<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1996.
1933 ACT REGISTRATION NO. 2-51992
1940 ACT REGISTRATION NO. 811-2527
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-1A
<TABLE>
<CAPTION>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
<S> <C>
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 42 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 42 [X]
</TABLE>
(Check appropriate box or boxes)
----------------
KEMPER MONEY FUNDS
(formerly named Kemper Money Market Fund)
(Exact name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, 60606
Illinois
(Address of Principal Executive (Zip Code)
Office)
Registrant's Telephone Number, including Area Code: (312) 781-1121
Philip J. Collora, Vice President and With a copy to:
Secretary
Cathy G. O'Kelly
Kemper Money Funds
David A. Sturms
222 South Riverside Plaza Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60606-5808
(Name and Address of Agent for Service) Chicago, Illinois 60601
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's fiscal year ended July 31,
1996 was filed on or about September 26, 1996.
It is proposed that this filing will become effective (check appropriate
box)
[_] immediately upon filing pursuant to paragraph (b)
[X] on November 10, 1996 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
KEMPER MONEY FUNDS
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER OF FORM N-1A LOCATION IN PROSPECTUS
- ------------------------ ----------------------
<S> <C>
1.Cover Page................................. Cover Page
2.Synopsis................................... Summary; Summary of Expenses
3.Condensed Financial Information............ Financial Highlights; Performance
4.General Description of Registrant.......... Summary; Capital Structure; How the Funds
Work; Investment Objectives, Policies and
Risk Factors
5.Management of the Fund..................... Summary; Investment Manager; How to Buy
Shares
5A.Management's Discussion of Fund Perfor-
mance....................................... Inapplicable
6.Capital Stock and Other Securities......... Summary; Capital Structure; Dividends and
Taxes;
How to Buy Shares; Investment Objectives,
Policies and Risk Factors
7.Purchase of Securities Being Offered....... Summary; How to Buy Shares; Net Asset
Value;
Investment Manager; Special Features;
Account
Services Directory
8.Redemption or Repurchase................... Summary; How to Redeem Shares; Special
Features;
Account Services Directory
9.Pending Legal Proceedings.................. Inapplicable
</TABLE>
<PAGE>
Kemper Money Funds
PROSPECTUS
November 10, 1996
KEMPER MONEY FUNDS
222 SOUTH RIVERSIDE PLAZA,
CHICAGO, ILLINOIS 60606-5808
1-800-537-6001.
The Funds are designed for investors who seek maximum current income to the ex-
tent consistent with stability of principal. Each Fund invests exclusively in
high quality money market instruments.
.KEMPER MONEY MARKET FUND
.KEMPER GOVERNMENT MONEY FUND
.KEMPER TAX-FREE MONEY FUND
This prospectus contains information about each Fund that a prospective in-
vestor should know before investing and should be retained for future refer-
ence. A Statement of Additional Information dated November 10, 1996, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. It is available upon request without charge from the Funds at the
address above or by calling 1-800-537-6001.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERN-
MENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR EN-
DORSED BY, ANY BANK. THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary..................................................................... 2
Summary of Fund Expenses.................................................... 3
Financial Highlights........................................................ 4
How the Funds Work.......................................................... 5
Investment Objectives, Policies and Risk Factors............................ 5
Net Asset Value--Determining Share Price.................................... 10
How To Buy Shares........................................................... 10
How To Sell Shares.......................................................... 12
Exchanging Shares........................................................... 14
Special Features............................................................ 16
Dividends and Taxes......................................................... 17
Investment Manager.......................................................... 19
Performance................................................................. 20
Capital Structure........................................................... 21
Account Services Directory.................................................. 22
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
SUMMARY
INVESTMENT OBJECTIVES
Kemper Money Funds (the "Trust") is an open-end, diversified, management in-
vestment company offering a choice of three investment funds ("Funds"). Each
Fund is designed to provide you with professional management of your short-term
investment dollars; the dollars that you want to be very liquid and accessible
when special opportunities arise or that you want to know are in high quality
investments.
Each Fund invests in high quality short-term money market instruments consis-
tent with its specific objective.
.THE KEMPER MONEY MARKET FUND seeks maximum current income to the extent con-
sistent with stability of principal from a portfolio primarily of commercial
paper and bank obligations.
.THE KEMPER GOVERNMENT MONEY FUND seeks maximum current income to the extent
consistent with stability of principal from a portfolio of obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
.THE KEMPER TAX-FREE MONEY FUND seeks maximum current income that is exempt
from federal income taxes to the extent consistent with stability of principal
from a portfolio of municipal securities.
Each Fund may use a variety of investment techniques in seeking its objective
including the purchase of repurchase agreements and variable rate securities.
Each Fund seeks to maintain a net asset value of $1.00 per share; however,
there is no assurance that the objective of any Fund will be achieved or that
any Fund will be able to maintain a net asset value of $1.00 per share. See
"How the Funds Work" and "Investment Objectives, Policies and Risk Factors."
INVESTMENT MANAGER
Zurich Kemper Investments, Inc. ("ZKI") is the investment manager for the
Funds and provides the Funds with continuous professional investment supervi-
sion. ZKI is paid an annual investment management fee, payable monthly, on a
graduated basis ranging from .50% of the first $215 million of average daily
net assets of the Trust to .25% of average daily net assets of the Trust over
$800 million. See "Investment Manager."
BUYING AND SELLING SHARES
You may buy and sell shares of each Fund at net asset value with no sales
charge. The minimum initial investment is $1,000 and the minimum subsequent in-
vestment is $100 ($50 under an automatic investment plan). Accounts may be
opened using the Account Application available from the Funds. Shares may be
purchased by mailing a check, by wire transfer or in person in downtown Chicago
and Kansas City. Please see "How To Buy Shares" for more information on how
easy it is to invest. Shares may be sold or redeemed by written request or by
using one of the Funds' expedited redemption procedures. See "How To Sell
Shares" for specific details.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested in additional shares of the same Fund, unless you elect to be paid
by check. See "Dividends and Taxes."
SPECIAL FEATURES
A number of features are available to account holders, including: the Kemper
Money-PLUSSM Account, a cash management program offering a combination of fea-
tures including a no minimum checking account and a VISA(R) check card and
Electronic Funds Transfer Programs. See "Special Features" and "Account Serv-
ices Directory" for a description of these and other features.
2
<PAGE>
SUMMARY OF
FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES*
<TABLE>
<S> <C>
Sales Load on Purchases.................................................... None
Sales Load on Reinvested Dividends......................................... None
Deferred Sales Load........................................................ None
Redemption Fees............................................................ None
Exchange Fee............................................................... None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
KEMPER KEMPER
MONEY KEMPER TAX-FREE
MARKET GOVERNMENT MONEY
FUND MONEY FUND FUND
------ ---------- --------
<S> <C> <C> <C>
Management Fees...................................... .27% .27% .27%
12b-1 Fees........................................... None None None
Other Expenses....................................... .23% .19% .12%
---- ---- ----
Total Operating Expenses............................. .50% .46% .39%
</TABLE>
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming a 5% an-
nual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---- ------ ------- ------- --------
<C> <S> <C> <C> <C> <C>
Money Market.............................. $ 5 $16 $28 $63
Government Money.......................... $ 5 $15 $26 $58
Tax-Free Money............................ $ 4 $13 $22 $49
</TABLE>
- --------
*Table does not include $3.00 monthly small account fee. See "How to Sell
Shares."
The purpose of the table above is to assist you in understanding the various
costs and expenses that an investor in a Fund will bear directly or indirectly.
Investment dealers and other firms may independently charge shareholders addi-
tional fees. The Example assumes a 5% annual rate of return pursuant to re-
quirements of the Securities and Exchange Commission. This hypothetical rate of
return is not intended to be representative of past or future performance of
any Fund. The Example should not be considered to be a representation of past
or future expenses. Actual expenses may be greater or less than those shown.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below show financial information for each Fund, expressed in terms
of one share outstanding throughout the period. The information in the tables
is covered by the report of the Funds' independent auditors. The report is con-
tained in the Funds' Registration Statement and is available from the Funds.
The financial statements contained in the Funds' 1996 Annual Report to Share-
holders are incorporated herein by reference and may be obtained by writing or
calling the Funds.
KEMPER MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <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 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------
Net investment
income and
dividends
declared .05 .05 .03 .03 .04 .07 .08 .09 .07 .06
- ------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of year $1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 5.34% 5.34 3.20 2.96 4.45 7.19 8.50 9.03 7.03 6.02
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE
NET ASSETS:
Expenses .50% .52 .52 .52 .49 .46 .45 .49 .50 .52
- ------------------------------------------------------------------------------------------------------------------------
Net investment
income 5.20% 5.19 3.14 2.92 4.42 6.94 8.16 8.71 6.79 5.84
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL
DATA:
Net assets at end
of year
(in thousands) $4,225,775 4,025,098 4,148,789 4,499,930 5,664,194 7,553,950 7,603,418 6,638,489 4,893,284 4,235,907
- ------------------------------------------------------------------------------------------------------------------------
KEMPER GOVERNMENT MONEY FUND
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <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 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------
Net investment
income and
dividends
declared .05 .05 .03 .03 .04 .07 .08 .09 .07 .06
- ------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of year $1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 5.34% 5.36 3.20 2.97 4.50 6.95 8.45 8.96 6.88 5.79
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE
NET ASSETS:
Expenses .46% .46 .47 .45 .43 .43 .43 .49 .51 .67
- ------------------------------------------------------------------------------------------------------------------------
Net investment
income 5.20% 5.21 3.15 2.94 4.44 6.65 8.08 8.79 6.66 5.64
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL
DATA:
Net assets at end
of year
(in thousands) $672,041 603,601 707,368 694,303 926,328 1,126,417 845,347 514,303 177,812 110,366
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEMPER TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
SEPTEMBER 10, 1987
YEAR ENDED JULY 31, TO JULY 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PER-
FORMANCE:
Net asset value, begin-
ning of period $1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------
Net investment income
and dividends declared .03 .03 .02 .02 .04 .05 .06 .06 .04
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 3.44% 3.53 2.33 2.39 3.57 5.07 5.81 6.21 4.33
- -------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS:
Expenses .39% .40 .41 .39 .39 .38 .40 .39 .45
- -------------------------------------------------------------------------------------------------------------
Net investment income 3.38% 3.46 2.30 2.36 3.49 4.92 5.64 6.12 4.68
- -------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of pe-
riod (in thousands) $729,018 760,143 792,131 758,630 796,272 788,253 693,307 529,670 190,933
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Ratios have been determined on an annualized basis. Total return is not
annualized. The Kemper Money Market Fund's total return for the year ended July
31, 1995 includes the effect of a capital contribution from the investment man-
ager. Without the capital contribution, the total return would have been 4.62%.
4
<PAGE>
HOW THE FUNDS WORK
Kemper Money Funds is designed to provide you with professional management
of short-term investment dollars. They are designed for investors who seek
maximum current income consistent with stability of principal plus liquidity.
To help meet these objectives, you are provided with a choice of separate in-
vestment funds ("Funds"): the Kemper Money Market Fund (the "Money Market
Fund"), the Kemper Government Money Fund (the "Government Money Fund") and the
Kemper Tax-Free Money Fund (the "Tax-Free Money Fund"). Because each Fund com-
bines its shareholders' money, it can buy and sell large blocks of securities,
which reduces transaction costs and maximizes yields. Each Fund is managed by
investment professionals who analyze market trends to take advantage of chang-
ing conditions and who seek to minimize risk by diversifying each Fund's in-
vestments.
Each Fund seeks to maintain a net asset value of $1.00 per share. Thus, the
Funds are designed for investors who want to avoid the fluctuations of princi-
pal commonly associated with equity and long-term bond investments. The fluc-
tuations of these other types of investments are often represented by the
movement of various unmanaged market indexes, such as the Dow Jones Industrial
Average. In addition, although there can be no guarantee that a Fund will
achieve its objective or that it will maintain a net asset value of $1.00 per
share, each Fund has maintained a $1.00 net asset value since its inception.
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
. MONEY MARKET FUND
THE MONEY MARKET FUND SEEKS MAXIMUM CURRENT INCOME TO THE EXTENT CONSISTENT
WITH STABILITY OF PRINCIPAL. The Fund pursues its objective by investing ex-
clusively in the following types of U.S. Dollar denominated money market in-
struments that mature in 12 months or less:
. Obligations of, or guaranteed by, the U.S. Government, its agencies or in-
strumentalities.
. Bank certificates of deposit (including time deposits) or bankers' accept-
ances limited to domestic banks (including their foreign branches) and Canadian
chartered banks having total assets in excess of $1 billion.
. Commercial paper obligations rated A-1 or A-2 by Standard & Poor's Corpora-
tion ("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc.
("Moody's") or issued by companies with an unsecured debt issue outstanding
currently rated Aa by Moody's or AA by S&P or higher and investments in other
corporate obligations such as publicly traded bonds, debentures and notes rated
Aa by Moody's or AA by S&P or higher. For a description of these ratings, see
"Appendix--Ratings of Investments" in the Statement of Additional Information.
. Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. Repurchase agreements are discussed below.
To the extent the Money Market Fund purchases Eurodollar certificates of de-
posit issued by London branches of U.S. banks, or commercial paper issued by
foreign entities, consideration will be given to their marketability, to pos-
sible restrictions on international currency transactions and to regulations
imposed by the domicile country of the foreign issuer. Eurodollar certificates
of deposit are not subject to the same regulatory requirements as certificates
issued by U.S. banks and associated income may be subject to the imposition of
foreign taxes.
The Money Market Fund may invest in commercial paper which is issued by ma-
jor corporations without registration under the Securities Act of 1933 in re-
liance on the exemption from registration afforded by Section 3(a)(3) thereof.
Such commercial paper may be issued only to finance current transactions and
must mature in nine months or less. Trading of such commercial paper is con-
ducted primarily by institutional investors through investment dealers, and
individual investor participation in the commercial paper market is very lim-
ited.
5
<PAGE>
Investment Objectives and Policies--continued
Repurchase Agreements of the obligations described above.
The Fund may also invest in commercial paper issued in reliance on the so-
called "private placement" exemption from registration afforded by Section 4(2)
of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2) paper is
restricted as to disposition under the federal securities laws, and generally is
sold to institutional investors such as the Fund who agree that they are
purchasing the paper for investment and not with a view to public distribu-tion.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. The Fund's invest-ment manager
considers the legally restricted but readily saleable Section 4(2) paper to be
liquid; however, pursuant to procedures approved by the Board of Trustees of the
Trust, if a particular investment in Section 4(2) paper is not determined to be
liquid, that investment will be included within the 10% limitation on illiquid
securities discussed under "The Funds" below. The Fund's investment manager
monitors the liquidity of its investments in Section 4(2) paper on a continuous
basis.
The Money Market Fund may concentrate more than 25% of its assets in bank
certificates of deposit or banker's acceptances of United States banks in ac-
cordance with its investment objective and policies. Accordingly, the Fund may
be more adversely affected by changes in market or economic conditions and
other circumstances affecting the banking industry than it would be if the
Fund's assets were not so concentrated.
GOVERNMENT MONEY FUND
THE GOVERNMENT MONEY FUND SEEKS MAXIMUM CURRENT INCOME TO THE EXTENT CONSIS-
TENT WITH STABILITY OF PRINCIPAL. The Fund pursues its objective by investing
exclusively in the following securities that mature within 12 months or less.
U.S. TREASURY BILLS, NOTES, BONDS AND OTHER OBLIGATIONS ISSUED OR GUARANTEED
BY THE U.S. GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES.
Some securities issued by U.S. Government agencies or instrumentalities are
supported only by the credit of the agency or instrumentality, such as those
issued by the Federal Home Loan Bank, and others have an additional line of
credit with the U.S. Treasury, such as those issued by the Federal National
Mortgage Association, Farm Credit System and Student Loan Marketing Associa-
tion. Short-term U.S. Government obligations generally are considered to be
the safest short-term investment. The U.S. Government guarantee of the securi-
ties owned by the Fund, however, does not guarantee the net asset value of its
shares, which the Fund seeks to maintain at $1.00 per share. Also, with re-
spect to securities supported only by the credit of the issuing agency or in-
strumentality or by an additional line of credit with the U.S. Treasury, there
is no guarantee that the U.S. Government will provide support to such agencies
or instrumentalities and such securities may involve risk of loss of principal
and interest.
TAX-FREE MONEY FUND
THE TAX-FREE MONEY FUND SEEKS MAXIMUM CURRENT INCOME THAT IS EXEMPT FROM
FEDERAL INCOME TAXES TO THE EXTENT CONSISTENT WITH STABILITY OF PRINCIPAL. The
Fund pursues its objective primarily through a professionally managed, diver-
sified portfolio of short-term high quality tax-exempt municipal obligations.
Under normal market conditions at least 80% of the Fund's total assets will,
as a fundamental policy, be invested in obligations issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, the
income from which is exempt from federal income tax ("Municipal Securities").
In compliance with the position of the staff of the Securities and Exchange
Commission, the Fund does not consider "private activity" bonds as described
in "Dividends and Taxes--Tax-Free Money Fund" as Municipal Securities for pur-
poses of the 80% limitation. This is a fundamental pol
6
<PAGE>
Investment Objectives and Policies--continued
icy so long as the staff maintains its position, after which it would become
non-fundamental.
Dividends representing net interest income received by the Tax-Free Money
Fund on Municipal Securities will be exempt from federal income tax when dis-
tributed to the Fund's shareholders. Such dividend income may be subject to
state and local taxes. See "Dividends and Taxes--Tax-Free Money Fund." The
Fund's assets will consist of Municipal Securities, temporary investments as
described below and cash. The Fund considers short-term Municipal Securities
to be those that mature in one year or less.
The Tax-Free Money Fund will invest only in Municipal Securities which at
the time of purchase:
Are rated within the two highest ratings for Municipal Securities (AAA or
AA) assigned by Moody's or (AAA or AA) assigned by S&P;
Are guaranteed or insured by the U.S. Government as to the payment of
principal and interest;
Are fully collateralized by an escrow of U.S. Government Securities accept-
able to the Fund's investment manager;
Have at the time of purchase a Moody's short-term Municipal Securities
rating of MIG-2 or higher or a municipal commercial paper rating of P-2 or
higher, or S&P's Municipal commercial paper rating of A-2 or higher;
Are unrated, if longer term municipal securities of that issuer are rated
within the two highest rating categories by moody's or S&P; or
Are determined to be at least equal in quality to one or more of the above
ratings in the discretion of the fund's investment manager.
