<PAGE> 1
[ZURICH LOGO]
ZURICH YIELDWISE MONEY FUND
ANNUAL REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED JULY 31, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
SUBJECT PAGE
- ------------------------------------------------------------------------
<S> <C>
FUND OBJECTIVE 1
- ------------------------------------------------------------------------
PERFORMANCE SUMMARY 2
- ------------------------------------------------------------------------
VARIABLES AFFECTING PERFORMANCE 3
- ------------------------------------------------------------------------
PERFORMANCE UPDATE 4
- ------------------------------------------------------------------------
TERMS TO KNOW 6
- ------------------------------------------------------------------------
PORTFOLIO COMPOSITION 7
- ------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 8
- ------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS 14
- ------------------------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 20
- ------------------------------------------------------------------------
TRUSTEES AND OFFICERS 21
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 3
1
FUND OBJECTIVE
- ------------------------------------------------------------------------------
Zurich YieldWise Money Fund is an open-end, diversified, management investment
company which seeks maximum current income to the extent consistent with
stability of principal by investing in high-quality, short-term money market
instruments. The Fund is designed for investors who are willing to make high
minimum investments and to pay for certain individual transactions in order to
pursue higher yields through lower costs.
An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a fund will be able to
maintain a stable $1.00 share value.
<PAGE> 4
2
PERFORMANCE SUMMARY
- ---------------------------------------------------------------------
YIELD COMPARISON [LINE GRAPH]
Zurich YieldWise Money
Fund* is compared to FUND YIELD VS. FIRST TIER MONEY MARKET FUNDS
its IBC Financial Data
category -- The First 4/29/97 through 7/29/97
Tier Money Market Fund Weekly 7-Day Average Yield
Average which consists
of all non- Fund 1st Tier Money
institutional taxable Yield Market Funds
money market funds
investing in only 4/97 5.75% 4.89%
first tier (highest 5/97 5.8% 4.93%
rating) securities 6/97 5.82% 4.94%
tracked by IBC 7/97 5.76% 4.93%
Financial Data.
Returns are historical
and do not guarantee
future results. Fund
yields fluctuate.
IBC RANKING IBC RANKING
IBC Financial Data 5/1/97 through 7/29/97
7-day yield ranking is
based upon average TOP FUND #1 of 229 funds Since May 1,1997
annualized net
investment income for
the period indicated
as of 7/31/97. Ranking
is historical and does
not reflect future
performance. The IBC
category used for
comparison is the IBC
General Purpose Money
Market Fund category.
* Performance reflects 100% fee waiver and expense absorption during this period
which improved results. The manager is waiving management fees of .50% and
absorbing expenses of .10%. Otherwise, the 7-day average yield would have been
5.16% on 7/29/97.
<PAGE> 5
3
VARIABLES AFFECTING
PERFORMANCE
- --------------------------------------------------------------------------------
Zurich Kemper Investments provides professional management of your short-term
investment dollars. We invest in high-quality, short-term securities that are
consistent with the fund's specific objective.
Our primary goal is to provide competitive yields while maintaining preservation
of principal and a high degree of liquidity. The specific securities our
portfolio managers select have a major impact on reaching our goal. However,
they must continuously analyze other variables which affect share price
stability and fund performance. Traditionally, there are three important
variables which are factored into the decision-making process:
- --------------------------------------------------------------------------------
MONETARY POLICY
- --------------------------------------------------------------------------------
Monetary Policy is managed by the Federal Reserve Board (the "Fed") and has a
direct impact on short-term interest rates. If the Fed determines that inflation
is climbing, it will enact a policy to decrease or "tighten" the money supply.
With less money available, money lenders can command higher interest rates on
the money market securities they sell. If the Fed determines the economy is
heading toward a recession, it will increase or "ease" the money supply. With
more money for borrowers to access, the interest rates for money market
securities decline.
