sales of investments are translated into U.S. Dollars at the rate of exchange prevailing on the respective dates of such transactions. The Portfolios include that portion of the results of operations resulting from changes in foreign exchange rates with the net realized and unrealized gain (loss) on investments, as appropriate. 22 23 NOTES TO FINANCIAL STATEMENTS--(CONTINUED) 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, except that certain dividends from foreign securities are recorded as soon as the information is available to the Fund. Interest income is recorded on the accrual basis and includes discount amortization on all fixed income securities and premium amortization on mortgage-backed securities. Realized gains and losses from investment transactions are reported on an identified cost basis. Several of the Portfolios may purchase securities with delivery or payment to occur at a later date. At the time a Portfolio enters into a commitment to purchase a security, the transaction is recorded and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations. No interest accrues to the Portfolio until payment takes place. At the time the Portfolio enters into this type of transaction it is required to segregate cash or other liquid assets equal to the value of the securities purchased. At June 30, 1996, the Government Securities Portfolio had $16,252,000 of purchase commitments outstanding (19% of net assets) with a corresponding amount of assets segregated. EXPENSES. Expenses arising in connection with a Portfolio are allocated to that Portfolio. Other Fund expenses are allocated among the Portfolios in proportion to their relative net assets. FUND SHARE VALUATION. Shares of each Portfolio of the Fund are offered on a continuous basis to the separate accounts of participating insurance companies where permitted by law. On each day the New York Stock Exchange is open for trading, each Portfolio determines its net asset value per share (NAV) by dividing the total value of the Portfolio's investments and other assets, less liabilities, by the number of Portfolio shares outstanding. The NAV is determined as of the earlier of 3:00 p.m. Chicago time or the close of the Exchange for all Portfolios except the Money Market Portfolio, and at 11:00 a.m. and as of the earlier of 3:00 p.m. Chicago time or the close of the Exchange for the Money Market Portfolio. Because of the need to obtain prices as of the close of trading on various exchanges throughout the world, the calculation of net asset value for the International Portfolio does not take place contemporaneously with the determination of prices of the Fund's foreign securities. FEDERAL INCOME TAXES. Each Portfolio has complied or intends to comply with the special provisions of the Internal Revenue Code available to investment companies for the six months ended June 30, 1996. The accumulated net realized loss on sales of investments for federal income tax purposes at June 30, 1996 amounted to approximately $22,163,000 in the High Yield Portfolio and $3,567,000 in the Government Securities Portfolio. These losses are available to offset future taxable gains in the respective Portfolios and, if not applied, expire during the period 1998 through 2004. DIVIDENDS TO SHAREHOLDERS. All Portfolios except the Money Market Portfolio declare and pay dividends of net investment income and net realized capital gains annually, which are recorded on the ex-dividend date. The Money Market Portfolio declares a daily dividend equal to its net investment income for that day, payable monthly. Shareholders will receive dividends in additional shares. 23 24 NOTES TO FINANCIAL STATEMENTS--(CONTINUED) Dividends are determined in accordance with income tax principles which may treat certain transactions differently from generally accepted accounting principles. These differences are primarily due to differing treatments for certain transactions such as foreign currency transactions, if applicable. EQUALIZATION ACCOUNTING. A portion of proceeds from sales and cost of redemptions of Fund shares in all Portfolios except the Money Market Portfolio 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 The Fund has a management agreement with Zurich Kemper Investments, Inc. (ZKI), the Fund's investment manager for each Portfolio except the Value and Small Cap Value Portfolios. For management services and facilities furnished, the Fund pays a fee, based on average daily net assets, at an annual rate of .50% for the Money Market Portfolio, .55% for the Total Return and Government Securities Portfolios, .60% for the High Yield, Growth, Investment Grade Bond, Horizon 20+, Horizon 10+ and Horizon 5 Portfolios, .65% for the Small Cap Growth Portfolio and .75% for the International and Value + Growth Portfolios. Dreman Value Advisors, Inc. (DVA), a wholly owned subsidiary of ZKI, serves as the investment manager for the Value and the Small Cap Value Portfolios and is paid a management fee at an annual rate of .75% of average daily net assets of such Portfolios. DVA also serves as sub-adviser for the Value + Growth and Horizon Portfolios. For the six months ended June 30, 1996, the Fund incurred management fees of $5,033,000. Kemper Distributors, Inc., an affiliate of ZKI, is the distributor and principal underwriter for shares of the Fund. Certain officers or trustees of the Fund are also officers or directors of ZKI or DVA. During the six months ended June 30, 1996, the Fund made no direct payments to its officers and incurred trustees' fees of $83,000 to independent trustees. (4) INVESTMENT TRANSACTIONS For the six months ended June 30, 1996, investment transactions (excluding short-term investments) are as follows (in thousands):
Total High Government Small Return Yield Growth Securities International Cap Growth Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio --------- --------- --------- ---------- ------------- ---------- Purchases............................... $ 331,820 166,110 276,247 149,993 94,601 36,156 Proceeds from sales..................... 319,171 160,608 245,379 144,791 77,687 23,905
For the period from May 1, 1996 to June 30, 1996, investment transactions (excluding short-term investments) are as follows (in thousands):
Investment Grade Small Value + Horizon Horizon Horizon Bond Value Cap Value Growth 20+ 10+ 5 Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio ---------- --------- --------- --------- --------- --------- --------- Purchases........................ $ 30 4,632 5,995 1,651 488 802 305 Proceeds from sales.............. -- 1,849 2,601 -- 6 6 --
24 25 NOTES TO FINANCIAL STATEMENTS--(CONTINUED) (5) CAPITAL SHARE TRANSACTIONS The following tables summarize the activity in capital shares of the Fund (in thousands):
Six months ended June 30, 1996 --------------------------------------------------------------------------------------------------------------------------- Money Government Market Total Return High Yield Growth Securities International Small Cap Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Growth Portfolio --------- ------------------ ----------------- ----------------- ----------------- ----------------- ---------------- (a) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount --------- ------- --------- ------- -------- ------- -------- ------- -------- ------- -------- ------ -------- Shares sold... $ 70,069 20,334 $ 50,834 44,753 $ 51,926 14,881 $ 46,625 5,932 $ 5,151 20,085 $ 28,825 13,927 $ 20,354 Shares issued in reinvest- ment of divi- dends. 1,819 17,682 43,205 21,456 24,806 22,196 64,019 5,657 6,507 2,155 3,133 840 1,209 ---------- ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------ ------- 71,888 38,016 94,039 66,209 76,732 37,077 110,644 11,589 11,658 22,240 31,958 14,767 21,563 Shares re- deemed..(65,087) (27,609) (69,274) (54,582) (63,492) (16,747) (53,133) (10,850) (11,059) (14,153) (20,360) (6,129) (8,930) ---------- -------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------ ------- Net increase from capital share trans- actions.$ 6,801 10,407 $ 24,765 11,627 $ 13,240 20,330 $ 57,511 739 $ 599 8,087 $ 11,598 8,638 $ 12,633 ======== ======= ======== ======= ======== ======= ======== ======= ======== ======= ======== ====== =======
(a) For the Money Market Portfolio, dollar amounts and number of shares are the same.
May 1, 1996 to June 30, 1996 ------------------------------------------------------ Investment Grade Bond Value Small Cap Portfolio Portfolio Value Portfolio ----------------- ----------------- ---------------- Shares Amount Shares Amount Shares Amount ------- -------- ------- -------- ------ -------- Shares sold............................................................. 345 $ 345 3,053 $ 3,088 4,095 $ 4,020 Shares redeemed......................................................... (8) (8) (10) (11) (10) (10) --- ---- ----- ------ ----- ------ Net increase from capital share transactions............................ 337 $ 337 3,043 $ 3,077 4,085 $ 4,010 === ==== ===== ====== ===== ======
May 1, 1996 to June 30, 1996 ------------------------------------------------------------------------- Value+Growth Horizon 20+ Horizon 10+ Horizon 5 Portfolio Portfolio Portfolio Portfolio ----------------- ----------------- ----------------- ---------------- Shares Amount Shares Amount Shares Amount Shares Amount ------- -------- ------- -------- ------- -------- ------ -------- Shares sold............................................ 1,604 $ 1,651 496 $ 509 1,201 $ 1,220 697 $ 705 Shares redeemed........................................ (84) (87) (20) (21) (3) (3) (53) (53) ----- ------ --- ---- ----- ------ --- ---- Net increase from capital share transactions........... 1,520 $ 1,564 476 $ 488 1,198 $ 1,217 644 $ 652 ===== ====== === ==== ===== ====== === ====
25 26 NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Year ended December 31, 1995 ----------------------------------------------------------------------------------------------------------- Money Government Market Total Return High Yield Growth Securities Portfolio Portfolio Portfolio Portfolio Portfolio --------- ------------------ ----------------- ------------------- ------------------- (a) Shares Amount Shares Amount Shares Amount Shares Amount --------- ------- --------- ------- -------- -------- --------- -------- -------- Shares sold. $122,960 35,774 $ 81,265 74,793 $ 84,004 40,308 $ 117,495 38,793 $ 36,895 Shares issued in reinvestment of dividends... 4,191 8,512 18,740 19,366 22,165 9,679 25,769 5,447 6,202 --------- ------- --------- ------- -------- -------- --------- -------- -------- 127,151 44,286 100,005 94,159 106,169 49,987 143,264 44,240 43,097 Shares redeemed (149,894) (66,098) (150,120) (74,907) (84,947) (43,622) (124,310) (53,140) (52,331) --------- ------- --------- ------- -------- -------- --------- -------- -------- Net increase (decrease) from capital share transactions... $ (22,743) (21,812) $ (50,115) 19,252 $ 21,222 6,365 $ 18,954 (8,900) $ (9,234) ========= ======= ========= ======= ======== ======== ========= ======== ========
Year ended December 31, 1995 ---------------------------------------- International Small Cap Portfolio Growth Portfolio -------------------- ------------------ Shares Amount Shares Amount --------- -------- ------- --------- Shares sold. 29,450 $ 37,549 22,379 $ 26,856 Shares issued in reinvestment of dividends... 2,361 2,911 71 76 --------- -------- ------- --------- 31,811 40,460 22,450 26,932 Shares redeemed (32,312) (41,211) (8,586) (10,133) --------- -------- ------- --------- Net increase (decrease) from capital share transactions... $ (501) $ (751) 13,861 $ 46,799 ========= ======== ======= =========
(a) For the Money Market Portfolio, dollar amounts and number of shares are the same. (6) FINANCIAL FUTURES CONTRACTS The Total Return, High Yield and Government Securities Portfolios have entered into exchange traded financial futures contracts in order to help protect themselves from anticipated market conditions and, as such, bear the risk that arises from owning these contracts. At the time a Portfolio enters into a futures contract, it is required to make a margin deposit with its custodian. Subsequently, gain or loss is recognized and payments are made on a daily basis between the Portfolios and the broker as the market value of the futures contract fluctuates. At June 30, 1996, the market value of assets pledged by the Portfolios to cover margin requirements for open futures positions were $135,000, $26,000 and $1,055,000 for the Total Return, High Yield and Government Securities Portfolios, respectively. The Portfolios also had liquid securities in their portfolio sufficient to cover the following short Treasury futures positions open at June 30, 1996 that expire in September, 1996.