Municipal Securities generally are classified as "general obligation" or
"revenue" issues. General obligation bonds are secured by the issuer's pledge
of its full credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular fa-
cility or class of facilities or, in some cases, from the proceeds of a spe-
cial excise tax or other specific revenue source such as the user of the fa-
cility being financed. Industrial development bonds held by the Fund are in
most cases revenue bonds and are not payable from the unrestricted revenues of
the issuer. Among other types of instruments, the Fund may purchase tax-exempt
commercial paper, warrants and short-term municipal notes such as tax antici-
pation notes, bond anticipation notes, revenue anticipation notes, construc-
tion loan notes and other forms of short-term loans. Such notes are issued
with a short-term maturity in anticipation of the receipt of tax payments, the
proceeds of bond placements or other revenues. A more detailed discussion of
Municipal Securities and the Moody's and S&P ratings outlined above is con-
tained in the Statement of Additional Information. As indicated above and un-
der "Dividends and Taxes--Tax-Free Money Fund," the Fund may invest in "pri-
vate activity" bonds.
The Tax-Free Money Fund may purchase securities which provide for the right
to resell them to an issuer, bank or dealer at an agreed upon price or yield
within a specified period prior to the maturity date of such securities. Such
a right to resell is referred to as a "Standby Commitment." Securities may
cost more with Standby Commitments than without them. Standby Commitments will
be entered into solely to facilitate portfolio liquidity. A Standby Commitment
may be exercised before the maturity date of the related Municipal Security if
the Fund's investment manager revises its evaluation of the creditworthiness
of the underlying security or of the entity issuing the Standby Commitment.
The Fund's policy is to enter into Standby Commitments only with issuers,
banks or dealers that are determined by the Fund's investment manager to pres-
ent minimal credit risks. If an issuer, bank or dealer should default on its
obligation to repurchase an underlying security, the Fund might be unable to
recover all or a portion of any loss sustained from having to sell the secu-
rity elsewhere. For purposes of valuing the Fund's securities at amortized
cost, the stated maturity of Municipal Securities subject to Standby Commit-
ments is not changed.
7
<PAGE>
Investment Objectives and Policies--continued
The Tax-Free Money Fund may purchase high quality Certificates of Participa-
tion in trusts that hold Municipal Securities. A Certificate of Participation
gives the Fund an undivided interest in the Municipal Security in the propor-
tion that the Fund's interest bears to the total principal amount of the Mu-
nicipal Security. These Certificates of Participation may be variable rate or
fixed rate with remaining maturities of one year or less. A Certificate of
Participation may be backed by an irrevocable letter of credit or guarantee of
a financial institution that satisfies rating agencies as to the credit qual-
ity of the Municipal Security
supporting the payment of principal and interest on the Certificate of Partic-
ipation. Payments of principal and interest would be dependent upon the under-
lying Municipal Security and may be guaranteed under a letter of credit to the
extent of such credit. The quality rating by a rating service of an issue of
Certificates of Participation is based primarily upon the rating of the Munic-
ipal Security held by the trust and the credit rating of the issuer of any
letter of credit and of any other guarantor providing credit support to the
issue. The Fund's investment manager considers these factors as well as oth-
ers, such as any quality ratings issued by the rating services identified
above, in reviewing the credit risk presented by a Certificate of Participa-
tion and in determining whether the Certificate of Participation is appropri-
ate for investment by the Fund. It is anticipated by the Fund's investment
manager that, for most publicly offered Certificates of Participation, there
will be a liquid secondary market or there may be demand features enabling the
Fund to readily sell its Certificates of Participation prior to maturity to
the issuer or a third party. As to those instruments with demand features, the
Fund intends to exercise its right to demand payment from the issuer of the
demand feature only upon a default under the terms of the Municipal Security,
as needed to provide liquidity to meet redemptions, or to maintain a high
quality investment portfolio.
The Tax-Free Money Fund may purchase and sell Municipal Securities on a
when-issued or delayed delivery basis. A when-issued or delayed delivery
transaction arises when securities are bought or sold for future payment and
delivery to secure what is considered to be an advantageous price and yield to
the Fund at the time it enters into the transaction. In determining the matu-
rity of portfolio securities purchased on a when-issued or delayed delivery
basis, the Fund will consider them to have been purchased on the date when it
committed itself to the purchase.
A security purchased on a when-issued basis, like all securities held by the
Tax-Free Money Fund, is subject to changes in market value based upon
changes in the level of interest rates and investors' perceptions of the cred-
itworthiness of the issuer. Generally such securities will appreciate in value
when interest rates decline and decrease in value when interest rates rise.
Therefore if, in order to achieve higher interest income, the Fund remains
substantially fully invested at the same time that it has purchased securities
on a when-issued basis, there will be a greater possibility that the market
value of the Fund's assets will vary from $1.00 per share, since the value of
a when-issued security is subject to market fluctuation and no interest ac-
crues to the purchaser prior to settlement of the transaction. See "Net Asset
Value--Determining Share Price."
The Fund will only make commitments to purchase Municipal Securities on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but the Fund reserves the right to sell these securities be-
fore the settlement date if deemed advisable. The sale of these securities may
result in the realization of gains that are not exempt from federal income
tax.
In seeking to achieve its investment objective, the Tax-Free Money Fund may
invest all or any part of its assets in Municipal Securities that are indus-
trial development bonds. Moreover, although the Fund does not currently intend
to do so on a regular basis, it may invest more than 25% of its assets in Mu-
nicipal Securities that are repayable out of revenue streams generated from
economically related projects or facilities, if such investment is deemed nec-
essary or appropriate by the Fund's investment manager. To
8
<PAGE>
Investment Objectives and Policies--continued
the extent that the Fund's assets are concentrated in Municipal Securities
payable from revenues on economically related projects and facilities, the
Fund will be subject to the risks presented by such projects to a greater ex-
tent than it would be if the Fund's assets were not so concentrated.
From time to time, as a defensive measure or when acceptable short-term Mu-
nicipal Securities are not available, the Tax-Free Money Fund may invest in
taxable "temporary investments" which include:
.OBLIGATIONS OF THE U.S. GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES;
.DEBT SECURITIES RATED WITHIN THE TWO HIGHEST GRADES BY MOODY'S OR S&P;
.COMMERCIAL PAPER RATED IN THE TWO HIGHEST GRADES BY EITHER OF SUCH RATING
SERVICES;
.CERTIFICATES OF DEPOSIT OF DOMESTIC BANKS WITH ASSETS OF $1 BILLION OR MORE;
AND
.ANY OF THE FOREGOING TEMPORARY INVESTMENTS SUBJECT TO REPURCHASE AGREEMENTS
(REPURCHASE AGREEMENTS ARE DISCUSSED BELOW).
Interest income from temporary investments is taxable to shareholders as or-
dinary income. Although the Fund is permitted to invest in taxable securities,
it is the Fund's primary intention to generate income dividends that are not
subject to federal income taxes. See "Dividends and Taxes." For a description
of the ratings, see "Appendix--Ratings of Investments" in the Statement of Ad-
ditional Information.
THE FUNDS
In addition to the specific investment objective and policies listed above,
each Fund limits its investments to securities that meet the requirements of
Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"). See "Net
Asset Value--Determining Share Price."
Each Fund may invest in instruments that have interest rates that adjust pe-
riodically or that "float" continuously according to formulae intended to min-
imize fluctuation in values of the instruments ("Variable Rate Securities").
The interest rate on a Variable Rate Security is ordinarily determined by ref-
erence to or is a percentage of an objective standard such as a bank's prime
rate, the 90-day U.S. Treasury bill rate, or the rate of return on commercial
paper or bank certificates of deposit. Generally, the changes in the interest
rate on Variable Rate Securities reduce the fluctuation in the market value of
such securities. Accordingly, as interest rates decrease or increase, the po-
tential for capital appreciation or depreciation is less than for fixed-rate
obligations. Some Variable Rate Securities ("Variable Rate Demand Securities")
have a demand feature entitling the purchaser to resell the securities at an
amount approximately equal to amortized cost or the principal amount thereof
plus accrued interest. As is the case for other Variable Rate Securities, the
interest rate on Variable Rate Demand Securities varies according to some ob-
jective standard intended to minimize fluctuation in the values of the instru-
ments. Each Fund determines the maturity of Variable Rate Securities in accor-
dance with Securities and Exchange Commission rules which allow the Fund to
consider certain of such instruments as having maturities shorter than the ma-
turity date on the face of the instrument.
Each Fund may invest in repurchase agreements, which are instruments under
which a Fund acquires ownership of a security from a broker-dealer or bank
that agrees to repurchase the security at a mutually agreed upon time and
price (which price is higher than the purchase price), thereby determining the
yield during the Fund's holding period. Maturity of the securities subject to
repurchase may exceed one year. In the event of a bankruptcy or other default
of a seller of a repurchase agreement, a Fund might incur expenses in enforc-
ing its rights, and could experience losses, including a decline in the value
of the underlying securities and loss of income. A Fund will not purchase il-
liquid securities, including time deposits and repurchase agreements maturing
in more than seven days, if, as a result thereof, more than 10% of such Fund's
net assets valued at the time of the transaction would be invested in such se-
curities.
9
<PAGE>
Investment Objectives and Policies--continued
A Fund may not borrow money except as a temporary measure for extraordinary
or emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without immediately
selling any portfolio securities. Any such borrowings under this provision
will not be collateralized. If for any reason the current value of the Fund's
total assets falls below an amount equal to three times the amount of its in-
debtedness from money borrowed, the Fund will, within three business days, re-
duce its indebtedness to the extent necessary. No Fund will borrow for lever-
age purposes.
Certain investment restrictions have been adopted for each Fund and are pre-
sented in the Statement of Additional Information and together with the in-
vestment objective and policies of such Fund, cannot be changed without ap-
proval by holders of a majority of its outstanding voting shares. As defined
in the 1940 Act, this means the lesser of the vote of (a) 67% of the shares of
such Fund present at a meeting where more than 50% of the outstanding shares
are present in person or by proxy; or (b) more than 50% of the outstanding
shares of the Fund.
NET ASSET VALUE--DETERMINING SHARE PRICE
The price you pay when you buy shares in a Fund and the price you receive if
you redeem is the net asset value computed after we receive your order to buy
or redeem in proper form (as described under "How To Buy Shares"). The net as-
set value per share of each Fund is calculated by dividing the total value of
the assets of the Fund, minus its liabilities, by the total number of its
shares outstanding.
The net asset value per share of each Fund is determined on each day the New
York Stock Exchange is open for trading, at 11:00 a.m., 1:00 p.m. and 3:00
p.m. Central time for the Money Market and Government Money Funds and at 11:00
a.m. and 3:00 p.m. Central time for the Tax-Free Money Fund. Each Fund seeks
to maintain a net asset value of $1.00 per share.
Each Fund values its portfolio instruments at amortized cost in accordance
with Rule 2a-7 under the 1940 Act, which means that they are valued at their
acquisition cost (as ad-justed for amortization of premium or discount) rather
than at current market value. Calculations are made to compare the value of each
Fund's investments valued at amortized cost with market-based value. Market-
based valuations are obtained by using actual quotations provided by market
makers, estimates of market value, or values obtained from yield data relating
to classes of money market instruments published by reputable sources at the
mean between the bid and asked prices for the instruments. If a deviation of 1/2
of 1% or more were to occur between a Fund's net asset value per share
calculated by reference to market-based values and a Fund's $1.00 per share net
asset value, or if there were any other deviation that the Board of Trustees
believed would result in a material dilution to shareholders or purchasers, the
Board of Trustees would promptly consider what action, if any, should be
initiated. In order to value its investments at amortized cost, the Funds
purchase only securities with a maturity of one year or less and maintain a
dollar-weighted average portfolio maturity of 90 days or less. In addition, the
Funds limit their portfolio in-vestments to securities that meet the quality and
diversification requirements of Rule 2a-7.
HOW TO BUY SHARES
Whether you're opening an account or adding to it, we hope that you'll find
that we've made your shareholder transactions easy. Shares of each Fund are
sold at their net asset value with no sales charge. To open an account you
should use the Account Application available from the Funds and choose one of
the methods outlined below. Call 1-800-537-6001 if you have questions or need
assistance.
INVESTMENT AMOUNTS
The minimum initial investment for each Fund is $1,000 and the minimum subse-
quent investment is $100. For an Individual Retirement Account ("IRA"), the
minimum initial investment is $250 and the minimum subsequent investment is
$50. Under an automatic investment plan, such as Bank Direct Deposit,
10
<PAGE>
How To Buy Shares--continued
Payroll Direct Deposit and Government Direct Deposit, the minimum periodic in-
vestment is $50. These minimum amounts may be changed at any time in manage-
ment's discretion.
.BY MAIL
Complete the Account Application and mail it with your check (payable to KMF
followed by the Fund name) to the Funds' Shareholder Service Agent to:
Kemper Service Company
Transfer Agency Division
P.O. Box 419356
Kansas City, Missouri 64141-6356.
Subsequent purchases should be sent to:
Kemper Service Company
Transfer Agency Division
P.O. Box 419154
Kansas City, Missouri 64141-6154.
Purchases by check or other negotiable bank draft will be invested as of 3:00
p.m. Central time on the next business day after receipt and will begin earning
dividends the following business day. Purchases by check drawn on a foreign
bank will normally be effective after the check clears. See "Purchase and
Redemption of Shares" in the Statement of Additional Information.
.BY WIRE
If you open your account by wire, your money is invested faster than if you
mail a check, so you'll start earning dividends sooner. To open an account
through wire transfer, call a Kemper Money Fund Specialist, toll free at 1-800-
537-6001 to obtain an account number. Then have your bank or broker wire Fed-
eral Funds (monies credited to a bank's account with its regional Federal Re-
serve Bank), together with your account number, the name of the Fund and the
name in which your account is registered, to United Missouri Bank of Kansas
City, N.A. (ABA # 1010-0069-5), 10th and Grand Avenue, Kansas City, MO 64106
for credit to the appropriate Fund bank account (Kemper Money Market Fund: 98-
0103-346-8; Kemper Government Money Fund: 98-0116-259-4; or Kemper Tax-Free
Money Fund; 98-0001-577-6). Your account will then be opened and the order for
purchase of Fund shares will be effected at the next determined net asset val-
ue. Shares purchased by wire will receive that day's dividend if effected at or
prior to 1:00 p.m. Central time for the Money Market and the Government Money
Funds, and by 11:00 a.m. Central time net asset value determination for the
Tax-Free Money Fund. The Funds accept wires at no charge, although your bank
may charge you for this service.
.BY ELECTRONIC FUNDS TRANSFER
Please see "Special Features" for more information on buying shares using
electronics funds transfer such as:
EXPRESS-TRANSFER
BANK DIRECT DEPOSIT
PAYROLL DIRECT DEPOSIT
GOVERNMENT DIRECT DEPOSIT
via the Automated Clearing House ("ACH") System.
.IN PERSON
In downtown Chicago, you can make a direct investment at the Customer Service
Center at 222 South Riverside Plaza, 1st Floor, with the assistance of customer
service representatives. In Kansas City, you can make a direct investment at
811 Main Street, 7th Floor.
OTHER INFORMATION
The Funds reserve the right to withdraw all or any part of the offering made
by this prospectus or to reject purchase orders. The Funds also reserve the
right at any time to waive or increase the minimum investment requirements. All
orders to purchase shares are subject to acceptance by the Funds and are not
binding until confirmed or accepted in writing. Any purchase that would result
in total account balances for a single shareholder in excess of $3 million is
subject to prior approval by the Funds. Share certificates are issued only on
request to the Funds and may not be available for certain types of account reg-
istrations. Investments may also be made in the Funds through broker-dealers
and others, who may charge a commission or other fee for their services. A
11
<PAGE>
How To Buy Shares--continued
$10 service fee will be charged when a check for the purchase of shares is re-
turned because of insufficient or uncollected funds or a stop payment order.
If you elect to redeem shares of a Fund purchased by check or through EX-
PRESS-Transfer or Bank Direct Deposit the Fund may delay transmittal of re-
demption proceeds until it has determined that collected funds have been re-
ceived for the purchase of such shares, which may be up to 10 calendar days
from receipt by the Fund of the purchase amount. See "How to Sell Shares."
HOW TO SELL SHARES
You can access all or part of your account by redeeming your shares. Your
shares will be redeemed at the next determined net asset value after your re-
quest has been received in proper form. If processed at 3:00 p.m. Central
time, you will receive that day's dividend on the shares you sold. If you re-
deem all your shares of a Fund, you will receive the net asset value of such
shares and all declared but unpaid dividends on such shares. You may use ei-
ther the regular or expedited redemption features described in this section to
sell your shares.
.BY MAIL
Send a written request signed by all account owners stating the amount to be
redeemed and specifying
the account number and Fund from which shares are to be redeemed to:
Kemper Service Company
Transfer Agency Division
P.O. Box 419557
Kansas City, Missouri 64141-6557.
The request must be signed exactly as the account is registered, including any
special capacity of the registered owner, and signature(s) must be guaranteed
(except as noted under "By Telephone" below) by a commercial bank, trust com-
pany, savings and loan association, federal savings bank, member firm of a na-
tional securities exchange or other eligible financial institution. If any
share certificates were issued, they must also be signed with signature(s)
guaranteed. Additional documentation may be requested, and a signature guaran-
tee is normally required, from institutional and fiduciary account holders
such as corporations, custodians (e.g. under the Uniform Transfers to Minors
Act), executors, administrators, trustees or guardians.
.BY TELEPHONE
If the proceeds of the redemption are $50,000 or less and the proceeds are
payable to the shareholder of record at the address of record, normally a tel-
ephone request or a written request by any one account holder without a signa-
ture guarantee is sufficient for redemptions by individual or joint account
holders, and trust, executor and guardian account holders (excluding custodial
accounts for gifts and transfers to minors), provided the trustee, executor or
guardian is named in the account registration. Other institutional account
holders and guardian account holders of custodial accounts for gifts and
transfers to minors may exercise this special privilege of redeeming shares by
telephone request or written request without signature guarantee subject to
the same conditions as individual account holders and subject to the limita-
tions on liability described under "General" below, provided that this privi-
lege has been pre-authorized by the institutional account holder or guardian
account holder by written instruction to the Shareholder Service Agent with
signatures guaranteed. Telephone requests may be made by calling Kemper Share-
holder Services at 1-800-621-1048. Shares purchased by check or through EX-
PRESS-Transfer or Bank Direct Deposit may not be redeemed under this privilege
of redeeming shares by telephone request until such shares have been owned for
at least 10 days. This privilege of redeeming shares by telephone request or
by written request without a signature guarantee may not be used to redeem
shares held in certificated form and may not be used if the shareholder's ac-
count has had an address change within 30 days of the redemption request. Dur-
ing periods when it is difficult to contact the Shareholder Service Agent by
telephone, it may be difficult to use the telephone redemption privilege, al-
though you can still redeem by mail. The Funds reserve the right to terminate
or modify this privilege at any time.