- --------------------------------------------------------------------------------
INTEREST RATES
- --------------------------------------------------------------------------------
Interest Rates will affect yields because as investments mature, the cash
received will be reinvested at current money market rates which could be either
higher or lower. Reinvesting at higher interest rates generally means higher
yields for money funds and reinvesting at lower rates generally means lower
yields.
- --------------------------------------------------------------------------------
AVERAGE LENGTH OF MATURITY
- --------------------------------------------------------------------------------
Average Length of Maturity affects the timing of reinvesting cash from maturing
investments. If interest rates are expected to rise, decreasing the portfolio's
average length of maturity would enable the Fund to purchase higher-yielding
money market securities sooner. Conversely, if rates were expected to decrease,
the Fund would lock into money market securities with a longer length of
maturity in order to maintain higher yields longer.
(ALSO SEE "TERMS TO KNOW" SECTION)
<PAGE> 6
4
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
AN INTERVIEW WITH PORTFOLIO MANAGER FRANK RACHWALSKI
- --------------------------------------------------------------------------------
[RACHWALSKI PHOTO] While the "hot" topic of discussion among
investment analysts was whether or not the Federal
Reserve Board would continue to raise interest
rates, there were no signs of inflation as the
economy continued to grow at a moderate rate.
Portfolio manager Frank Rachwalski discusses the
market and Zurich YieldWise Money Fund's
performance since inception.
---------------------------------------------------
FRANK RACHWALSKI IS SENIOR VICE PRESIDENT OF ZURICH KEMPER INVESTMENTS, INC. AND
PORTFOLIO MANAGER OF ALL ZURICH MONEY FUNDS. RACHWALSKI HOLDS A B.B.A. AND AN
M.B.A. DEGREE FROM LOYOLA UNIVERSITY.
Q FRANK, ZURICH YIELDWISE MONEY FUND HAS BEEN IN EXISTENCE SINCE APRIL 17,
1997. WHAT WAS THE BIGGEST CHALLENGE YOU FACED IN MANAGING THIS NEW
FUND?
------------------------------------------------------------------------
A The biggest challenge in launching any fund is the timing of cash flow
because it might not occur when you like the market conditions -- i.e.
when market conditions are favorable. We expected a strong cash flow in
the beginning and we were right. This got us off to a good start.
Q THAT'S GREAT TO HEAR. SO, WHAT WAS YOUR MANAGEMENT STRATEGY FOR
CAPITALIZING ON THIS STRONG INFLUX OF CASH?
------------------------------------------------------------------------
A We decided that initially, we would keep a longer average life structure
for our investments. This allowed us to take advantage of the premium
interest rates you get for taking longer maturities. We also
- --------------------------------------------------------------------------------
The views expressed in this report reflect those of the portfolio
manager only through the end of the period of the report, as stated on the
cover. The manager's views are subject to change at any time, based on market
and other conditions.
<PAGE> 7
5
decided that over time, as new participants entered the fund, we would shorten
the average life. This will ultimately give us the flexibility to respond to
changing interest rates.
Q IN LOOKING BACK OVER THE LAST 3 1/2 MONTHS, WHAT HAS THE ECONOMIC
CLIMATE BEEN LIKE SINCE THIS FUND OPENED AND WHAT KIND OF ACTIVITY DO YOU
ANTICIPATE FOR THE REST OF THE YEAR?
- --------------------------------------------------------------------------------
A Since April 17, we've seen slow but steady growth in the economy.
Although economic growth builds expectations of inflation, up to now we have
seen very little evidence of rising consumer prices. Because of this, the
Federal Reserve Board has held the line on increasing interest rates. However, I
expect the third and fourth quarter of this year to show even stronger growth,
and with the low unemployment rate we may see the Fed starting to tighten the
money supply which will cause interest rates to go up.
Q GIVEN YOUR EXPECTATIONS FOR THE REST OF THE YEAR, WILL YOU MAINTAIN YOUR
CURRENT STRATEGY FOR YIELDWISE AND WHAT KIND OF PERFORMANCE DO YOU ANTICIPATE
FOR THIS FUND?