Face Loss at Portfolio amount 6/30/96 - ----------------------------------------------------- Total Return $ 3,517,000 $ (31,000) - ----------------------------------------------------- High Yield 1,591,000 (22,000) - ----------------------------------------------------- Government Securities 97,266,000 (1,153,000) - -----------------------------------------------------
26 27 NOTES TO FINANCIAL STATEMENTS--(CONTINUED) (7) FORWARD FOREIGN CURRENCY CONTRACTS In order to protect themselves against a decline in the value of particular foreign currencies against the U.S. Dollar, the Total Return, Growth and International Portfolios have entered into forward contracts to deliver foreign currency in exchange for U.S. Dollars as described below. The Portfolios bear the market risk that arises from changes in foreign exchange rates, and accordingly, the net unrealized gain on these contracts is reflected in the accompanying financial statements. The Portfolios also bear the credit risk if the counterparty fails to perform under the contract. At June 30, 1996, the Portfolios had the following forward foreign currency contracts outstanding with settlement dates in July, 1996: TOTAL RETURN PORTFOLIO
Unrealized Contract gain Foreign Currency amount in (loss) to be delivered U.S. dollars at 6/30/96 - ------------------------------------------------------------ 130,000 British Pounds $ 196,000 $ (6,000) - ------------------------------------------------------------ 285,000 Dutch Guilders 170,000 3,000 - ------------------------------------------------------------ 1,320,000 French Francs 259,000 3,000 - ------------------------------------------------------------ 80,565,000 Japanese Yen 760,000 24,000 - ------------------------------------------------------------ 148,000 Swiss Francs 122,000 4,000 - ------------------------------------------------------------ Net unrealized gain $ 28,000 - ------------------------------------------------------------
GROWTH PORTFOLIO
Unrealized Contract gain Foreign Currency amount in (loss) to be delivered U.S. dollars at 6/30/96 - ------------------------------------------------------------ 385,000 British Pounds $ 582,000 $ (15,000) - ------------------------------------------------------------ 609,000 Dutch Guilders 356,000 (1,000) - ------------------------------------------------------------ 2,100,000 French Francs 405,000 (3,000) - ------------------------------------------------------------ 255,354,000 Japanese Yen 2,414,000 82,000 - ------------------------------------------------------------ 463,000 Swiss Francs 372,000 -- - ------------------------------------------------------------ Net unrealized gain $ 63,000 - ------------------------------------------------------------
INTERNATIONAL PORTFOLIO
Unrealized Contract gain Foreign Currency amount in (loss) to be delivered U.S. dollars at 6/30/96 - ------------------------------------------------------------ 3,022,000 British Pounds $ 4,565,000 $ (130,000) - ------------------------------------------------------------ 13,530,000 Dutch Guilders 7,998,000 64,000 - ------------------------------------------------------------ 25,750,000 French Francs 5,013,000 9,000 - ------------------------------------------------------------ 2,551,000,000 Japanese Yen 23,962,000 662,000 - ------------------------------------------------------------ 4,909,000 Swiss Francs 4,006,000 80,000 - ------------------------------------------------------------ Net unrealized gain $ 685,000 - ------------------------------------------------------------
27 28 FINANCIAL HIGHLIGHTS MONEY MARKET PORTFOLIO
Six months ended June 30, Year ended December 31, 1996 1995 1994 1993 1992 ---------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period.............................. $ 1.00 1.00 1.00 1.00 1.00 Net investment income and dividends declared...................... .02 .06 .04 .03 .03 ---------- ------- ------- ------- ------- Net asset value, end of period.................................... $ 1.00 1.00 1.00 1.00 1.00 ========== ======= ======= ======= ======= TOTAL RETURN (NOT ANNUALIZED)..................................... 2.50% 5.66 3.96 2.83 3.43 RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses.......................................................... .59% .55 .53 .56 .57 Net investment income............................................. 4.89% 5.52 3.95 2.79 3.38 SUPPLEMENTAL DATA: Net assets at end of period (in thousands)........................ $ 67,879 61,078 83,821 68,177 75,270
NOTE TO MONEY MARKET PORTFOLIO: The total returns for 1995 and 1994 include the effect of a capital contribution from the investment manager. Without the capital contribution, the total returns would have been 5.11% and 3.47%, respectively. TOTAL RETURN PORTFOLIO
Six months ended June 30, Year ended December 31, 1996 1995 1994 1993 1992 ---------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period.............................. $ 2.579 2.112 2.586 2.473 2.658 Income from investment operations: Net investment income........................................... .040 .084 .069 .069 .061 Net realized and unrealized gain (loss)......................... .096 .453 (.313) .214 (.026) ---------- ------- ------- ------- ------- Total from investment operations.................................. .136 .537 (.244) .283 .035 Less dividends: Distribution from net investment income......................... .090 .070 .060 .050 .080 Distribution from net realized gain............................. .080 -- .170 .120 .140 ---------- ------- ------- ------- ------- Total dividends................................................... .170 .070 .230 .170 .220 ---------- ------- ------- ------- ------- Net asset value, end of period.................................... $ 2.545 2.579 2.112 2.586 2.473 ========== ======= ======= ======= ======= TOTAL RETURN (NOT ANNUALIZED)..................................... 5.54% 25.97 (9.50) 12.13 1.69 RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses.......................................................... .58% .60 .61 .59 .60 Net investment income............................................. 3.14% 3.52 3.13 3.19 3.41 SUPPLEMENTAL DATA: Net assets at end of period (in thousands)........................ $677,642 659,894 586,594 643,830 528,007 Portfolio turnover rate (annualized).............................. 94% 118 128 191 160
Average commission rate paid per share on stock transactions for the six months ended June 30, 1996 was $.0576. 28 29 FINANCIAL HIGHLIGHTS--(CONTINUED) HIGH YIELD PORTFOLIO
Six months ended June Year ended December 31, 30, 1996 1995 1994 1993 1992 ---------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period.............................. $ 1.259 1.185 1.338 1.209 1.144 Income from investment operations: Net investment income........................................... .060 .125 .116 .120 .125 Net realized and unrealized gain (loss)......................... (.005) .069 (.149) .109 .070 ---------- ------- ------- ------- ------- Total from investment operations.................................. .055 .194 (.033) .229 .195 Less distribution from net investment income...................... .140 .120 .120 .100 .130 ---------- ------- ------- ------- ------- Net asset value, end of period.................................... $ 1.174 1.259 1.185 1.338 1.209 ========== ======= ======= ======= ======= TOTAL RETURN (NOT ANNUALIZED)..................................... 4.51% 17.40 (2.25) 20.00 17.76 RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses.......................................................... .65% .65 .65 .63 .64 Net investment income............................................. 9.66% 10.27 9.49 9.54 10.44 SUPPLEMENTAL DATA: Net assets at end of period (in thousands)........................ $253,580 257,377 219,415 233,964 162,158 Portfolio turnover rate (annualized).............................. 121% 90 98 84 57
GROWTH PORTFOLIO
Six months ended Year ended December 31, June 30, 1996 1995 1994 1993 1992 ---------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period.............................. $ 3.262 2.665 2.935 2.631 2.642 Income from investment operations: Net investment income........................................... .019 .034 .018 .004 .007 Net realized and unrealized gain (loss)......................... .292 .793 (.138) .370 .082 ---------- ------- ------- ------- ------- Total from investment operations.................................. .311 .827 (.120) .374 .089 Less dividends: Distribution from net investment income......................... .040 .010 -- .010 .005 Distribution from net realized gain............................. .470 .220 .150 .060 .095 ---------- ------- ------- ------- ------- Total dividends................................................... .510 .230 .150 .070 .100 ---------- ------- ------- ------- ------- Net asset value, end of period.................................... $ 3.063 3.262 2.665 2.935 2.631 ========== ======= ======= ======= ======= TOTAL RETURN (NOT ANNUALIZED)..................................... 10.50% 32.97 (4.02) 14.63 3.57 RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses.......................................................... .64% .64 .66 .64 .64 Net investment income............................................. 1.18% 1.15 .69 .30 .65 SUPPLEMENTAL DATA: Net assets at end of period (in thousands)........................ $451,507 414,533 321,708 284,461 203,624 Portfolio turnover rate (annualized).............................. 124% 88 106 78 78
Average commission rate paid per share on stock transactions for the six months ended June 30, 1996 was $.0477. 29 30 FINANCIAL HIGHLIGHTS--(CONTINUED) GOVERNMENT SECURITIES PORTFOLIO
Six months ended June 30, Year ended December 31, 1996 1995 1994 1993 1992 ---------- ------ ------ ------------ ------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period...................... $ 1.269 1.142 1.267 1.277 1.287 Income from investment operations: Net investment income................................... .041 .084 .067 .060 .064 Net realized and unrealized gain (loss)................. (.067) .123 (.102) .020 .006 ---------- ------ ------ ------------ ------ Total from investment operations.......................... (.026) .207 (.035) .080 .070 Less dividends: Distribution from net investment income................. .090 .080 .060 .060 .050 Distribution from net realized gain..................... -- -- .030 .030 .030 ---------- ------ ------ ------------ ------ Total dividends........................................... .090 .080 .090 .090 .080 ---------- ------ ------ ------------ ------ Net asset value, end of period............................ $ 1.153 1.269 1.142 1.267 1.277 ========== ====== ====== ============ ====== TOTAL RETURN (NOT ANNUALIZED)............................. (2.02)% 18.98 (2.74) 6.48 5.90 RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses.................................................. .66% .65 .63 .60 .61 Net investment income..................................... 6.80% 7.08 5.69 5.05 6.08 SUPPLEMENTAL DATA: Net assets at end of period (in thousands)................ $ 87,344 95,185 95,782 121,912 98,814 Portfolio turnover rate (annualized)...................... 290% 275 606 534 492
INTERNATIONAL PORTFOLIO
Six months January 6, ended 1992 to June 30, Year ended December 31, December 31, 1996 1995 1994 1993 1992 ---------- ------- ------- ------ ------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period........................ $ 1.371 1.244 1.306 .993 1.000 Income from investment operations: Net investment income..................................... .010 .018 .009 .010 .010 Net realized and unrealized gain (loss)................... .141 .139 (.056) .313 (.017) ---------- ------- ------- ------ ------ Total from investment operations............................ .151 .157 (.047) .323 (.007) Less dividends: Distribution from net investment income................... .020 .010 -- .009 -- Distribution from net realized gain....................... .010 .020 .015 .001 -- ---------- ------- ------- ------ ------ Total dividends............................................. .030 .030 .015 .010 -- ---------- ------- ------- ------ ------ Net asset value, end of period.............................. $ 1.492 1.371 1.244 1.306 .993 ========== ======= ======= ====== ============ TOTAL RETURN (NOT ANNUALIZED)............................... 11.10% 12.83 (3.59) 32.83 (.72) RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses.................................................... .95% .92 .93 .92 1.11 Net investment income....................................... 1.51% 1.39 .74 .86 1.01 SUPPLEMENTAL DATA: Net assets at end of period (in thousands).................. $158,453 134,481 122,710 88,880 19,447 Portfolio turnover rate (annualized)........................ 101% 126 107 116 129
Average commission rate paid per share on stock transactions for the six months ended June 30, 1996 was $.0199. Foreign commissions usually are lower than U.S. commissions when expressed as cents per share due to the lower per share price of many non-U.S. securities. 30 31 FINANCIAL HIGHLIGHTS--(CONTINUED) SMALL CAP GROWTH PORTFOLIO
Six months May 2, 1994 ended Year ended to June 30, 1996 December 31, 1995 December 31, 1994 ------------- ----------------- ----------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period............................ $ 1.346 1.039 1.000 Income from investment operations: Net investment income......................................... .041 .005 .008 Net realized and unrealized gain.............................. .170 .307 .031 ------------- ------ ------ Total from investment operations................................ .211 .312 .039 Less dividends: Distribution from net investment income....................... -- .005 -- Distribution from net realized gain........................... .040 -- -- ------------- ------ ------ Total dividends................................................. .040 .005 -- ------------- ------ ------ Net asset value, end of period.................................. $ 1.517 1.346 1.039 ============ ================= ================= TOTAL RETURN (NOT ANNUALIZED)................................... 15.82% 30.07 3.95 RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses........................................................ .78% .87 1.25 Net investment income........................................... .15% .42 .91 SUPPLEMENTAL DATA: Net assets at end of period (in thousands)...................... $52,963 35,373 12,909 Portfolio turnover rate (annualized)............................ 123% 81 58
Average commission rate paid per share on stock transactions for the six months ended June 30, 1996 was $.0561. 31 32 FINANCIAL HIGHLIGHTS--(CONTINUED) FOR THE PERIOD MAY 1, 1996 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1996
Investment Small Value+ Grade Bond Value Cap Value Growth Horizon 20+ Horizon 10+ Horizon 5 Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio ---------- --------- --------- --------- ----------- ----------- --------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period............................ $1.000 1.000 1.000 1.000 1.000 1.000 1.000 Income from investment operations: Net investment income............. .006 .004 .006 .003 .024 .019 .015 Net realized and unrealized gain (loss)..................... -- .014 (.076) .012 (.011) (.009) (.005) ------ ----- ----- ----- ----- ----- ----- Total from investment operations.... .006 .018 (.070) .015 .013 .010 .010 Net asset value, end of period...... $1.006 1.018 .930 1.015 1.013 1.010 1.010 ====== ===== ===== ===== ===== ===== ===== TOTAL RETURN (NOT ANNUALIZED)....... .62% 1.79 (7.05) 1.45 1.26 1.03 .99 RATIOS TO AVERAGE NET ASSETS (ANNUALIZED): Expenses............................ .74% .90 .85 .89 .74 .74 .74 Net investment income............... 3.61% 4.19 5.94 1.53 3.11 2.61 2.96 SUPPLEMENTAL DATA: Net assets at end of period (in thousands).................... $ 440 3,199 3,890 1,643 584 1,311 752 Portfolio turnover rate (annualized)...................... --% 520 568 -- 15 9 -- Average commission rate paid per share on stock transactions....... $ -- .0500 .0500 .0595 .0597 .0595 .0592