12
<PAGE>
How To Sell Shares--continued
.BY WIRE
If you wish to have the proceeds of a redemption "wire transferred" to your
brokerage or bank account you need to have signed up for the privilege and
have the form on file with the Shareholder Service Agent. Once the form is on
file, redemption requests ($1,000 minimum) may be made by calling 1-800-621-
1048 or in writing, subject to the limitations on liability described under
"General" below. However, the proceeds will be sent only to the single bank or
trust company you have designated on the Account Application. This privilege
will be terminated if the Shareholder Service Agent receives written notice
from any account holder of revocation of this authority.
Requests for wire transfer redemptions received by the Shareholder Service
Agent prior to 11:00 a.m. Central time will result in shares being redeemed that
day and normally a wire transfer will be sent to the designated account that
day. Dividends for that day will not be earned. The Funds are not respon-sible
for the efficiency of the federal wire system or the account holder's financial
services firm or bank. The Funds currently do not charge you for wire transfers.
You are responsible for any charges your firm or bank makes for sending or
receiving wire transfers. There is a $1,000 wire redemption minimum. To change
the designated account to receive wire redemption proceeds, send a written
request to the Shareholder Service Agent with signatures guaranteed as described
above.
Shares purchased by check or through EXPRESS-Transfer or Bank Direct Deposit
may not be redeemed by wire transfer until the shares have been owned for at
least 10 days. You may not use this privilege to redeem shares held in certif-
icated form. During periods when it is difficult to contact the Shareholder
Service Agent by telephone, it may be difficult to use the expedited wire re-
demption privilege. The Funds reserve the right to terminate or modify this
privilege at any time.
.BY REDEMPTION CHECK
If you select this method of redemption on your Account Application, you
will normally receive drafts ("Redemption Checks") within 2 weeks of opening
your account which you may use to draw on your Fund account, but not to close
it. When a Redemption Check is presented for payment, a sufficient number of
full and fractional shares in your account will be redeemed at the next deter-
mined net asset value to cover the amount of the Redemption Check. This will
enable you to continue earning daily dividends until the Fund receives the Re-
demption Check.
You may write Redemption Checks payable to the order of any person in any
amount not more than $5 million. Shareholders should not write Redemption
Checks in an amount less than $500 since a $10 service fee will be charged as
described below. In addition, Redemption Checks should not be used to close an
account since the account normally includes accrued but unpaid dividends.
Unless one signer is authorized on the Account Application, Redemption
Checks must be signed by all account holders. If the Shareholder Service Agent
receives written notice by any owner revoking the authorization to sign indi-
vidually, all account owners will be required to sign. Redemption Checks must
be signed exactly as the account is registered. Shares purchased by check or
through EXPRESS-Transfer or Bank Direct Deposit may not be redeemed by Redemp-
tion Check until the shares have been on the Fund's books for at least 10
days. You may not use this privilege to redeem shares held in certificated
form. The Funds reserve the right to terminate or modify this privilege at any
time.
The Funds may refuse to honor Redemption Checks whenever the right of re-
demption has been suspended or postponed, or whenever the account is otherwise
impaired. A $10 service fee will be charged when a Redemption Check is pre-
sented to redeem Fund shares in excess of the value of your Fund account or in
an amount less than $500; when a Redemption Check is presented that would re-
quire redemption of shares that were purchased by check or
13
<PAGE>
How To Sell Shares--continued
through EXPRESS-Transfer or Bank Direct Deposit within 10 days; or when you
request "stop payment" of a Redemption Check by telephone or in writing. A
"stop payment" request may be made by calling Shareholder Services at 1-800-
621-1048.
.GENERAL
If shares of a Fund to be redeemed were purchased by check or through EX-
PRESS-Transfer or Bank Direct Deposit (see "Special Features--Electronic Funds
Transfer Programs") the Fund may delay transmittal of redemption proceeds un-
til it has determined that collected funds have been received for the purchase
of such shares, which will be up to 10 days from receipt by the Fund of the
purchase amount. Shareholders may not use wire transfer or Redemption Check
features until the shares being redeemed have been owned for at least 10 days
and shareholders may not use such procedures to redeem shares held in certifi-
cated form. There is no such delay when the shares being redeemed were origi-
nally purchased by wiring Federal Funds.
If shares being redeemed were acquired from an exchange of shares of a mu-
tual fund that were offered subject to a contingent deferred sales charge as
described in the prospectus for that other fund, the redemption of such shares
by a Fund may be subject to a contingent deferred sales charge as explained in
such prospectus.
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individ-
ual and institutional accounts and pre-authorized telephone redemption trans-
actions for certain institutional accounts. Shareholders may choose these
privileges on the Account Application or by contacting the Shareholder Service
Agent for appropriate instructions. Please note that the telephone exchange
privilege is automatic unless the shareholder refuses it on the account appli-
cation. The Trust or its agents may be liable for losses, expenses or costs
arising out of fraudulent or unauthorized telephone requests pursuant to these
privileges, unless the Trust or its agent reasonably believe, based upon rea-
sonable verification procedures, that the telephonic instructions are genuine.
The SHAREHOLDER WILL BEAR THE RISK OF LOSS,
including loss resulting from fraudulent or unauthorized transactions, as long
as the reasonable verification procedures are followed. The verification pro-
cedures include recording instructions, requiring
certain identifying information before acting upon instructions and sending
written confirmations.
Because of the high cost of maintaining small accounts, THE FUNDS MAY ASSESS
A MONTHLY FEE OF $3 ON ANY ACCOUNT WITH A BALANCE BELOW $1,000 FOR 30 CONSECU-
TIVE DAYS. The fee will not apply to accounts enrolled in an automatic invest-
ment program or to IRAs. See "How To Buy Shares".
EXCHANGING SHARES
Diversification is at the heart of most effective investment planning.
That's why we make it easy for you to exchange your shares of Kemper Money
Funds for shares of other Kemper Funds. Please remember that money market
shares you acquire by dividend reinvestment may be exchanged into a Kemper Mu-
tual Fund with no sales charge; though money fund shares you purchase are sub-
ject to the applicable sales charge when exchanged.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged. Ex-
changes are made based on relative dollar values of the shares involved in the
exchange. We don't charge you a service fee for an exchange; however, dealers
or other firms may charge for their services. To exchange shares, call us or
contact your financial adviser to obtain prospectuses of the Kemper Funds in
which you are interested. You may make an exchange by mail or by telephone:
.BY TELEPHONE
Once you've completed the authorization section on the account application
and we have it on file, exchange requests may be made by calling 1-800-621-
1048, subject to the limitations on liability described under "How To Sell
Shares--General." During peri
14
<PAGE>
Exchanging Shares--continued
ods when it is difficult to contact the Shareholder Service Agent by telephone,
it may be difficult to use the telephone exchange privilege.
.BY MAIL
Send your request to:
Kemper Money Funds
P.O. Box 419557
Attention: Exchange Department
Kansas City, Missouri 64141-6557
Exchanges will be effected by redemption of shares of the fund held and pur-
chase of shares of the other fund. For federal income tax purposes, any such
exchange constitutes a sale upon which a gain or loss may be realized, depend-
ing upon whether the value of the shares being exchanged is more or less than
the shareholder's adjusted cost basis. Any certificates for shares must be de-
posited prior to any exchange of such shares. The exchange privilege is not a
right and may be suspended, terminated or modified at any time. Except as oth-
erwise permitted by applicable regulation, 60 days prior written notice of any
termination or material change will be provided.
SYSTEMATIC EXCHANGE PRIVILEGE
With an account balance of $1,000 or more, shareholders may authorize the au-
tomatic exchange of a specified amount ($100 minimum) of such shares for shares
of another Kemper Fund. If selected, exchanges will be made automatically until
the privilege is terminated by the shareholder or the Kemper Fund. Exchanges
are subject to the terms and conditions described above under "Exchanging
Shares," except that there is no minimum investment
requirement for the Kemper Fund acquired on exchange. This privilege may not be
used for the exchange of shares held in certificated form.
Subject to the limitations described in this section, Class A shares (or the
equivalent) of the following Kemper Mutual Funds may be exchanged for each
other at their relative net asset values: Kemper Technology Fund, Kemper Total
Return Fund, Kemper Growth Fund, Kemper Small Capitalization Equity Fund, Kem-
per Income and Capital Preservation Fund, Kemper Municipal Bond Fund, Kemper
Diversified Income Fund, Kemper High Yield Fund, Kemper U.S. Government Securi-
ties Fund, Kemper International Fund, Kemper State Tax-Free Income Series, Kem-
per Adjustable Rate U.S. Government Fund, Kemper Blue Chip Fund, Kemper Global
Income Fund, Kemper Target Equity Fund (series are subject to a limited offer-
ing period), Kemper Intermediate Municipal Bond Fund, Kemper Cash Reserves
Fund, Kemper U.S. Mortgage Fund, Kemper Short-Intermediate Government Fund,
Kemper Value+Growth Fund, Kemper-Dreman Fund, Inc., Kemper Horizon Fund, Kemper
Quantitative Equity Fund, Kemper Europe Fund and Kemper Asian Growth Fund
("Kemper Mutual Funds") and certain "Money Market Funds" (Kemper Money Funds,
Cash Equivalent Fund, Tax-Exempt California Money Market Fund, Cash Account
Trust, Tax-Exempt New York Money Market Fund and Investors Cash Trust). Shares
of Money Market Funds and Kemper Cash Reserves Fund that were acquired by pur-
chase (not including shares acquired by dividend reinvestment) are subject to
the applicable sales charge on exchange. Shares purchased by check or through
EXPRESS-Transfer or Bank Direct Deposit may not be exchanged until they have
been owned for at least 15 days. In addition, shares of Kemper Funds, other
than a Money Market Fund and Kemper Cash Reserves Fund, acquired by exchange
from another fund may not be exchanged thereafter until they have been owned
for 15 days. Series of Kemper Target Equity Fund will be available on exchange
only during the Offering Period for such series as described in the prospectus
for such series. Cash Equivalent Fund, Tax-Exempt California Money Market Fund,
Cash Account Trust, Tax-Exempt New York Money Market Fund and Investors Cash
Trust are available on exchange but only through a financial services firm hav-
ing a services agreement with Kemper Distributors, Inc. with respect to such
funds. Exchanges may only be made for funds that are available for sale in the
shareholder's state of residence. Currently, Tax-Exempt California Money Market
Fund is available for sale only in California; and Tax-Exempt New York Money
Market Fund is available for sale only in New York, Connecticut, New Jersey and
Pennsylvania.
15
<PAGE>
Exchanging Shares--continued
SPECIAL RETIREMENT PLANS
Shareholders of the Money Market Fund who have purchased shares because they
are participants in tax-exempt retirement plans of ZKI and its affiliates may
exchange their shares for Class I shares of any "Kemper Mutual Fund" listed
above to the extent that they are available through their plan. Conversely,
shareholders of Class I shares may exchange their shares for shares of the
Money Market Fund if the shareholders of Class I shares have purchased shares
because they are participants in tax-exempt retirement plans of ZKI and its
affiliates. Exchanges will be made at the shares' relative net asset values
through their plan. Exchanges are subject to the limitations set forth above.
SPECIAL FEATURES
.KEMPER MONEY-PLUSSM ACCOUNT
The Kemper Money-PLUSSM Account is a cash management program offering a com-
bination of features and benefits. The program includes checkwriting (no mini-
mum dollar amount) and a VISA(R) Gold Check Card (a debit card). The INVESTORS
MONEYCARDSM VISA(R) is issued by Investors Fiduciary Trust Company ("IFTC").
Currently, the fee for this service is $65 a year with charges for additional
checks. There is a fee of $1.00 per transaction for use of Automated Teller
Machines. The minimum initial account balance required to be eligible for this
privilege is $5,000. You may use only the checks provided through the Kemper
Money-PLUSSM Account. Any check for an amount in excess of the funds available
for redemption from the shareholder's account will be returned and will sub-
ject the account to additional service fees. If you have the INVESTORS
MONEYCARDSM VISA(R) and request an expedited wire transfer redemption, the
wire will be sent on the next business day following the request. Fees and
features of the Kemper Money-PLUSSM Account are subject to modification. This
program is available only to those who are residents of the United States.
Shareholders should contact the Shareholder Service Agent at 1-800-537-6001
for more information.
.ELECTRONIC FUNDS TRANSFER PROGRAMS
For your convenience, the Funds have established several investment and re-
demption programs using electronic funds transfer which are described below.
There is currently no charge by the Funds for these programs. Shareholders
should contact the Shareholder Service Agent at 1-800-621-1048 for more infor-
mation.
.EXPRESS-TRANSFER With just one easy phone call, EXPRESS-Transfer quickly and
conveniently transfers money (minimum $100 and maximum $50,000) from your
bank, savings and loan or credit union account to purchase shares in a Fund.
You can also redeem shares (minimum $100 and maximum $50,000) from your Fund
account and transfer the proceeds to your bank, savings and loan or credit
union checking account. When you choose to participate in the EXPRESS-Transfer
program, you designate the bank, savings and loan or credit union account
which will be debited or credited under the program. After you have received a
notice confirming that this service has been added to your Fund account,
please allow a minimum of 20 days for bank notification and processing. By
choosing to participate in this program, you authorize the Shareholder Service
Agent to rely upon telephone instructions from any person to transfer the
specified amounts between your Fund account and your predesignated bank, sav-
ings and loan or credit union account, subject to the limitations on liability
under "How To Sell Shares--General." The Shareholder Service Agent will then
purchase or redeem sufficient full and fractional shares in your account to
satisfy the request. Once you are enrolled in EXPRESS-Transfer, you can initi-
ate a transaction by simply calling Kemper Shareholder Services toll free at
1-800-621-1048 Monday through Friday, 8:00 a.m. to 3:00 p.m. Central time or
by calling KemperAccess at 1-800-972-3060 24 hours a day. See "How To Sell
Shares--General" for information on our 10 day hold policy. Any account holder
may terminate this privilege by sending written notice to Kemper Money Funds,
P.O. Box 419415, Kansas City, Missouri 64141-6415. Termination will become ef-
fective as soon as the Shareholder Service Agent has had a reasonable time to
act upon the request. EXPRESS-Trans
16
<PAGE>
Special Features--continued
fer cannot be used with passbook savings accounts. This program may not be used
for tax-deferred plans such as Individual Retirement Accounts (IRAs).
.BANK DIRECT DEPOSIT You may establish an automatic investment program with
your Fund account. With Bank Direct Deposit, monthly investments (maximum
$50,000) are made automatically from your account at a bank, savings and loan,
or credit union into your Fund account. By signing up for this privilege, you
authorize the Trust and its agents to take money out of your predesignated
bank, savings and loan or credit union account and invest that money in your
Fund account. Any account owner may terminate this privilege simply by sending
written notice to Kemper Money Funds, P.O. Box 419415, Kansas City, Missouri
64141-6415. Termination will become effective as soon as the Shareholder Serv-
ice Agent has had a reasonable time to act upon the request. This privilege may
not be used with passbook savings accounts.
.PAYROLL DIRECT DEPOSIT AND GOVERNMENT DIRECT DEPOSIT You may conveniently in-
vest in the Funds through Payroll Direct Deposit or Government Direct Deposit.
You can arrange to have all or a portion of
your net pay or government check automatically invested in your Fund account
each payment period. You may terminate your participation in these programs by
giving written notice to your employer or the government agency, as appropri-
ate. (A reasonable time to act is required.) The Funds are not responsible for
the efficiency of your employer or the government agency making the payment or
any financial institution transmitting payment.
To use these features, the participating financial institution must be affil-
iated with the ACH System. This ACH affiliation permits the Shareholder Service
Agent to electronically transfer money between your bank account or employer's
payroll bank in the case of Payroll Direct Deposit or the U.S. Government in
the case of Government Direct Deposit, and your Fund account. Your financial
institution's crediting policies for these transferred funds may vary. These
features may be amended or terminated at any time by the Funds.
OTHER SPECIAL FEATURES
Information about the following special features is contained in the State-
ment of Additional Information. Additional information may also be obtained by
contacting Kemper Shareholder Services at 1-800-621-1048.
--Systematic Withdrawal Programs
--Tax Sheltered Retirement Programs
DIVIDENDS AND TAXES
.DIVIDEND PAYMENT
To help keep your account growing, dividends from any Fund are automatically
reinvested in additional shares of that Fund, unless you request payment by
check on your account application or make such a request later. Dividends are
declared daily and paid monthly.
Dividends are normally reinvested on the 25th of each month if a business
day, otherwise on the prior business day. If you've chosen to receive dividends
in cash, checks will be mailed monthly to you or any person you designate.
Shareholders may request this option by contacting the Shareholder Service
Agent (see "How To Buy Shares").
Each Fund will reinvest dividend checks (and future dividends) in shares of
that same Fund if checks are returned as undeliverable. Dividends and other
distributions of a Fund in the aggregate amount of $10 or less are automati-
cally reinvested in shares of the same Fund unless you request that such policy
not be applied to your account.
.DIVIDEND EXCHANGE PRIVILEGE
Upon written request to the Shareholder Service Agent, a shareholder may
elect to have Fund dividends invested without sales charge in shares of another
Kemper Fund offering this privilege at the net asset value of the other fund.
See "Exchanging Shares" for a list of these Kemper Funds. To use this privilege
of investing Fund dividends in shares of an-
17
<PAGE>
Dividends and Taxes--continued
other Kemper Fund, shareholders must maintain a minimum account value of $1,000
in the Kemper Money Funds. Share certificates will only be issued on request.
.TAXABLE FUNDS
The Money Market Fund and the Government Money Fund each intend to continue
to qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code (the "Code") and if so qualified will not be subject to federal
income taxes to the extent its earnings are distributed. Dividends derived from
interest and short-term capital gains are taxable as ordinary income whether
received in cash or reinvested in additional shares. Dividends from these Funds
do not qualify for the dividends received deduction available to corporate
shareholders.
.TAX-FREE MONEY FUND
The Tax-Free Money Fund intends to continue to qualify under the Code as a
regulated investment company and, if so qualified, will not be liable for fed-
eral income taxes to the extent its earnings are distributed. This Fund also
intends to meet the requirements of the Code applicable to regulated investment
companies distributing tax-exempt interest dividends and, accordingly, divi-
dends representing net interest received on Municipal Securities will not be
includable by shareholders in their gross income for federal income tax purpos-
es, except to the extent such interest is subject to the alternative minimum
tax as discussed below. Dividends representing taxable net investment income
(such as net interest income from temporary investments in obligations of the
U.S. Government) and net short-term capital gains, if any, are taxable to
shareholders as ordinary income. All taxpayers will be required to disclose on
their federal income tax returns the amount of tax-exempt interest earned dur-
ing the year, including exempt-interest dividends from the Tax-Free Money Fund.
Net interest on certain "private activity bonds" issued on or after August 8,
1986 is treated as an item of tax preference and may, therefore, be subject to
both the individual and corporate alternative minimum tax. To the extent pro-
vided by regulations to be issued by the Secretary of the Treasury, exempt-in-
terest dividends from the Tax-Free Money Fund are to be treated as interest on
private activity bonds in proportion to the interest income the Fund receives
from private activity bonds, reduced by allowable deductions. For the 1995 cal-
endar year, 17% of the net interest income of the Tax-Free Money Fund was de-
rived from "private activity bonds."