- --------------------------------------------------------------------------------
A We will definitely stick with our strategy. Our initial, longer maturity
investments were just long enough to capture higher interest rates up-front but
not too long to miss future opportunities. And as I mentioned, subsequent
investments were shorter in duration. I am confident that we are in a position
of strength to capture rising rates if and when they go up.
<PAGE> 8
6
TERMS TO KNOW
- --------------------------------------------------------------------------------
NET ASSET
VALUE (NAV) Net Asset Value is the value of all your fund's assets,
minus any liabilities, divided by the number of
outstanding shares (shares owned by all shareholders).
Unlike other mutual funds, money market funds are
managed to maintain a net asset value of $1.00 per
share, although there can be no assurance that a fund
will maintain that value.
MATURITY Maturity is the time remaining before an issuer is
scheduled to repay the principal amount on a debt
security. Money market instruments are debt securities.
WEIGHTED In order to determine the average length of maturity of
AVERAGE a fund's securities, it is important to consider that a
MATURITY fund has different amounts of money invested in many
different securities, each of which may have a different
maturity date. Therefore, larger and longer-term
investments have greater impact on the fund and its
overall average maturity. To accurately reflect the
impact each security has on a fund, it is standard
industry practice to perform a statistical calculation
that considers the amount invested in each security.
This "weighting" allows for calculating an accurate
average.
The weighted average maturity reflects a fund's
sensitivity to interest rate changes and is used to
measure risk.
YIELD Yield is the amount of net investment income (income
minus expenses including management fees) your
investment has produced over a specific period,
expressed as a percentage of your investment. Capital
gains and losses, infrequent in a money market fund, are
not included.
7-DAY AVERAGE Every money market fund calculates its yield according
YIELD to a standardized method prescribed by the Securities
and Exchange Commission. Each day's yield is an average
taken over a 7-day period. This average helps to
minimize the effect of daily fluctuations in fund
income.
<PAGE> 9
7
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ZURICH YIELDWISE MONEY FUND On 7/31/97*
- -------------------------------------------------------------------------------
<S> <C> <C>
[PIE CHART]
Commercial Paper 91%
------------------------------------------------
Certificates of Deposit 9
------------------------------------------------
100%
------------------------------------------------
WEIGHTED AVERAGE MATURITY
------------------------------------------------
Zurich YieldWise Money Fund 33 days
------------------------------------------------
First Tier Money Fund
Average+ 62 days
</TABLE>
* Portfolio composition and holdings are subject to change.
+ The portfolio is compared to its IBC Financial Data category: The First Tier
Money Fund Average which consists of all non-institutional taxable money market
funds investing in only first tier (highest rating) securities and tracked by
IBC Financial Data.
<PAGE> 10
8
ZURICH YIELDWISE MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1997 (value in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
CORPORATE OBLIGATIONS
- --------------------------------------------------------------------------
BANKING -- 1.2% RATE MATURITY VALUE
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Credit Lyonnais N.A. Inc. 5.71% 10/21/97 $ 2,962
- --------------------------------------------------------------------------
BUSINESS LOANS -- 22.1%
- --------------------------------------------------------------------------
Astro Capital Corp. 5.66% - 5.70% 10/01/97 - 10/15/97 5,058
- --------------------------------------------------------------------------
Banner Receivables Corp. 5.68% - 5.82% 08/11/97 - 10/03/97 3,563
- --------------------------------------------------------------------------
FP Funding Corp. 5.63% - 5.83% 08/05/97 - 09/09/97 6,480
- --------------------------------------------------------------------------
Falcon Asset
Securitization Corp. 5.54% 08/04/97 4,998
- --------------------------------------------------------------------------
First Brands
Commercial Inc. 5.65% 08/11/97 3,495