32 33 KEMPER INVESTORS FUND MONEY MARKET PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Value ------- CORPORATE OBLIGATIONS CAPITAL AND MORTGAGE LENDING--8.8% Countrywide Funding Corporation 5.51%, 7/31/96................................. $ 2,001 PHH Corporation 5.38%, 7/23/96................................. 1,993 SRD Finance Inc. 5.47%, 7/18/96................................. 1,994 ------- 5,988 CAPTIVE AUTO FINANCE--8.8% Ford Motor Credit Company 5.36%, 7/19/96................................. 1,994 General Motors Acceptance Corp. 5.36%, 7/3/96.................................. 1,999 Mitsubishi Motors Credit of America, Inc. 5.47%, 8/1/96.................................. 1,990 ------- 5,983 CAPTIVE BUSINESS FINANCE--20.6% B.A.T Capital Corp. 5.38%, 7/26/96................................. 1,992 CSW Credit, Inc. 5.39%, 7/26/96................................. 1,992 (a)Finova Capital Corporation 5.56%, 7/15/96................................. 2,000 Orix America Inc. 5.43%-5.62%, 7/1/96-9/3/96..................... 3,979 (a)USL Capital Corporation 5.62%, 8/29/96................................. 2,001 Xerox Credit Corporation 5.37%, 7/23/96................................. 1,993 ------- 13,957 CONSUMER PRODUCTS AND SERVICES--5.9% American Home Products Corporation 5.45%, 8/15/96................................. 1,986 Sony Capital Corporation 5.38%, 7/17/96................................. 1,995 ------- 3,981 CORPORATE FINANCING--14.7% Astro Capital Corp. 5.50%, 8/30/96................................. 1,981 B I Funding Inc. 5.38%, 7/17/96................................. 1,995 Broadway Capital Corp. 5.52%, 7/1/96.................................. 1,999 Ranger Funding Corporation 5.40%, 7/3/96.................................. 1,999 Windmill Funding Corporation 5.38%, 7/22/96................................. 1,993 ------- 9,967 Value ------- ENERGY AND UTILITIES--7.9% DIC Americas, Inc. 5.47%, 7/11/96................................. $ 1,996 New England Power Co. 5.42%, 7/18/96................................. 3,340 ------- 5,336 FINANCIAL SERVICES--8.8% (a)Bear Stearns Companies Inc. 5.51%, 7/19/96................................. 2,000 Dean Witter, Discover & Co. 5.39%, 7/9/96.................................. 1,997 (a)Goldman, Sachs & Co. 5.55%, 7/25/96................................. 2,000 ------- 5,997 INFORMATION SERVICES--5.9% International Business Machines Corp. 5.26%, 2/28/97................................. 1,997 Nynex Corporation 5.43%, 8/9/96.................................. 1,988 ------- 3,985 MANUFACTURING AND INDUSTRIAL PRODUCTS--2.9% Bridgestone/Firestone, Inc. 5.45%, 7/22/96................................. 1,993 RECEIVABLES FINANCING--11.7% (a)Heller Financial, Inc. 5.66%, 7/1/96.................................. 2,002 Jet Funding Corporation 5.54%, 9/30/96................................. 1,972 Old Line Funding Corp. 5.43%, 7/18/96................................. 1,994 Receivables Capital Corp. 5.35%, 7/16/96................................. 1,995 ------- 7,963 ------- TOTAL CORPORATE OBLIGATIONS--96.0% (average maturity: 31 days)....................... 65,150 U.S. TREASURY NOTE--3.0% (average maturity: 214 days) 5.04%, 1/31/97................................... 2,027 ------- TOTAL INVESTMENTS--99.0% (average maturity: 36 days)....................... 67,177 CASH AND OTHER ASSETS, LESS LIABILITIES--1.0%............................ 702 ------- NET ASSETS--100%.................................. $67,879 =======
See accompanying notes to Money Market Portfolio of Investments. 33 34 NOTES TO MONEY MARKET PORTFOLIO OF INVESTMENTS Interest rates represent annualized yield to date of maturity, except for variable rate securities described in Note (a). For each security, cost (for financial reporting and federal income tax purposes) and carrying value are the same. Likewise, carrying value approximates principal amount. (a) Variable rate securities. The rates shown are the current rates at June 30, 1996. The dates shown represent the demand date or next interest rate change date. See accompanying notes to financial statements. 34 35 KEMPER INVESTORS FUND TOTAL RETURN PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Principal Amount or Number of Shares Value ---------- -------- GOVERNMENT OBLIGATIONS U.S. Treasury Notes 7.75%, 2000..................... $ 10,000 $ 10,430 7.875%, 2001.................... 7,000 7,416 7.75%, 2001..................... 9,000 9,464 6.25%, 2003..................... 8,500 8,359 7.25%, 2004..................... 33,000 34,218 6.50%, 2005..................... 4,200 4,146 U.S. Treasury Bonds 12.00%, 2013.................... 1,800 2,541 12.50%, 2014.................... 13,000 19,153 Government of Canada, 8.625%, 2005.................... 2,000 2,157 -------- TOTAL GOVERNMENT OBLIGATIONS--14.4% (Cost: $97,886)................... 97,884 COMMON STOCKS BASIC INDUSTRIES--2.6% Air Products & Chemicals.......... 92,500 shs. 5,342 Crown Cork & Seal Co.............. 33,700 1,517 Monsanto Co....................... 175,000 5,688 Praxair, Inc...................... 106,100 4,483 Sumitomo Metal Industries......... 50,000 153 Toray Industries.................. 23,000 159 -------- 17,342 CAPITAL GOODS--7.2% Boeing Co......................... 86,000 7,493 Emerson Electric Co............... 70,900 6,408 Fluor Corp........................ 89,000 5,818 General Electric Co............... 161,600 13,978 B.F. Goodrich Co.................. 165,000 6,167 Honda Motor Co., Ltd. ............ 6,000 155 Illinois Tool Works............... 36,500 2,468 Mitsubishi Heavy Industries....... 18,000 156 Technip S.A. ..................... 1,734 159 York International Corp........... 120,900 6,256 -------- 49,058 CONSUMER CYCLICALS--8.2% Burton Group PLC.................. 70,330 170 Carnival Corp..................... 200,000 5,775 (b)Circus Circus Enterprises...... 94,900 3,891 (b)Consolidated Stores Corporation....................... 85,000 3,124 Walt Disney Company............... 100,000 6,288 (b)Federated Department Stores.... 119,000 4,061 Number of Shares Value ---------- -------- Harcourt General.................. 31,600 $ 1,580 Hilton Hotels..................... 35,000 3,938 Liberty Media Group, "A".......... 145,000 3,842 Lowes Companies................... 80,000 2,890 Manpower, Inc. ................... 75,000 2,944 Marriott International............ 98,500 5,294 Merrill Lynch & Co. (convertible preferred)........... 96,000 2,124 (b)Mirage Resorts, Inc............ 73,000 3,942 Moet Hennessy Louis Vuitton....... 642 152 (b)OfficeMax Inc.................. 116,400 2,779 Pep Boys-Manny Moe & Jack......... 64,400 2,190 (b)Thrifty Payless Holdings....... 47,500 208 -------- 55,192 CONSUMER DURABLES--1.6% Leggett & Platt Incorporated...... 149,000 4,135 Magna International Inc........... 140,500 6,463 -------- 10,598 CONSUMER STAPLES--8.1% Avon Products..................... 50,000 2,256 Duracell International............ 100,000 4,313 Gillette Co....................... 75,000 4,678 Heineken N.V...................... 734 164 Melville Corp..................... 52,700 2,134 PepsiCo........................... 145,400 5,144 Philip Morris Companies........... 172,800 17,971 Procter & Gamble Co............... 101,700 9,216 Reed International PLC............ 8,968 150 Sysco Corp........................ 50,000 1,712 Warnaco Group..................... 190,000 4,892 Wendy's International............. 115,000 2,142 -------- 54,772 ENERGY--1.4% Enron Corp........................ 142,200 5,812 Mobil Corp........................ 31,000 3,476 -------- 9,288 FINANCE--9.3% Allstate Corp. ................... 120,000 5,475 American International Group, Inc. ........................... 45,000 4,438 Bank of Boston.................... 85,800 4,247 Bank of Ireland................... 24,057 164 CITIC Pacific Ltd. ............... 42,000 170 Cheung Kong Holdings Ltd. ........ 22,000 158 Dean Witter Discover.............. 80,000 4,580
35 36 KEMPER INVESTORS FUND TOTAL RETURN PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value ---------- -------- Development Bank of Singapore..... 13,000 $ 162 Federal National Mortgage Association..................... 262,000 8,777 First USA......................... 73,900 4,065 ITT Hartford Group................ 90,000 4,793 Internationale Nederlanden Groep........................... 5,750 171 KeyCorp........................... 102,500 3,972 Krung Thai Bank Public Co. Ltd. ........................... 31,800 149 MBIA Inc. ........................ 68,800 5,358 MGIC Investment Corp. ............ 72,200 4,052 Marsh & McLennan Companies, Inc. ........................... 30,000 2,895 NationsBank....................... 45,000 3,718 Swire Pacific Ltd., "A"........... 19,500 167 Travelers Group................... 123,750 5,646 -------- 63,157 HEALTH CARE--8.4% Abbott Laboratories............... 120,000 5,220 American Home Products............ 100,000 6,013 Astra AB.......................... 3,691 163 C. R. Bard........................ 60,000 2,040 Baxter International.............. 120,000 5,670 (b)Biogen......................... 25,000 1,372 Johnson & Johnson................. 240,000 11,880 Eli Lilly & Co. .................. 100,000 6,500 Medtronic, Inc. .................. 77,000 4,312 Merck & Co., Inc. ................ 91,200 5,894 Omnicare.......................... 41,000 1,087 Perkin-Elmer Corp. ............... 70,000 3,378 Roche Holding AG.................. 40 153 Sandoz, Ltd. ..................... 61,200 3,481 (b)U.S. Bioscience.................. 2,326 31 -------- 57,194 TECHNOLOGY--14.4% Alco Standard Corporation......... 62,000 2,806 (b)Atmel Corporation.............. 110,800 3,338 (b)Cisco Systems.................. 190,000 10,759 Computer Associates International................... 72,600 5,173 (b)Computer Sciences Corp. ....... 56,000 4,186 (b)Electronic Arts................ 70,000 1,873 Electronic Data Systems........... 115,100 6,187 L.M. Ericsson Telephone Co., "B"............................. 8,045 173 First Data Corporation............ 49,174 3,915 Harris Corp. ..................... 60,000 3,660 Hewlett-Packard, Co. ............. 57,000 5,679 Intel Corp. ...................... 94,000 6,903 Linear Technology Corp. .......... 107,400 3,222 Number of Shares or Principal Amount Value ---------- -------- Matsushita Electric Industrial Co., Ltd. ...................... 10,000 $ 186 (b)Microsoft Corp. ............... 36,000 4,325 Murata Manufacturing.............. 5,000 189 (b)Parametric Technology Corp. ... 56,500 2,451 (b)Seagate Technology............. 86,000 3,870 (b)Solectron Corp. ............... 77,000 2,916 (b)Sun Microsystems............... 85,000 5,004 Texas Instruments................. 52,000 2,593 (b)3Com Corporation............... 185,000 8,464 United Technologies............... 20,000 2,300 Xerox Corporation................. 141,000 7,543 -------- 97,715 TRANSPORTATION--.7% Canadian National Railway Company......................... 8,767 161 Conrail........................... 35,000 2,323 Nippon Express.................... 17,000 166 Union Pacific Corp. .............. 30,000 2,096 -------- 4,746 UTILITIES--2.9% AT&T.............................. 142,900 8,860 (b)AirTouch Communications........ 130,000 3,673 Iberdrola, S.A. .................. 17,400 178 SBC Communications Inc. .......... 80,000 3,940 (b)WorldCom....................... 58,600 3,245 -------- 19,896 -------- TOTAL COMMON STOCKS--64.8% (Cost: $363,671).................. 438,958 CORPORATE OBLIGATIONS BASIC INDUSTRIES--1.4% Boise Cascade Corp. 9.85%, 2002..................... $ 1,000 1,118 9.45%, 2009..................... 1,000 1,112 Crown Paper, 11.00%, 2005......... 1,200 1,143 Owens-Illinois, Inc., 11.00%, 2003............................ 3,990 4,289 Smurfit Capital Funding, 6.75%, 2005............................ 2,000 1,904 -------- 9,566 CAPITAL GOODS--.5% G-I Holdings, zero coupon, 1998... 360 291 Lockheed Corp., 7.45%, 2004....... 2,000 2,029 Nortek, Inc., 9.875%, 2004........ 90 85 Northrop Grumman, 7.00%, 2006..... 750 722 -------- 3,127
36 37 KEMPER INVESTORS FUND TOTAL RETURN PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Principal Amount Value ---------- -------- CONSUMER CYCLICALS--7.0% American Radio System Corporation, 9.00%, 2006..................... $ 1,260 $ 1,178 Bally's Park Place Funding, 9.25%, 2004..................... 1,800 1,915 CF Cable TV, Inc., 11.625%, 2005............................ 510 561 Cablevision Systems Corporation, 9.25%, 2005..................... 1,800 1,674 Century Communications Corporation, 9.50%, 2005........ 1,500 1,451 Cinemark USA, Inc., 12.00%, 2002............................ 570 618 Comcast Corporation, 10.625%, 2012............................ 1,500 1,567 (a)Comcast UK Cable Partners Limited, 11.20%, 2007........... 2,880 1,670 Continental Cablevision, Inc., 9.50%, 2013..................... 2,000 2,162 Empress River Casino, 10.75%, 2002............................ 2,000 2,100 Federated Department Stores, 10.00%, 2001.................... 2,000 2,148 Granite Broadcasting Corp., 9.375%, 2005.................... 1,240 1,139 ITT Corporation, 6.75%, 2005...... 2,000 1,892 K-III Communication Corporation, 8.50%, 2006..................... 750 697 Mobilemedia Communications, 9.375%, 2007.................... 2,000 1,780 News American Holdings, 9.25%, 2013..................... 2,000 2,177 P&C Food Markets, Inc., 11.50%, 2001.................... 120 113 Pathmark Stores, Inc., 11.625%, 2002............................ 1,390 1,387 Penn Traffic Company 10.25%, 2002.................... 30 27 10.65%, 2004.................... 400 361 10.375%, 2004................... 930 830 Rogers Cablesystems Limited, 10.00%, 2005.................... 1,050 1,047 Rogers Cantel, 11.125%, 2002...... 1,790 1,902 Sears Roebuck Acceptance Corp., 6.75%, 2005..................... 2,000 1,929 Sinclair Broadcast Group, Inc. 10.00%, 2003.................... 810 786 10.00%, 2005.................... 900 867 TCI Communications, 8.65%, 2004... 1,000 1,020 (a)TeleWest Communications PLC, 11.00%, 2007.................... 4,020 2,382 360 Communications, 7.125%, 2003............................ 2,000 1,917 Principal Amount Value ---------- -------- Time Warner Entertainment Company, L.P., 8.875%, 2012.............. $ 1,000 $ 1,064 Time Warner Inc., 9.125%, 2013.... 1,000 1,043 Trump Atlantic City, 11.25%, 2006............................ 1,800 1,805 Univision TV, 11.75%, 2001........ 1,500 1,575 Viacom International, Inc., 8.00%, 2006..................... 2,400 2,217 (a)Videotron Holdings, 11.125%, 2004.............................. 625 456 -------- 47,457 CONSUMER DURABLES--.3% WestPoint Stevens, 9.375%, 2005... 1,900 1,843 CONSUMER STAPLES--.5% Philip Morris Companies 8.25%, 2003..................... 1,000 1,057 7.25%, 2003..................... 1,000 999 RJR Nabisco Inc., 8.00%, 2000..... 1,000 1,031 -------- 3,087 ENERGY--1.6% BHP Finance USA, 7.875%, 2002..... 2,000 2,087 Gulf Canada Resources Limited, 9.25%, 2004..................... 1,500 1,464 Parker & Parsley Petroleum, 8.25%, 2007..................... 2,000 2,080 Petronas Dagangan Bhd 7.125%, 2005.................... 1,000 990 7.750%, 2015.................... 1,000 1,003 Repsol International Finance, 7.00%, 2005..................... 1,000 986 USX Corporation, 9.375%, 2012..... 2,000 2,210 -------- 10,820 FINANCE--4.1% ABN AMRO Bank, 8.25%, 2009........ 2,000 2,064 Abbey National First Capital, 8.20%, 2004..................... 2,000 2,116 Associates Corp, N.A., 8.25%, 1999............................ 2,000 2,090 Banco Central Hispano Americano, 7.50%, 2005..................... 1,000 994 Bangkok Bank Ltd., 7.25%, 2005.... 2,000 1,927 Capital One Bank, 8.125%, 2000.... 2,000 2,057 Citicorp, 7.625%, 2005............ 1,000 1,015 Commercial Credit, 7.375%, 2005... 1,250 1,253 ERAC USA Finance, 6.95%, 2006..... 2,000 1,885 Equitable Life, 6.95%, 2005....... 2,000 1,917 First USA Bank, 8.10%, 1997....... 2,000 2,022
37 38 KEMPER INVESTORS FUND TOTAL RETURN PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Principal Amount Value ---------- -------- GMAC Medium Term Note, 8.50%, 2000..................... $ 2,000 $ 2,119 Lehman Brothers Holdings, 7.250%, 2003.................... 2,000 1,976 Malayan Banking Berhad, 7.125%, 2005.................... 1,000 977 Merita Bank Ltd., 6.50%, 2006..... 1,000 928 Merrill Lynch & Co., 7.375%, 2006.............................. 750 750 Societe Generale, 7.40%, 2006..... 2,000 1,999 -------- 28,089 HEALTH CARE--.8% Columbia/HCA Healthcare Corp., 6.91%, 2005..................... 2,000 1,951 Ornda HealthCorp. 12.25%, 2002.................... 1,440 1,555 11.375%, 2004................... 410 452 Tenet Healthcare Corporation 9.625%, 2002.................... 130 138 10.125%, 2005................... 1,370 1,449 -------- 5,545 TRANSPORTATION--.8% Delta Airlines 9.875%, 2008.................... 749 835 9.75%, 2021..................... 2,250 2,577 United Airlines, 9.56%, 2018...... 2,000 2,199 -------- 5,611 UTILITIES--1.7% Ameritech Capital Funding, 7.50%, 2005..................... 2,000 2,047 Principal Amount Value ---------- -------- (a)International CableTel Inc., 11.50%, 2006.................... $ 2,600 $ 1,462 (a)MFS Communications Company, Inc., 8.875%, 2006.............. 3,525 2,141 (a)PanAmSat, L.P., 11.375%, 2003.............................. 1,800 1,557 Southwestern Bell Telephone, 6.625%, 2005.................... 1,000 969 Tenaga Nasional Berhad, 7.875%, 2004.................... 1,750 1,810 USA Mobile Communication, Inc. II, 9.50%, 2004..................... 1,750 1,612 -------- 11,598 -------- TOTAL CORPORATE OBLIGATIONS--18.7% (Cost: $128,340).................. 126,743 MONEY MARKET INSTRUMENTS--1.2% Yield--5.45% to 5.50% Due--July 1996 (Cost: $7,992).................... 8,000 7,992 -------- TOTAL INVESTMENTS--99.1% (Cost: $597,889).................. 671,577 CASH AND OTHER ASSETS, LESS LIABILITIES--.9%.................... 6,065 -------- NET ASSETS--100%.................... $677,642 ========