Exempt-interest dividends, except to the extent of interest from "private ac-
tivity bonds," are not treated as a tax preference item. For a corporate share-
holder, however, such dividends will be included in determining such corporate
shareholder's "adjusted current earnings." Seventy-five percent of the excess,
if any, of "adjusted current earnings" over the corporate shareholder's other
alternative minimum taxable income with certain adjustments will be a tax pref-
erence item. Corporate shareholders are advised to consult their tax advisers
with respect to alternative minimum tax consequences.
Individuals whose modified income exceeds a base amount will be subject to
federal income tax on up to 85% of their Social Security benefits. Modified in-
come includes adjusted gross income, tax-exempt interest, including exempt-in-
terest dividends from the Tax-Free Money Fund, and 50% of Social Security
benefits.
The tax exemption of dividends from the Tax-Free Money Fund for federal in-
come tax purposes does not necessarily result in exemption under the income or
other tax laws of any state or local taxing authority. The laws of the several
states and local taxing authorities vary with respect to the taxation of such
income and shareholders of the Fund are advised to consult their own tax ad-
viser as to the status of their accounts under state and local tax laws.
.THE FUNDS
Dividends declared in October, November or December to shareholders of record
as of a date in one of
18
<PAGE>
Dividends and Taxes--continued
those months and paid during the following January are treated as paid on De-
cember 31 of the calendar year in which declared for federal income tax pur-
poses. Each Fund may adjust its schedule for dividend reinvestment for the
month of December to assist it in complying with reporting and minimum distri-
bution requirements contained in the Code.
Each Fund is required by law to withhold 31% of taxable dividends paid to
certain shareholders who do not furnish a correct taxpayer identification num-
ber (in the case of individuals, a social security number) and in certain other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts
are required by law to withhold 20% of the taxable portion of any distribution
that is eligible to be "rolled over." The 20% withholding requirement does not
apply to distributions from IRAs or any part of a distribution that is trans-
ferred directly to another qualified retirement plan, 403(b)(7) account, or
IRA. Shareholders should consult their tax advisers regarding the 20% withhold-
ing requirement.
You will receive a monthly statement giving complete details of dividend re-
investment and purchase and redemption transactions during the month. Tax in-
formation will be provided annually. You should retain copies of your monthly
account statements or year-end statements for tax reporting purposes. However,
those who have incomplete records may obtain historical account transaction in-
formation at a reasonable fee.
When more than one shareholder resides at the same address, certain reports
and communications to be delivered to such shareholders may be combined in the
same mailing package, and certain duplicate reports and communications may be
eliminated. Similarly, account statements to be sent to such shareholders may
be combined in the same mailing package or consolidated into a single state-
ment. However, a shareholder may request that the foregoing policies not be ap-
plied to the shareholder's account.
INVESTMENT MANAGER
Zurich Kemper Investments, Inc. ("ZKI"), 222 South Riverside Plaza, Chicago,
Illinois 60606-5808, is the investment manager of the Funds and provides the
Funds with continuous professional investment supervision. ZKI has been engaged
in the management of investment funds for more than forty-eight years and is
one of the largest investment managers in the country. ZKI and its affiliates
provide investment advice and manage investment portfolios for the Kemper
Funds, affiliated insurance companies, and other corporate, pension, profit-
sharing and individual accounts representing approximately $76 billion under
management, including $10 billion in money market fund assets. ZKI acts as in-
vestment manager for 30 open-end and seven closed-end investment companies,
with 77 separate investment portfolios, representing more than 3 million share-
holder accounts. ZKI is an indirect subsidiary of Zurich Insurance Company, an
internationally recognized company providing services in life and non-life in-
surance, reinsurance and asset management.
Responsibility for overall management of the Funds rests with the Board of
Trustees and officers of the Trust. Professional investment supervision is pro-
vided by ZKI. The investment management agreement provides that ZKI shall act
as the Funds' investment adviser, manage their investments and provide the
Funds with various services and facilities.
Frank J. Rachwalski, Jr. is the portfolio manager of the Funds. He has served
in this capacity since the Funds commenced operations. Mr. Rachwalski joined
ZKI in January, 1973 and is currently a Senior Vice President of ZKI and a Vice
President of the Trust. He received a B.B.A. and an M.B.A. from Loyola Univer-
sity, Chicago, Illinois.
For the services and facilities furnished, the Trust pays an annual invest-
ment management fee, payable monthly, on a graduated basis ranging from .50% of
the first $215 million of average daily net assets of the Trust, to .25% of av-
erage daily net assets of the Trust over $800 million.
19
<PAGE>
Investment Manager--continued
Kemper Distributors, Inc. ("KDI"), 222 South Riverside Plaza, Chicago, Illi-
nois 60606-5808, an affiliate of ZKI, is the principal underwriter of the Funds
and acts as agent of the Funds in the sale of their shares.
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas
City, Missouri 64105, as custodian, and State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110, as sub-custodian, have cus-
tody of all securities and cash of the Funds. They attend to the collection of
principal and income, and payment for and collection of proceeds of securities
bought and sold by the Funds. IFTC is also the Funds' transfer and dividend-
paying agent. Pursuant to a services agreement with IFTC, Kemper Service Compa-
ny, 811 Main Street, Kansas City, Missouri 64105, an affiliate of ZKI, serves
as Shareholder Service Agent of the Funds.
PERFORMANCE
The Funds may advertise several types of performance information, including
"yield," "effective yield," "total return," "average annual total return" and,
for the Tax-Free Money Fund only, "tax equivalent yield." Please remember that
performance information is based upon historical earnings and is not represen-
tative of future performance. The yield of a Fund refers to the net investment
income generated by a hypothetical investment in the Fund over a specific sev-
en-day period. This net investment income is then annualized, which means that
the net invest- ment income generated during the seven-day period is assumed to
be generated each week over an annual period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but the net in-
vestment income earned by the investment is assumed to be compounded weekly
when annualized. The effective yield will be slightly higher than the yield due
to this compounding effect. Average annual total return and total return meas-
ure both net investment income and any realized or unrealized appreciation or
depreciation of a Fund's investments, assuming reinvestment of all dividends.
Average annual total return represents the average annual percentage change
over the period and total return represents the aggregate percentage or dollar
value change over the period. Tax equivalent yield is the yield that a taxable
investment must generate in order to equal the Tax-Free Money Fund's yield for
an investor in a stated federal income tax bracket (normally assumed to be the
maximum tax rate). Tax equivalent yield is based upon, and will be higher than,
the portion of the Tax-Free Money Fund's yield that is tax-exempt.
The performance of a Fund may be compared to that of other money market mu-
tual funds or mutual fund indexes as reported by independent mutual fund re-
porting services such as Lipper Analytical Services, Inc. ("Lipper"). A Fund's
performance and its relative size may be compared to other money market mutual
funds as reported by IBC Financial Data, Inc.'s Money Fund Report(R) or Money
Market Insight(R), reporting services on money market funds. Investors may want
to compare a Fund's performance to that of various bank products as reported by
BANK RATE MONITOR(TM), a financial reporting service that weekly publishes av-
erage rates of bank and thrift institution money market deposit accounts and
interest bearing checking accounts or various certificate of deposit indexes.
The performance of a Fund also may be compared to that of U.S. Treasury bills
and notes. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured. In addition, investors may
want to compare a Fund's performance to the Consumer Price Index either di-
rectly or by calculating its "real rate of return," which adjusts its return
for the effects of inflation.
Information may be quoted from publications such as Morningstar, Inc., The
Wall Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago
Tribune, USA Today, Institutional Investor and Registered Representative. The
Funds may depict the historical performance of the securities in which a Fund
may invest over periods reflecting a variety of market or economic conditions
either alone or in comparison with alternative investments, performance in
20
<PAGE>
Performance--continued
dexes of those investments or economic indicators. Each Fund may also describe
its portfolio holdings and depict its size or relative size compared to other
mutual funds, the number and make-up of its shareholder base and other descrip-
tive factors concerning the Fund.
Each Fund's returns will fluctuate. Shares of the Funds are not insured. Ad-
ditional information concerning a Fund's performance appears in the Statement
of Additional Information.
CAPITAL STRUCTURE
Kemper Money Funds is an open-end, diversified, management investment compa-
ny, organized as a business trust under the laws of Massachusetts on August 9,
1985. Effective February 1, 1996, the name of the Trust was changed from Kemper
Money Market Fund to Kemper Money Funds. Effective November 29, 1985, the Money
Market Fund, pursuant to a reorganization, succeeded to the assets and liabili-
ties of Kemper Money Market Fund, Inc., a Maryland corporation organized on
September 19, 1974. Effective November 14, 1986, the Government Money Fund suc-
ceeded to the assets and liabilities of Kemper Government Money Market Fund, a
business trust organized under the laws of Massachusetts on August 9, 1985. Ef-
fective November 29, 1985, Kemper Government Money Market Fund succeeded to the
assets and liabilities of Kemper Government Money Market Fund, Inc., a Maryland
corporation organized November 3, 1981. The Tax-Free Money Fund commenced pub-
lic offering of its shares on September 10, 1987. The Trust may issue an unlim-
ited number of shares of beneficial interest, all having no par value. While
only shares of the three previously described Funds are presently being of-
fered, the Board of Trustees may authorize the issuance of additional series if
deemed desirable, each with its own investment objective, policies and restric-
tions. Since the Trust may offer multiple series, it is known as a "series com-
pany." Shares of a Fund have equal noncumulative voting rights and equal rights
with respect to dividends, assets and liquidation of such Fund. Shares are
fully paid and nonassessable when issued, are transferable without restriction
and have no preemptive or conversion rights. The Trust is not required to hold
annual shareholders' meetings and does not intend to do so. However, it will
hold special meetings as required or deemed desirable for such purposes as
electing trustees, changing fundamental policies or approving an investment
management agreement. Subject to the Agreement and Declaration of Trust of the
Trust, shareholders may remove trustees. Shareholders will vote by Fund and not
in the aggregate except when voting in the aggregate is required under the 1940
Act, such as for the election of trustees.
21
<PAGE>
ACCOUNT SERVICES DIRECTORY
To avoid delays in the future, it is a good idea to sign up for account
services and features at the time an account is opened.
TO OPEN A NEW ACCOUNT
If you would like to open a new account or need a question answered, call a
Kemper Money Fund Specialist between 8 a.m. and 6 p.m. Central time at 1-800-
537-6001.
CURRENT ACCOUNT ASSISTANCE
If you have a question about a current account, call a Shareholder Services
Representative between 7 a.m. and 6 p.m. Central time, Monday through Friday,
and between 9 a.m. and 2 p.m. Central time on Saturday at 1-800-621-1048.
For better service, please have your account number and your most recent state-
ment at hand. For a special phone line for hearing impaired shareholders with a
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD), call 1-800-972-3006.
24-HOUR ACCOUNT INFORMATION
From a touch-tone phone, you can use KemperACCESS, our automated account infor-
mation service, to obtain the following information 24 hours a day (1-800-972-
3060):
. account balance . last dividend paid
. current yield . transaction confirmation
. pre-authorized transfers to and from a bank account
CHECKWRITING
You can write any number of checks for $500 or more against your available ac-
count balance. See MoneyPlusSM Account for a no-minimum checking option.
AUTOMATIC CHECK DEPOSIT
You can save time by signing up for direct deposit of Payroll or Government
checks into your Kemper Money Funds account. Ask your employer about how to ar-
range this with all or part of your paycheck. Government Direct Deposit forms
are available by calling 1-800-621-1048.
AUTOMATIC INVESTING
If you already directly deposit your paycheck into a bank account, you may want
to consider using Bank Direct Deposit to help set aside some money for the
future. You specify the frequency and amount of your investment, and Kemper will
automatically have money from your personal checking or savings account
transferred to your Kemper Money Funds account. And this service may be changed
at any time . . . even de-ferred for a few months if you need to.
MONEY-BY-PHONE
You can make transfers from your money market account to your bank account with
just a phone call if you sign up for EXPRESS-Transfer. This feature also allows
you to transfer money to your Kemper Money Funds account over-the-phone. These
transfers generally take 1-2 days, depending on the time of day that you call
Shareholder Services.
You can also request an expedited (same day) wire transfer from your money mar-
ket account to your bank if you call before 11 a.m. Central time ($1,000 mini-
mum redemption).
AUTOMATIC BILL-PAYING
The Systematic Withdrawal feature can be used to pay a regular, important bill
such as a mortgage or car payment. You designate when and how much, and Kemper
will make the payment directly from your money market account.
MONEYPLUSSM ACCOUNT
A powerful money management feature that makes it easy and economical to use
your Kemper Money Funds for day-to-day transactions. For a $65 annual fee, you
get unlimited checkwriting and a VISA Gold Check Card to use for debit and ATM
transactions. For special forms to sign-up for this add-on feature, call 1-800-
537-6001. For customer service on the VISA card, call 1-800-346-8904.
EXCHANGES WITH KEMPER MUTUAL FUNDS
You can exchange between Kemper Funds with just a phone call to Shareholder
Services between 8 a.m. and 3 p.m. Central time, Monday through Friday. To ex-
change between the Kemper Funds, call Kemper Shareholder Services at 1-800-621-
1048.
22
<PAGE>
Kemper Distributors, Inc.
222 South Riverside Plaza
Chicago, Illinois 60606-5808
LOGO OF KEMPER FUNDS
[RECYCLING LOGO] printed on recycled paper
KMMF-1 (11/96)
KD1 610110
PROSPECTUS
Kemper
Money
Funds
November 10, 1996
Kemper Money Market Fund
Kemper Government Money Fund
Kemper Tax-Free Money Fund
[LOGO OF KEMPER FUNDS]
<PAGE>
KEMPER MONEY FUNDS
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
LOCATION IN STATEMENT OF
ITEM NUMBER OF FORM N-1A ADDITIONAL INFORMATION
------------------------ ------------------------
<C> <S>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Inapplicable
13. Investment Objectives and Policies....... Investment Restrictions;
Municipal Securities;
Appendix
14. Management of the Fund................... Investment Manager; Officers
and Trustees
15. Control Persons and Principal Holders of
Securities............................... Officers and Trustees
16. Investment Advisory and Other Services... Investment Manager; Officers
and Trustees
17. Brokerage Allocation and Other Practices. Portfolio Transactions
18. Capital Stock and Other Securities....... Shareholder Rights
19. Purchase, Redemption and Pricing of Secu-
rities Purchase and Redemption of
Being Offered............................ Shares;
Dividends, Net Asset Value and
Taxes
20. Tax Status............................... Dividends, Net Asset Value and
Taxes
21. Underwriters............................. Investment Manager
22. Calculations of Performance Data......... Performance
23. Financial Statements..................... Financial Statements
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 10, 1996
KEMPER MONEY FUNDS
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606-5808
(800) 621-1048
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the prospectus of Kemper Money Funds (the "Trust")
dated November 10, 1996. The prospectus may be obtained without charge by
calling or writing Kemper Money Funds.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Restrictions............................................. B-1
Municipal Securities................................................ B-4
Investment Manager.................................................. B-5
Portfolio Transactions.............................................. B-6
Purchase and Redemption of Shares................................... B-7
Dividends, Net Asset Value and Taxes................................ B-8
Performance......................................................... B-9
Officers and Trustees............................................... B-14
Special Features.................................................... B-16
Shareholder Rights.................................................. B-16
Appendix--Ratings of Investments.................................... B-18
</TABLE>
The financial statements appearing in the Funds' 1996 Annual Report to
Shareholders are incorporated herein by reference. The Funds' Annual Report
accompanies this Statement of Additional Information.
KMMF-13 11/96
LOGO
printed on recycled paper
<PAGE>
INVESTMENT RESTRICTIONS
The Kemper Money Market Fund (the "Money Market Fund"), Kemper Government
Money Fund (the "Government Money Fund") and Kemper Tax-Free Money Fund (the
"Tax-Free Money Fund") have adopted certain investment restrictions which,
together with the investment objective and policies of each Fund, cannot be
changed without approval by holders of a majority of such Fund's outstanding
voting shares. As defined in the Investment Company Act of 1940, this means
the lesser of the vote of (a) 67% of the shares of the Fund present at a
meeting where more than 50% of the outstanding shares of the Fund are present
in person or by proxy; or (b) more than 50% of the outstanding shares of the
Fund.
THE MONEY MARKET FUND may not:
(1) Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds or industrial revenue bonds (except
through the purchase of debt obligations in accordance with its investment
objective and policies).
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the value of the Fund's
assets would be invested in securities of that issuer.
(3) Purchase more than 10% of any class of securities of any issuer. All debt
securities and all preferred stocks are each considered as one class.
(4) Invest more than 5% of the Fund's total assets in securities of issuers
which with their predecessors have a record of less than three years
continuous operation, and equity securities of issuers which are not readily
marketable.
(5) Enter into repurchase agreements if, as a result thereof, more than 10% of
the Fund's total assets valued at the time of the transaction would be subject
to repurchase agreements maturing in more than seven days.
(6) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and
policies).
(7) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
money market instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three business days,
reduce its indebtedness to the extent necessary. The Fund will not borrow for
leverage purposes.
(8) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the clearance
of transactions.
(9) Write, purchase or sell puts, calls or combinations thereof.
(10) Concentrate more than 25% of the value of its assets in any one industry;
provided, however, that the Fund reserves freedom of action to invest up to
100% of its assets in certificates of deposit or bankers' acceptances when
management considers it to be in the best interests of the Fund in attaining
its investment objective.
(11) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Trust or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more
than 5% of the securities of such issuer.
B-1
<PAGE>
(12) Invest more than 5% of the Fund's total assets in securities restricted
as to disposition under the federal securities laws (except commercial paper
issued under Section 4(2) of the Securities Act of 1933).
(13) Invest for the purpose of exercising control or management of another
issuer.
(14) Invest in commodities or commodity futures contracts or in real estate,
although it may invest in securities which are secured by real estate and
securities of issuers which invest or deal in real estate.
(15) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
(16) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
(17) Underwrite securities issued by others except to the extent the Fund may
be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities.
(18) Issue senior securities as defined in the Investment Company Act of 1940.
THE GOVERNMENT MONEY FUND may not:
(1) Purchase securities or make investments other than in accordance with its
investment objective and policies.
(2) Enter into repurchase agreements if, as a result thereof, more than 10% of
the Fund's total assets valued at the time of the transaction would be subject
to repurchase agreements maturing in more than seven days.
(3) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and
policies).
(4) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three business days,
reduce its indebtedness to the extent necessary. The Fund will not borrow for
leverage purposes.
(5) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the clearance
of transactions.
(6) Underwrite securities issued by others except to the extent the Fund may
be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of Fund securities.
(7) Issue senior securities as defined in the Investment Company Act of 1940.
