<PAGE> 1
KEMPER MONEY MARKET FUND
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED JULY 31, 1995
"The rising interest rate environment
allowed each portfolio's yield to quickly
increase due to the reinvestment of its
short maturity investments at current
higher rate levels."
[KEMPER MUTUAL FUNDS LOGO]
<PAGE> 2
================================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
Performance Update 3
Terms to Know 5
Portfolio Statistics 6
Portfolio of Investments 7
Notes to Portfolio of Investments 15
Report from Independent Auditors 16
Financial Statements 17
Notes to Financial Statements 19
Financial Highlights 21
</TABLE>
================================================================================
AT A GLANCE
YIELD COMPARISON
12 month effective yields, which assume reinvestment of dividends, for the
period ended July 31, 1995.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
8/2/94 9/6 10/11 11/15 12/20 1/24 2/28 4/4 5/9 6/13 7/25/95
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KEMPER GOVERNMENT SECURITIES PORTFOLIO 4.02 4.27 4.48 4.68 5.36 5.51 5.75 5.76 5.78 5.67 5.55
- ------------------------------------------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUNDS 3.64 3.95 4.11 4.32 4.82 4.93 5.3 5.41 5.34 5.33 5.14
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: THE TAX EQUIVALENT YIELD FOR KEMPER'S TAX EXEMPT PORTFOLIO WAS 5.61%.
The tax-equivalent yield for the Tax-Exempt Portfolio is based on a marginal
federal income tax rate of 37.1%. Income from the Tax-Exempt Portfolio may be
subject to state and local taxes and, for some investors, a portion of income
may be subject to the alternative minimum tax.
*The portfolios are compared to their respective IBC/Donoghue category: The
Money Market Fund Average consists of all non-institutional taxable money market
funds investing in only first tier (highest rating) securities and tracked by
IBC/Donoghue; Government Money Market Fund Average includes all
non-institutional government money markets tracked by IBC/Donoghue; Tax-Free
Money Market Fund Average consists of all non-institutional tax-free money
markets tracked by IBC/Donoghue.
KEMPER MONEY MARKET FUND LIPPER RANKINGS
Compared to all other funds in the respective
Lipper Category**
- -------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT
MONEY MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------
<S> <C> <C> <C>
1-year #32 of #5 of #5 of
251 funds 106 funds 122 funds
- --------------------------------------------------------------
5-years #19 of #4 of #8 of
174 funds 67 funds 87 funds
- --------------------------------------------------------------
10-years #5 of #2 of N/A
106 funds 43 funds
- --------------------------------------------------------------
15-years #1 of N/A N/A
52 funds
- --------------------------------------------------------------
</TABLE>
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 value of $1.00 per share.
**Lipper Analytical Services, Inc. rankings reflect reinvestment of all
dividends for the periods indicated as of 7/31/95. Rankings are historical and
do not reflect future performance. The Lipper categories that are used for
comparison are as follows: Money Market Portfolio compared to the Lipper Money
Market Instrument Fund category, Government Securities Portfolio compared to the
Lipper Government Money Market Fund category and Tax-Exempt Portfolio compared
to the Lipper Tax-Exempt Money Market Fund category.
================================================================================
ABOUT YOUR REPORT
SHAREHOLDER REPORTS REVISED
Your Fund's annual report is one of your best sources for tracking the progress
of your investment. This report includes several changes that have been made in
an effort to provide additional information to you as well as explain
significant changes to the Fund over the last fiscal year. In addition, the
performance update includes commentary from your Fund's portfolio manager or
management team on what might be expected in the coming months. Specifically,
your report now includes:
- - Yield comparisons to IBC/Donoghue
- - A look at your Fund's portfolio composition
- - Terms you'd need to know related to your Fund
- - The days to maturity of the Fund's underlying investments
If you have any comments about the revised format or if you have suggestions
for additional changes, please write to:
Kemper Mutual Funds
Shareholder Communications
120 South LaSalle Street
Chicago, IL 60603
<PAGE> 3
===============================================================================
PERFORMANCE UPDATE
[PHOTO OF FRANK RACHWALSKI]
Frank Rachwalski is Senior Vice President of Kemper Financial Services, Inc. and
Portfolio Manager of Kemper Money Market Fund. Mr. Rachwalski holds a B.B.A. and
an M.B.A. degree from Loyola University.
KEMPER MONEY MARKET FUND PORTFOLIO MANAGER FRANK RACHWALSKI EXPLAINS HOW HE HAS
ADJUSTED THE FUND'S MATURITY TO INCREASE ITS YIELDS DURING A RISING INTEREST
RATE ENVIRONMENT.
Q Frank, it appears that the momentum of 1994 continued into 1995,
causing the Federal Reserve board to respond throughout the period. Would
you agree?
A Absolutely. We started this fiscal year, August 1, 1994, with an
economy that continued to grow at a pace that was exceptionally strong.
Growth in manufacturing and construction caused labor conditions to
improve, which in turn meant an increase in personal income and consumer
spending.
Concerned that the rate of growth might spark inflation, the Federal
Reserve (Fed) increased its federal funds rate -- the most sensitive
indicator of the direction of interest rates -- in August. This was only
one in a series of increases that totaled 1.75% during the fiscal year.
Unlike other markets, these interest rate increases had a positive impact
on the short-term market, namely improving investor returns.
Q HOW DID YOU MANAGE THE FUND IN THIS RISING RATE ENVIRONMENT? AND
WITH WHAT RESULT?
A Generally, we positioned the Fund defensively by reducing the
average maturity of each portfolio. This allowed the portfolios' yields to
quickly increase due to reinvestment of their short maturity investments in
a rising interest rate environment. In most cases, our average maturity
fell well below the average of our peers.
We continued this strategy until the early part of 1995 when the
economy began to show some signs of slowing. At that time, we repositioned
the portfolios and began increasing their average maturities. As always, we
emphasized high quality instruments throughout the period.
Q After a year of rising rates, what's ahead for the fund?