NOTES TO TOTAL RETURN PORTFOLIO OF INVESTMENTS (a) Deferred interest obligation; currently zero coupon under the terms of the initial offering. (b) Non-income producing security. Based on the cost of investments of $597,889,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $84,161,000, the gross unrealized depreciation was $10,473,000 and the net unrealized appreciation on investments was $73,688,000. See accompanying notes to financial statements. 38 39 KEMPER INVESTORS FUND HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Principal Amount Value --------- -------- U.S. TREASURY NOTES--.4% 8.875%, 1997 (Cost: $1,043)..................... $ 1,000 $ 1,038 CORPORATE OBLIGATIONS AEROSPACE--1.5% Fairchild Corporation, 12.00%, 2001............................... 2,390 2,384 Howmet Inc., 10.00%, 2003............ 270 285 K & F Industries, Inc., 11.875%, 2003............................... 470 503 Sequa Corporation, 8.75%, 2001....... 730 708 -------- 3,880 BROADCASTING, CABLESYSTEMS AND PUBLISHING--20.7% Adelphia Communication Corporation, 12.50%, 2002....................... 1,380 1,401 Affinity Group, Inc., 11.50%, 2003... 1,460 1,480 American Radio Systems, 9.00%, 2006............................... 1,520 1,421 (b)American Telecasting 14.50%, 2004....................... 970 667 14.50%, 2005....................... 590 348 (b)Bell Cablemedia PLC, 11.95%, 2004............................... 3,370 2,376 Big Flower Press, Inc., 10.75%, 2003............................... 1,147 1,118 CAI Wireless Systems, 12.25%, 2002... 1,000 1,050 CF Cable TV, Inc., 11.625%, 2005..... 1,180 1,295 (b)CS Wireless, 11.375%, 2006.......... 2,520 1,307 Cablevision Industries Corporation, 9.25%, 2008........................ 1,000 1,015 Cablevision Systems Corporation 9.25%, 2005........................ 420 391 9.875%, 2013....................... 965 895 10.50%, 2016....................... 1,250 1,212 9.875%, 2023....................... 550 498 Century Communications Corporation 11.875%, 2003...................... 960 1,020 9.50%, 2005........................ 2,200 2,128 (b)Charter Communications, 14.00%, 2007............................... 1,870 1,038 Comcast Corporation 9.125%, 2006....................... 1,740 1,657 9.50%, 2008........................ 630 608 10.625%, 2012...................... 570 596 (b)Comcast UK Cable Partners Limited, 11.20%, 2007....................... 4,630 2,685 Continental Cablevision, Inc., 9.50%, 2013............................... 2,200 2,379 EZ Communications, 9.75%, 2005....... 1,420 1,349 (b)Echostar Communications, 12.875%, 2004............................... 2,645 1,937 Principal Amount Value --------- -------- Granite Broadcasting Corp. 10.375%, 2005...................... $ 1,220 $ 1,188 9.375%, 2005....................... 640 588 (b)International Cabletel Incorporated 12.75%, 2005....................... 3,750 2,414 11.50%, 2006....................... 450 253 Katz Corporation, 12.75%, 2002....... 960 1,069 Multicanal Port, 12.625%, 2004....... 820 845 Neodata Services, 12.00%, 2003....... 1,610 1,606 Newsquest Capital PLC, 11.00%, 2006............................... 1,020 1,020 (b)People's Choice TV Unit, 13.125%, 2004............................... 2,050 1,187 Rogers Cablesystems Limited 9.625%, 2002....................... 720 715 10.00%, 2005....................... 620 618 10.00%, 2007....................... 290 284 Sinclair Broadcasting Group, Inc., 10.00%, 2003....................... 1,620 1,569 Sullivan Broadcasting 10.25%, 2005....................... 410 395 13.25%, 2006....................... 810 798 Telewest Communications PLC 9.625%, 2006....................... 1,080 1,053 (b) 11.00%, 2007...................... 1,465 868 (b)UIH Australia Pacific, Inc., 14.00%, 2006....................... 2,590 1,366 Univision TV, 11.75%, 2001........... 370 389 (b)Videotron Holdings PLC 11.125%, 2004...................... 745 544 11.00%, 2005....................... 1,020 650 Young Broadcasting Inc. 11.75%, 2004....................... 440 464 9.00%, 2006........................ 990 881 -------- 52,635 BUSINESS SERVICES--1.8% Allied Waste Industry, 12.00%, 2004............................... 550 599 Corporate Express, Inc., 9.125%, 2004............................... 1,300 1,287 Monarch Marking Systems, 12.50%, 2003............................... 1,270 1,343 Outdoor Systems, Inc., 10.75%, 2003............................... 1,250 1,300 -------- 4,529 CHEMICALS AND AGRICULTURE--5.1% Agriculture, Mining and Chemicals, Inc., 10.75%, 2003................. 940 996 Arcadian Partners, L.P., 10.75%, 2005............................... 1,370 1,480 Atlantis Group, Inc., 11.00%, 2003... 1,735 1,640 G-I Holdings Inc., zero coupon, 1998............................... 3,240 2,616 Hines Horticulture, 11.75%, 2005..... 350 364
39 40 KEMPER INVESTORS FUND HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Principal Amount Value --------- -------- Pioneer Americas Acquisition Corporation, 13.375%, 2005......... $ 840 $ 882 Polymer Group Inc., 12.25%, 2002..... 827 889 Rexene Corporation, 11.75%, 2004..... 1,910 1,986 Terra Industries, 10.50%, 2005....... 840 874 UCC Investors Holdings, Inc. 10.50%, 2002....................... 840 886 11.00%, 2003....................... 300 316 -------- 12,929 COMMUNICATIONS--8.6% (b)Call-Net Enterprises Inc., 13.25%, 2004............................... 1,000 742 (b)Cellular, Inc., 11.75%, 2003........ 625 500 (b)Commcell, 13.125%, with warrants, 2003............................... 2,200 1,419 CommNet Cellular, 11.25%, 2005....... 500 533 (b)Intelcom Group, Inc., 13.50%, with warrants, 2005..................... 1,470 933 Intermedia Communications of Florida, Inc., 13.50%, with warrants, 2005............................... 1,140 1,328 (b)Millicom International Cellular S.A., 13.50%, 2006................. 2,050 1,084 Mobilemedia Communications, 9.375%, 2007............................... 1,170 1,041 Nextlink Communications, 12.50%, 2006............................... 1,260 1,260 Paging Network, Inc. 11.75%, 2002....................... 2,070 2,225 10.125%, 2007...................... 1,140 1,129 (b)PanAmSat, L.P., 11.375%, 2003....... 2,815 2,435 Rogers Cantel 11.125%, 2002...................... 1,820 1,934 9.375%, 2008....................... 780 757 9.75%, 2016........................ 520 504 (b)Shared Technologies, 12.25%, 2006............................... 810 608 (b)Teleport Communications, 11.125%, 2007............................... 880 513 USA Mobile Communicatons, Inc. II 14.00%, 2004....................... 1,190 1,342 9.50%, 2004........................ 600 553 Vanguard Cellular Systems, 9.375%, 2006............................... 580 567 Western Wireless, 10.50%, 2006....... 540 543 -------- 21,950 CONSTRUCTION MATERIALS--4.0% American Standard Inc. 10.875%, 1999...................... 2,315 2,448 (b) 10.50%, 2005...................... 1,110 968 Principal Amount Value --------- -------- (b)Building Materials Corporation of America, 11.75%, 2004.............. $ 3,285 $ 2,464 Nortek, 9.875%, 2004................. 2,170 2,043 Triangle Pacific Corporation, 10.50%, 2003............................... 2,185 2,251 -------- 10,174 CONSUMER PRODUCTS AND SERVICES--6.2% AMF Group (b) 12.25%, 2006...................... 1,000 554 10.875%, 2006...................... 1,520 1,510 Avondale Mills, 10.25%, 2006......... 1,070 1,053 (c)Beatrice Foods, Inc., 12.00%, 2001............................... 2,000 755 Cinemark USA, Inc., 12.00%, 2002..... 940 1,020 Coinmach Corporation, 11.75%, 2005... 2,340 2,451 (b)Dr. Pepper Bottling Holdings, Inc., 11.625%, 2003................ 1,120 924 Foodbrands America, 10.75%, 2006..... 510 511 Herff Jones, Inc., 11.00%, 2005...... 200 206 Premier Parks Inc., 12.00%, 2003..... 1,220 1,305 (b)Six Flags Theme Park, 12.25%, 2005............................... 2,830 2,420 Van De Kamps, Inc., 12.00%, 2005..... 550 588 West Point Stevens, Inc., 9.375%, 2005............................... 2,550 2,474 -------- 15,771 DRUGS AND HEALTH CARE--3.5% Dade International Inc., 11.125%, 2006............................... 930 965 Magellan Health Services, 11.25%, 2004............................... 2,570 2,776 Ornda Healthcorporation 12.25%, 2002....................... 2,120 2,290 11.375%, 2004...................... 2,000 2,205 Tenet Healthcare, 9.625%, 2002....... 500 531 -------- 8,767 ENERGY AND RELATED SERVICES--5.8% Benton Oil & Gas Co., 11.625%, 2003............................... 695 719 Chesapeake Energy Corporation, 10.50%, 2002....................... 1,265 1,328 Clark USA Inc., 10.875%, 2005........ 490 503 Cliffs Drilling Co., 10.25%, 2003.... 850 841 Coda Energy, 10.50%, 2006............ 1,070 1,067 Empire Gas Corporation, 7.00%, with warrants, 2004..................... 900 773 Ferrellgas Partners, L.P., 9.375%, 2006............................... 1,000 970
40 41 KEMPER INVESTORS FUND HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Principal Amount Value --------- -------- Gulf Canada Resources Limited 9.25%, 2004........................ $ 1,690 $ 1,650 9.625%, 2005....................... 930 922 MESA Inc. (b) 11.625%, 2006..................... 830 490 10.625%, 2006...................... 860 877 Nuevo Energy Co., 9.50%, 2006........ 510 501 Plains Resources, 10.25%, 2006....... 950 950 Santa Fe Energy Resources, 11.00%, 2004............................... 1,040 1,113 United Meridian Corp., 10.375%, 2005............................... 730 756 Vintage Petroleum, 9.00%, 2005....... 1,360 1,289 -------- 14,749 FINANCIAL SERVICES, HOME BUILDING AND REAL ESTATE--2.4% Continental Homes Holding, 10.00%, 2006............................... 1,556 1,490 Forecast Group L.P., 11.375%, 2000... 740 518 Fortress Group, 13.75%, 2003......... 660 682 Hovnanian Kent, 11.25%, 2002......... 1,188 1,102 J.M. Peters Company, 12.75%, 2002.... 740 688 Presley Companies, 12.50%, 2001...... 1,575 1,504 -------- 5,984 HOTELS AND GAMING--4.8% Bally's Park Place Funding, Inc., 9.25%, 2004........................ 1,490 1,585 Empress River Casino, 10.75%, 2002... 1,670 1,754 Harvey's Casino Resorts, 10.625%, 2006............................... 460 467 MGM Grand Hotel Finance Corporation, 12.00%, 2002....................... 2,475 2,716 Majestic Star Casino, 12.75%, 2003... 200 216 Players International, 10.875%, 2005............................... 1,380 1,408 Station Casinos Inc., 10.125%, 2006............................... 1,440 1,411 Trump Atlantic City, 11.25%, 2006.... 2,550 2,556 -------- 12,113 MANUFACTURING, METALS AND MINING--11.1% Aftermarket Technology, 12.00%, 2004............................... 780 847 Alvey Systems, 11.375%, 2003......... 650 663 Bar Technologies, 13.50%, 2001....... 750 769 Bluebird Body Company, 11.75%, 2002............................... 1,540 1,586 Collins & Aikman Corporation, 11.50%, 2006............................... 660 672 Crain Industries, Inc., 13.50%, 2005............................... 750 799 Day International Group, 11.125%, 2005............................... 1,440 1,472 Essex Group, Incorporated, 10.00%, 2003............................... 1,290 1,258 Principal Amount Value --------- -------- Fairfield Manufacturing Company, 11.375%, 2001...................... $ 580 $ 593 Foamex L.P. 11.25%, 2002....................... 1,470 1,518 11.875%, 2004...................... 500 513 (b)Foamex - JPS Automotive L.P., 14.00%, 2004 with warrants, 1999... 940 663 Great Dane Holdings Inc., 12.75%, 2001............................... 835 810 GS Technologies 12.00%, 2004....................... 650 665 12.25%, 2005....................... 890 914 Gulf States Steel, 13.50%, with warrants, 2003..................... 1,150 1,034 IMO Industries, 11.75%, 2006......... 630 645 JPS Automotive Products Corporation, 11.125%, 2001...................... 1,670 1,716 Jordan Industries, 10.375%, 2003..... 1,560 1,482 Knoll Inc., 10.875%, 2006............ 870 887 NS Group, Inc., 13.50%, 2003......... 1,055 1,029 Newflo Corporation, 13.25%, 2002..... 1,050 1,126 Penda Industries, Inc., 10.75%, 2004............................... 950 881 Renco Metals, 11.50%, 2003........... 620 629 Terex Corporation Unit, 13.75%, 2002............................... 1,000 1,045 Thermadyne Industries, Inc. 10.25%, 2002....................... 1,320 1,333 10.75%, 2003....................... 1,476 1,487 UNC, Inc., 11.00%, 2006.............. 500 505 Weirton Steel Corp., 11.375%, 2004... 520 513 -------- 28,054 PAPER, FOREST PRODUCTS AND CONTAINERS--7.6% BPC Holding Corp., 12.50%, 2006...... 720 727 Berry Plastics Corporation, 12.25%, with warrants, 2004................ 480 532 Container Corporation of America, 11.25%, 2004....................... 1,815 1,865 Crown Paper, 11.00%, 2005............ 1,630 1,553 Florida Coast Paper Company, 12.75%, 2003............................... 500 520 Four M Corporation, 12.00%, 2006..... 500 511 Gaylord Container Corporation, 12.75%, 2005....................... 2,390 2,518 Maxxam Group, Inc. (b) 12.25%, 2003.................... 440 334 11.25%, 2003....................... 1,653 1,645 National Fiberstock, 11.625%, 2002... 520 524
41 42 KEMPER INVESTORS FUND HIGH YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Principal Amount Value --------- -------- Owens-Illinois 11.00%, 2003....................... $ 670 $ 720 9.95%, 2004........................ 1,125 1,128 9.75%, 2004........................ 2,230 2,230 Repap New Brunswick, Inc., 10.625%, 2005............................... 1,430 1,351 Riverwood International Corp. 10.25%, 2006....................... 510 507 10.875%, 2008...................... 1,840 1,812 Sweetheart Cup Company, Inc., 10.50%, 2003............................... 900 891 -------- 19,368 RETAILING--4.6% Brunos, 10.50%, 2005................. 1,050 1,042 (c)Color Tile, Inc., 10.75%, 2001...... 1,470 73 Dominick's, 10.875%, 2005............ 1,000 1,058 Finlay Fine Jewelry Corporation, 10.625%, 2003...................... 1,520 1,512 Guitar Center, 11.00%, 2006.......... 420 426 Michaels Stores, 10.875%, 2006....... 520 530 Pamida Holdings, 11.75%, 2003........ 2,410 2,085 Pathmark Stores, Inc. 12.625%, 2002...................... 1,000 1,017 11.625%, 2002...................... 1,535 1,531 Penn Traffic Company 10.25%, 2002....................... 250 227 10.65%, 2004....................... 760 686 10.375%, 2004...................... 1,080 964 11.50%, 2006....................... 500 467 -------- 11,618 TECHNOLOGY--.7% Communication and Power Industry, Inc., 12.00%, 2005................. 585 622 Computervision Corporation, 11.375%, 1999...................... 1,080 1,115 -------- 1,737 TRANSPORTATION--.7% (c)Burlington Motor Holdings, Inc., 11.50%, 2003....................... 1,350 27 GPA Group PLC, 10.875%, 2019......... 1,190 1,241 (b)Transtar Holdings, L.P., 13.375%, 2003............................... 631 467 -------- 1,735 -------- Number of Shares or Principal Amount Value --------- -------- TOTAL CORPORATE OBLIGATIONS--89.1% (Cost: $226,668)..................... $225,993 COMMON AND PREFERRED STOCKS BCP/Essex Holdings, PIK, preferred... 26,648shs. 698 (a)Benedek Unit, PIK, preferred........ 500 500 Computervision Corporation........... 130,160 1,304 (c)Echostar Communications............. 14,987 425 Gaylord Container Corporation, warrants expiring 1996............. 122,950 961 (c)Grand Union Company................. 62,520 408 Great Bay Power...................... 2,662 20 (c)Sullivan Broadcasting............... 12,960 130 (c)Thrifty Payless Inc................. 31,540 138 (c)Walter Industries, Inc.............. 7,468 104 (a)(c)Waxman Industries, Inc., warrants expiring 2004............. 52,274 157 -------- TOTAL COMMON AND PREFERRED STOCKS--1.9% (Cost: $5,342)....................... 4,845 MONEY MARKET INSTRUMENTS Yield--5.45%-5.55% Due--July 1996 Dynamic Funding Corporation.......... $ 5,000 4,991 Enserch Corporation.................. 6,000 5,991 Finova Capital Corporation........... 2,000 1,994 Union Pacific Corporation............ 7,000 6,998 -------- TOTAL MONEY MARKET INSTRUMENTS--7.9% (Cost: $19,974)...................... 19,974 -------- TOTAL INVESTMENTS--99.3% (Cost: $253,027)..................... 251,850 CASH AND OTHER ASSETS, LESS LIABILITIES--.7%.................. 1,730 -------- NET ASSETS--100%....................... $253,580 ========
42 43 NOTES TO HIGH YIELD 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. These securities are valued at fair value as determined in good faith by the Board of Trustees of the Fund. At June 30, 1996, the value of the Portfolio's restricted securities was $657,000, which represented .26% of net assets.