THE TAX-FREE MONEY FUND may not:
(1) Purchase securities if as a result of such purchase 25% or more of the
Fund's total assets would be invested in any one industry or in any one state.
Municipal Securities and obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities are not considered an industry
for purposes of this restriction.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities) if as a
result more than 5% of the value of the Fund's assets would be invested in the
B-2
<PAGE>
securities of such issuer. For purposes of this limitation, the Fund will
regard the entity which has the primary responsibility for the payment of
interest and principal as the issuer.
(3) Invest more than 5% of the Fund's total assets in industrial development
bonds sponsored by companies which with their predecessors have less than
three years' continuous operation.
(4) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and
policies).
(5) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
money market instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three business days,
reduce its indebtedness to the extent necessary. The Fund will not borrow for
leverage purposes.
(6) Make short sales of securities or purchase securities on margin, except to
obtain such short-term credits as may be necessary for the clearance of
transactions.
(7) Write, purchase or sell puts, calls or combinations thereof, although the
Fund may purchase Municipal Securities subject to Standby Commitments in
accordance with its investment objective and policies.
(8) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Trust or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more
than 5% of the securities of such issuer.
(9) Invest more than 5% of the Fund's total assets in securities restricted as
to disposition under the federal securities laws (except commercial paper
issued under Section 4(2) of the Securities Act of 1933).
(10) Invest for the purpose of exercising control or management of another
issuer.
(11) Invest in commodities or commodity futures contracts or in real estate
except that the Fund may invest in Municipal Securities secured by real estate
or interests therein.
(12) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in Municipal Securities of
issuers which invest in or sponsor such programs.
(13) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
(14) Underwrite securities issued by others except to the extent the Fund may
be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities.
(15) Issue senior securities as defined in the Investment Company Act of 1940.
If a Fund adheres to a percentage restriction at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values or net assets will not be considered a violation. The
Funds did not borrow money, as permitted by investment restrictions number 7
(Money Market Fund), number 4 (Government Money Fund) and number 5 (Tax-Free
Money Fund), in the latest fiscal year; and they have no present intention of
borrowing during the coming year. In any event, borrowings would only be as
permitted by such restrictions. The Tax-Free Money Fund may invest more than
25% of its total assets in industrial development bonds.
B-3
<PAGE>
MUNICIPAL SECURITIES
Municipal Securities which the Tax-Free Money Fund may purchase include,
without limitation, debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as airports, bridges, highways, housing, hospitals, mass transportation,
public utilities, schools, streets, and water and sewer works. Other public
purposes for which Municipal Securities may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
obtaining funds to loan to other public institutions and facilities.
Municipal Securities, such as industrial development bonds, are issued by or
on behalf of public authorities to obtain funds for purposes including
privately operated airports, housing, conventions, trade shows, ports, sports,
parking or pollution control facilities or for facilities for water, gas,
electricity or sewage and solid waste disposal. Such obligations, which may
include lease arrangements, are included within the term Municipal Securities
if the interest paid thereon qualifies as exempt from federal income tax.
Other types of industrial development bonds, the proceeds of which are used
for the construction, equipment, repair or improvement of privately operated
industrial or commercial facilities, may constitute Municipal Securities,
although current federal tax laws place substantial limitations on the size of
such issues.
Municipal Securities generally are classified as "general obligation" or
"revenue." General obligation notes are secured by the issuer's pledge of its
full credit and taxing power for the payment of principal and interest.
Revenue notes are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source. Industrial development bonds
which are Municipal Securities are in most cases revenue bonds and generally
do not constitute the pledge of the credit of the issuer of such bonds.
Examples of Municipal Securities that are issued with original maturities of
one year or less are short-term tax anticipation notes, bond anticipation
notes, revenue anticipation notes, construction loan notes, pre-refunded
municipal bonds, warrants and tax-free commercial paper.
Tax anticipation notes typically are sold to finance working capital needs of
municipalities in anticipation of receiving property taxes on a future date.
Bond anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under the Federal Revenue Sharing Program. Construction loan
notes are instruments insured by the Federal Housing Administration with
permanent financing by "Fannie Mae" (the Federal National Mortgage
Association) or "Ginnie Mae" (the Government National Mortgage Association) at
the end of the project construction period. Pre-refunded municipal bonds are
bonds which are not yet refundable, but for which securities have been placed
in escrow to refund an original municipal bond issue when it becomes
refundable. Tax-free commercial paper is an unsecured promissory obligation
issued or guaranteed by a municipal issuer. The Tax-Free Money Fund may
purchase other Municipal Securities similar to the foregoing, which are or may
become available, including securities issued to pre-refund other outstanding
obligations of municipal issuers.
The federal bankruptcy statutes relating to the adjustments of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or
consent of creditors, which proceedings could result in material adverse
changes in the rights of holders of obligations issued by such subdivisions or
authorities.
B-4
<PAGE>
Litigation challenging the validity under state constitutions of present
systems of financing public education has been initiated or adjudicated in a
number of states, and legislation has been introduced to effect changes in
public school finances in some states. In other instances there has been
litigation challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or federal law which ultimately could
affect the validity of those Municipal Securities or the tax-free nature of
the interest thereon.
INVESTMENT MANAGER
INVESTMENT MANAGER. Zurich Kemper Investments, Inc. ("ZKI") is the Funds'
investment manager. ZKI is wholly owned by ZKI Holding Corp. ZKI Holding Corp.
is a more than 90% owned subsidiary of Zurich Holding Company of America,
Inc., which is a wholly owned subsidiary of Zurich Insurance Company, an
internationally recognized company providing services in life and non-life
insurance, reinsurance and asset management. Pursuant to an investment
management agreement, ZKI acts as each Fund's investment adviser, manages its
investments, administers its business affairs, furnishes office facilities and
equipment, provides clerical, bookkeeping and administrative services,
provides shareholder and information services and permits any of its officers
or employees to serve without compensation as trustees or officers of the
Trust if elected to such positions. The Trust pays the expenses of its
operations, including the fees and expenses of independent auditors, counsel,
custodian and transfer agent and the cost of share certificates, reports and
notices to shareholders, costs of calculating net asset value, brokerage
commissions or transaction costs, taxes, registration fees, the fees and
expenses of qualifying the Fund and its shares for distribution under federal
and state securities laws and membership dues in the Investment Company
Institute or any similar organization. Trust expenses generally are allocated
among the Funds on the basis of relative net assets at the time of allocation,
except that expenses directly attributable to a particular Fund are charged to
that Fund.
The investment management agreement continues in effect from year to year for
each Fund so long as its continuation is approved at least annually (a) by a
majority of the trustees who are not parties to such agreement or interested
persons of any such party except in their capacity as trustees of the Trust
and (b) by the shareholders of each Fund or the Board of Trustees. If
continuation is not approved for a Fund, the investment management agreement
nevertheless may continue in effect for the Funds for which it is approved and
ZKI may continue to serve as investment manager for the Fund for which it is
not approved to the extent permitted by the Investment Company Act of 1940.
The agreement may be terminated at any time upon 60 days notice by either
party, or by a majority vote of the outstanding shares of a Fund with respect
to that Fund, and will terminate automatically upon assignment. Shareholders
of each Fund will vote separately upon continuation of the investment
management agreement and upon other matters affecting only an individual Fund.
Additional Funds may be subject to a different agreement. The agreement
provides that ZKI shall not be liable for any error of judgment or of law, or
for any loss suffered by the Funds in connection with the matters to which the
agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of ZKI in the performance of its obligations
and duties, or by reason of its reckless disregard of its obligations and
duties under the agreement.
For the services and facilities furnished, the Trust pays an annual investment
management fee, payable monthly, on a graduated basis of .50% of the first
$215 million of average daily net assets of the Trust, .375% on the next $335
million, .30% on the next $250 million and .25% of average daily net assets of
the Trust over $800 million. ZKI has agreed to reimburse the Trust should all
operating expenses of the Trust, including the investment management fee of
ZKI but excluding taxes, interest, extraordinary expenses and brokerage
commissions or transaction costs, exceed 1 1/2% of the first $30 million of
average net assets of the Trust and 1% of average net assets over $30 million
on an annual basis. The investment management fee and the expense limitation
are
B-5
<PAGE>
computed based upon the combined average daily net assets of the Funds and are
allocated among such Funds based upon the relative net assets of each Fund.
For its services as investment adviser and manager and for facilities furnished
during the fiscal years ended July 31 indicated, the Funds incurred investment
management fees as shown.
<TABLE>
<CAPTION>
FUND 1996 1995 1994
- ---- ----------- ----------- -----------
<S> <C> <C> <C>
Money Market................................ $11,134,000 $10,924,000 $11,439,000
Government Money............................ $ 1,747,000 $ 1,637,000 $ 1,840,000
Tax-Free Money.............................. $ 2,032,000 $ 2,072,000 $ 2,100,000
</TABLE>
PRINCIPAL UNDERWRITER. Kemper Distributors, Inc. ("KDI"), an affiliate of ZKI,
is the principal underwriter for shares of the Funds and acts as agent of the
Funds in the sale of their shares. The Funds pay the cost for the prospectus
and shareholder reports to be set in type and printed for existing
shareholders, and KDI pays for the printing and distribution of copies thereof
used in connection with the offering of shares to prospective investors. KDI
also pays for supplementary sales literature and advertising costs. Terms of
continuation, termination and assignment under the underwriting agreement are
identical to those described above with regard to the investment management
agreement, except that termination other than upon assignment requires six
months notice and shares are voted in the aggregate and not by Fund whenever
shareholders vote with respect to such agreement.
Certain officers or trustees of the Trust are also directors or officers of ZKI
and KDI as indicated under "Officers and Trustees."
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, as custodian, and
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, as sub-custodian, have custody of all securities and cash of the Funds.
They attend to the collection of principal and income, and payment for and
collection of proceeds of securities bought and sold by the Funds. IFTC is also
the Funds' transfer and dividend-paying agent. Pursuant to a services agreement
with IFTC, Kemper Service Company ("KSvC"), an affiliate of ZKI, serves as
"Shareholder Service Agent." IFTC receives, as transfer agent, and pays to
KSvC, annual account fees of a maximum of $8 per account plus account set-up,
transaction, maintenance and out-of-pocket expense reimbursement. For the
fiscal year ended July 31, 1996, IFTC remitted shareholder service fees in the
amount of $6,709,000 to KSvC as Shareholder Service Agent.
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Funds' independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Funds' annual financial statements, review certain
regulatory reports and the Funds' federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Funds. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken principally to pursue the objective of
each Fund in relation to movements in the general level of interest rates, to
invest money obtained from the sale of Fund shares, to reinvest proceeds from
maturing portfolio securities and to meet redemptions of Fund shares. This may
increase or decrease the yield of a Fund depending upon management's ability to
correctly time and execute such transactions. Since a Fund's assets are
invested in securities with short maturities, its portfolio will turn over
several times a year. Securities with maturities of less than one year are
excluded from required portfolio turnover rate calculations, so each Fund's
portfolio turnover rate for reporting purposes is zero.
B-6
<PAGE>
"ZKI" and its affiliates furnish investment management services for the Kemper
Funds and other clients including affiliated insurance companies. These
entities may share some common research and trading facilities. At times
investment decisions may be made to purchase or sell the same investment
security for a Fund and for one or more of the other clients of ZKI or its
affiliates. When two or more of such clients are simultaneously engaged in the
purchase or sale of the same security through the same trading facility, the
transactions are allocated as to amount and price in a manner considered
equitable to each.
ZKI, in effecting purchases and sales of portfolio securities for the account
of each Fund, will implement the Funds' policy of seeking the best execution of
orders, which includes best net prices. Consistent with this policy, orders for
portfolio transactions are placed with broker-dealer firms giving consideration
to the quality, quantity and nature of the firm's professional services which
include execution, clearance procedures, reliability and other factors. In
selecting among the firms believed to meet the criteria for handling a
particular transaction, ZKI may give consideration to those firms that provide
market, statistical and other research information to the Funds and ZKI and its
affiliates. Subject to seeking best execution of an order, brokerage is
allocated on the basis of all services provided. Any research benefits derived
are available for all clients, including clients of affiliated companies. Since
it is only supplementary to ZKI's own research efforts and must be analyzed and
reviewed by ZKI's staff, the receipt of research information is not expected to
materially reduce expenses. The Funds expect that purchases and sales of
portfolio securities usually will be principal transactions. Portfolio
securities will normally be purchased directly from the issuer or from an
underwriter or market maker for the securities. There are normally no brokerage
commissions paid by the Funds for such purchases and none were paid by any Fund
during the Funds' last three fiscal years. Purchases from underwriters include
a commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked prices.
PURCHASE AND REDEMPTION OF SHARES
Shares of each Fund are sold at their net asset value next determined after an
order and payment are received in the form described in the Funds' prospectus.
There is no sales charge. The minimum initial investment in any Fund is $1,000
and the minimum subsequent investment is $100 but such minimum amounts may be
changed at any time. See the prospectus for certain exceptions to these
minimums. The Funds may waive the minimum for purchases by trustees, directors,
officers or employees of the Trust or ZKI and its affiliates and the $3 monthly
fee assessed on accounts below $1,000. An investor wishing to open an account
should use the Account Application Form available from the Funds and choose one
of the methods of purchase described in the Funds' prospectus. An order for the
purchase of shares that is accompanied by a check drawn on a foreign bank
(other than a check drawn on a Canadian bank in U.S. Dollars) will not be
considered in proper form and will not be processed unless and until the Fund
determines that it has received payment of the proceeds of the check. The time
required for such a determination will vary and cannot be determined in
advance.
Upon receipt by the Shareholder Service Agent, of a request for redemption in
proper form, shares will be redeemed by a Fund at the applicable net asset
value as described in the Funds' prospectus. A shareholder may elect to use
either the regular or expedited redemption procedures.
The Funds may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange ("Exchange") is
closed other than customary weekend and holiday closings
B-7
<PAGE>
or during any period in which trading on the Exchange is restricted, (b) during
any period when an emergency exists as a result of which (i) disposal of a
Fund's investments is not reasonably practicable, or (ii) it is not reasonably
practicable for the Fund to determine the value of its net assets, or (c) for
such other periods as the Securities and Exchange Commission may by order
permit for the protection of the Funds' shareholders.
Although it is the Trust's present policy to redeem in cash, if the Board of
Trustees determines that a material adverse effect would be experienced by the
remaining shareholders if payment were made wholly in cash, the Trust will pay
the redemption price in whole or in part by a distribution of portfolio
securities in lieu of cash, in conformity with the applicable rules of the
Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
occurs, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition could incur
certain transaction costs. Such a redemption would not be as liquid as a
redemption entirely in cash. The Trust has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940 pursuant to which the Trust is
obligated to redeem shares of a Fund solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder of record.
DIVIDENDS, NET ASSET VALUE AND TAXES
DIVIDENDS. Dividends are declared daily and paid monthly. Shareholders will
receive dividends in additional shares of the same Fund unless they elect to
receive cash. Dividends will be reinvested monthly at the net asset value
normally on the 25th of each month if a business day, otherwise on the prior
business day. The Funds will pay shareholders who redeem their entire accounts
all unpaid dividends at the time of redemption not later than the next dividend
payment date.
Each Fund calculates its dividends based on its daily net investment income.
For this purpose, the net investment income of a Fund consists of (a) accrued
interest income plus or minus amortized discount or premium (excluding market
discount for the Tax-Free Money Fund), (b) plus or minus all short-term
realized gains and losses on portfolio assets and (c) minus accrued expenses
allocated to the Fund. Expenses of the Funds are accrued each day. While each
Fund's investments are valued at amortized cost, there will be no unrealized
gains or losses on portfolio securities. However, should the net asset value of
a Fund deviate significantly from market value, the Board of Trustees could
decide to value the portfolio securities at market value and then unrealized
gains and losses would be included in net investment income above.
NET ASSET VALUE. As described in the prospectus, each Fund values its portfolio
instruments at amortized cost, which does not take into account unrealized
capital gains or losses. This involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument. Calculations are made to compare the value of a Fund's
investments valued at amortized cost with market values. Market valuations are
obtained by using actual quotations provided by market makers, estimates of
market value, or values obtained from yield data relating to classes of money
market instruments published by reputable sources at the mean between the bid
and asked prices for the instruments. If a deviation of 1/2 of 1% or more were
to occur between the net asset value per share calculated by reference to
market values and a Fund's $1.00 per share net asset value, or if there were
any other
B-8
<PAGE>
deviation that the Board of Trustees of the Trust believed would result in a
material dilution to shareholders or purchasers, the Board of Trustees would
promptly consider what action, if any, should be initiated. If a Fund's net
asset value per share (computed using market values) declined, or were
expected to decline, below $1.00 (computed using amortized cost), the Board of
Trustees of the Trust might temporarily reduce or suspend dividend payments in
an effort to maintain the net asset value at $1.00 per share. As a result of
such reduction or suspension of dividends or other action by the Board of
Trustees, an investor would receive less income during a given period than if
such a reduction or suspension had not taken place. Such action could result
in investors receiving no dividends for the period during which they held
shares and receiving, upon redemption, a price per share lower than that which
they paid. On the other hand, if a Fund's net asset value per share (computed
using market values) were to increase, or were anticipated to increase, above
$1.00 (computed using amortized cost), the Board of Trustees of the Trust
might supplement dividends in an effort to maintain the net asset value at
$1.00 per share.
TAXES. Interest on indebtedness which is incurred to purchase or carry shares
of a mutual fund portfolio which distributes exempt-interest dividends during
the year is not deductible for federal income tax purposes. Further, the Tax-
Free Money Fund may not be an appropriate investment for persons who are
"substantial users' of facilities financed by industrial development bonds
held by the Tax-Free Money Fund or are "related persons' to such users; such
persons should consult their tax advisers before investing in the Tax-Free
Money Fund.
The "Superfund Act of 1986" (the "Superfund Act") imposes a separate tax on
corporations at a rate of 0.12 percent of the excess of such corporation's
"modified alternative minimum taxable income" over $2 million. A portion of
tax-exempt interest, including exempt-interest dividends from the Tax-Exempt
Portfolio, may be includible in modified alternative minimum taxable income.
Corporate shareholders are advised to consult their tax advisers with respect
to the consequences of the Superfund Act.
PERFORMANCE
As reflected in the prospectus, the historical performance calculation for a
Fund may be shown in the form of "yield," "effective yield," "total return,"
"average annual total return" and, for the Tax-Free Money Fund only, "tax
equivalent yield." These various measures of performance are described below.
Each Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. Under that
method, the current yield quotation is based on a seven-day period and is
computed for each Fund as follows. The first calculation is net investment
income per share, which is accrued interest on Fund securities, plus or minus
amortized discount or premium (excluding market discount for the Tax-Free Money
Fund), less accrued expenses. This number is then divided by the price per share
(expected to remain constant at $1.00) at the beginning of the period ("base
period return"). The result is then divided by 7 and multiplied by 365 and the
resulting yield figure is carried to the nearest one-hundredth of one percent.