A As previously mentioned, the economy softened toward the end of
the fiscal year. In fact, the Fed slightly decreased the federal funds rate
in the beginning of July. While this meant somewhat lower money market
rates, we do not anticipate the Fed's move as the start of an extended
trend to lower rates. Instead, we view this decrease as a mid-cycle
adjustment. However, we will continue to emphasize longer portfolio average
maturities until the economy begins to show signs that it is growing at a
slightly faster pace.
3
<PAGE> 4
================================================================================
AVERAGE ANNUAL TOTAL RETURNS++
For periods ended July 31, 1995
<TABLE>
<CAPTION>
LIFE OF
1 - YEAR 5 - YEAR 10 YEAR PORTFOLIO
===================================================================================
<S> <C> <C> <C> <C> <C>
KEMPER MONEY
MARKET PORTFOLIO 5.34% 4.61% 6.10% 8.05% (Since 11/25/74)
- -----------------------------------------------------------------------------------
KEMPER GOVERNMENT
SECURITIES PORTFOLIO 5.36 4.58 5.97 6.90 (Since 11/30/81)
- -----------------------------------------------------------------------------------
KEMPER TAX-EXEMPT
PORTFOLIO 3.53 3.37 N/A 4.17 (Since 9/10/87)
- -----------------------------------------------------------------------------------
</TABLE>
YIELD COMPARISON
August 2, 1994 to July 25, 1995
KEMPER MONEY MARKET PORTFOLIO COMPARED TO FIRST TIER MONEY MARKET FUND AVERAGE
<TABLE>
<CAPTION>
8/2/94 9/6 10/11 11/15 12/20 1/24 2/28 4/4 5/9 6/13 7/25/95
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KEMPER GOVERNMENT SECURITIES PORTFOLIO 4.12 4.24 4.49 4.79 5.31 5.4 5.67 5.7 5.7 5.62 5.54
- ----------------------------------------------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUNDS 3.78 4.03 4.24 4.46 5.04 5.2 5.46 5.51 5.47 5.43 5.29
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
KEMPER GOVERNMENT SECURITIES PORTFOLIO COMPARED TO GOVERNMENT MONEY MARKET FUND
AVERAGE
<TABLE>
<CAPTION>
8/2/94 9/6 10/11 11/15 12/20 1/24 2/28 4/4 5/9 6/13 7/25/95
=======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KEMPER GOVERNMENT SECURITIES PORTFOLIO 4.02% 4.27% 4.48% 4.68% 5.36% 5.51% 5.75% 5.76% 5.78% 5.67% 5.55%
- -----------------------------------------------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUNDS 3.64% 3.95% 4.11% 4.32% 4.82% 4.93% 5.30% 5.41% 5.34% 5.33% 5.14%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns fluctuate.
++ Average annual total return measures net investment income and capital gain
or loss from portfolio investments, assuming reinvestment of all dividends.
During the periods noted, securities prices fluctuated. For additional
information, see the Prospectus and Statement of Additional Information and
the Financial Highlights at the end of this report.
4
<PAGE> 5
================================================================================
KEMPER TAX-EXEMPT PORTFOLIO COMPARED TO TAX-FREE MONEY MARKET FUND AVERAGE
[BAR GRAPH]
<TABLE>
=================================================
<S> <C>
KEMPER'S MONEY MARKET PORTFOLIO 5.34
- -------------------------------------------------
MONEY MARKET FUND AVERAGE* 5.09
- -------------------------------------------------
KEMPER'S GOVERNMENT SECURITIES PORTFOLIO 5.36
- -------------------------------------------------
GOVERNMENT MONEY MARKET FUND AVERAGE* 4.94
- -------------------------------------------------
KEMPER'S TAX-EXEMPT PORTFOLIO 3.53
- -------------------------------------------------
TAX-FREE MONEY MARKET FUND AVERAGE 3.14
- -------------------------------------------------
</TABLE>
AVERAGE WEIGHTED MATURITY
<TABLE>
<CAPTION>
ON 7/25/95
===================================================================================================
<S> <C>
MONEY MARKET PORTFOLIO 35 DAYS
- ---------------------------------------------------------------------------------------------------
FIRST TIER MONEY MARKET FUND AVERAGE+ 59
- ---------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO 44
--------------------------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND AVERAGE+ 47
- ---------------------------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO 37
- ---------------------------------------------------------------------------------------------------
TAX-FREE MONEY MARKET FUNDAVERAGE+ 52
- ---------------------------------------------------------------------------------------------------
</TABLE>
Please note: the tax-equivalent yield for Kemper's Tax-Exempt Portfolio was
5.79% based on an annualized 7-day yield on 7/25/95 (at a marginal federal
income tax rate of 37.1%).
+ The portfolios are compared to their respective IBC/Donoghue category: The
First Tier Money Market Fund Average consists of all non-institutional
taxable money market funds investing in only first tier (highest rating)
securities and tracked by IBC/Donoghue; Government Money Market Fund Average
includes all non-institutional government money markets tracked by
IBC/Donoghue; Tax-Free Money Market Fund Average consists of all
non-institutional tax-free money markets tracked by IBC/Donoghue.
================================================================================
TERMS TO KNOW
FEDERAL FUNDS RATE - the interest rate banks charge each other for overnight
loans that are needed to meet reserve requirements. Often considered the most
sensitive indicator of the direction of interest rates.
AVERAGE MATURITY - the weighted average number of days in which each security in
the portfolio matures. A variable or floating rate security may at times be
treated as having a maturity that is shorter than on the face of the instrument.
TENDER SECURITIES - a special term applying to tax-exempt issues that are
subject to repayment on a specified date prior to their final maturity.
REPURCHASE AGREEMENTS (REPOS) - arrangements under which a security is bought
under an agreement that the seller will repurchase that security at an agreed
upon price, time and yield to the buyer.