Date of Number Unit Acquisition of Shares Cost Security Description -------------------------------------------------------------------------------------------------------------------------- Benedek Unit, PIK, preferred May 1996 500 $1,000 -------------------------------------------------------------------------------------------------------------------------- Waxman Industries, Inc., warrants expiring 2004 June 1994 52,274 2.00 --------------------------------------------------------------------------------------------------------------------------
(b) Deferred interest obligation; currently zero coupon under terms of the initial offering. (c) Non-income producing security. In the case of a bond, generally denotes that issuer has defaulted on the payment of interest or has filed for bankruptcy. "PIK" denotes that interest or dividends are paid in kind. Based on the cost of investments of $253,027,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $8,198,000, the gross unrealized depreciation was $9,375,000 and the net unrealized depreciation on investments was $1,177,000. See accompanying notes to financial statements. 43 44 KEMPER INVESTORS FUND GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- COMMON STOCKS BASIC INDUSTRIES--3.0% (a)FMC Corp. ......................... 100,000 $ 6,525 Monsanto Co. ....................... 100,000 3,250 Praxair, Inc. ...................... 61,000 2,577 Sumitomo Metal Industries........... 161,000 493 Toray Industries.................... 76,000 524 -------- 13,369 CAPITAL GOODS--5.2% Boeing Co. ......................... 65,200 5,681 Fluor Corp. ........................ 76,900 5,027 B.F. Goodrich Co. .................. 125,000 4,672 Honda Motor Co., Ltd. .............. 19,000 492 Kyocera Corp. ...................... 4,500 318 Mitsubishi Heavy Industries......... 61,000 530 Technip S.A. ....................... 2,317 213 York International Corp. ........... 128,400 6,645 -------- 23,578 CONSUMER CYCLICALS--18.0% Burton Group PLC.................... 249,970 604 Carnival Corp. ..................... 204,000 5,890 (a)Cox Communications Inc. ........... 470,000 10,164 Walt Disney Company................. 64,100 4,030 (a)Federated Department Stores........ 268,900 9,176 Home Depot.......................... 91,500 4,941 (a)Liberty Media Group, "A"........... 206,100 5,462 Lowes Companies Inc. ............... 125,000 4,516 Manpower, Inc. ..................... 80,000 3,140 Marriott International.............. 150,000 8,063 (a)Mirage Resorts, Inc. .............. 20,000 1,080 Moet Hennessy Louis Vuitton......... 2,317 550 (a)Office Depot....................... 118,950 2,424 Paging Network, Inc. ............... 260,000 6,240 Tele-Communications, Inc. .......... 463,000 8,392 (a)Viking Office Products............. 30,800 966 Wal-Mart Stores..................... 219,100 5,560 -------- 81,198 Number of Shares Value --------- -------- CONSUMER DURABLES--1.9% Armstrong World Industries.......... 92,800 $ 5,348 Shaw Industries..................... 255,000 3,347 -------- 8,695 CONSUMER STAPLES--6.6% Duracell International.............. 80,000 3,450 Heineken N.V. ...................... 2,692 601 Kimberly-Clark Corp. ............... 56,400 4,357 Philip Morris Companies............. 77,900 8,102 Procter & Gamble Co. ............... 44,200 4,006 Reed International PLC.............. 31,114 521 Warnaco Group....................... 151,200 3,893 Wendy's International............... 250,000 4,656 -------- 29,586 FINANCE--14.3% Allstate Corp. ..................... 100,000 4,562 American International Group, Inc. ............................. 45,000 4,438 Bank of Ireland..................... 72,091 492 CITIC Pacific Ltd. ................. 90,000 364 Cheung Kong Holdings Ltd............ 51,000 367 Dean Witter Discover................ 73,300 4,196 Development Bank of Singapore....... 35,000 436 Federal Home Loan Mortgage Corp. ... 60,000 5,130 Federal National Mortgage Association....................... 220,000 7,370 General Re Corp. ................... 28,000 4,263 ITT Hartford Group.................. 45,000 2,396 Internationale Nederlanden Groep.... 19,202 572 Krung Thai Bank Public Co. Ltd. .... 95,000 445 MBIA Inc. .......................... 133,700 10,412 MGIC Investment Corp. .............. 136,000 7,633 NationsBank......................... 45,800 3,784 Swire Pacific Ltd. "A".............. 44,000 377 Travelers Group..................... 162,500 7,414 -------- 64,651
44 45 KEMPER INVESTORS FUND GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 -- (CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- HEALTH CARE--23.6% Astra AB............................ 11,731 $ 518 Baxter International................ 90,000 4,252 (a)Biogen............................. 100,000 5,488 (a)Boston Scientific Corp............. 100,000 4,500 Columbia/HCA Healthcare Corp........ 97,000 5,177 Glaxo Wellcome, ADR................. 195,000 5,216 Guidant Corporation................. 120,745 5,947 (a)IDEXX Laboratories................. 72,300 2,838 Johnson & Johnson................... 191,000 9,455 Eli Lilly & Co...................... 95,000 6,175 Medtronic, Inc...................... 169,000 9,464 Omnicare............................ 148,600 3,938 Pall Corp........................... 250,000 6,031 Perkin-Elmer Corp................... 120,000 5,790 Pfizer Inc.......................... 30,000 2,141 Roche Holding AG.................... 134 513 Sandoz, Ltd......................... 165,000 9,384 (a)R.P. Scherer Corp.................. 80,100 3,635 SmithKline Beecham PLC.............. 135,000 7,341 United Healthcare Corp.............. 175,000 8,836 -------- 106,639 TECHNOLOGY--16.2% Alco Standard Corporation........... 140,000 6,335 (a)BMC Software....................... 28,000 1,673 (a)Cisco Systems...................... 122,200 6,920 (a)Compaq Computer Corp............... 95,000 4,679 (a)Computer Sciences Corp............. 120,000 8,970 DSC Communications Corp............. 59,300 1,786 Electronic Data Systems............. 40,000 2,150 LM Ericsson Telephone Co., "B"...... 16,329 352 First Data Corporation.............. 20,572 1,638 Hewlett-Packard, Co................. 69,500 6,924 Intel Corp.......................... 52,800 3,877 Linear Technology Corp.............. 92,500 2,775 Matsushita Electric Industrial Co., Ltd............................... 30,000 558 (a)Microchip Technology............... 40,000 990 (a)Microsoft Corp..................... 38,500 4,625 Number of Shares or Principal Amount Value --------- -------- Murata Manufacturing................ 15,000 $ 567 (a)Parametric Technology Corp......... 21,600 937 (a)Solectron Corp..................... 75,000 2,841 (a)Sun Microsystems................... 45,000 2,649 (a)3Com Corporation................... 123,000 5,627 Xerox Corporation................... 117,000 6,260 -------- 73,133 TRANSPORTATION--.2% Canadian National Railway Company... 28,372 521 Nippon Express...................... 52,000 507 -------- 1,028 UTILITIES--2.1% (a)AirTouch Communications............ 224,000 6,328 Iberdrola, S.A...................... 45,000 462 (a)WorldCom, Inc...................... 45,000 2,492 -------- 9,282 -------- TOTAL COMMON STOCKS--91.1% (Cost: $352,666).................... 411,159 MONEY MARKET INSTRUMENTS Yield--5.49% to 5.57% Due--July 1996 ConAgra, Inc.......................... $14,000 13,963 Houston Industries, Inc............... 10,000 9,986 Other................................. 14,000 13,983 -------- TOTAL MONEY MARKET INSTRUMENTS--8.4% (Cost: $37,932)....................... 37,932 -------- TOTAL INVESTMENTS--99.5% (Cost: $390,598)...................... 449,091 CASH AND OTHER ASSETS, LESS LIABILITIES--.5%........................ 2,416 -------- NET ASSETS--100%........................ $451,507 ========
NOTES TO GROWTH PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $390,598,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $63,729,000, the gross unrealized depreciation was $5,236,000 and the net unrealized appreciation on investments was $58,493,000. See accompanying notes to financial statements. 45 46 KEMPER INVESTORS FUND GOVERNMENT SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Principal Coupon Rate Maturity Amount Value ----------- --------- --------- ------- GOVERNMENT OBLIGATIONS FEDERAL HOME LOAN MORTGAGE CORPORATION--11.2% (Cost: $9,476) Pass-through Certificates.............................................. 7.00% 2023-2024 $10,129 $ 9,756 FEDERAL NATIONAL MORTGAGE ASSOCIATION--16.3% (Cost: $14,556) Pass-through Certificates.............................................. 6.50 2025-2026 2,547 2,382 7.50 2025-2026 4,792 4,729 8.00 2024-2025 932 939 8.50 2026 6,000 6,158 ------- 14,208 GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--52.1% (Cost: $44,996) Pass-through Certificates.............................................. 7.00 2022-2024 15,394 14,773 7.50 2022-2026 12,512 12,336 8.00 2016-2026 11,603 11,712 8.50 2016-2024 1,455 1,497 9.00 2016-2026 3,273 3,417 9.50 2013-2022 692 739 10.00 2016 921 1,003 ------- 45,477 U.S. TREASURY SECURITIES--25.9% (Cost: $23,443) Notes.................................................................. 8.875 1998 5,000 5,288 8.00 1999 7,000 7,324 8.75 2000 5,000 5,418 7.875 2004 2,000 2,152 Bonds.................................................................. 9.125 2009 484 551 12.75 2010 1,382 1,941 ------- 22,674 CANADIAN PROVINCIAL OBLIGATIONS--1.2% (Cost: $1,094) Province of Ontario.................................................... 7.625 2004 500 516 Province of Quebec..................................................... 8.625 2005 500 539 ------- 1,055 ------- TOTAL GOVERNMENT OBLIGATIONS--106.7% (Cost: $93,565)........................................................ 93,170 CORPORATE OBLIGATIONS BHP Finance USA........................................................ 7.875 2002 500 522 Banco Central Hispano.................................................. 7.50 2005 500 497 Equitable Life......................................................... 6.95 2005 500 479 Nabisco Inc............................................................ 6.70 2002 500 487 NationsBank Corporation................................................ 9.50 2004 500 564 Sears Roebuck Acceptance Corp.......................................... 6.75 2005 500 482 Southwestern Bell Telephone............................................ 6.625 2005 500 484 ------- TOTAL CORPORATE OBLIGATIONS--4.0% (Cost: $3,695)........................................................... 3,515 -------
46 47 KEMPER INVESTORS FUND GOVERNMENT SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Value ------- TOTAL INVESTMENTS--110.7% (Cost $97,260).................................................................................................. $96,685 LIABILITIES, LESS CASH AND OTHER ASSETS--(10.7)%.................................................................. (9,341) ------- NET ASSETS--100%.................................................................................................. $87,344 =======
NOTE TO GOVERNMENT SECURITIES PORTFOLIO OF INVESTMENTS Based on the cost of investments of $97,260,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $1,264,000, the gross unrealized depreciation was $1,839,000 and the net unrealized depreciation on investments was $575,000. See accompanying notes to financial statements. 47 48 KEMPER INVESTORS FUND INTERNATIONAL PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value ---------- -------- COMMON STOCKS EUROPE DENMARK--.5% Copenhagen Airports................. 7,800 $ 771 Airport operator FRANCE--5.5% Carrefour S.A....................... 6,000 2,510 Food retailer Christian Dior S.A.................. 2,500 325 Luxury goods manufacturer Elf Aquitaine....................... 22,000 1,618 Oil and gas producer Grand Optical Photoservice.......... 5,000 644 Photodeveloping and prescription optical manufacturing Moet Hennessy Louis Vuitton......... 9,000 2,134 Luxury goods manufacturer Technip S.A......................... 16,400 1,510 Engineering company -------- 8,741 GERMANY--3.5% Bayer A.G........................... 46,000 1,624 Chemical company Mannesmann A.G...................... 4,100 1,417 Capital goods producer SGL CARBON A.G...................... 7,000 819 Chemical company Veba, A.G........................... 32,000 1,700 Electric utility -------- 5,560 HUNGARY--.3% (a)Cofinec GDR...................... 10,220 488 Labels and packaging material manufacturer IRELAND--3.5% Bank of Ireland..................... 272,176 1,857 Banking Greencore Group PLC................. 256,990 1,345 Food producer Independent Newspapers PLC.......... 366,666 1,672 Publisher Kerry Group PLC..................... 70,280 724 Food processing -------- 5,598 Number of Shares Value --------- -------- ITALY--1.5% Bulgari SpA......................... 55,000 $ 879 Luxury goods manufacturer Telecom Italia Mobile............... 700,000 1,564 Mobile telecommunications provider -------- 2,443 NETHERLANDS--11.2% Aalberts Industries N.V............. 12,289 1,204 Capital goods and components Aegon N.V........................... 33,646 1,549 Insurance company GTI Holding......................... 8,840 849 Engineering services Getronics N.V....................... 57,700 1,278 Information technology services (a)Gucci Group N.V.................. 10,300 667 Luxury goods manufacturer Heineken N.V........................ 7,000 1,564 Brewery IHC Caland N.V...................... 23,800 1,170 Marine technology holding company Internationale Nederlanden Groep.... 66,695 1,989 Banking and insurance koninklijke Ahold N.V............... 31,915 1,729 Food retailer Randstad Holding N.V................ 18,750 1,384 Business services Royal Dutch Petroleum............... 9,065 1,400 Petroleum producer Schuttersveld Holding N.V........... 32,735 1,266 Holding company Wolters Kluwer...................... 15,000 1,704 Publisher -------- 17,753 NORWAY--.3% Schibsted A/S....................... 35,550 460 Publisher SPAIN--3.0% Banco Bilbao Vizcaya................ 34,600 1,401 Banking Empresa Nacional de Electricidad S.A............................... 20,000 1,246 Electric utility Iberdrola, S.A...................... 125,000 1,282 Electric utility