Realized capital gains or losses and unrealized appreciation or depreciation of
investments are not included in the calculation.
Each Fund's effective yield is determined by taking the base period return
(computed as described above) and calculating the effect of assumed compounding.
The formula for the effective yield is: (base period return + 1)/365/7/ - 1.
Average annual total return ("AATR") is found for a specific period by first
taking a hypothetical $1,000 investment ("initial investment") on the first
day of the period and computing the "redeemable value" of that investment at
the end of the period. The redeemable value is then divided by the initial
investment, and this quotient is taken to
B-9
<PAGE>
the Nth root (N representing the number of years in the period) and 1 is
subtracted from the result, which is then expressed as a percentage. The
calculation assumes that all dividends have been reinvested at net asset value
on the reinvestment dates.
Total return is not calculated according to a standard formula, except when
calculated for the "Financial Highlights" table in the financial statements.
Total return is calculated similarly to AATR but is not annualized. It may be
shown as a percentage or the increased dollar value of the hypothetical
investment over the period.
All performance information shown below is for periods ended July 31, 1996.
<TABLE>
<CAPTION>
*TAX- AATR TOTAL TOTAL TOTAL
YIELD EFFECTIVE YIELD EQUIVALENT YIELD AATR 5 AATR RETURN RETURN RETURN
FUND 7 DAYS 7 DAYS 7 DAYS 1 YR. YRS. 10 YRS. 1 YR. 5 YRS. 10 YRS.
- ---- ------ --------------- ---------------- ----- ---- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Kemper Money Market..... 5.1% 5.2% -- 5.4% 4.3% 5.9% 5.3% 23.1% 77.1%
Kemper Government Money. 5.1 5.2 -- 5.4 4.3 5.8 5.4 23.3 76.1
Kemper Tax-Free Money**. 3.3 3.4 5.3% 3.5 3.1 N/A 3.4 16.3 43.3**
</TABLE>
- -------
* Based upon a marginal federal income tax rate of 37.1%.
**Since 9/10/87.
The tax equivalent yield of the Tax-Free Money Fund is computed by dividing
that portion of the Fund's yield (computed as described above) which is tax-
exempt by (one minus the stated federal income tax rate) and adding the result
to that portion, if any, of the yield of the Fund that is not tax-exempt. For
additional information concerning tax-exempt yields, see "Tax-Exempt versus
Taxable Yield" below.
Each Fund's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in a Fund will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
which the investment in a Fund is held, but also on such matters as Fund
expenses.
Money market mutual funds allow smaller investors to participate in the money
market and to receive money market yields that previously were available only
to those investors with large sums of money. Prior to the introduction of the
first money market mutual funds, small investors wanting to manage their cash
reserves had a limited choice of bank products available with a predetermined
set of interest rates such as passbook savings accounts and checking accounts.
Currently, there are hundreds of money market funds managing billions of
dollars for millions of investors. Kemper Money Funds is one of the largest
money market funds.
Investors have an extensive choice of money market funds and money market
deposit accounts and the information below may be useful to investors who wish
to compare the past performance of the Money Market Fund, the Government Money
Fund and the Tax-Free Money Fund with that of their competitors. Past
performance cannot be a guarantee of future results.
As indicated in the prospectus (see "Performance"), the performance of the
Funds may be compared to that of other mutual funds tracked by Lipper
Analytical Services, Inc. ("Lipper"). Lipper performance calculations include
the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. A Fund's performance also may be compared to
other money market funds reported by IBC Financial Data, Inc.'s Money Fund
Report(R), or Money Market Insight(R), reporting services on money market
funds. As reported by IBC, all investment results represent total return
(annualized results for the period net of management fees and expenses) and
one year investment results are effective annual yields assuming reinvestment
of dividends.
Lipper and IBC reported the following results for the Money Market Fund and
the Government Money Fund.
B-10
<PAGE>
LIPPER ANALYTICAL SERVICES, INC.
IBC
<TABLE>
<CAPTION>
MONEY MARKET
FUND'S
RANKING VS
MONEY MARKET
PERIOD ENDED 9/30/96 INSTRUMENT FUNDS
- -------------------- ------------------
<S> <C>
1 Year.................. 26 of 287
3 Months................ 26 of 295
1 Month................. 105 of 295
<CAPTION>
GOVERNMENT
MONEY FUND'S
RANKING VS
U.S. GOVERNMENT
PERIOD ENDED 9/30/96 MONEY MARKET FUNDS
- -------------------- ------------------
<S> <C>
1 Year.................. 7 of 112
3 Months................ 10 of 115
1 Month................. 31 of 116
</TABLE>
<TABLE>
<CAPTION>
KEMPER
MONEY AVERAGE YIELD
MARKET ALL TAXABLE
PERIOD ENDED FUND'S MONEY MARKET
9/30/96 YIELD FUNDS
- ------------ ---------- -------------
<S> <C> <C>
1 Year............ 5.27% 5.05%
1 Month........... 5.07 4.83
7 Days**.......... 5.09 4.86
<CAPTION>
KEMPER
GOVERNMENT AVERAGE YIELD
MONEY ALL TAXABLE
PERIOD ENDED FUND'S GOVERNMENT
9/30/96 YIELD MONEY FUNDS
- ------------ ---------- -------------
<S> <C> <C>
1 Year............ 5.25% 4.87%
1 Month........... 5.06 4.66
7 Days**.......... 5.04 4.69
</TABLE>
According to IBC, for the one-year period ended September 30, 1996, the Money
Market Fund ranked by yield #18 among 222 General Purpose Money Funds (this
category does not include money market funds whose shares are marketed
primarily to institutional investors). According to IBC, for the one-year
period ended September 30, 1996, the Government Money Fund ranked by yield #9
among 190 Taxable Government Money Funds (this category does not include
taxable government money funds whose shares are marketed primarily to
institutional investors). For the one year period ended September 30, 1996, the
Tax-Free Money Fund ranked by yield #7 among 120 Tax-Free Money Funds (this
category does not include tax-free money funds whose shares are marketed
primarily to institutional investors or state specific tax-free money funds).
The Money Market Fund ranked #4 among 93 General Purpose Money Funds with a
ten-year history according to IBC as of June 30, 1996. The Government Money
Fund ranked #2 among 56 Government Money Funds with a ten-year history
according to IBC as of June 30, 1996. The number of shareholder accounts in the
Funds were approximately 285,273 at September 30, 1996, including 240,490 in
the Money Market Fund, 26,775 in the Government Money Fund, and 18,008 in the
Tax-Free Money Fund. The value of shares in the Funds as of September 30, 1996
was approximately $5.6 billion, including $4.2 billion in the Money Market
Fund, $681 million in the Government Money Fund and $734 million in the Tax-
Free Money Fund. The Money Market Fund was the 29th largest in total assets of
724 Taxable Money Market Funds reported by IBC as of September 30, 1996.
The following investment comparisons are based upon information reported by
Lipper and IBC. In the comparison of the Tax-Free Money Fund's performance
versus the comparison yields, the performance of that Fund has been adjusted on
a taxable equivalent basis assuming a marginal federal tax rate of 37.1% (see
"Tax-Exempt versus Taxable Yield" below for more information concerning taxable
equivalent performance).
LIPPER ANALYTICAL SERVICES, INC.
IBC
<TABLE>
<CAPTION>
TAX-FREE MONEY
FUND'S RANKING VS
TAX-EXEMPT
PERIOD ENDED 9/30/96 MONEY MARKET FUNDS
- -------------------- ------------------
<S> <C>
1 Year.................. 7 of 132
3 Months................ 4 of 136
1 Month................. 25 of 136
</TABLE>
<TABLE>
<CAPTION>
KEMPER AVERAGE YIELD
TAX-FREE ALL TAX-FREE
PERIOD ENDED MONEY MONEY MARKET
9/30/96 FUND FUNDS
------------ -------- -------------
<S> <C> <C>
1 Year............. 3.38% 3.08%
1 Month............ 3.32 3.00
7 Days**........... 3.46 3.18
</TABLE>
B-11
<PAGE>
<TABLE>
<CAPTION>
LIPPER KEMPER LIPPER
TAX-EXEMPT TAX-FREE MONEY
KEMPER MONEY FUND MARKET
TAX- MARKET TAXABLE INSTRUMENT
FREE FUND EQUIVALENT FUNDS
PERIOD FUND AVERAGE BASIS* AVERAGE
- ------ ------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
1 Year Ended
9/30/96 3.39% 3.02% 5.39% 4.89%
</TABLE>
<TABLE>
<CAPTION>
KEMPER
TAX- AVERAGE
FREE FUND YIELD ALL
TAXABLE TAXABLE
PERIOD ENDED EQUIVALENT MONEY MARKET
9/30/96 BASIS* FUNDS
- ------------ ---------- ------------
<S> <C> <C>
1 Year............. 5.37% 5.05%
1 Month............ 5.27 4.83
7 Days**........... 5.50 4.86
</TABLE>
- --------
*Source: Zurich Kemper Investments (not reported by IBC).
**For Period Ended October 1, 1996.
For the ten, five and one year periods ended September 30, 1996, Lipper ranked
the Money Market Fund #5 of 102, #17 of 173 and #26 of 287, respectively, among
Money Market Instrument Funds. Lipper also ranked the Money Market Fund #1 in
such category for the periods shown below.
<TABLE>
<CAPTION>
NUMBER
OF
FUNDS
IN PERIOD
ATEGORYC PERIOD ENDING
- -------- -------- --------
<S> <C> <C>
41......................................................... 3 Years 12/31/80
23......................................................... 5 Years 12/31/80
50......................................................... 3 Years 12/31/81
34......................................................... 5 Years 12/31/81
110......................................................... 3 Years 12/31/84
81......................................................... 4 Years 12/31/84
66......................................................... 5 Years 12/31/84
109......................................................... 4 Years 12/31/85
80......................................................... 5 Years 12/31/85
142......................................................... 5 Years 12/31/88
39......................................................... 10 Years 12/31/88
54......................................................... 10 Years 12/31/89
33......................................................... 12 Years 12/31/89
64......................................................... 10 Years 12/31/90
79......................................................... 10 Years 12/31/91
31......................................................... 15 Years 12/31/92
36......................................................... 15 Years 12/31/93
</TABLE>
As indicated in the prospectus, a Fund's performance also may be compared on a
before or after-tax basis to various bank products, including the average rate
of bank and thrift institution money market deposit accounts, interest bearing
checking accounts and certificates of deposit as reported in the BANK RATE
MONITOR National Index(TM) of 100 leading bank and thrift institutions as
published by the BANK RATE MONITOR(TM), N. Palm Beach, Florida 33408. The rates
published by the BANK RATE MONITOR National Index(TM) are averages of the
personal account rates offered on the Wednesday prior to the date of
publication by 100 large banks and thrifts in the top ten Consolidated Standard
Metropolitan Statistical Areas.
With respect to money market deposit accounts and interest bearing checking
accounts, account minimums range upward from $2,000 in each institution and
compounding methods vary. Interest bearing checking accounts generally offer
unlimited check writing while money market deposit accounts generally restrict
the number of checks that may be written. If more than one rate is offered, the
lowest rate is used. Rates are determined by the financial institution and are
subject to change at any time specified by the institution. Generally, the
rates offered for these products take market conditions and competitive product
yields into consideration when set. Bank
B-12
<PAGE>
products represent a taxable alternative income producing product. Bank and
thrift institution deposit accounts may be insured. Shareholder accounts in
the Funds are not insured. Bank passbook savings accounts compete with money
market mutual fund products with respect to certain liquidity features but may
not offer all of the features available from a money market mutual fund, such
as check writing. Bank passbook savings accounts normally offer a fixed rate
of interest while the yield of the Funds fluctuates. Bank checking accounts
normally do not pay interest but compete with money market mutual fund
products with respect to certain liquidity features (e.g., the ability to
write checks against the account). Bank certificates of deposit may offer
fixed or variable rates for a set term. (Normally, a variety of terms are
available.) Withdrawal of these deposits prior to maturity will normally be
subject to a penalty. In contrast, shares of the Funds are redeemable at the
net asset value (normally, $1.00 per share) next determined after a request is
received, without charge.
The table below compares the seven day annualized yields of the Money Market
Fund and the Government Money Fund at September 4, 1996 with the rates for
money market deposit accounts, interest bearing checking accounts and 6-month
maturity certificates of deposit reported for September 4, 1996 for the BANK
RATE MONITOR National Index(TM) for each of the ten Consolidated Standard
Metropolitan Statistical Areas that are covered by that index and for all
areas combined. The information provided below is historical and is not
representative of future performance of any type of bank product or of any
Fund. The rates reported by the BANK RATE MONITOR(TM) are not necessarily
representative of the rates offered by banks outside of the scope of report.
Furthermore, rate information for one area of the country is not necessarily
representative of rates in other areas. The rates provided for the bank
accounts assume no compounding and are for the lowest minimum deposit required
to open an account. Higher rates may be available for large deposits.
<TABLE>
<CAPTION>
MONEY MARKET INTEREST 6-MONTH GOVERNMENT
DEPOSIT ACCOUNTS CHECKING CERTIFICATES OF MONEY MARKET MONEY FUND
AREA STATED RATE STATED RATE DEPOSIT RATE FUND YIELD YIELD
- ---- ---------------- ----------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
New York................ 2.8% 1.6% 4.4% 5.04% 5.02%
Los Angeles............. 2.3 1.0 5.0 5.04 5.02
Chicago................. 3.0 1.7 5.1 5.04 5.02
San Francisco........... 2.3 1.0 5.0 5.04 5.02
Philadelphia............ 2.2 1.1 4.1 5.04 5.02
Detroit................. 2.8 1.7 4.7 5.04 5.02
Boston.................. 2.8 1.2 5.1 5.04 5.02
Houston................. 2.9 1.5 4.9 5.04 5.02
Dallas.................. 2.8 1.3 4.8 5.04 5.02
Washington.............. 3.0 1.8 4.6 5.04 5.02
NATIONAL INDEX.......... 2.7 1.4 4.8 5.04 5.02
</TABLE>
Since January, 1984, the Money Market Fund has had a higher yield than the
BANK RATE MONITOR National Index(TM) for both money market deposit accounts
and for interest bearing checking accounts for 657 out of 657 weeks through
September 4, 1996.
Investors may also want to compare a Fund's performance to that of U.S.
Treasury bills or notes because such instruments represent alternative income
producing products. Treasury obligations are issued in selected denominations.
Rates of U.S. Treasury obligations are fixed at the time of issuance and
payment of principal and interest is backed by the full faith and credit of
the U.S. Treasury. The market value of such instruments will generally
fluctuate inversely with interest rates prior to maturity and will equal par
value at maturity. Generally, the values of obligations with shorter
maturities will fluctuate less than those with longer maturities. Each Fund's
yield will fluctuate. Also, while each Fund seeks to maintain a net asset
value per share of $1.00, there is no assurance that it will be able to do so.
B-13
<PAGE>
TAX-FREE VERSUS TAXABLE YIELD. You may want to determine which investment--tax-
free or taxable--will provide you with a higher after-tax return. To determine
the taxable equivalent yield, simply divide the yield from the tax-free
investment by the sum of [1 minus your marginal tax rate]. The tables below are
provided for your convenience in making this calculation for selected tax-free
yields and taxable income levels. These yields are presented for purposes of
illustration only and are not representative of any yield that the Tax-Free
Money Fund may generate. Both tables are based upon current law as to the 1996
federal tax rate schedules.
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS UNDER
$117,950
<TABLE>
<CAPTION>
YOUR A TAX-EXEMPT YIELD OF:
TAXABLE INCOME MARGINAL 2% 3% 4% 5% 6% 7%
FEDERAL TAX IS EQUIVALENT TO A TAXABLE
SINGLE JOINT RATE YIELD OF:
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$24,000-$58,150 $40,100-$96,900 28.0% 2.78 4.17 5.56 6.94 8.33 9.72
- ---------------------------------------------------------------------------
Over $58,150 Over $96,900 31.0 2.90 4.35 5.80 7.25 8.70 10.14
- ---------------------------------------------------------------------------
</TABLE>
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS OVER
$117,950*
<TABLE>
<CAPTION>
YOUR A TAX-EXEMPT YIELD OF:
TAXABLE INCOME MARGINAL 2% 3% 4% 5% 6% 7%
FEDERAL TAX IS EQUIVALENT TO A TAXABLE
SINGLE JOINT RATE YIELD OF:
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$58,150-$121,300 $96,900-$147,700 31.9% 2.94 4.41 5.87 7.34 8.81 10.28
- --------------------------------------------------------------------------------
$121,300-$263,750 $147,700-$263,750 37.1 3.18 4.77 6.36 7.95 9.54 11.13
- --------------------------------------------------------------------------------
Over $263,750 Over $263,750 40.8 3.38 5.07 6.76 8.45 10.14 11.82
- --------------------------------------------------------------------------------
</TABLE>
*This table assumes a decrease of $3.00 of itemized deductions for each $100 of
adjusted gross income over $117,950. For a married couple with adjusted gross
income between $176,950 and $299,450 (single between $117,950 and $240,450),
add 0.7% to the above Marginal Federal Tax Rate for each personal and
dependency exemption. The taxable equivalent yield is the tax-exempt yield
divided by: 100% minus the adjusted tax rate. For example, if the table tax
rate is 37.1% and you are married with no dependents, the adjusted tax rate is
38.5% (37.1% + 0.7% + 0.7%). For a tax-exempt yield of 6%, the taxable
equivalent yield is about 9.8% (6% / (100% - 38.5%)).
OFFICERS AND TRUSTEES
The officers and trustees of the Trust, their birthdates, their principal
occupations and their affiliations, if any, with ZKI and KDI are as follows
(The number following each person's title is the number of investment companies
managed by ZKI and its affiliates for which he or she holds similar positions):
DAVID W. BELIN (6/20/28), Trustee (24), 2000 Financial Center, 7th and Walnut,
Des Moines, Iowa; Member, Belin Harris Lamson McCormick, P.C. (attorneys).
LEWIS A. BURNHAM (1/8/33), Trustee (24), 16410 Avila Boulevard, Tampa, Florida;
Director, Management Consulting Services, McNulty & Company; formerly,
Executive Vice President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY (3/8/37), Trustee (24), 7515 Pelican Bay Blvd., Naples,
Florida; Retired; formerly, Executive Vice President, A. O. Smith Corporation
(diversified manufacturer).
B-14
<PAGE>
ROBERT B. HOFFMAN (12/11/36), Trustee (24), 800 North Lindbergh Boulevard, St.
Louis, Missouri; Senior Vice President and Chief Financial Officer, Monsanto
Company (chemical products); prior thereto, Vice President, FMC Corporation
(manufacturer of machinery and chemicals); prior thereto, Director, Executive
Vice President and Chief Financial Officer, Staley Continental, Inc. (food
products).