5
<PAGE> 6
================================================================================
PORTFOLIO STATISTICS
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO ON 7/31/95
================================================================================
<S> <C>
COMMERCIAL PAPER 74%
- --------------------------------------------------------------------------------
DOMESTIC CDs 12
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 7
- --------------------------------------------------------------------------------
OTHER 7
- --------------------------------------------------------------------------------
100%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES PORTOFOLIO ON 7/31/95
================================================================================
<S> <C>
FEDERAL AGENCIES 56%
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 43
- --------------------------------------------------------------------------------
U.S. TREASURIES 1
- --------------------------------------------------------------------------------
100%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TAX-EXEMPT PORTFOLIO ON 7/31/95
================================================================================
<S> <C>
TAX-EXEMPT COMMERCIAL PAPER 51%
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES 42
- --------------------------------------------------------------------------------
TENDER SECURITIES 3
- --------------------------------------------------------------------------------
GENERAL MARKET OBLIGATIONS 4
- --------------------------------------------------------------------------------
100%
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
================================================================================
PORTFOLIO OF INVESTMENTS
MONEY MARKET PORTFOLIO
Investments at July 31, 1995
(Value in thousands)
<TABLE>
<CAPTION>
CORPORATE OBLIGATIONS VALUE
================================================================================
<S> <C>
BANKING -- 4.4%
Commonwealth Bank of Australia
5.89%, 9/22/95 $ 49,581
(a) Keycorp
5.88%, 8/22/95 15,000
Nordbanken North America, Inc.
5.79%, 10/13/95 49,422
Postipankki U.S. Inc.
5.97%, 8/16/95 49,877
Skandinaviska Enskilda Banken
Funding Inc.
5.73%, 10/11/95 14,833
=======================================================================
178,713
- --------------------------------------------------------------------------------
CAPITAL AND MORTGAGE LENDING -- 2.3%
Countrywide Funding Corporation
5.81%-5.83%, 8/21/95-8/28/95 39,843
(b) GMAC Mortgage Corporation of
Pennsylvania
6.16%, 8/31/95 54,719
=======================================================================
94,562
- --------------------------------------------------------------------------------
CAPTIVE BUSINESS FINANCE -- 12%
(a) American Honda Finance
Corporation
6.19%, 8/7/95 44,995
Asset Securitization Cooperative
Corporation
5.76%, 10/3/95 49,501
Budget Funding Corporation
5.78%, 9/22/95 39,669
Chrysler Financial Corporation
6.04%, 8/30/95 49,760
(a) Deere (John) Capital Corporation
5.88%, 8/16/95 25,000
(a) Emprise I Corporation
6.23%, 9/22/95 45,989
Enterprise Capital Funding
Corporation
6.09%, 8/14/95 19,957
(a) Finova Capital Corporation
6.16%, 9/15/95 50,000
Ford Motor Credit Company
5.90%-6.00%, 8/29/95-9/22/95 39,759
Hanson Finance (UK) PLC
5.86%, 10/12/95 24,711
National Fleet Funding
6.03%, 8/4/95 49,975
Orix America Inc.
5.81%-5.99%, 8/30/95-9/7/95 19,893
USL Capital Corporation
6.01%, 8/11/95 24,959
=======================================================================
484,168
- --------------------------------------------------------------------------------
CONSUMER FINANCING -- 9.7%
American Express Credit Corporation
5.75%-5.94%, 8/17/95-10/17/95 49,631
American General Finance
Corporation
5.78%, 9/20/95 24,801
Associates Corporation of
North America
5.73%, 10/5/95 49,490
Beneficial Corporation
5.96%, 9/15/95 39,706
General Electric Capital Corporation
5.97%, 9/1/95 49,746
Household Finance Corporation
5.75%-5.89%, 9/12/95-10/12/95 54,513
JTB Finance Americas
5.86%, 9/27/95 24,770
Sears Roebuck Acceptance Corp.
6.01%, 8/7/95 49,950
Sierra Funding Corporation
5.85%-5.88%, 10/25/95-10/31/95 49,294
=======================================================================
391,901
CONSUMER PRODUCTS AND SERVICES -- 5.3%
American Home Products Corporation
5.82%-6.01%, 8/28/95-10/23/95 49,558
Coca-Cola Enterprises Inc.
6.01%, 8/11/95-8/18/95 49,888
(a) PepsiCo, Inc.
5.76%, 8/16/95 49,993
Quaker Oats Company
5.99%-6.01%, 8/22/95-9/13/95 64,721
=======================================================================
214,160
CORPORATE FINANCING -- 10.2%
(a) Beta Finance Corporation
5.70%, 8/1/95 45,000
Broadway Capital Corporation
5.76%, 10/16/95 24,700
Clipper Receivables Corporation
5.82%-6.02%, 8/21/95-8/25/95 64,754
GTE Finance Corporation
5.83%, 8/23/95 24,911
Ranger Funding Corporation
5.78%, 10/16/95 24,699
Receivables Capital Corporation
5.76%-5.79%, 8/28/95-10/12/95 49,608
(a) Sanwa Business Credit Corporation
6.06%-6.15%, 8/7/95-8/9/95 124,997
Windmill Funding Corporation
5.79%, 9/6/95 49,713
=======================================================================
408,382
</TABLE>
7
<PAGE> 8
================================================================================
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
VALUE
================================================================================
<S> <C>
ENERGY AND UTILIITIES -- 1.9%
Brazos River Authority, Texas
5.76%, 10/18/95 $ 50,000
New Hampshire Industrial
Development Authority
5.80%, 10/26/95 25,000
=======================================================================
75,000
- --------------------------------------------------------------------------------
FINANCIAL SERVICES -- 11.2%
(a) Bear Stearns Companies Inc.
6.00%-6.15%, 8/8/95-8/21/95 105,000
(a) CS First Boston, Inc.
5.93%, 8/9/95 50,000
(a) Goldman, Sachs & Co.
5.95%, 8/25/95 75,000
(a)(b) Lehman Brothers Holdings Inc.
6.00%, 8/16/95 50,000
(a) Morgan Stanley Group Inc.
5.98%-6.06%, 8/16/95-8/23/95 35,003
Nomura Holding America Inc.
5.80%-5.92%, 9/20/95-11/1/95 44,473
(a) Salomon Inc.