48 49 KEMPER INVESTORS FUND INTERNATIONAL PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- PRYCA Centros....................... 35,000 $ 874 Food retailer -------- 4,803 SWEDEN--4.7% Astra AB............................ 90,000 3,974 Pharmaceutical company Dahl International.................. 13,540 195 Technical wholesaler LM Ericsson Telephone Co. "B"....... 60,000 1,293 Telecommunications equipment manufacturer Getinge Industrier AB............... 24,750 466 Medical supply company Hoganas AB.......................... 24,200 846 Engineering company WM-data AB.......................... 11,320 716 Information technology services -------- 7,490 SWITZERLAND--5.6% Ciba-Geigy Limited.................. 3,900 4,752 Pharmaceutical company Rhone-Poulenc Rorer................. 200 13 Chemical and pharmaceutical company Roche Holding AG.................... 1,050 4,019 Pharmaceutical company -------- 8,784 UNITED KINGDOM--9.1% BBA Group PLC....................... 275,551 1,319 Automotive products manufacturer British Airways PLC................. 180,000 1,549 Airline (a)British Bio-Technology Group....... 40,000 1,548 Pharmaceutical company Burton Group PLC.................... 1,000,000 2,416 Retailer Dixons Group PLC.................... 213,393 1,754 Electronics retailer Glaxo Wellcome...................... 20,000 269 Pharmaceutical company (a)Millenium & Copthorne.............. 175,500 900 Hotel operator Next PLC............................ 110,000 962 Retailer Number of Shares Value --------- -------- Reed International PLC.............. 136,000 2,276 Publisher (a)Sun Life & Provincial Holdings... 398,700 $ 1,369 Life insurance company -------- 14,362 -------- TOTAL EUROPEAN COUNTRIES--48.7%....... 77,253 PACIFIC REGION HONG KONG--4.1% CITIC Pacific Ltd................... 210,000 849 Conglomerate Cheung Kong Holding Ltd............. 140,000 1,008 Real estate Dao Heng Bank Ltd................... 190,000 734 Banking Guangdong Investment Ltd............ 1,650,000 1,044 Conglomerate HSBC Holdings PLC................... 65,935 997 Banking Henderson Land Development Co., Ltd............................... 100,000 749 Property developer Swire Pacific Ltd................... 128,000 1,095 Conglomerate -------- 6,476 JAPAN--28.9% Bridgestone Corp.................... 100,000 1,905 Rubber related products Manufacturer Canon Inc........................... 88,000 1,829 Precision instruments manufacturer Circle K Japan...................... 18,000 932 Convenience retailer (a)Daicel Chemical Industries, Ltd............................... 130,000 800 Chemical company daifuku Co., Ltd.................... 66,000 1,011 Diversified machinery manufacturer Honda Motor Co., Ltd................ 40,000 1,036 Automobile manufacturer Ishikawajima-Harima Heavy Industries........................ 325,000 1,585 Heavy machinery manufacturer Kyocera Corp........................ 31,000 2,190 Electronics manufacturer Mabuchi Motor Co., Ltd.............. 36,000 2,291 Engine manufacturer
49 50 KEMPER INVESTORS FUND INTERNATIONAL PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- Matsushita Electric Industrial Co., Ltd............................... 145,000 $ 2,697 Electronics manufacturer Mitsubishi Heavy Industries......... 165,000 1,434 Industrial equipment manufacturer Miura Co., Ltd...................... 43,000 729 Boiler maker Murata Manufacturing................ 42,000 1,589 Electronics components manufacturer NEC Corporation..................... 95,000 1,031 Electronics manufacturer NKK Corp............................ 350,000 1,059 Steel manufacturer New Japan Securities Co., Ltd....... 190,000 1,155 Securities broker Nippon Express...................... 195,000 1,902 Transportation company Olympus Optical Co., Ltd............ 150,000 1,504 Camera and optical equipment manufacturer Seven Eleven Japan Co., Ltd......... 16,000 1,020 Convenience retailer Shimizu Corp........................ 140,000 1,544 Construction company Sony Music Entertainment............ 29,100 1,353 Entertainment software company Sumitomo Bank Ltd................... 75,000 1,450 Banking Sumitomo Metal Industries........... 610,000 1,869 Steel manufacturer Sumitomo Trust & Banking............ 168,000 2,297 Banking Taisei Corp......................... 253,000 1,795 Construction company Teijin Ltd.......................... 275,000 1,492 Textile manufacturer Tokyo Style......................... 77,000 1,341 Women's apparel manufacturer Tokyu Department Store.............. 166,000 1,132 Retailer Toray Industries.................... 385,000 2,654 Textile manufacturer Tsubakimoto Chain Co................ 175,000 1,192 Chain and conveyor manufacturer -------- 45,818 Number of Shares Value --------- -------- MALAYSIA--3.0% DCB Holdings Bhd.................... 375,000 $ 1,285 Banking Edaran Otomobil Nasional Berhad..... 30,000 287 Automobile distributor Hong Leong Industries Berhad........ 160,000 776 Conglomerate Hume Industries Bhd................. 155,000 758 Construction material manufacturer KFC Holdings Bhd.................... 63,000 341 Restaurant Kedah Cement Berhad................. 150,000 278 Cement manufacturer Renong Berhad....................... 520,000 829 Conglomerate Sungei Way Holdings Berhad.......... 35,000 164 Building materials company -------- 4,718 SINGAPORE--1.2% Development Bank of Singapore....... 90,000 1,122 Banking Fraser & Neave Ltd.................. 70,000 724 Beer and soft drink manufacturer -------- 1,846 THAILAND--1.3% Advanced Info Service Ltd........... 42,000 658 Telecommunication services Shinawatra Computer Co.............. 45,000 967 Computer equipment distributor Siam Cement Co. Ltd................. 6,000 294 Building materials producer Siam City Bank...................... 200,000 217 Banking -------- 2,136 -------- TOTAL PACIFIC REGION--38.5%........... 60,994 COMMONWEALTH COUNTRIES AUSTRALIA--1.4% Aristocrat.......................... 72,000 164 Entertainment Tabcorp Holdings Ltd................ 436,400 1,975 Entertainment and gaming -------- 2,139
50 51 KEMPER INVESTORS FUND INTERNATIONAL PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- CANADA--4.6% CAE Inc............................. 181,000 $ 1,506 Flight simulator manufacturer Canadian National Railway Company... 84,000 1,544 Railway company Petro-Canada........................ 232,700 1,425 Oil and gas company (a)Philip Environmental............... 166,500 1,311 Waste collection and recycling company Shaw Communications................. 209,100 1,479 Cable television company -------- 7,265 NEW ZEALAND--1.6% Lion Nathan Ltd..................... 657,800 1,717 Beer and soft drink manufacturer Tranz Rail Holdings Ltd............. 63,100 876 Tranportation -------- 2,593 -------- TOTAL COMMONWEALTH COUNTRIES--7.6%.... 11,997 LATIN AMERICA ARGENTINA--.5% (a)Ciadea S.A......................... 107,000 760 Automobile manufacturer and dealer Number of Shares or Principal Amount Value --------- -------- BRAZIL--.5% (a)Iochpe-Maxion...................... 6,100,000 $ 762 Auto parts and machinery -------- manufacturer TOTAL LATIN AMERICAN COUNTRIES--1.0%....................... 1,522 TOTAL COMMON STOCKS--95.8% (Cost: $130,451).................... 151,766 MONEY MARKET INSTRUMENTS--4.3% Yield--5.50% to 5.54% Due-July 1996 (Cost: $6,874)...................... $ 6,900 6,874 -------- TOTAL INVESTMENTS--100.1% (Cost: $137,325).................... 158,640 LIABILITIES, LESS OTHER ASSETS--(.1)%......................... (187) -------- NET ASSETS--100%...................... $158,453 ========
51 52 KEMPER INVESTORS FUND INTERNATIONAL PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS) At June 30, 1996, the International Portfolio of Investments had the following industry diversification (dollars in thousands):
VALUE % -------- ----- Finance................................................................................. $ 26,422 16.7 Consumer Cyclicals...................................................................... 20,852 13.1 Basic Industries........................................................................ 17,307 10.9 Technology.............................................................................. 17,271 10.9 Capital Goods........................................................................... 17,011 10.7 Consumer Staples........................................................................ 16,261 10.3 Health Care............................................................................. 15,685 9.9 Transportation.......................................................................... 6,642 4.2 Utilities............................................................................... 5,792 3.7 Energy.................................................................................. 4,443 2.8 Consumer Durables....................................................................... 4,080 2.6 -------- ----- Total Common Stocks..................................................................... 151,766 95.8 Other Net Assets........................................................................ 6,687 4.2 -------- ----- Net Assets.............................................................................. $158,453 100.0 ======== =====
NOTES TO INTERNATIONAL PORTFOLIO OF INVESTMENTS (a)Non-income producing security. Based on the cost of investments of $137,325,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $22,847,000, the gross unrealized depreciation was $1,532,000 and the net unrealized appreciation on investments was $21,315,000. See accompanying notes to financial statements. 52 53 KEMPER INVESTORS FUND SMALL CAP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value --------- ------- COMMON STOCKS BASIC INDUSTRIES--6.6% Greenfield Industries............... 13,000 $ 429 Hollinger International............. 30,100 342 (a)Jacobs Engineering Group........... 27,000 712 Outdoor Systems, Inc................ 30,000 1,057 Philip Environmental................ 35,000 276 Trico Marine Services, Inc.......... 30,000 667 ------- 3,483 CAPITAL GOODS--5.2% (a)Cascade Communications............. 6,000 408 (a)Elsag Bailey Process Automation.......................... 25,500 682 Federal Signal Corp................. 13,000 306 (a)Lamson & Sessions.................. 15,000 178 Nordson Corp........................ 6,000 339 Pioneer-Standard Electronics........ 8,500 113 (a)Renters Choice..................... 11,200 286 TriMas Corp......................... 19,200 449 ------- 2,761 CONSUMER CYCLICALS--12.5% (a)APAC TeleServices.................. 16,000 576 Allen Group......................... 17,000 370 Gaylord Entertainment Co............ 41,000 1,158 (a)Global DirectMail.................. 15,000 593 (a)MGM Grand.......................... 10,000 399 (a)OfficeMax, Inc..................... 31,500 752 (a)Primadonna Resorts................. 25,000 575 SPX Corp............................ 35,000 857 (a)Safety 1st......................... 9,500 80 (a)Tellabs Operations................. 9,500 635 (a)Viking Office Products............. 6,800 213 Vincam Group, Inc................... 2,000 52 (a)Williams-Sonoma.................... 15,000 354 ------- 6,614 CONSUMER DURABLES--3.4% (a)Ethan Allen Interiors.............. 20,300 502 Diamond Home Services, Inc.......... 25,000 419 (a)Mohawk Industries.................. 17,000 302 (a)Triangle Pacific Corp.............. 30,000 592 ------- 1,815 Number of Shares Value --------- ------- CONSUMER STAPLES--8.2% (a)Kenneth Cole Productions........... 20,000 $ 395 (a)Gymboree........................... 8,000 244 Intimate Brands..................... 12,500 286 (a)Donna Karan International Inc...... 4,000 112 (a)Opta Food Ingredients.............. 2,800 28 (a)Patterson Dental Co................ 22,300 808 (a)Revlon, Inc........................ 29,000 845 Richfood Holdings................... 10,500 341 (a)Starbucks Corp..................... 28,000 791 Talbots............................. 15,000 486 ------- 4,336 ENERGY--.4% (a)Input/Output, Inc.................. 6,600 214 FINANCE--11.2% (a)Cityscape Financial................ 16,400 841 Executive Risk...................... 11,500 440 (a)Financial Federal Corporation...... 55,000 859 (a)Meadowbrook Insurance Group........ 5,500 169 PMI Group........................... 20,800 884 (a)Riscorp, Inc....................... 21,800 398 (a)Risk Capital Holdings, Inc......... 40,000 785 Roosevelt Financial Group........... 37,500 722 Texas Regional Bancshares........... 10,800 270 (a)United Insurance Companies......... 11,200 255 Western National Corporation........ 18,000 331 ------- 5,954 HEALTH CARE--20.8% (a)ABR Information Services........... 11,500 578 (a)Access Health, Inc................. 14,950 706 (a)CRA Managed Care, Inc.............. 22,500 1,007 Caremark International, Inc......... 13,800 348 (a)Dura Pharmaceuticals............... 11,000 616 (a)EndoSonics Corp.................... 25,000 447 (a)IDEXX Laboratories................. 14,000 549 (a)IMNET Systems...................... 5,100 156 (a)Interim Services................... 18,600 800 Millenmum Pharmaceutical............ 10,000 155 (a)Occusystems, Inc................... 12,300 460 Omnicare, Inc....................... 33,000 875 Physician Computer Network.......... 20,000 231 Physician Sales & Service........... 35,200 854 (a)Quest Medical...................... 15,000 105 RTW, Inc............................ 11,100 350 (a)Renal Treatment Centers............ 13,200 379 (a)Research Industries................ 12,000 265
53 54 KEMPER INVESTORS FUND SMALL CAP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS AT JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- ------- (a)Serologicals Corporation........... 10,700 $ 284 (a)Steris Corp........................ 8,000 256 Stewart Enterprises................. 24,250 758 (a)Total Renal Care Holdings.......... 19,800 837 ------- 11,016 TECHNOLOGY--17.3% (a)Alternative Resources Corporation......................... 27,000 992 (a)Ascend Communications.............. 4,500 253 Atmel Corporation................... 17,500 527 (a)Auspex Systems, Inc................ 18,000 270 (a)Boca Research...................... 17,500 319 (a)Ciber, Inc......................... 11,400 251 (a)Dendrite International, Inc........ 17,000 587 (a)Electronic Arts.................... 20,000 535 (a)Gartner Group...................... 10,000 366 (a)Integrated Systems................. 6,400 256 (a)InterVoice, Inc.................... 18,000 358 (a)Keane, Inc......................... 19,200 708 (a)McAfee Associates, Inc............. 7,200 353 (a)Parametric Technology Corp......... 19,000 824 (a)SPSS, Inc.......................... 10,000 250 (a)Softkey International.............. 25,000 473 (a)Solectron Corp..................... 21,500 814 (a)Tech Data Corporation.............. 21,700 472 U.S. Robotics....................... 4,000 342 (a)Wang Laboratories.................. 10,000 189 ------- 9,139 TRANSPORTATION--3.9% (a)Copart, Inc........................ 28,500 470 Number of Shares or Principal Amount Value --------- ------- (a)Genesee & Wyoming Inc.............. 37,000 $ 759 Tranz Rail Holdings, Ltd............ 25,000 347 (a)Wisconsin Central Transportation...................... 15,400 500 ------- 2,076 UTILITIES--2.2% (a)LCI International, Inc............. 36,400 1,142 ------- TOTAL COMMON STOCKS--91.7% (Cost: $39,021)..................... 48,550 MONEY MARKET INSTRUMENTS Yield--5.48% to 5.65% Due--July 1996 ConAgra............................. $ 1,000 996 Enserch Corporation................. 1,000 999 Houston Industries.................. 1,000 999 Union Pacific Corp.................. 1,000 1,000 ------- TOTAL MONEY MARKET INSTRUMENTS--7.5% (Cost: $3,994)...................... 3,994 ------- TOTAL INVESTMENTS--99.2% (Cost: $43,015)..................... 52,544 CASH AND OTHER ASSETS, LESS LIABILITIES--.8%...................... 419 ------- NET ASSETS--100%...................... $52,963 =======