- --------------------------------------------------------------------------
Gotham Capital Corp. 5.65% - 5.83% 08/15/97 - 09/19/97 2,246
- --------------------------------------------------------------------------
Jet Funding Corp. 5.67% - 5.79% 08/20/97 - 10/31/97 8,406
- --------------------------------------------------------------------------
Sigma Finance, Inc. 5.61% 10/06/97 4,949
- --------------------------------------------------------------------------
Strategic Asset
Funding Corp. 5.65% - 5.85% 08/29/97 - 09/30/97 8,715
- --------------------------------------------------------------------------
Working Capital
Management Co. 5.62% - 5.78% 08/15/97 - 10/15/97 6,195
- --------------------------------------------------------------------------
54,105
</TABLE>
<PAGE> 11
9
<TABLE>
<CAPTION>
------------------------------------------------------------------------
CAPITAL AND EQUIPMENT
LENDING -- 11.7% RATE MATURITY VALUE
------------------------------------------------------------------------
<S> <C> <C> <C>
American Honda
Finance Corp. 5.56% 8/5/97 $ 4,997
------------------------------------------------------------------------
BTM Capital Corp. 5.68% - 5.86% 8/7/97 - 10/27/97 4,614
------------------------------------------------------------------------
Golden Manager's
Acceptance Corp. 5.58% 8/26/97 1,494
------------------------------------------------------------------------
Mitsubishi Motors
Credit
of America, Inc. 5.67% - 5.74% 8/4/97 - 9/12/97 2,993
------------------------------------------------------------------------
SRD Finance Inc. 5.66% - 5.69% 8/7/97 - 9/18/97 9,467
------------------------------------------------------------------------
Sanwa Business Credit
Corp.
(a)5.92% 8/8/97 1,501
5.61% - 5.78% 8/12/97 - 8/18/97 3,493
------------------------------------------------------------------------
28,559
------------------------------------------------------------------------
CAPTIVE BUSINESS LENDING -- 10.0%
------------------------------------------------------------------------
FINOVA Capital Corp.
5.65% 8/12/97 998
(a)5.73% 8/13/97 1,500
------------------------------------------------------------------------
Oakland-Alameda County
Coliseum, California 5.70% 9/9/97 5,000
------------------------------------------------------------------------
Orix America, Inc. 5.68% - 5.80% 8/4/97 - 10/10/97 6,934
------------------------------------------------------------------------
Philip Morris Capital
Corp. 5.80% 8/1/97 5,000
------------------------------------------------------------------------
Sony Capital Corp. 5.61% 8/7/97 4,995
------------------------------------------------------------------------
24,427
------------------------------------------------------------------------
CONSUMER LENDING -- 2.6%
------------------------------------------------------------------------
(a)Countrywide Funding
Corp. 6.10% 10/23/97 501
------------------------------------------------------------------------
Countrywide Home Loans 5.60% 8/29/97 4,978
------------------------------------------------------------------------
(a)Household Finance
Corp. 5.69% 8/1/97 1,000
------------------------------------------------------------------------
6,479
</TABLE>
<PAGE> 12
10
ZURICH YIELDWISE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------
DIVERSIFIED
FINANCE -- 12.7% RATE MATURITY VALUE
------------------------------------------------------------------------
<S> <C> <C> <C>
APEX Funding Corp. 5.63% - 5.72% 8/5/97 - 10/20/97 $ 4,694
------------------------------------------------------------------------
Dynamic Funding Corp. 5.63% - 5.85% 8/14/97 - 9/25/97 7,983
------------------------------------------------------------------------
Heller Financial, Inc.
(a)5.79% 8/20/97 500
5.86% 9/4/97 1,641
------------------------------------------------------------------------
Old Line Funding Corp. 5.57% - 5.69% 8/11/97 - 9/16/97 5,983
------------------------------------------------------------------------
STRAIT Capital Corp. 5.63% - 5.79% 8/29/97 - 12/20/97 10,325
------------------------------------------------------------------------
------------------------------------------------------------------------
FINANCIAL SERVICES -- 13.6%
------------------------------------------------------------------------
(a)CS First Boston,
Inc. 5.67% 8/1/97 5,000
------------------------------------------------------------------------
Lehman Brothers
Holdings Inc. 5.70% 8/5/97 1,499
------------------------------------------------------------------------
Merrill Lynch & Co.