6.42%, 8/1/95 90,000
=======================================================================
449,476
- --------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS -- 1.7%
(a) Kingdom of Sweden
5.63%, 10/11/95 44,986
Province of Quebec
5.85%, 10/4/95 24,744
=======================================================================
69,730
- --------------------------------------------------------------------------------
INFORMATION SERVICES -- 1.2%
GTE Corporation
5.86%, 8/29/95 14,932
Nynex Corporation
5.81%-6.01%, 8/29/95-10/24/95 34,751
=======================================================================
49,683
- --------------------------------------------------------------------------------
MANUFACTURING AND INDUSTRIAL PRODUCTS -- 1.4%
Bridgestone/Firestone, Inc.
5.81%, 8/18/95 29,919
Cooper Industries, Inc.
5.81%, 8/21/95 24,920
=======================================================================
54,839
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS -- 2.5%
(a)(b)(c) Orange County, California
7.02%, 6/30/96 (maturity),
$100,000,000 (cost and par) 76,000
Letter of Credit from The Bank of
New York 24,000
=======================================================================
100,000
- --------------------------------------------------------------------------------
RECEIVABLES FINANCING -- 10.5%
Cooperative Receivables Corporation
5.76%, 9/19/95 39,690
Dynamic Funding Corporation
5.85%-5.97%, 10/2/95-10/31/95 49,383
ESC Securitization, Inc.
5.96%, 9/20/95-9/21/95 49,588
Heller Financial, Inc.
6.04%, 9/27/95 24,765
Heller International Corporation
6.11%, 8/7/95 24,975
Jet Funding Corporation
5.85%, 10/31/95 49,272
Monte Rosa Capital Corporation
5.80%, 9/8/95 24,848
SFC (USA) Inc.
6.04%, 8/31/95 49,752
STRAIT Capital Corporation
5.84%-6.05%, 8/31/95-10/31/95 59,346
Strategic Asset Funding Corporation
6.04%, 8/31/95 24,876
Working Capital Management Co. L.P.
5.84%, 9/25/95 24,779
=======================================================================
421,274
=======================================================================
TOTAL CORPORATE
OBLIGATIONS -- 74.3%
(average maturity: 36 days) 2,991,888
=======================================================================
================================================================================
BANK OBLIGATIONS
CERTIFICATES OF DEPOSIT --
U.S. BANKS -- 10.3
Bank of America Illinois
5.75%, 10/19/95 40,001
Bank of New York Company Inc.
6.07%, 8/8/95 25,000
(a) Boatmen's Credit Card Bank
6.06%, 9/5/95 25,000
(a) First Bank (S.D.)
5.88%, 8/16/95 14,999
(a) First Chicago Corporation
5.74%-6.35%, 8/1/95-3/4/96 40,002
(a) First National Bank of Boston
6.00%-6.22%, 8/3/95-10/2/95 50,000
MBNA America Bank N.A.
6.18%-6.25%, 8/10/95-8/31/95 40,000
Mellon Bank Corporation
5.84%, 5/31/96 15,016
(a) Old Kent Bank & Trust Co.
5.87%, 8/30/95 25,000
(a) PNC Bank Corporation
5.68%, 8/1/95 50,000
(a) Shawmut Bank Connecticut, N.A.
5.74%-6.03%, 8/1/95-9/25/95 50,004
Wachovia Corporation
6.00%-6.81%, 8/7/95-8/18/95 39,994
=======================================================================
415,016
</TABLE>
8
<PAGE> 9
================================================================================
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
VALUE
- --------------------------------------------------------------------------------
<S> <C>
CERTIFICATES OF DEPOSIT --
FOREIGN BANKS -- 4.4%
Canadian Imperial Bank of Commerce
5.75%, 10/17/95 $ 50,000
Chemical Bank of Canada
5.75%, 9/18/95 25,000
Citibank Canada
5.76%-5.78%, 9/21/95-9/26/95 50,000
(a) Kansallis Osake Pankki
6.01%, 8/1/95 49,953
=======================================================================
174,953
- --------------------------------------------------------------------------------
TIME DEPOSITS --
(b) CANADIAN BANKS -- 3.7%
Bank of Montreal
5.75%, 10/6/95 50,000
Bank of Nova Scotia
5.94%, 8/14/95 50,000
Toronto Dominion Bank
5.75%, 9/18/95 50,000
=======================================================================
150,000
=======================================================================
TOTAL BANK OBLIGATIONS -- 18.4%
(average maturity: 41 days) 739,969
=======================================================================
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
(Dated 7/95, collateralized by Federal
Home Loan Mortgage Corporation,
Federal National Mortgage Association
and U.S. Treasury Securities)
Donaldson, Lufkin, & Jenrette
Securities Corporation
(held at Chemical Bank)
5.85%, 8/18/95 30,000
Goldman, Sachs & Co.
(held at The Bank of New York)
5.74%-5.75%, 9/11/95-10/24/95 225,000
Lehman Government Securities, Inc.
(held at Chemical Bank)
5.99%, 8/7/95 31,000
=======================================================================
TOTAL REPURCHASE AGREEMENTS --
7.1%
(average maturity: 49 days) 286,000
=======================================================================
TOTAL INVESTMENTS -- 99.8%
(average maturity: 38 days) 4,017,857
=======================================================================
CASH AND OTHER ASSETS,
LESS LIABILITIES -- .2% 7,241
=======================================================================
NET ASSETS -- 100% 4,025,098
=======================================================================
</TABLE>
See accompanying Notes to Portfolios of Investments.
9
<PAGE> 10
================================================================================
PORTFOLIO OF INVESTMENTS
GOVERNMENT SECURITIES PORTFOLIO
Investments at July 31, 1995
(Value in thousands)
<TABLE>
<CAPTION>
VALUE
================================================================================
<S> <C>
U.S. TREASURY NOTES -- .7%
(AVERAGE MATURITY: 288 DAYS)
5.75%, 5/15/96 $ 4,048
SHORT-TERM NOTES (ISSUED OR
GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES)
(a) Agency for International
Development
Government of Israel
5.75%, 8/1/95 7,071
(a) Export-Import Bank of the
United States
Cathay Pacific Airways Limited
5.81%, 8/15/95 8,268
KA Leasing, LTD.