NOTES TO SMALL CAP GROWTH PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $43,015,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $10,500,000, the gross unrealized depreciation was $971,000 and the net unrealized appreciation on investments was $9,529,000. 54 55 KEMPER INVESTORS FUND INVESTMENT GRADE BOND PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Principal Amount Value --------- ----- U.S. TREASURY BILLS--22.5% (Cost: $100)............................ $ 100 $ 99 CORPORATE OBLIGATIONS AEROSPACE--2.3% Lockheed Martin, 7.70%, 2008............ 10 10 BANKING--2.3% Societe Generale, 7.40%, 2006........... 10 10 OIL, GAS AND PETROLEUM SERVICES--2.2% Parker & Parsley Petroleum, 8.25%, 2007........................... 10 10 ---- TOTAL CORPORATE OBLIGATIONS--6.8% (Cost: $30)............................. 30 Principal Amount Value --------- ----- MONEY MARKET INSTRUMENTS Yield -- 5.08% to 5.31% Due--July and September 1996 Federal Farm Credit Banks............... $ 50 $ 50 Federal Home Loan Mortgage Corporation........................... 150 150 Federal National Mortgage Association... 50 50 ---- TOTAL MONEY MARKET INSTRUMENTS--56.8% (Cost: $249)............................ 250 ---- TOTAL INVESTMENTS--86.1% (Cost: $379)............................ 379 CASH AND OTHER ASSETS, LESS LIABILITIES--13.9%........................ 61 ---- NET ASSETS--100%.......................... $440 ====
NOTE TO INVESTMENT GRADE BOND PORTFOLIO OF INVESTMENTS Based on the cost of investments of $379,000 for federal income tax purposes at June 30, 1996, there was no appreciation or depreciation on investments. See accompanying notes to financial statements. 55 56 KEMPER INVESTORS FUND VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- COMMON STOCKS BANKS--19.2% Banc One Corporation............... 2,300 $ 78 Bank of New York Co................ 300 15 BankAmerica Corp................... 1,000 76 Bankers Trust New York Corp........ 500 38 Barnett Banks...................... 1,200 73 First Chicago NBD Corp............. 1,900 74 First Union Corp................... 1,400 85 NationsBank........................ 1,200 99 PNC Bank, N.A...................... 2,600 77 -------- 615 BASIC INDUSTRIES--.1% Crane Company...................... 100 4 CAPITAL GOODS--3.0% General Electric Co................ 1,100 95 CONSUMER CYCLICALS--9.4% (a)Burlington Coat Factory......... 900 9 Liz Claiborne...................... 700 24 Dayton Hudson Corp................. 300 32 Dillard Department Stores.......... 600 22 (a)Fruit of The Loom............... 1,200 31 Philips N.V., ADR.................. 1,800 59 TJX Companies, Inc................. 1,200 41 (a)Toys R Us....................... 800 23 V.F. Corp.......................... 500 30 Wal-Mart Stores.................... 1,200 30 -------- 301 CONSUMER DURABLES--.4% Ford Motor Co...................... 400 13 CONSUMER STAPLES--9.2% Hanson PLC, ADR.................... 400 6 Philip Morris Companies............ 1,600 166 UST, Inc........................... 3,600 123 -------- 295 ENERGY--9.5% AMOCO Corp......................... 700 51 Atlantic Richfield Co.............. 600 71 Columbia Gas System................ 2,800 147 Louisiana-Pacific Corp............. 1,600 35 -------- 304 Number of Shares Value --------- -------- FINANCIAL SERVICES--21.8% H.F. Ahmanson & Co................. 400 $ 11 American General Corp.............. 600 22 American International Group, Inc.............................. 400 39 Capital One Financial Corp......... 100 3 Crestar Financial Corp............. 200 11 Federal Home Loan Mortgage Corp.... 2,000 171 Federal National Mortgage Association...................... 6,600 221 Fleet Financial Group, Inc......... 600 26 Great Western Financial Corp....... 600 14 KeyCorp............................ 1,600 62 J.P. Morgan & Company.............. 500 42 Norwest Corp....................... 500 17 Signet Banking Corp................ 2,400 56 -------- 695 HEALTH CARE--6.7% Baxter International............... 200 9 Becton Dickinson & Co.............. 100 8 Columbia/HCA Healthcare Corp....... 100 5 Glaxo Wellcome, ADR................ 200 5 (a)Humana, Inc..................... 2,400 43 Eli Lilly & Co..................... 500 33 Merck & Co., Inc................... 300 19 Pharmacia-Upjohn Inc............... 500 22 (a)Tenet Healthcare Corporation.... 1,400 30 U.S. Healthcare.................... 700 39 -------- 213 TECHNOLOGY--8.1% (a)Compaq Computer Corp............ 1,800 89 Intel Corp......................... 1,500 110 Texas Instruments.................. 1,200 60 -------- 259 -------- TOTAL COMMON STOCKS--87.4% (Cost: $2,780)..................... 2,794
56 57 KEMPER INVESTORS FUND VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 -- (CONTINUED) (DOLLARS IN THOUSANDS)
Principal Amount Value --------- -------- MONEY MARKET INSTRUMENTS--20.5% Yield--5.25% to 5.30% Due--July and August 1996 (Cost: $657) Federal Home Loan Mortgage Corp.... $ 660 $ 657 --------
Value -------- TOTAL INVESTMENTS--107.9% (Cost: $3,437)..................... $ 3,451 LIABILITIES, LESS CASH AND OTHER ASSETS--(7.9)%..................... (252) -------- NET ASSETS--100%..................... $ 3,199 ========
NOTES TO VALUE PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $3,437,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $63,000, the gross unrealized depreciation was $49,000 and the net unrealized appreciation on investments was $14,000. See accompanying notes to financial statements. 57 58 KEMPER INVESTORS FUND SMALL CAP VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value ---------- ------ COMMON STOCKS AUTOS AND TRANSPORTATION--5.0% Airborne Freight Corporation........ 2,700 $ 70 Fleetwood Enterprises............... 2,900 90 Simpson Industries.................. 3,700 34 ------ 194 BANKS AND THRIFTS--12.9% Compass Bancshares.................. 2,100 69 Cullen Frost Bankers................ 1,400 39 First Commerce Corp................. 1,800 64 First Financial Corp................ 1,600 36 Liberty Bancorp..................... 1,500 53 Long Island Bancorp................. 2,300 70 North Side Savings Bank............. 1,300 45 Roosevelt Financial Group........... 3,600 69 T.R. Financial Corp................. 2,000 55 ------ 500 CONSUMER DISCRETIONARY--12.8% J. Baker, Inc....................... 6,400 48 Bally Entertainment Corp............ 4,500 124 Cato Corp........................... 9,700 58 Fedders Corporation................. 5,300 38 Haggar Apparel Co................... 3,100 42 Heilig-Meyers....................... 2,000 48 (a)Insurance Auto Auctions.......... 6,300 63 (a)Sports & Recreation.............. 8,500 77 ------ 498 ENERGY--5.1% Giant Industries.................... 4,800 70 KCS Energy.......................... 4,500 129 ------ 199 FINANCE--10.9% First Financial Caribbean Corp...... 3,300 68 Guaranty National Insurance......... 2,200 40 Imperial Credit Industries.......... 3,400 103 Integon Corp........................ 3,000 60 Lawyers Title Insurance Corp........ 1,900 34 PHH Corporation..................... 2,100 120 ------ 425 INTEGRATED OILS--1.9% (a)Tesoro Petroleum Corp............ 6,500 75 MATERIALS AND PROCESSING--10.4% AK Steel Holding Corp............... 1,600 63 Number of Shares or Principal Amount Value ---------- ------ AMCOL International................. 2,600 $ 39 Del Webb Corp....................... 4,500 90 (a)Mueller Industries, Inc.......... 2,600 108 Quanex Corp......................... 1,500 35 Rexene Corp......................... 7,300 72 ------ 407 PRODUCER DURABLES--8.0% (a)Asyst Technologies............... 2,000 38 Blount, Inc......................... 4,400 139 (a)Electroglas...................... 4,600 65 Stewart & Stevenson Services........ 3,000 68 ------ 310 TECHNOLOGY--7.7% (a)Burr Brown Corp.................. 1,800 32 (a)Cyrix............................ 900 15 (a)Diamond Multimedia Systems, Inc. ............................. 2,700 26 (a)EXAR Corporation................. 5,100 66 (a)Proxima Corp..................... 2,700 33 (a)Read-Rite Corp................... 5,100 72 (a)Western Digital Corp............. 2,100 55 ------ 299 UTILITIES--3.4% (a)Atlantic Tele-Network............ 5,500 132 OTHER--2.9% Arbatax International, Inc.......... 3,250 15 (a)Mercer International Inc......... 7,100 96 ------ 111 ------ TOTAL COMMON STOCKS--81.0% (Cost: $3,291)...................... 3,150 MONEY MARKET INSTRUMENTS--17.4% Yield--5.25% to 5.29% Due--July and August 1996 (Cost: $678) Federal Home Loan Mortgage Corp..... $ 680 678 ------ TOTAL INVESTMENTS--98.4% (Cost: $3,969)...................... 3,828 CASH AND OTHER ASSETS, LESS LIABILITIES--1.6%..................... 62 ------ NET ASSETS--100%...................... $3,890 ======
58 59 NOTES TO SMALL CAP VALUE PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $3,969,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $107,000, the gross unrealized depreciation was $248,000 and the net unrealized depreciation on investments was $141,000. See accompanying notes to financial statements. 59 60 KEMPER INVESTORS FUND VALUE + GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value --------- ------- COMMON STOCKS BASIC INDUSTRIES--1.6% (a)FMC Corp......................... 400 $ 26 CAPITAL GOODS--4.9% Emerson Electric Co................. 200 18 General Electric Co................. 400 35 Xerox Corporation................... 500 27 ------- 80 CONSUMER CYCLICALS--10.8% Circuit City Stores................. 500 18 Dayton Hudson Corp.................. 200 21 Dillard Department Stores........... 300 11 (a)Fruit of The Loom................ 400 10 Mattel, Inc......................... 800 23 Newell Co........................... 1,000 31 Philips N.V., ADR................... 300 10 TJX Companies, Inc.................. 300 10 (a)Toys R Us........................ 600 17 V.F. Corp........................... 200 12 Wal-Mart Stores..................... 600 15 ------- 178 CONSUMER DURABLES--1.7% Ford Motor Co....................... 400 13 Leggett & Platt Incorporated........ 300 8 Singer Company N.V.................. 400 8 ------- 29 CONSUMER STAPLES--14.0% American Greetings Corp............. 400 11 Carnival Corp....................... 700 20 (a)Cox Communications Inc........... 1,000 22 Walt Disney Company................. 400 25 (a)Franklin Quest Co................ 600 12 Philip Morris Companies............. 400 42 Procter & Gamble Co................. 300 27 Tele-Communications, Inc............ 1,000 18 UST, Inc............................ 1,000 34 Wendy's International............... 1,000 19 ------- 230 Number of Shares Value --------- ------- ENERGY--6.9% AMOCO Corp.......................... 400 $ 29 Atlantic Richfield Co............... 200 24 Columbia Gas System................. 600 31 Enron Corp.......................... 400 16 Louisiana-Pacific Corp.............. 600 13 ------- 113 FINANCE--21.6% American General Corp............... 300 11 American International Group, Inc............................... 200 20 Banc One Corporation................ 300 10 BankAmerica Corp.................... 200 15 Bankers Trust New York Corp......... 200 15 Barnett Banks....................... 300 18 Federal Home Loan Mortgage Corp..... 500 43 Federal National Mortgage Association....................... 1,500 50 First Chicago NBD Corp.............. 400 16 First Union Corp.................... 400 24 First USA........................... 300 16 Fleet Financial Group, Inc.......... 200 9 KeyCorp............................. 200 8 MGIC Investment Corp................ 200 11 J.P. Morgan & Company............... 200 17 NationsBank......................... 300 25 PNC Bank, N.A....................... 500 15 Signet Banking Corp................. 600 14 Travelers Group..................... 400 18 ------- 355 HEALTH CARE--12.7% Abbott Laboratories................. 600 26 (a)Foundation Health Corp............. 400 14 Glaxo Wellcome, ADR................. 400 11 (a)Humana, Inc........................ 800 14 Johnson & Johnson................... 500 25 Eli Lilly & Co...................... 300 19 Mallinckrodt Group.................. 300 12 Merck & Co., Inc.................... 400 26 (a)Mid Atlantic Medical Services, Inc................................. 1,000 14 Sandoz, Ltd......................... 300 17 United Healthcare Corp.............. 600 30 ------- 208
60 61 KEMPER INVESTORS FUND VALUE + GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- ------- TECHNOLOGY--21.3% (a)Applied Materials, Inc........... 600 $ 18 (a)Atmel Corporation................ 500 15 (a)Bay Networks..................... 700 18 (a)Cisco Systems.................... 400 23 (a)Compaq Computer Corp............. 800 39 (a)EMC Corp......................... 1,000 19 Intel Corp.......................... 300 22 International Business Machines Corp.............................. 200 20 (a)LSI Logic Corp................... 600 16 (a)Lam Research Corp................ 900 23 Linear Technology Corp.............. 400 12 (a)Maxim Integrated Products........ 500 14 (a)Novellus Systems................. 500 18 (a)Seagate Technology............... 400 18 (a)Silicon Graphics Inc............. 700 17 (a)Softkey International............ 800 15 Texas Instruments................... 400 20 (a)3Com Corporation................. 500 23 ------- 350 UTILITIES--3.5% AT & T.............................. 400 25 (a)Paging Network, Inc.............. 700 17 SBC Communications Inc.............. 300 15 ------- 57 ------- Principal Amount Value --------- ------- TOTAL COMMON STOCK--99.0% (Cost: $1,651)...................... $ 1,626 MONEY MARKET INSTRUMENTS--6.1% Yield--5.26% Due--July 1996 (Cost: $100) Federal Home Loan Mortgage Corp..... $ 100 100 ------- TOTAL INVESTMENTS--105.1% (Cost: $1,751)...................... 1,726 LIABILITIES, LESS CASH AND OTHER ASSETS--(5.1)%........................ (83) ------- NET ASSETS--100%...................... $ 1,643 =======