DONALD R. JONES (1/17/30), Trustee (24), 1776 Beaver Pond Road, Inverness,
Illinois; Retired; Director, Motorola, Inc. (manufacturer of electronic
equipment and components); formerly, Executive Vice President and Chief
Financial Officer, Motorola, Inc.
DOMINIQUE P. MORAX (10/02/48), Trustee* (37), 222 S. Riverside Plaza, Chicago,
Illinois; Member, Extended Corporate Executive Board, Zurich Insurance Company,
Director, ZKI.
SHIRLEY D. PETERSON, (9/3/41), Trustee (24), 401 Rosemont Avenue, Frederick,
Maryland; President, Hood College; prior thereto, partner, Steptoe & Johnson
(attorneys); prior thereto, Commissioner, Internal Revenue Service; prior
thereto, Assistant Attorney General, U.S. Department of Justice.
WILLIAM P. SOMMERS (7/22/33), Trustee (24), 333 Ravenswood Avenue, Menlo Park,
California; President and Chief Executive Officer, SRI International (research
and development); prior thereto, Executive Vice President, Iameter (medical
information and educational service provider), prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton, Inc. (management consulting
firm) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
STEPHEN B. TIMBERS (8/8/44), President and Trustee* (37), 222 South Riverside
Plaza, Chicago, Illinois; President, Chief Executive Officer, Chief Investment
Officer and Director, ZKI; Director, KDI, Dreman Value Advisors, Inc. and LTV
Corporation.
CHARLES R. MANZONI, JR. (1/23/47), Vice President* (37), 222 South Riverside
Plaza, Chicago, Illinois; Executive Vice President, Secretary and General
Counsel of ZKI; Secretary, ZKI Holding Corp.; Secretary, ZKI Agency, Inc.;
formerly, Partner, Gardner, Carton & Douglas (attorneys).
JEROME L. DUFFY (6/29/36), Treasurer* (37), 222 South Riverside Plaza, Chicago,
Illinois; Senior Vice President, ZKI.
PHILIP J. COLLORA (11/15/45), Vice President and Secretary* (37), 222 South
Riverside Plaza, Chicago, Illinois; Attorney, Senior Vice President and
Assistant Secretary, ZKI.
ELIZABETH C. WERTH (10/1/47), Assistant Secretary* (30), 222 South Riverside
Plaza, Chicago, Illinois; Vice President, ZKI; Vice President and Director of
State Registrations, KDI.
J. PATRICK BEIMFORD, Jr. (5/25/50), Vice President* (24), 222 South Riverside
Plaza, Chicago, Illinois; Executive Vice President and Chief Investment
Officer--Fixed Income, ZKI.
FRANK RACHWALSKI, Jr. (3/26/45), Vice President* (9), 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President, ZKI.
*Interested persons of the Funds as defined in the Investment Company Act of
1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds. The table below shows amounts paid or
accrued to those trustees who are not designated "interested
B-15
<PAGE>
persons" during the Trust's 1996 fiscal year except that the information in
the last column is for calendar year 1995.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM TRUST AND
AGGREGATE COMPENSATION KEMPER FUND COMPLEX
NAME OF TRUSTEE FROM TRUST PAID TO TRUSTEES**
- --------------- ----------------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
David W. Belin*......... $12,900 $149,700
Lewis A. Burnham........ $ 7,700 $111,000
Donald L. Dunaway*...... $12,200 $151,000
Robert B. Hoffman....... $ 7,700 $105,500
Donald R. Jones......... $ 7,900 $110,700
Shirley D. Peterson***.. $ 6,300 $ 44,500
William P. Sommers...... $ 7,500 $100,700
</TABLE>
- -------
* Includes current fees deferred and interest pursuant to deferred
compensation agreements with the Trust. Deferred amounts accrue interest
monthly at a rate equal to the yield of Kemper Money Funds--Money Market
Fund. Total deferred amounts and interest accrued through July 31, 1996 are
$119,900 for Mr. Belin and $91,000 for Mr. Dunaway.
** Includes compensation for service on twenty-three Kemper funds with 40 fund
portfolios. Each trustee currently serves as a trustee of 24 Kemper funds
with 41 fund portfolios.
*** Appointed a trustee of certain Kemper fund boards on June 15, 1995.
As of October 31, 1996, the officers and trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of each Fund and no person owned
of record 5% or more of the outstanding shares of any Fund except as shown
below:
<TABLE>
<CAPTION>
FUND NAME & ADDRESS PERCENTAGE
---- -------------------- ----------
<S> <C> <C>
Kemper Government Money Fund Everen Capital Corp. 6.20%
77 W. Wacker Dr.
Chicago, IL 60601
</TABLE>
SPECIAL FEATURES
SYSTEMATIC WITHDRAWAL PROGRAM. If you own $5,000 or more of a Fund's shares
you may provide for the payment from your account of any requested dollar
amount to be paid to you or your designated payee monthly, quarterly, semi-
annually or annually. The $5,000 minimum account size is not applicable to
Individual Retirement Accounts. Dividend distributions will be automatically
reinvested at net asset value. A sufficient number of full and fractional
shares will be redeemed to make the designated payment. Depending upon the
size of the payments requested, redemptions for the purpose of making such
payments may reduce or even exhaust the account. The program may be amended on
thirty days notice by the Fund and may be terminated at any time by the
shareholder or the Funds.
TAX-SHELTERED RETIREMENT PROGRAMS. The Shareholder Service Agent provides
retirement plan services and documents and can establish your account in any
of the following types of retirement plans:
. Individual Retirement Accounts (IRAs) with IFTC as custodian. This includes
Simplified Employee Pension Plan (SEP) IRA accounts and prototype documents.
. 403(b) Custodial Accounts with IFTC as custodian. This type of plan is
available to employees of most non-profit organizations.
. Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum contribution per participant is the lesser of 25% of
compensation or $30,000.
Brochures describing the above plans as well as providing model defined
benefit plans, target benefit plans, 457 plans, 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon
request. The brochures for plans with IFTC as custodian describe the current
fees payable to IFTC for its services as custodian. Investors should consult
with their own tax advisers before establishing a retirement plan.
B-16
<PAGE>
SHAREHOLDER RIGHTS
The Trust generally is not required to hold meetings of its shareholders.
Under the Agreement and Declaration of Trust of the Trust ("Declaration of
Trust"), however, shareholder meetings will be held in connection with the
following matters: (a) the election or removal of trustees, if a meeting is
called for such purpose; (b) the adoption of any contract for which
shareholder approval is required by the Investment Company Act of 1940 ("1940
Act"); (c) any termination of the Trust to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other
than amendments changing the name of the Trust or any Fund, establishing a
Fund, supplying any omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision thereof); (e) as to
whether a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
shareholders, to the same extent as the stockholders of a Massachusetts
business corporation; and (f) such additional matters as may be required by
law, the Declaration of Trust, the By-laws of the Trust, or any registration
of the Trust with the Securities and Exchange Commission or any state, or as
the trustees may consider necessary or desirable. The shareholders also would
vote upon changes in fundamental investment objectives, policies or
restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of
his successor or until such trustee sooner dies, resigns, retires or is
removed by a majority vote of the shares entitled to vote (as described below)
or a majority of the trustees. In accordance with the 1940 Act (a) the Trust
will hold a shareholder meeting for the election of trustees at such time as
less than a majority of the trustees have been elected by shareholders, and
(b) if, as a result of a vacancy in the Board of Trustees, less than two-
thirds of the trustees have been elected by the shareholders, that vacancy
will be filled only by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting
shall be held upon the written request of the holders of not less than 10% of
the outstanding shares. Upon the written request of ten or more shareholders
who have been such for at least six months and who hold shares constituting at
least 1% of the outstanding shares of the Trust stating that such shareholders
wish to communicate with the other shareholders for the purpose of obtaining
the signatures necessary to demand a meeting to consider removal of a trustee,
the Trust has undertaken to disseminate appropriate materials at the expense
of the requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting
in person or by proxy of at least 30% of the shares entitled to vote on a
matter shall constitute a quorum. Thus, a meeting of shareholders of the Trust
could take place even if less than a majority of the shareholders were
represented on its scheduled date. Shareholders would in such a case be
permitted to take action which does not require a larger vote than a majority
of a quorum, such as the election of trustees and ratification of the
selection of auditors. Some matters requiring a larger vote under the
Declaration of Trust, such as termination or reorganization of the Trust and
certain amendments of the Declaration of Trust, would not be affected by this
provision; nor would matters which under the 1940 Act require the vote of a
"majority of the outstanding voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or any Fund) by notice to the shareholders without
shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Trust. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation, or instrument entered into or executed
by the Trust or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust and the
Trust will be covered by insurance which the trustees consider adequate to
cover foreseeable tort claims. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered by ZKI remote
and not material since it is limited to circumstances in which a disclaimer is
inoperative and the Trust itself is unable to meet its obligations.
B-17
<PAGE>
APPENDIX--RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2 AND PRIME-1, PRIME-2 COMMERCIAL PAPER RATINGS
Commercial paper rated by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements. Long-
term senior debt is rated "A" or better. The issuer has access to at least two
additional channels of borrowing. Basic earnings and cash flow have an upward
trend with allowance made for unusual circumstances. Typically, the issuer's
industry is well established and the issuer has a strong position within the
industry. The reliability and quality of management are unquestioned. Relative
strength or weakness of the above factors determine whether the issuer's
commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by it
in assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated Prime-1, 2 or 3.
MIG-1 AND MIG-2 MUNICIPAL NOTES
Moody's ratings for state and municipal notes and other short-term loans will
be designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower are uppermost in
importance in short-term borrowing, while various factors of the first
importance in bond risk are of lesser importance in the short run. Loans
designated MIG-1 are of the best quality, enjoying strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both. Loans designated
MIG-2 are of high quality, with margins of protection ample although not so
large as in the preceding group.
STANDARD & POOR'S CORPORATION BOND RATINGS
AAA. This is the highest rating assigned by Standard & Poor's Corporation to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA. Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A. Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt-
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
B-18
<PAGE>
Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
A. Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
B-19
<PAGE>
PORTFOLIO OF INVESTMENTS
KEMPER MONEY MARKET FUND
Investments at July 31, 1996
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------
CORPORATE OBLIGATIONS VALUE
<S> <C>
- --------------------------------------------------------
BANKING--2.6%
(a) NationsBank N.A.
5.71%, 9/18/96 $ 15,002
Nordbanken N.A. Inc.
5.43%, 8/5/96 14,991
Sumitomo Bank Capital Markets, Inc.
5.52%-5.53%, 8/5/96-8/19/96 49,916
(a) Wells Fargo & Co.
5.58%, 9/18/96 30,004
------------------------------------------------
109,913
- --------------------------------------------------------
BUSINESS LOANS--23.4%
Astro Capital Corp.
5.50%-5.53%, 8/30/96-9/10/96 49,739
Broadway Capital Corp.
5.47%, 8/1/96 15,000
CSW Credit, Inc.
5.46%, 8/28/96 24,898
CXC Incorporated
5.42%-5.46%, 8/8/96-9/19/96 74,748
Clipper Receivables Corp.
5.40%, 8/23/96 24,918
Corporate Receivables Corp.
5.41%-5.43%, 8/14/96-8/26/96 74,806
(a) Emprise I Corporation
5.70%, 9/23/96 25,000
Enterprise Funding Corp.
5.35%-5.45%, 8/1/96-8/16/96 44,967
(a) Finova Capital Corporation
5.58%, 8/15/96 50,000
First Brands Commercial Inc.
5.45%, 8/12/96 24,959
(a) Heller Financial, Inc.
5.61%-5.66%, 8/1/96-10/1/96 50,018
Jet Funding Corporation
5.54%, 9/30/96 49,547
Madison Funding Corp.
5.50%, 8/20/96-9/18/96 49,746
Monte Rosa Capital Corp.
5.41%, 8/12/96 24,959
National Fleet Funding Corp.
5.44%-5.49%, 8/21/96-8/23/96 49,842
Orix America, Inc.
5.50%-5.62%, 8/1/96-9/3/96 44,899
Prudential Funding Corp.
5.38%, 8/12/96 24,959
(a) Sanwa Business Credit Corp.
5.55%-5.57%, 8/5/96-8/16/96 50,000
Stellar Capital Corporation
5.47%, 9/12/96 34,778
Strategic Asset Funding Corp.
5.50%-5.66%, 9/3/96-10/31/96 49,523
WCP Funding Inc.
5.41%-5.42%, 8/20/96-9/13/96 49,769
Windmill Funding Corp.
5.44%, 8/15/96-9/9/96 49,801
Working Capital Management Co.,
L.P.
5.42%-5.48%, 8/13/96-8/14/96 49,906
------------------------------------------------
986,782
- --------------------------------------------------------
VALUE
- --------------------------------------------------------
CAPITAL AND EQUIPMENT LENDING--4.8%
Deere (John) Capital Corporation
5.42%, 8/22/96 $ 49,843
Golden Manager's Acceptance Corp.
5.40%, 8/21/96 49,851
IBM Credit Corp.
5.98%, 5/29/97 24,951
SRD Finance Inc.
5.44%-5.45%, 8/8/96-8/22/96 79,821
------------------------------------------------
204,466
- --------------------------------------------------------
COMMUNICATIONS AND MEDIA--1.8%
Electronic Data Systems Corp.
5.35%-5.44%, 8/2/96-8/20/96 74,921
- --------------------------------------------------------
CONSUMER LENDING--11.6%
American Express Credit Corp.
5.36%, 8/14/96 49,904
(a) American Honda Finance Corporation
5.50%-5.53%, 8/5/96-8/7/96 64,985
Chrysler Financial Corporation
(a) 5.88%, 8/15/96 10,006
5.92%, 3/17/97 10,092
Countrywide Funding Corporation
5.43%, 8/27/96 24,903
Ford Motor Credit Company
(a) 5.33%, 8/5/96 10,000
5.39%, 8/27/96 24,903
(b) GMAC Mortgage Corporation
of Pennsylvania
5.68%, 8/30/96 44,795
General Motors Acceptance Corp.
5.80%, 3/24/97 15,014
(a) Household Finance Corp.
5.47%, 8/28/96 25,000
Mitsubishi Motors Credit of
America, Inc.
5.47%-5.48%, 8/1/96-8/5/96 49,985
New Center Asset Trust
5.41%, 8/26/96 49,814
PHH Corporation
(a) 5.45%, 8/6/96 9,996
5.43%, 8/7/96-8/13/96 49,933
Sears Roebuck Acceptance Corp.
5.42%, 9/12/96 49,686
------------------------------------------------
489,016
- --------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--1.2%
Coca-Cola Enterprises Inc.
5.45%, 8/7/96 49,955
- --------------------------------------------------------
DIVERSIFIED FINANCE--6.5%
APEX Funding Corp.
5.66%, 10/31/96 24,648
Associates Corporation of North
America
5.44%, 8/26/96 49,813
(a) CIT Group Holdings Inc.
5.35%, 8/1/96 14,986
Dynamic Funding Corporation
5.50%-5.59%, 8/5/96-8/16/96 59,931
General Electric Capital Corp.
5.41%, 8/19/96 49,866
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS
(Value in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------
VALUE
- --------------------------------------------------------
<S> <C> <C>
Norwest Financial, Inc.
5.41%, 8/14/96 $ 24,951
Old Line Funding Corp.
5.40%-5.43%, 8/20/96-9/4/96 49,802
----------------------------------------------
273,997
- --------------------------------------------------------
FINANCIAL SERVICES--7.3%
(a) Bear Stearns Companies Inc.
5.52%-5.53%, 8/6/96-8/19/96 55,000
(a) CS First Boston, Inc.
5.51%, 8/14/96 30,000
(a) Goldman, Sachs & Co.
5.47%, 8/25/96 50,000
(a)(b) Lehman Brothers Holdings Inc.
5.59%, 8/21/96 50,000
Morgan Stanley Group Inc.
5.40%, 8/13/96 24,955
Nomura Holding America Inc.
5.40%-5.47%, 8/5/96-8/12/96 49,944
Salomon Inc.
6.00%-6.42%, 1/17/97-4/21/97 48,207
----------------------------------------------
308,106
- --------------------------------------------------------
HEALTH CARE AND PRODUCTS--1.2%
American Home Products Corporation
5.45%, 8/15/96 24,948
A.H. Robins Company, Incorporated
5.46%, 8/15/96 24,947
------------------------------------------------
49,895
- --------------------------------------------------------
MANUFACTURING AND INDUSTRIAL--2.7%
DIC Americas, Inc.
5.48%, 8/30/96 24,890
IBM Corporation
5.26%, 2/28/97 24,964
Monsanto Co.
5.37%, 8/5/96 24,985
Whirlpool Corporation
5.47%, 8/22/96-8/23/96 39,871
------------------------------------------------
114,710
- --------------------------------------------------------
UTILITIES--6.2%
AES Shady Point, Inc.
5.43%-5.50%, 8/15/96-9/5/96 74,687
Brazos River Authority, Texas
5.43%, 8/8/96 50,000
GTE Corporation
5.41%, 8/30/96 24,892
Gulf Coast Waste Authority, Texas
5.43%, 9/9/96 40,000
New Hampshire Industrial
Development Authority
5.43%, 8/8/96 25,000
Nynex Corporation
5.42%-5.45%, 8/6/96-8/19/96 49,914
------------------------------------------------
264,493
------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--69.3%
(average maturity: 30 days) 2,926,254
------------------------------------------------
<CAPTION>
- --------------------------------------------------------
BANK OBLIGATIONS VALUE
- --------------------------------------------------------
CERTIFICATES OF DEPOSITS
<S> <C> <C>
(a) FCC National Bank
5.36%, 8/1/96 $ 14,998
(a) First National Bank of Boston
5.36%, 8/1/96 24,991
Harris Trust & Savings Bank
6.10%, 6/17/97 14,992
(a) Key Bank of Maine
5.44%, 8/14/96 29,988
MBNA America Bank N.A.
5.41%-5.42%, 8/21/96-9/12/96 50,000
(a) Mercantile Bankshares Corporation
5.61%, 8/19/96 25,008
NationsBank N.A.
5.72%, 4/30/97 19,991
(a) PNC Bank N.A.
5.40%-5.41%, 8/5/96-8/20/96 49,989
------------------------------------------------
TOTAL BANK
OBLIGATIONS--5.4%
(average maturity: 58 days) 229,957
------------------------------------------------
- --------------------------------------------------------
(C) REPURCHASE AGREEMENTS
(Dated 6/96 and 7/96,
collateralized by Federal Home Loan
Mortgage Corporation, Federal
National Mortgage Association,
Government National Mortgage
Association and U.S. Treasury
securities)
Chase Securities, Inc.
(held at The Chase Manhattan Bank, N.A.)
5.41%, 8/14/96-8/23/96 100,000
Goldman, Sachs & Co.