5.81%, 8/15/95 8,699
Kuwait Investment Authority
5.65%, 8/15/95 19,260
VARIG Brazilian Airlines
5.81%, 10/16/95 12,255
(a) Federal Farm Credit Banks
5.81%, 8/25/95 1,049
Federal Home Loan Bank
(a) 6.00%-6.14%, 8/1/95-8/2/95 10,898
5.88%, 5/15/96 24,216
Federal Home Loan Bank
Downey Savings & Loan
5.66%, 3/8/96 4,833
Fidelity Federal Bank
5.88%-5.96%, 8/30/95-9/26/95 15,694
(a) Federal Home Loan Mortgage
Corporation
5.95%, 8/15/95 12,496
Federal National Mortgage
Association
(a) 6.24%, 8/1/95 34,501
5.75%-6.01%, 8/4/95-6/21/96 108,194
(a) Overseas Private
Investment Corporation
International Paper Company
5.76%, 10/16/95 6,000
(a) Student Loan Marketing Association
5.83%-6.08%, 8/1/95-12/30/95 61,993
=======================================================================
TOTAL SHORT-TERM NOTES -- 55.6%
(average maturity: 54 days) 335,427
=======================================================================
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
(Dated 5/95-7/95, collateralized
by Federal Home Loan Mortgage
Corporation, Federal National
Mortgage Association and
Government National Mortgage
Association Securities)
Bear, Stearns & Co. Inc.
5.83%, 8/2/95 51,000
Chase Manhattan Corporation
(held at Chemical Bank)
6.00%, 8/1/95 28,000
Donaldson, Lufkin & Jenrette
Securities Corporation
(held at Chemical Bank)
5.85%, 8/21/95 25,000
Goldman, Sachs & Co.
(held at The Bank of New York)
5.88%, 9/20/95 40,000
Lehman Government Securities Inc.
(held at Chemical Bank)
5.99%, 8/7/95 24,000
Nomura Securities International, Inc.
5.85%, 9/1/95 4,000
Nomura Securities International, Inc.
(held at The Bank of New York)
5.85%, 9/1/95-9/14/95 77,000
Smith Barney Shearson Inc.
5.80%, 8/24/95 11,000
=======================================================================
TOTAL REPURCHASE
AGREEMENTS -- 43.0%
(average maturity: 24 days) 260,000
=======================================================================
TOTAL INVESTMENTS -- 99.3%
(average maturity: 43 days) 599,475
=======================================================================
CASH AND OTHER ASSETS,
LESS LIABILITIES -- .7% 4,126
=======================================================================
NET ASSETS -- 100% $603,601
=======================================================================
</TABLE>
See accompanying Notes to Portfolios of Investments.
10
<PAGE> 11
================================================================================
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT PORTFOLIO
Investments at July 31, 1995
(Value in thousands)
<TABLE>
<CAPTION>
(a) VARIABLE RATE DEMAND SECURITIES VALUE
- --------------------------------------------------------------------------------
<S> <C>
ALABAMA
Birmingham
Medical Clinic Revenue
3.90% $ 6,680
ARIZONA
Apache County
Industrial Development Authority
3.85% 10,000
CALIFORNIA
Alameda
Revenue
5.80% 7,500
Costa Mesa
Performing Arts Center
4.00% 4,650
Educational Facilities Authority
4.25% 1,300
Los Angeles
Harbor Improvement Corporation
3.95% 8,000
Regional Airports Improvement Corporation
4.70% 5,000
DISTRICT OF COLUMBIA
General Obligation
4.35% 10,400
FLORIDA
Dade County
Aviation Facilities Revenue
3.90% 8,400
Housing Finance Agency
3.80% 9,750
Naples
Hospital Revenue
3.90% 8,000
GEORGIA
Fulton County
Development Authority
3.90% 10,445
Wayne County
Solid Waste Management Authority
4.45% 3,000
ILLINOIS
Chicago
O'Hare International Airport
Special Facility Revenue
4.80% 9,000
Development Finance Authority
4.17% 9,395
Educational Facilities Authority
3.85% 11,900
Mundelein
Industrial Development Revenue
4.05% 6,500
Richmond
Industrial Development Revenue
4.25% 4,000
INDIANA
Health Facility Financing Authority
3.95% 7,235
Rockport
Pollution Control Revenue
3.90% 13,745
IOWA
Louisa County
Pollution Control Revenue
3.85% 6,300
KENTUCKY
Development Finance Authority
3.90% 8,160
Higher Education Student Loan Corporation
4.10% 5,000
Lexington-Fayette Urban County Government
4.30% 5,300
Todd County
Industrial Development Revenue
4.00% 2,900
LOUISIANA
Caddo Parish
Industrial Development Board
4.30% 2,800
Iberville
Pollution Control Revenue
3.95% 3,200
Jefferson Parish
Hospital Revenue
4.05% 7,200
</TABLE>
11
<PAGE> 12
================================================================================
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
VALUE
- --------------------------------------------------------------------------------
<S> <C>
MARYLAND
Baltimore County
Multi-Family Housing Revenue
4.10% $3,900
Department of Housing and Community Development
Mutli-Family Development Revenue
4.00% 5,510
MICHIGAN
Dearborn
Economic Development Corporation
3.80% 7,800
MINNESOTA
Minneapolis
Community Development Agency
3.95% 4,455
MISSOURI
Kirksville
Industrial Development Agency
4.30% 4,200
NEVADA
Clark County
Industrial Development Revenue
4.00% 4,000
Community Industrial
Development Revenue
4.00% 4,650
NORTH CAROLINA
Lenoir County
Pollution Control Financing Authority
3.90% 5,000
OHIO
Pollution Control Revenue
4.00% 2,500
PENNSYLVANIA
Berks County
Redevelopment Authority
4.20% 8,000
Delaware Valley
Regional Finance Authority
3.95% 21,500
Philadelphia
Industrial Development Authority