Inc.
5.85% 8/1/97 7,000
(a)6.00% 9/17/97 501
------------------------------------------------------------------------
(a)Morgan Stanley Group
Inc. 6.07% 9/17/97 8,015
------------------------------------------------------------------------
Nomura Holding
America Inc. 5.86% - 5.88% 10/7/97 - 10/14/97 7,912
------------------------------------------------------------------------
Salomon Inc. 5.77% - 6.13% 8/4/97 - 11/19/97 3,475
------------------------------------------------------------------------
33,402
------------------------------------------------------------------------
HEALTH CARE -- 2.2%
------------------------------------------------------------------------
Columbia/HCA
Healthcare Corp. 5.65% - 5.72% 8/20/97 - 9/16/97 5,371
------------------------------------------------------------------------
</TABLE>
<PAGE> 13
11
<TABLE>
<CAPTION>
------------------------------------------------------------------------
MANUFACTURING AND
INDUSTRIAL -- 4.5% RATE MATURITY VALUE
------------------------------------------------------------------------
<S> <C> <C> <C>
Bridgestone/Firestone,
Inc. 5.63% - 5.68% 8/6/97 - 8/8/97 $ 10,989
------------------------------------------------------------------------
------------------------------------------------------------------------
MEDIA -- 2.0%
------------------------------------------------------------------------
Tribune Co. 5.70% - 5.80% 8/18/97 - 9/26/97 4,962
------------------------------------------------------------------------
------------------------------------------------------------------------
UTILITIES -- 8.4%
------------------------------------------------------------------------
Brazos River
Authority, Texas 5.63% 10/14/97 5,000
------------------------------------------------------------------------
Frontier Corp. 5.61% 8/14/97 6,194
------------------------------------------------------------------------
GTE Corp. 5.56% - 5.70% 8/1/97 - 9/22/97 8,447
------------------------------------------------------------------------
NYNEX Corp. 5.57% 8/8/97 999
------------------------------------------------------------------------
20,640
------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS -- 91.0%
(AVERAGE MATURITY: 34 DAYS) 223,022
</TABLE>
<PAGE> 14
12
ZURICH YIELDWISE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT RATE MATURITY VALUE
------------------------------------------------------------------------
<S> <C> <C> <C>
(a)Bankers Trust Co. 5.69% 8/1/97 $ 500
------------------------------------------------------------------------
(a)Barclays Bank PLC 5.65% 8/1/97 4,998
------------------------------------------------------------------------
(a)CoreStates Bank N.A. 5.66% 8/4/97 2,000
------------------------------------------------------------------------
(a)First National Bank
of Boston 5.63% - 5.67% 8/1/97 - 10/23/97 7,497
------------------------------------------------------------------------
MBNA America Bank N.A. 5.69% 8/4/97 2,000
------------------------------------------------------------------------
(a)Old Kent Bank 5.68% 8/1/97 500
------------------------------------------------------------------------
(a)PNC Bank, N.A. 5.62% 8/1/97 2,999
------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT -- 8.4%
(AVERAGE MATURITY: 21 DAYS) 20,494
------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.4%
(AVERAGE MATURITY: 33 DAYS) 243,516
------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES -- .6% 1,548
------------------------------------------------------------------------
NET ASSETS -- 100% $245,064
</TABLE>
<PAGE> 15
13
NOTES TO
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 July 31,
1997. The dates shown represent the demand date or the next interest rate
change date.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE> 16
14
REPORT OF
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES We have audited the accompanying statement of
AND SHAREHOLDERS assets and liabilities, including the portfolio of
ZURICH YIELDWISE investments, of Zurich YieldWise Money Fund as of
MONEY FUND July 31, 1997, and the related statements of
operations and changes in net assets and the
financial highlights for the period from April 17,
1997 (commencement of operations) to July 31, 1997.
These financial statements and financial highlights
are the responsibility of the Fund's management.