NOTES TO VALUE + GROWTH PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $1,751,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $36,000, the gross unrealized depreciation was $61,000 and the net unrealized depreciation on investments was $25,000. See accompanying notes to financial statements. 61 62 KEMPER INVESTORS FUND HORIZON 20+ PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value --------- ----- COMMON STOCKS BASIC INDUSTRIES--1.2% (a)FMC Corp........................... 100 $ 7 CAPITAL GOODS--2.4% General Electric Co................... 100 9 Xerox Corporation..................... 100 5 ----- 14 CONSUMER CYCLICALS--8.7% Circuit City Stores................... 200 7 Dillard Department Stores............. 100 4 (a)Fruit of The Loom.................. 200 5 Mattel, Inc........................... 200 6 Newell Co............................. 200 6 Philips N.V., ADR..................... 100 3 TJX Companies, Inc.................... 100 3 (a)Toys R Us.......................... 200 6 V.F. Corp............................. 100 6 Wal-Mart Stores....................... 200 5 ----- 51 CONSUMER DURABLES--2.2% Ford Motor Co......................... 100 3 Leggett & Platt Incorporated.......... 200 6 Singer Company N.V.................... 200 4 ----- 13 CONSUMER STAPLES--9.8% American Greetings Corp............... 200 5 Carnival Corp......................... 200 6 (a)Cox Communications Inc............. 200 4 Walt Disney Company................... 100 6 Philip Morris Companies............... 100 10 Procter & Gamble Co................... 100 9 Tele-Communications, Inc.............. 300 5 UST, Inc.............................. 200 7 Wendy's International................. 300 5 ----- 57 Number of Shares Value --------- ----- ENERGY--5.5% AMOCO Corp............................ 100 $ 7 Atlantic Richfield Co................. 100 12 Columbia Gas System................... 100 5 Enron Corp............................ 100 4 Louisiana-Pacific Corp................ 200 4 ----- 32 FINANCE--18.5% American International Group, Inc..... 100 10 Banc One Corporation.................. 100 3 BankAmerica Corp...................... 100 8 Bankers Trust New York Corp........... 100 7 Barnett Banks......................... 100 6 Federal Home Loan Mortgage Corp....... 100 9 Federal National Mortgage Association......................... 400 13 First Chicago NBD Corp................ 100 4 First Union Corp...................... 100 6 First USA............................. 100 6 MGIC Investment Corp.................. 100 6 NationsBank........................... 100 8 PNC Bank, N.A......................... 200 6 Signet Banking Corp................... 400 9 Travelers Group....................... 150 7 ----- 108 HEALTH CARE--9.9% Abbott Laboratories................... 200 9 (a)Foundation Health Corp............. 100 4 Glaxo Wellcome, ADR................... 200 5 (a)Humana, Inc........................ 200 4 Johnson & Johnson..................... 100 5 Eli Lilly & Co........................ 100 7 Mallinckrodt Group.................... 100 4 Merck & Co., Inc...................... 100 6 (a)Mid Atlantic Medical Services, Inc................................... 200 3 Sandoz, Ltd........................... 100 6 United Healthcare Corp................ 100 5 ----- 58
62 63 KEMPER INVESTORS FUND HORIZON 20+ PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- ----- TECHNOLOGY--20.2% (a)Applied Materials, Inc............. 100 $ 3 (a)Atmel Corporation.................. 200 6 (a)Bay Networks....................... 200 5 (a)Cisco Systems...................... 100 6 (a)Compaq Computer Corp............... 100 5 (a)EMC Corp........................... 300 6 Intel Corp............................ 100 7 (a)LSI Logic Corp..................... 300 8 (a)Lam Research Corp.................. 300 8 Linear Technology Corp................ 200 6 (a)Maxim Integrated Products.......... 200 5 (a)Novellus Systems................... 300 11 (a)Seagate Technology................. 300 14 (a)Silicon Graphics Inc............... 400 10 (a)Softkey International.............. 200 4 Texas Instruments..................... 100 5 (a)3Com Corporation................... 200 9 ----- 118 UTILITIES--3.1% AT&T.................................. 100 6 (a)Paging Network, Inc................ 300 7 SBC Communications Inc................ 100 5 ----- 18 ----- TOTAL COMMON STOCKS--81.5% (Cost: $483).......................... 476
Principal Amount Value --------- ----- MONEY MARKET INSTRUMENTS--17.1% Yield--5.52% Due--July 1996 (Cost: $100) Federal Farm Credit Banks............. $ 100 $100 ----- TOTAL INVESTMENTS--98.6% (Cost: $583).......................... 576 CASH AND OTHER ASSETS, LESS LIABILITIES--1.4%....................... 8 ----- NET ASSETS--100%........................ $584 =====
NOTES TO HORIZON 20+ PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $583,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $11,000, the gross unrealized depreciation was $18,000 and the net unrealized depreciation on investments was $7,000. See accompanying notes to financial statements. 63 64 KEMPER INVESTORS FUND HORIZON 10+ PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- COMMON STOCKS BASIC INDUSTRIES--.6% (a)FMC Corp.......................... 100 $ 7 CAPITAL GOODS--2.7% Emerson Electric Co................ 100 9 General Electric Co................ 200 17 Xerox Corporation.................. 200 10 -------- 36 CONSUMER CYCLICALS--6.1% Circuit City Stores................ 300 11 Dayton Hudson Corp................. 50 5 Dillard Department Stores.......... 200 7 Mattel, Inc........................ 300 9 Newell Co.......................... 400 12 Philips N.V., ADR.................. 100 3 TJX Companies, Inc................. 200 7 (a)Toys R Us......................... 200 6 V.F. Corp.......................... 100 5 Wal-Mart Stores.................... 600 15 -------- 80 CONSUMER DURABLES--1.7% Ford Motor Co...................... 300 10 Leggett & Platt Incorporated....... 300 8 Singer Company N.V................. 200 4 -------- 22 CONSUMER STAPLES--7.8% American Greetings Corp............ 200 5 Carnival Corp...................... 400 12 (a)Cox Communications Inc............ 400 9 Walt Disney Company................ 200 13 Philip Morris Companies............ 200 21 Procter & Gamble Co................ 100 9 Tele-Communications, Inc........... 300 5 UST, Inc........................... 500 17 Wendy's International.............. 600 11 -------- 102 Number of Shares Value --------- -------- ENERGY--3.8% AMOCO Corp......................... 100 $ 7 Atlantic Richfield Co.............. 100 12 Columbia Gas System................ 300 16 Enron Corp......................... 200 8 Louisiana-Pacific Corp............. 300 7 -------- 50 FINANCE--14.8% American General Corp.............. 300 11 American International Group, Inc.............................. 100 10 Banc One Corporation............... 400 14 BankAmerica Corp................... 100 8 Bankers Trust New York Corp........ 100 7 Barnett Banks...................... 200 12 Federal Home Loan Mortgage Corp.... 200 17 Federal National Mortgage Association...................... 500 17 First Chicago NBD Corp............. 200 8 First Union Corp................... 200 12 First USA.......................... 200 11 Fleet Financial Group, Inc......... 100 4 KeyCorp............................ 100 4 MGIC Investment Corp............... 200 11 J.P. Morgan & Company.............. 100 8 NationsBank........................ 100 8 PNC Bank, N.A...................... 300 9 Signet Banking Corp................ 400 9 Travelers Group.................... 300 14 -------- 194 HEALTH CARE--7.4% Abbott Laboratories................ 300 13 (a)Foundation Health Corp............ 200 7 Glaxo Wellcome, ADR................ 200 5 (a)Humana, Inc....................... 300 5 Johnson & Johnson.................. 200 10 Eli Lilly & Co..................... 100 6 Mallinckrodt Group................. 200 8 Merck & Co., Inc................... 200 13 (a)Mid Atlantic Medical Services, Inc.............................. 600 9 Sandoz, Ltd........................ 100 6 United Healthcare Corp............. 300 15 -------- 97
64 65 KEMPER INVESTORS FUND HORIZON 10+ PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 -- (CONTINUED) (DOLLARS IN THOUSANDS)
Number of Shares Value --------- -------- TECHNOLOGY--12.2% (a)Applied Materials, Inc............ 100 $ 3 (a)Atmel Corporation................. 100 3 (a)Bay Networks...................... 300 8 (a)Cisco Systems..................... 100 6 (a)Compaq Computer Corp.............. 300 15 (a)EMC Corp.......................... 300 6 Intel Corp......................... 200 15 International Business Machines Corp............................. 100 10 (a)Lam Research Corp. 400 10 (a)LSI Logic Corp.................... 400 10 Linear Technology Corp............. 200 6 (a)Maxim Integrated Products......... 300 8 (a)Novellus Systems 300 11 (a)Seagate Technology................ 300 14 (a)Silicon Graphics Inc.............. 200 5 (a)Softkey International............. 300 6 Texas Instruments.................. 200 10 (a)3Com Corporation................. 300 14 -------- 160 UTILITIES--2.7% AT&T............................... 200 12 (a)Paging Network, Inc............... 600 14 SBC Communications Inc............. 200 10 -------- 36 -------- Principal Amount Value --------- -------- TOTAL COMMON STOCKS--59.8% (Cost: $796)....................... $ 784 MONEY MARKET INSTRUMENTS Yield--5.28% to 5.31% Due--July 1996 Federal Farm Credit Banks.......... $ 100 100 Federal Home Loan Mortgage Corporation...................... 300 299 Federal National Mortgage Association...................... 100 100 -------- TOTAL MONEY MARKET INSTRUMENTS--38.1% (Cost: $499)....................... 499 -------- TOTAL INVESTMENTS--97.9% (Cost: $1,295)..................... 1,283 CASH AND OTHER ASSETS, LESS LIABILITIES--2.1%.................... 28 -------- NET ASSETS--100%..................... $ 1,311 ========
NOTES TO HORIZON 10+ PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $1,295,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $15,000, the gross unrealized depreciation was $27,000 and the net unrealized depreciation on investments was $12,000. See accompanying notes to financial statements. 65 66 KEMPER INVESTORS FUND - HORIZON 5 PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996 (DOLLARS IN THOUSANDS)
Number of Shares Value --------- ----- COMMON STOCKS BASIC INDUSTRIES--.9% (a)FMC Corp........................... 100 $ 7 CAPITAL GOODS--1.9% General Electric Co................... 100 9 Xerox Corporation..................... 100 5 ---- 14 CONSUMER CYCLICALS--3.0% Circuit City Stores................... 200 7 Dillard Department Stores............. 100 4 Mattel, Inc........................... 100 3 Newell Co............................. 200 6 Wal-Mart Stores....................... 100 3 ---- 23 CONSUMER DURABLES--1.1% Ford Motor Co......................... 100 3 Leggett & Platt Incorporated.......... 100 3 Singer Company N.V.................... 100 2 ---- 8 CONSUMER STAPLES--6.6% American Greetings Corp............... 100 3 Carnival Corp......................... 100 3 (a)Cox Communications Inc............. 200 4 Walt Disney Company................... 100 6 Philip Morris Companies............... 100 10 Procter & Gamble Co................... 100 9 Tele-Communications, Inc.............. 200 4 UST, Inc.............................. 200 7 Wendy's International................. 200 4 ---- 50 ENERGY--1.5% Columbia Gas System................... 100 5 Enron Corp............................ 100 4 Louisiana-Pacific Corp................ 100 2 ---- 11 FINANCE--8.9% Banc One Corporation.................. 100 3 Barnett Banks......................... 100 6 Federal Home Loan Mortgage Corp....... 100 9 Federal National Mortgage Association......................... 300 10 First Union Corp...................... 100 6 First USA............................. 100 5 Number of Shares Value ---- KeyCorp............................... 100 $ 4 NationsBank........................... 100 8 PNC Bank, N.A......................... 200 6 Signet Banking Corp................... 200 5 Travelers Group....................... 100 5 ---- 67 HEALTH CARE--6.0% Abbott Laboratories................... 100 4 (a)Foundation Health Corp............. 100 4 Glaxo Wellcome, ADR................... 100 3 (a)Humana, Inc........................ 200 4 Johnson & Johnson..................... 100 5 Eli Lilly & Co........................ 100 7 Merck & Co., Inc...................... 100 6 (a)Mid Atlantic Medical Services, Inc................................. 100 1 Sandoz, Ltd........................... 100 6 United Healthcare Corp................ 100 5 ---- 45 TECHNOLOGY--8.4% (a)Applied Materials, Inc............. 100 3 (a)Bay Networks....................... 200 5 (a)Cisco Systems...................... 100 5 (a)Compaq Computer Corp............... 100 5 (a)EMC Corp........................... 200 4 Intel Corp............................ 100 7 (a)Lam Research Corp.................. 200 5 (a)Maxim Integrated Products.......... 100 3 (a)Novellus Systems................... 100 4 (a)Seagate Technology................. 200 9 (a)Silicon Graphics Inc............... 100 2 (a)Softkey International.............. 100 2 Texas Instruments..................... 100 5 (a)3Com Corporation................... 100 4 ---- 63 UTILITIES--1.7% AT&T.................................. 100 6 (a)Paging Network, Inc................ 100 2 SBC Communications Inc................ 100 5 ---- 13 ---- TOTAL COMMON STOCKS--40.0% (Cost: $305).......................... 301 ----
66 67 KEMPER INVESTORS FUND - HORIZON 5 PORTFOLIO PORTFOLIO OF INVESTMENTS JUNE 30, 1996--(CONTINUED) (DOLLARS IN THOUSANDS)
Principal Amount Value ---- MONEY MARKET INSTRUMENTS Yield--5.27% - 5.31% Due--July and August 1996 Federal Farm Credit Banks............. $ 200 $198 Federal Home Loan Mortgage Corp....... 200 200 ---- TOTAL MONEY MARKET INSTRUMENTS--52.9% (Cost: $398).......................... 398 ---- Value ----- TOTAL INVESTMENTS--92.9% (Cost: $703).......................... $699 CASH AND OTHER ASSETS, LESS LIABILITIES--7.1%....................... 53 ---- NET ASSETS--100%........................ $752 ====
NOTES TO HORIZON 5 PORTFOLIO OF INVESTMENTS (a) Non-income producing security. Based on the cost of investments of $703,000 for federal income tax purposes at June 30, 1996, the gross unrealized appreciation was $8,000, the gross unrealized depreciation was $12,000 and the net unrealized depreciation on investments was $4,000. See accompanying notes to financial statements. 67 68 This semi-annual report must be preceded or accompanied by a Kemper SELECT prospectus containing information on fees, charges and expenses. Read it carefully before you invest or send money. Kemper SELECT is not approved in all states. Please contact your KILICO representative for approval information in your particular state. Kemper SELECT, a variable life insurance policy, is issued by Kemper Investors Life Insurance Company under policy form series L-8001. Securities distributed by Investors Brokerage Services, Inc., 1 Kemper Drive, Long Grove, Illinois 60049. SEMI-ANNUAL REPORT Kemper Select [PHOTO] Confidence and Choice Kemper Investors Fund KILICO Variable Separate Account Period Ended June 30, 1996 INVESTMENT MANAGER: Zurich Kemper Investments, Inc. 120 South LaSalle Street Chicago, Illinois 60603 SEL2-3 (6/96) 1009390 -----END PRIVACY-ENHANCED MESSAGE-----