3.90% 5,400
Redevelopment Authority
3.95% 4,000
TENNESSEE
Clarksville
Public Building Authority
3.90% 5,000
Maury County
Water Facility Revenue
4.25% 2,500
Nashville and Davidson County
Multi-Family Housing Revenue
3.90% 4,000
TEXAS
Calhoun County
Industrial Development Authority
4.20% 12,000
Gulf Coast
Industrial Development Authority
3.95% 1,800
Trinity River Authority
4.10% 9,200
VIRGINIA
Louisa County
Industrial Development Authority
3.90% 5,000
------------------------------------------------------------------------
TOTAL VARIABLE RATE
DEMAND SECURITIES -- 41.6%
(average maturity: 6 days) 316,175
------------------------------------------------------------------------
OTHER SECURITIES
ALABAMA
Mobile
Port City Medical Clinic Board
3.95%,11/14/95 11,850
ALASKA
Valdez
Marine Terminal Revenue Refunding
3.85%-4.15%, 9/13/95-9/22/95 16,875
CALIFORNIA
Pollution Control Revenue
4.15%, 9/11/95 5,000
COLORADO
Arapahoe County
Capital Improvement Revenue
4.45%, 8/31/95 15,000
Denver City and County
Airport System Revenue
3.80%-4.30%, 8/21/95-9/27/95 22,900
Platte River Power Authority
3.75%, 11/14/95 4,000
</TABLE>
12
<PAGE> 13
================================================================================
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
VALUE
- --------------------------------------------------------------------------------
<S> <C>
DISTRICT OF COLUMBIA
Student Loan Revenue
4.10%, 7/01/96 $ 6,000
FLORIDA
First Municipal Loan Council
4.20%, 9/15/95 4,800
Hillsborough County
Aviation Authority
4.25%, 9/15/95 10,000
Pinellas County
Educational Facilities Authority
4.15%, 8/09/95 5,000
Sunshine State Government Financing Commission
4.15%, 9/15/95-9/19/95 13,300
GEORGIA
Municipal Electric Authority
3.95%-4.25%, 8/22/95-11/09/95 27,135
Municipal Gas Authority
3.90%, 9/20/95 1,975
ILLINOIS
Chicago
General Obligation
4.30%, 9/21/95 5,000
Development Finance Authority
4.85%, 12/01/95 2,000
INDIANA
Mt. Vernon
Pollution Control and Solid Waste Disposal Revenue
3.85%, 9/22/95 4,500
Sullivan
Pollution Control Revenue
3.85%-4.20%, 9/18/95-9/22/95 10,745
KANSAS
Burlington
Pollution Control Refunding and Improvement Revenue
4.20%-4.25%, 9/13/95-9/19/95 3,200
Pollution Control Revenue
3.85%, 9/22/95 1,000
KENTUCKY
Danville
Multi-City Lease Revenue
4.30%, 9/19/95 11,000
Pendleton County
Multi-County Lease Revenue
3.95%-4.20%, 9/14/95-9/20/95 11,700
LOUISANA
Public Facilities Authority
4.20%, 9/13/95 8,000
MARYLAND
Anne Arundel County
Port Facilities Revenue
4.20%, 9/12/95-9/19/95 18,000
MASSACHUSETTS
Pollution Control Revenue Refunding
4.10%-4.20%, 8/17/95-9/12/95 15,900
MISSISSIPPI
Claiborne County
Pollution Control Revenue
4.20%, 9/19/95 7,400
MISSOURI
Health Facilities Revenue
4.20%, 9/14/95 4,000
NEBRASKA
Public Power District
3.90%-4.15%, 8/17/95-9/15/95 10,000
NEW HAMPSHIRE
Business Finance Authority
4.30%, 8/22/95 2,400
NEW YORK
Dormitory Authority
3.80%, 11/13/95 6,000
Nassau County
Revenue Anticipation Notes
3.75%, 3/15/96 3,009
Tax Anticipation Notes
5.10%, 9/28/95 7,804
New York City
General Obligation
4.90%, 8/01/95 7,000
NORTH CAROLINA
Eastern Municipal Power Agency
3.95%-4.10%, 8/14/95-8/23/95 14,000
OHIO
Air Quality Development Authority
4.15%-4.20%, 9/13/95-9/19/95 18,875
Water Development Authority
4.20%, 9/19/95 2,800
</TABLE>
13
<PAGE> 14
================================================================================
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
VALUE
- --------------------------------------------------------------------------------
<S> <C>
PENNSYLVANIA
Montgomery County
Industrial Development Authority
3.95%, 8/23/95 $ 8,000
Tax Anticipation Notes
3.95%, 6/28/96 6,531
TEXAS
Austin
Combined Utility Systems
3.93%, 9/14/95 9,100
Brazoria County
Brazos River Harbor Navigation
4.30%, 8/08/95 5,400
Department of Housing and Community Affairs
4.15%, 8/22/95 5,000
Harris County
Health Facilities Development Corporation
4.00%, 9/19/95 6,300
Port Development Corporation
4.00%, 8/21/95 7,250
Public Finance Authority
4.20%, 9/07/95 10,000
San Antonio
Electric and Gas Systems
4.15%-4.20%, 9/11/95-9/14/95 28,500
Tax & Revenue Anticipation Notes
4.20%, 8/31/95 8,605
UTAH
Tooele County
Waste Treatment Revenue
4.35%, 10/18/95 6,000
VIRGINIA
Norfolk
Industrial Development Authority
3.80%, 9/22/95 5,885
Prince William County
Industrial Development Authority
4.10%, 8/22/95 4,700
York County
Industrial Development Authority
4.20%, 9/12/95 12,800
WYOMING
Sweetwater County
Pacific Central Revenue
4.15%-4.20%, 8/17/95-9/14/95 4,800
========================================================================
TOTAL OTHER SECURITIES--58.8%
(average maturity: 47 days) 447,039
========================================================================
TOTAL INVESTMENTS--100.4%
(average maturity: 34 days) 763,214
========================================================================
LIABILITIES, LESS CASH AND
OTHER ASSETS--.4% (3,071)
========================================================================
NET ASSETS--100% $760,143
========================================================================
</TABLE>
See accompanying Notes to Portfolios of Investments.