Our responsibility is to express an opinion on
these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards
require that we plan and perform the audit to
obtain reasonable assurance about whether the
financial statements and financial highlights are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial
statements. Our procedures included confirmation of
investments owned as of July 31, 1997, by
correspondence with the custodian. An audit also
includes assessing the accounting principles used
and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
<PAGE> 17
15
- --------------------------------------------------------------------------------
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of Zurich YieldWise Money Fund at July 31,
1997, the results of its operations, the changes in
its net assets and the financial highlights for the
period from April 17, 1997 (commencement of
operations) to July 31, 1997, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 17, 1997
<PAGE> 18
16
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
----------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
----------------------------------------------------------------------
July 31, 1997 (in thousands)
<S> <C>
----------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------
Investments, at amortized cost $243,516
----------------------------------------------------------------------
Cash 278
----------------------------------------------------------------------
Receivable for:
Fund shares sold 1,446
----------------------------------------------------------------------
Interest 238
----------------------------------------------------------------------
TOTAL ASSETS 245,478
----------------------------------------------------------------------
LIABILITIES AND NET ASSETS
----------------------------------------------------------------------
Payable for:
Dividends 215
----------------------------------------------------------------------
Fund shares redeemed 199
----------------------------------------------------------------------
TOTAL LIABILITIES 414
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $245,064
----------------------------------------------------------------------
THE PRICING OF SHARES
----------------------------------------------------------------------
Shares outstanding 245,064
----------------------------------------------------------------------
Net asset value and redemption price per share $1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE> 19
17
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the period from April 17, 1997 (commencement of operations) to July 31, 1997
(in thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME
- -------------------------------------------------------------------------------
<S> <C>
Interest income $1,395
- -------------------------------------------------------------------------------
Expenses:
Management fee 123
- -------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1
- -------------------------------------------------------------------------------
Reports to shareholders 11
- -------------------------------------------------------------------------------
Professional fees 13
- -------------------------------------------------------------------------------
Total expenses before expense waiver and absorption 148
- -------------------------------------------------------------------------------
Less expenses waived and absorbed by the investment
manager (148)
- -------------------------------------------------------------------------------
Total expenses absorbed by the Fund --
- -------------------------------------------------------------------------------
Net investment income $1,395
- -------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
For the period from April 17, 1997 (commencement of operations) to July 31,
1997 (in thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- -------------------------------------------------------------------------------
<S> <C>
Net investment income $1,395
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,395)
- -------------------------------------------------------------------------------
Capital share transactions
(dollar amounts and number of shares are the same):
Shares sold 267,580
- -------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 1,184
- -------------------------------------------------------------------------------
268,764
- -------------------------------------------------------------------------------
Shares redeemed (23,800)
- -------------------------------------------------------------------------------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS
AND TOTAL INCREASE IN NET ASSETS 244,964
- -------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------
Beginning of period 100
- -------------------------------------------------------------------------------
END OF PERIOD $245,064
</TABLE>
<PAGE> 20
18
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
- --------------------------------------------------------------------------------
Zurich YieldWise Money Fund (the Fund) is an
open-end, diversified, management investment company
organized as a business trust under the laws of
Massachusetts. The Fund invests in short-term
high-quality obligations of major banks and
corporations.
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Investments are stated at
amortized cost, which approximates market value. In the
event that a deviation of 1/2 of 1% or more exists
between a Fund's $1.00 per share net asset value,
calculated at amortized cost, and the net asset value
calculated by reference to market-based values, 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 should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME.
Investment transactions are accounted for on the trade
date (date the order to buy or sell is executed).
Interest income is recorded on the accrual basis and
includes amortization of premium and discount on
investments.
FUND SHARE VALUATION AND DIVIDENDS TO
SHAREHOLDERS. Fund shares are sold and redeemed on a
continuous basis at net asset value. On each day the
New York Stock Exchange is open for trading, the Fund
determines its net asset value per share (NAV) by
dividing the total value of the Fund's investments and
other assets, less liabilities, by the number of Fund
shares outstanding. The NAV is determined at 11:00
a.m., 1:00 p.m. and 3:00 p.m. Chicago time. The Fund
declares a daily dividend, equal to its net investment
income for that day, payable monthly. Net investment
income consists of all interest income plus (minus) all
realized gains (losses) on portfolio securities, minus
all expenses of the Fund.