14
<PAGE> 15
================================================================================
PORTFOLIO OF INVESTMENTS
NOTES TO PORTFOLIOS OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, except as
described in Note (c), 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, 1995. The dates shown represent the demand date or next
interest rate change date. Securities in the Tax-Exempt Portfolio shown
without a date are payable within five business days and are backed by
credit support agreements from banks or insurance institutions.
(b) Illiquid securities. At July 31, 1995, the aggregate value of
illiquid securities was $354,719,000 in the Money Market Portfolio,
which represented 8.8% of net assets.
(c) See Note (3) of the Notes to Financial Statements.
See accompanying Notes to Financial Statements.
15
<PAGE> 16
================================================================================
REPORT OF INDEPENDENT AUDITORS
BOARD OF TRUSTEES AND SHAREHOLDERS KEMPER MONEY MARKET FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of the Money Market, Government
Securities and Tax-Exempt Portfolios, comprising Kemper Money Market Fund, as of
July 31, 1995, and the related statements of operations for the year then ended
and changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the fiscal periods since 1991. 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 audits.
We conducted our audits 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, 1995, by correspondence with the custodian and brokers. 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios comprising Kemper Money Market Fund at July 31, 1995, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended and the financial
highlights for each of the fiscal periods since 1991, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 15, 1995
16
<PAGE> 17
================================================================================
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1995
(in thousands)
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments, at amortized cost:
Short-term securities $ 3,731,857 339,475 763,214
- --------------------------------------------------------------------------------------------------------------------
Repurchase agreements 286,000 260,000 --
- --------------------------------------------------------------------------------------------------------------------
Cash 5,905 2,420 --
- --------------------------------------------------------------------------------------------------------------------
Receivable for:
Interest 11,980 3,293 5,626
- --------------------------------------------------------------------------------------------------------------------
Shares of the portfolio sold 11,288 1,196 932
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 4,047,030 606,384 769,772
====================================================================================================================
LIABILITIES AND NET ASSETS
Cash overdraft -- -- 1,801
- --------------------------------------------------------------------------------------------------------------------
Payable for:
Dividends 4,229 547 467
- --------------------------------------------------------------------------------------------------------------------
Shares of the portfolio redeemed 15,273 1,928 2,298
- --------------------------------------------------------------------------------------------------------------------
Securities purchased -- -- 4,651
- --------------------------------------------------------------------------------------------------------------------
Management fee 902 135 172
- --------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1,086 111 127
- --------------------------------------------------------------------------------------------------------------------
Other 442 62 113
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 21,932 2,783 9,629
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 4,025,098 603,601 760,143
====================================================================================================================
ANALYSIS OF NET ASSETS
Paid in capital $ 4,053,426 603,601 760,143
- --------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on investments (28,328) -- --
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $4,025,098 603,601 760,143
====================================================================================================================
THE PRICING OF SHARES
Shares outstanding, no par value 4,025,098 603,601 760,143
- --------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE> 18
===============================================================================
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended July 31, 1995
(in thousands)
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INVESTMENT INCOME
Interest income $231,048 34,371 29,687
- --------------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 10,924 1,637 2,072
- --------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 9,098 954 806
- --------------------------------------------------------------------------------------------------------------------
Reports to shareholders 575 90 99
- --------------------------------------------------------------------------------------------------------------------
Registration costs 81 68 56
- --------------------------------------------------------------------------------------------------------------------
Professional fees 133 16 19
- --------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 138 16 44
- --------------------------------------------------------------------------------------------------------------------
Total expenses 20,949 2,781 3,096
- --------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 210,099 31,590 26,591
- --------------------------------------------------------------------------------------------------------------------
Change in unrealized depreciation on investments (28,328) -- --
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $181,771 31,590 26,591
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Years ended July 31, 1995 and 1994
(in thousands)
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
----------------- -------------- ---------------
1995 1994 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL ACTIVITY
Net investment income $ 210,099 133,554 31,590 21,561 26,591 17,957
- --------------------------------------------------------------------------------------------------------------------
Change in unrealized depreciation (28,328) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Capital contribution from investment
manager 28,328 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from
net investment income (210,099) (133,554) (31,590) (21,561) (26,591) (17,957)
- --------------------------------------------------------------------------------------------------------------------
Capital share transactions
(dollar amounts and number of
shares are the same):
Shares sold 5,434,790 5,726,409 808,318 975,931 816,602 853,432
- --------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 200,429 128,319 29,447 19,778 25,523 17,299
- --------------------------------------------------------------------------------------------------------------------
5,635,219 5,854,728 837,765 995,709 842,125 870,731
- --------------------------------------------------------------------------------------------------------------------
Less shares redeemed 5,758,910 6,205,869 941,532 982,644 874,113 837,230
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM CAPITAL
SHARE TRANSACTIONS AND
TOTAL INCREASE (DECREASE) IN NET ASSETS (123,691) (351,141) (103,767) 13,065 (31,988) 33,501
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 4,148,789 4,499,930 707,368 694,303 792,131 758,630
- --------------------------------------------------------------------------------------------------------------------
END OF YEAR $4,025,098 4,148,789 603,601 707,368 760,143 792,131
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
===============================================================================
- -------------------------------------------------------------------------------
1 DESCRIPTION OF THE FUND The Fund currently offers three series of shares
(Portfolios) -- the Money Portfolio, the
Government Securities Portfolio and the Tax-Exempt
Portfolio. The Money Market Portfolio invests
primarily in short-term high quality obligations
of major banks and corporations. The Government
Securities Portfolio invests exclusively in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and
repurchase agreements thereon. The Tax-Exempt
Portfolio invests in short-term high quality
municipal securities.30
- -------------------------------------------------------------------------------
2 SIGNIFICANT INVESTMENT VALUATION. Investments are stated at
ACCOUNTING POLICIES amortized cost, which approximates market value.
In the event that a deviation of 1/2 of 1% or more
exists between a Portfolio'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.