FEDERAL INCOME TAXES. The Fund has complied
with the special provisions of the Internal Revenue
Code available to investment companies and therefore no
federal income tax provision is required.
<PAGE> 21
19
- --------------------------------------------------------------------------------
3. TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT AGREEMENT. The Fund has a management
agreement with Zurich Kemper Investments, Inc. (ZKI)
and pays a management fee at an annual rate of .50% of
the first $215 million of average daily net assets
declining to .25% of average daily net assets in excess
of $800 million. During the period ended July 31, 1997,
the Fund paid no management fees due to an expense
waiver by ZKI.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Zurich Kemper Service Company (ZKSvC) is the
shareholder service agent of the Fund.
OFFICERS AND TRUSTEES. Certain officers or
trustees of the Fund are also officers or directors of
ZKI. During the period ended July 31, 1997, the Fund
made no payments to its officers or trustees.
EXPENSE ABSORPTION. ZKI has agreed to
temporarily waive its management fee and reimburse or
pay 100% of the Fund's other operating expenses for a
period of at least six months from April 17, 1997
(commencement of operations).
<PAGE> 22
20
FINANCIAL HIGHLIGHTS
For the period from April 17, 1997 (commencement of operations) to July 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 1.00
- -------------------------------------------------------------------------------
Net investment income and dividends declared .02
- -------------------------------------------------------------------------------
Net asset value, end of period $ 1.00
- -------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 1.69%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------
Expenses after expense waiver --
- -------------------------------------------------------------------------------
Net investment income 5.66%
- -------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------
Expenses .60%
- -------------------------------------------------------------------------------
Net investment income 5.06%
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------
Net assets at end of period (IN THOUSANDS) $245,064
</TABLE>
Note: ZKI has agreed to temporarily waive all operating expenses of the Fund.
The Other Ratios to Average Net Assets are computed without this expense waiver.
- -------------------------------------------------------------------------------
FEDERAL TAX STATUS OF 1997 DIVIDENDS
- -------------------------------------------------------------------------------
All of the dividends are taxable as ordinary income. These dividends, whether
received in cash or reinvested in shares, must be included in your federal
income tax return and must be reported by the Fund to the Internal Revenue
Service in accordance with U.S. Treasury Department Regulations.
<PAGE> 23
21
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
STEPHEN B. TIMBERS CHARLES R. MANZONI, JR.
President and Trustee Vice President
DAVID W. BELIN JOHN E. NEAL
Trustee Vice President
LEWIS A. BURNHAM ROBERT C. PECK, JR.
Trustee Vice President
DONALD L. DUNAWAY FRANK J. RACHWALSKI, JR.
Trustee Vice President
ROBERT B. HOFFMAN PHILIP J. COLLORA
Trustee Vice President
and Secretary
DONALD R. JONES JEROME L. DUFFY
Trustee Treasurer
SHIRLEY D. PETERSON ELIZABETH C. WERTH
Trustee Assistant Secretary
WILLIAM P. SOMMERS
Trustee
- --------------------------------------------------------------------------------
INVESTMENT MANAGER ZURICH KEMPER INVESTMENTS, INC.
PRINCIPAL UNDERWRITER ZURICH KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza
Chicago, IL 60606
www.zurichfunds.com
SHAREHOLDER SERVICE AGENT ZURICH KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
CUSTODIAN AND TRANSFER INVESTORS FIDUCIARY TRUST COMPANY
AGENT 127 West 10th Street
Kansas City, MO 64105
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
<PAGE> 24
This report must be preceded or
accompanied by a Zurich YieldWise Money Fund prospectus.
[RECYCLED LOGO]
Printed in the U.S.A on recycled paper.
ZYMF-2 (9/97) 1036950 [ZURICH LOGO]