REPURCHASE AGREEMENTS. Repurchase agreements are
fully collateralized by U.S. Treasury or
Government agency securities. All collateral is
held at the Fund's custodian bank, unless
otherwise indicated, and is monitored daily by the
Fund so that its market value exceeds the carrying
value of the repurchase agreement.
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 AND DIVIDENDS TO
SHAREHOLDERS. Fund shares are sold and redeemed on
a continuous basis at net asset value. On each day
that 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 at
11:00 a.m., 1:00 p.m. and 3:00 p.m. Chicago time
for the Money Market and Government Securities
Portfolios and at 11:00 a.m. and 3:00 p.m. Chicago
time for the Tax-Exempt Portfolio. Each Portfolio
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
Portfolio.
FEDERAL INCOME TAXES. Each Portfolio has complied
with the special provisions of the Internal
Revenue Code available to investment companies and
therefore no federal income tax provision is
required.
19
<PAGE> 20
================================================================================
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3 TRANSACTIONS MANAGEMENT AGREEMENT. The Fund has a management
WITH AFFILIATES agreement with Kemper Financial Services, Inc.
(KFS) and pays a management fee at an annual rate
of .50% of the first $215 million of average daily
net assets declining gradually to .25% of average
daily net assets in excess of $800 million. The
Fund incurred a management fee of $14,633,000 for
the year ended July 31, 1995.
Kemper Asset Holdings, Inc. (KAHI), a subsidiary
of Kemper Corporation, the parent company of
Kemper Financial Services, Inc., has arranged for
the issuance of a $107,081,000 irrevocable letter
of credit from The Bank of New York for the
benefit of the Fund. The letter of credit supports
the payment of principal and interest on the
Orange County, California obligation held in the
Money Market Portfolio. The Fund and KAHI are
parties to an agreement related to the letter of
credit which provides, among other things, that,
in connection with a payment of principal or
interest under the letter of credit, the Fund will
transfer to KAHI any proceeds received under the
Orange County obligation.
CUSTODIAN AND TRANSFER AGENT AGREEMENTS. The Fund
has a custodian agreement and a transfer agent
agreement with Investors Fiduciary Trust Company
(IFTC), which was 50% owned by KFS until
January 31, 1995, when KFS completed the sale of
IFTC to a third party. For the year ended July 31,
1995, the Fund incurred custodian and transfer
agent fees of $8,086,000 (excluding related
expenses). Pursuant to a services agreement with
IFTC, Kemper Service Company (KSvC), an affiliate
of KFS, is the Shareholder Service Agent of the
Fund. For the year ended July 31, 1995, IFTC
remitted shareholder service fees of $7,656,000 to
KSVC.
OFFICERS AND TRUSTEES. Certain officers or
trustees of the Fund are also officers or
directors of KFS. During the year ended July 31,
1995, the Fund made no payments to its officers
and incurred trustees' fees of $72,000 to
independent trustees.
20
<PAGE> 21
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
YEAR ENDED JULY 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends
declared .05 .03 .03 .04 .07
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.34% 3.20 2.96 4.45 7.19
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses .52% .52 .52 .49 .46
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 5.19 3.14 2.92 4.42 6.94
- ---------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of year
(in thousands) $4,025,098 4,148,789 4,499,930 5,664,194 7,553,950
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES PORTFOLIO
YEAR ENDED JULY 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends
declared .05 .03 .03 .04 .07
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.36% 3.20 2.97 4.50 6.95
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses .46% .47 .45 .43 .43
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 5.21 3.15 2.94 4.44 6.65
- ---------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of year
(in thousands) $603,601 707,368 694,303 926,328 1,126,417
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: The Money Market Portfolio's total return for the year ended July 31, 1995
includes the effect of a capital contribution from the investment manager.
Without the capital contribution, the total return would have been 4.62%.
21
<PAGE> 22
================================================================================
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TAX-EXEMPT PORTFOLIO
YEAR ENDED JULY 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- ----------------------------------------------------------------------------------------------------------------
Net investment income and dividends
declared .03 .02 .02 .04 .05
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- ----------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3.53% 2.33 2.39 3.57 5.07
- ----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses .40% .41 .39 .39 .38
- ----------------------------------------------------------------------------------------------------------------
Net investment income 3.46 2.30 2.36 3.49 4.92
- ----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of year
(in thousands) $760,143 792,131 758,630 796,272 788,253
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
NOTES TO FINANCIAL HIGHLIGHTS
================================================================================
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS
OF 1995 DIVIDENDS
All of the dividends from the Money Market and Government Securities Portfolios
are taxable as ordinary income. All of the dividends from the Tax-Exempt
Portfolio constitute tax-exempt interest which is not taxable for federal income
tax purposes; however, a portion of the dividends paid may be includable in the
alternative minimum tax calculation.
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.
23
<PAGE> 24
TRUSTEES AND OFFICERS
================================================================================
TRUSTEES
STEPHEN B. TIMBERS
President and Trustee
DAVID W. BELIN
Trustee
LEWIS A. BURNHAM
Trustee
DONALD L. DUNAWAY
Trustee
ROBERT B. HOFFMAN
Trustee
DONALD R. JONES
Trustee
DAVID B. MATHIS
Trustee
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
OFFICERS
J. PATRICK BEIMFORD, JR.
Vice President
JOHN E. PETERS
Vice President
FRANK J. RACHWALSKI, JR.
Vice President
PHILIP J. COLLORA
Vice President
and Secretary
CHARLES F. CUSTER
Vice President and
Assistant Secretary
JEROME L. DUFFY
Treasurer
ELIZABETH C. WERTH
Assistant Secretary
================================================================================
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
1-800-621-1048
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER KEMPER FINANCIAL SERVICES, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
120 S. LaSalle Street
Chicago, IL 60603
- --------------------------------------------------------------------------------
[RECYCLE LOGO]
Printed on recycled paper.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Money Market Fund prospectus.
KMMF - 2(9/95)
[KEMPER MUTUAL FUNDS LOGO]