(held at The Bank of New York)
5.40%-5.65%, 8/1/96-9/11/96 375,000
Lehman Government Securities Inc.
(held at The Chase Manhattan Bank, N.A.)
5.36%-5.42%, 8/6/96-9/10/96 425,000
Salomon Brothers Inc.
(held at The Bank of New York)
5.40%, 9/13/96 50,000
------------------------------------------------
TOTAL REPURCHASE
AGREEMENTS--22.5%
(AVERAGE MATURITY: 27 DAYS) 950,000
------------------------------------------------
- --------------------------------------------------------
U.S. TREASURY AND AGENCY NOTES
U.S. Treasury
5.06%, 1/31/97 65,753
(a) Federal National Mortgage
Association
5.59%, 8/6/96 54,450
------------------------------------------------
TOTAL U.S. TREASURY AND AGENCY
NOTES--2.8%
(average maturity: 102 days) 120,203
------------------------------------------------
TOTAL INVESTMENTS--100%
(AVERAGE MATURITY: 33 DAYS) 4,226,414
------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS (639)
------------------------------------------------
NET ASSETS--100% $4,225,775
------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
8
<PAGE>
PORTFOLIO OF INVESTMENTS
KEMPER GOVERNMENT MONEY FUND
INVESTMENTS AT JULY 31, 1996
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------
U.S. TREASURY NOTES --5.9%
(AVERAGE MATURITY: 183 DAYS)
5.13%, 1/31/97 $ 39,438
- -------------------------------------------------------
SHORT-TERM NOTES (ISSUED OR
GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES)
(a) Agency for International Development
Government of Israel
5.75%, 8/6/96 5,262
(a) Export-Import Bank of the United States
Cathay Pacific Airways Limited
5.69%, 8/13/96 6,425
KA Leasing, Ltd.
5.69%, 8/15/96 8,700
Kuwait Investment Authority
5.80%, 8/15/96 14,980
VARIG Brazilian Airlines
5.69%, 8/15/96 9,051
Federal Farm Credit Banks
5.81%, 8/1/96 10,800
Federal Home Loan Bank
(a) 5.43%, 8/2/96 9,102
6.02%, 6/2/97 2,506
Federal Home Loan Bank
Downey Savings & Loan
5.58%, 11/14/96 3,149
(a) Federal National Mortgage Association
5.59%-5.85%, 8/1/96-8/6/96 45,199
(a) Overseas Private Investment Corporation
International Paper Company
5.69%, 8/15/96 6,000
Omolon
5.64%, 8/6/96 20,500
(a) Student Loan Marketing Association
5.53%-5.87%, 8/6/96-6/30/97 86,024
Tennessee Valley Authority
5.18%, 1/15/97 2,007
--------------------------------------------------
TOTAL SHORT-TERM NOTES--34.2%
(average maturity: 38 days) 229,705
--------------------------------------------------
- -------------------------------------------------------
(C) REPURCHASE AGREEMENTS
(Dated 7/96, collateralized by Federal
Home Loan Mortgage Corporation, Federal
National Mortgage Association,
Government National Mortgage
Association and U.S. Treasury securities)
Bear, Stearns & Co. Inc.
5.39%-5.40%, 8/5/96-8/19/96 $ 74,000
CS First Boston Inc.
(held at The Chase Manhattan Bank, N.A.)
5.80%, 8/1/96 7,000
Chase Securities, Inc.
(held at The Chase Manhattan Bank, N.A.)
5.37%-5.39%, 8/5/96-8/7/96 55,000
Donaldson, Lufkin & Jenrette Securities
Corporation
(held at The Chase Manhattan Bank, N.A.)
5.75%, 8/1/96 15,500
Goldman, Sachs & Co.
(held at The Bank of New York)
5.40%-5.42%, 9/4/96-9/18/96 60,000
Lehman Government Securities Inc.
(held at The Chase Manhattan Bank, N.A.)
5.39%-5.42%, 8/14/96-9/4/96 52,000
Nikko Securities Co. International, Inc.
(held at The Bank of New York)
5.37%-5.75%, 8/1/96-8/19/96 31,000
Nomura Securities International, Inc.
(held at The Bank of New York)
5.40%-5.41%, 8/14/96-8/19/96 73,000
Salomon Brothers Inc.
(held at The Bank of New York)
5.43%, 8/7/96 30,500
--------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--59.2%
(average maturity: 14 days) 398,000
--------------------------------------------------
TOTAL INVESTMENTS--99.3%
(average maturity: 32 days) 667,143
--------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--.7% 4,898
--------------------------------------------------
NET ASSETS--100% $672,041
--------------------------------------------------
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS
KEMPER TAX-FREE MONEY FUND
INVESTMENTS AT JULY 31, 1996
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
VARIABLE RATE
(A) DEMAND SECURITIES VALUE
<C> <S> <C>
- ---------------------------------------------------------
ALABAMA
Livingston
Industrial Development Authority
4.25% $ 3,900
- ---------------------------------------------------------
ARIZONA
Apache County
Industrial Development Authority
3.65% 10,000
- ---------------------------------------------------------
CALIFORNIA
Los Angeles
Harbor Improvement Corporation
3.70% 11,500
- ---------------------------------------------------------
COLORADO
Denver
Multi-Family Housing Revenue
3.60% 9,100
- ---------------------------------------------------------
DISTRICT OF COLUMBIA
General Obligation
3.75% 19,900
- ---------------------------------------------------------
FLORIDA
Dade County
Aviation Facilities Revenue
4.05% 8,200
Naples
Hospital Revenue
3.80% 8,000
- ---------------------------------------------------------
GEORGIA
Fulton County
Development Authority
3.72% 10,445
Wayne County
Solid Waste Management Authority
4.45% 3,000
- ---------------------------------------------------------
ILLINOIS
Chicago
Development Finance Authority
3.93% 19,500
Educational Facilities Authority
3.65% 8,900
Health Facilities Authority
3.70% 7,000
Hillside
Economic Development Authority
3.85% 6,000
Mundelein
Industrial Development Revenue
3.85% 6,500
Richmond
Industrial Development Revenue
3.90% 4,000
Student Loan Revenue
3.75% 6,000
- ---------------------------------------------------------
INDIANA
Fort Wayne
Hospital Authority
3.56% $ 6,300
Rockport
Pollution Control Revenue
3.65% 6,745
- ---------------------------------------------------------
KANSAS
Kansas City
Pollution Control Revenue
3.80% 4,350
- ---------------------------------------------------------
KENTUCKY
Development Finance Authority
3.70% 8,025
Higher Education Student Loan
Corporation
3.65% 5,000
Lexington-Fayette
Urban County Government
3.85% 5,100
Todd County
Industrial Development Revenue
3.75% 2,600
- ---------------------------------------------------------
LOUISIANA
Caddo Parish
Industrial Development Board
4.10% 2,800
Jefferson Parish
Hospital Revenue
3.60% 7,200
- ---------------------------------------------------------
MARYLAND
Baltimore County
Multi-Family Housing Revenue
3.85% 3,900
- ---------------------------------------------------------
MICHIGAN
Dearborn
Economic Development Corporation
3.70% 7,700
- ---------------------------------------------------------
MINNESOTA
Minneapolis
Community Development Agency
3.75% 5,000
- ---------------------------------------------------------
MISSOURI
Kirksville
Industrial Development Authority
4.25% 6,900
</TABLE>
10
<PAGE>
PORTFOLIO OF INVESTMENTS
(Value in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------
VALUE
<C> <S> <C>
- --------------------------------------------------------
NEVADA
Department of Commerce
3.95% $ 4,650
- --------------------------------------------------------
NEW YORK
Municipal Water Finance Authority
3.70% 4,500
New York City
General Obligation
3.70% 8,900
- --------------------------------------------------------
NORTH CAROLINA
Hospital Revenue
3.70% 11,400
Lenoir County
Pollution Control Financing
Authority
3.90% 5,000
- --------------------------------------------------------
OHIO
Pollution Control Revenue
3.70% 2,500
- --------------------------------------------------------
PENNSYLVANIA
Berks County
Redevelopment Authority
4.60% 8,000
Philadelphia
Authority for Industrial
Development
3.85% 5,400
Industrial Development Authority
3.65% 7,200
- --------------------------------------------------------
TENNESSEE
Clarksville
Public Building Authority
3.65% 4,600
Maury County
Water Facility Revenue
3.95% 2,500
- --------------------------------------------------------
TEXAS
Calhoun County
Industrial Development Authority
3.75% 5,000
Gulf Coast
Industrial Development Authority
3.70% 1,700
Trinity River Authority
3.80% 9,200
- --------------------------------------------------------
UTAH
Springville
Industrial Development Revenue
3.65% 5,000
- --------------------------------------------------------
VIRGINIA
Louisa County
Industrial Development Authority
3.65% 5,000
- --------------------------------------------------------
WASHINGTON
Port Angeles
Industrial Development Corporation
4.25% $ 10,100
---------------------------------------------
TOTAL VARIABLE RATE DEMAND
SECURITIES--43.1%
(average maturity: 6 days) 314,215
---------------------------------------------
OTHER SECURITIES
- --------------------------------------------------------
ALASKA
Valdez
Marine Terminal Revenue
3.40%-3.75%, 8/21/96-9/20/96 30,975
- --------------------------------------------------------
ARIZONA
Salt River Project
Agricultural Improvement and Power
District
3.40%-3.70%, 8/8/96-9/19/96 27,800
- --------------------------------------------------------
CALIFORNIA
Revenue Anticipation Warrants
3.97%, 6/30/97 7,333
- --------------------------------------------------------
COLORADO
Denver City and County
Airport System Revenue
3.65%-3.95%, 8/8/96-8/21/96 28,600
- --------------------------------------------------------
CONNECTICUT
Mashantucket (Western) Pequot
Tribe
3.40%, 10/17/96 3,500
- --------------------------------------------------------
FLORIDA
Orlando
Waste Water System Revenue
3.50%-3.70%, 8/8/96-9/19/96 11,200
Sarasota County
Public Hospital District
3.60%, 8/20/96 1,660
- --------------------------------------------------------
GEORGIA
Municipal Electric Authority
3.70%, 8/12/96-8/15/96 12,300
Municipal Gas Authority
3.50%, 8/8/96 2,905
- --------------------------------------------------------
ILLINOIS
Chicago
General Obligation
3.60%, 9/10/96 5,000
Development Finance Authority
4.00%-4.40%, 12/2/96-2/3/97 5,990
Educational Facilities Authority
3.30%, 8/12/96 8,610
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
(Value in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
VALUE
<S> <C> <C>
- ----------------------------------------------------------
INDIANA
Bond Bank
Advance Funding Program Notes
3.50%, 1/9/97 $ 8,025
Gary
Environmental Improvement Revenue
3.65%, 9/17/96 4,000
Jasper County
Pollution Control Revenue
3.45%-3.70%, 8/9/96-8/19/96 4,000
Sullivan
Pollution Control Revenue
3.30%-3.45%, 8/12/96-8/20/96 8,100
- --------------------------------------------------------
KANSAS
Burlington
Pollution Control and Improvement
Revenue
3.50%, 8/14/96 6,535
- --------------------------------------------------------
KENTUCKY
Danville
Multi-City Lease Revenue
3.75%, 9/11/96 17,495
Pendleton County
Multi-County Lease Revenue
3.70%-3.75%, 8/15/96-9/11/96 8,600
- --------------------------------------------------------
MARYLAND
Anne-Arundel County
Port Facilities Revenue
3.50%-3.75%, 8/19/96-9/20/96 21,900
- --------------------------------------------------------
MICHIGAN
Strategic Fund
3.65%-3.75%, 8/8/96-9/12/96 10,550
- --------------------------------------------------------
MINNESOTA
University of Minnesota
3.50%-3.65%, 8/14/96-9/26/96 5,400
- --------------------------------------------------------
NEW YORK
Nassau County
Revenue Anticipation Notes
3.40%, 3/5/97 7,415
Power Authority
3.73%, 8/13/96 5,000
State Dormitory Authority
3.65%, 8/14/96-9/11/96 7,721
- --------------------------------------------------------
NORTH CAROLINA
Municipal Power Agency
3.50%, 8/12/96-8/14/96 22,000
- --------------------------------------------------------
OHIO
Air Quality Development Authority
3.60%, 9/20/96 2,800
- --------------------------------------------------------
OKLAHOMA
Oklahoma City
Industrial Authority
3.85%, 9/3/96 $ 8,000
- --------------------------------------------------------
PENNSYLVANIA
Delaware County
Redevelopment Authority
3.60%, 9/19/96 5,300
Philadelphia School District
Tax and Revenue Anticipation Notes
4.00%, 6/30/97 8,236
- --------------------------------------------------------
TEXAS
Austin
Combined Utility Systems
3.50%, 8/13/96 4,950
Brazoria County
Brazos River Harbor Navigation
District
3.60%-3.75%, 9/11/96-9/25/96 17,600
Harris County
Health Facilities Development
Corporation
3.60%, 8/21/96 6,200
Houston
Water and Sewer System
3.45%, 8/20/96 1,500
Lower Colorado River Authority
3.50%, 8/12/96 5,000
San Antonio
Electric and Gas Systems
3.25%-3.50%, 8/8/96-9/12/96 19,300
Tax and Revenue Anticipation Notes
3.94%, 8/30/96 6,004
- --------------------------------------------------------
UTAH
Intermountain Power Agency
3.40%-3.50%, 8/14/96-8/21/96 10,825
- --------------------------------------------------------
VIRGINIA
Chesterfield
Industrial Development Authority
3.60%-3.65%, 9/17/96-9/19/96 12,750
Norfolk
Industrial Development Authority
3.40%-3.70%, 8/8/96-8/21/96 15,000
Prince William County
Industrial Development Authority
3.75%, 9/11/96 4,700
York County
Industrial Development Authority
3.75%, 9/11/96 6,800
</TABLE>
12
<PAGE>
PORTFOLIO OF INVESTMENTS
(Value in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------
VALUE
<C> <S> <C>
- --------------------------------------------------------
WYOMING
Sweetwater
Pollution Control Revenue
3.65%, 9/20/96 $ 1,500
---------------------------------------------
TOTAL OTHER
SECURITIES--57.5%
(average maturity: 46 days) 419,079
---------------------------------------------
TOTAL INVESTMENTS--100.6%
(average maturity: 29 days) 733,294
---------------------------------------------
LIABILITIES, LESS
OTHER ASSETS--(.6)% (4,276)
---------------------------------------------
NET ASSETS--100% $729,018
---------------------------------------------
</TABLE>
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, 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,
1996. The dates shown represent the demand date or the next interest rate
change date. Securities in Kemper Tax-Free Money Fund 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, 1996, the aggregate value of illiquid
securities was $94,795,000 in Kemper Money Market Fund, which represented
2.2% of net assets.
(c) Repurchase agreements are fully collateralized by U.S. Government
securities. All collateral is held at the Funds' custodian bank, Investors
Fiduciary Trust Company, or at subcustodian banks, as indicated. The
collateral is monitored daily by the Funds so that its market value exceeds
the carrying value of the repurchase agreement.
See accompanying Notes to Financial Statements.
13
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER MONEY FUNDS
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of Kemper Money Market Fund, Kemper
Government Money Fund and Kemper Tax-Free Money Fund, comprising Kemper Money
Funds (formerly Kemper Money Market Fund), as of July 31, 1996, 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 1992. These financial statements and financial
highlights are the responsibility of the Funds' 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, 1996, 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 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 Funds comprising Kemper Money Funds at July 31, 1996, 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 1992, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 18, 1996
14
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
MONEY GOVERNMENT TAX-FREE
MARKET MONEY MONEY
FUND FUND FUND
<S> <C> <C> <C>
ASSETS
Investments, at amortized cost:
Short-term securities $3,276,414 269,143 733,294
- ---------------------------------------------------------------------------------------------------------
Repurchase agreements 950,000 398,000 --
- ---------------------------------------------------------------------------------------------------------
Cash 2,675 3,236 --
- ---------------------------------------------------------------------------------------------------------
Receivable for:
Interest 10,029 3,092 4,629
- ---------------------------------------------------------------------------------------------------------
Fund shares sold 9,345 896 1,367
- ---------------------------------------------------------------------------------------------------------
TOTAL ASSETS 4,248,463 674,367 739,290
- ---------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
Cash overdraft -- -- 75
- ---------------------------------------------------------------------------------------------------------
Payable for:
Dividends 3,532 557 394
- ---------------------------------------------------------------------------------------------------------
Fund shares redeemed 16,051 1,373 2,026
- ---------------------------------------------------------------------------------------------------------
Securities purchased -- -- 7,333
- ---------------------------------------------------------------------------------------------------------
Management fee 950 149 163
- ---------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 1,338 164 148
- ---------------------------------------------------------------------------------------------------------
Other 817 83 133
- ---------------------------------------------------------------------------------------------------------
Total liabilities 22,688 2,326 10,272
- ---------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $4,225,775 672,041 729,018
- ---------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
Shares outstanding 4,225,775 672,041 729,018
- ---------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
15
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Year ended July 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
MONEY GOVERNMENT TAX-FREE
MARKET MONEY MONEY
FUND FUND FUND
<S> <C> <C> <C>
NET INVESTMENT INCOME
Interest income $235,498 36,715 28,455
- ---------------------------------------------------------------------------------------------------------
Expenses:
Management fee 11,134 1,747 2,032
- ---------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 8,462 1,071 710
- ---------------------------------------------------------------------------------------------------------
Reports to shareholders 582 92 103
- ---------------------------------------------------------------------------------------------------------
Registration costs 87 70 68
- ---------------------------------------------------------------------------------------------------------
Professional fees 108 14 17
- ---------------------------------------------------------------------------------------------------------
Trustees' fees and other 276 13 14
- ---------------------------------------------------------------------------------------------------------
Total expenses 20,649 3,007 2,944
- ---------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 214,849 33,708 25,511
- ---------------------------------------------------------------------------------------------------------
Net realized loss on investments (28,328) -- --
- ---------------------------------------------------------------------------------------------------------
Change in unrealized depreciation on investments 28,328 -- --
- ---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $214,849 33,708 25,511
- ---------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Years ended July 31, 1996 and 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
MONEY MARKET GOVERNMENT MONEY TAX-FREE MONEY
FUND FUND FUND
------------------------ -------------------- --------------------
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS, DIVIDENDS AND
CAPITAL SHARE ACTIVITY
Net investment income $ 214,849 210,099 33,708 31,590 25,511 26,591
- --------------------------------------------------------------------------------------------------------------
Net realized loss (28,328) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Change in unrealized depreciation 28,328 (28,328) -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Capital contribution from
investment manager -- 28,328 -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Dividends to shareholders from
net investment income (214,849) (210,099) (33,708) (31,590) (25,511) (26,591)
- --------------------------------------------------------------------------------------------------------------
Capital share transactions
(dollar amounts and number of
shares are the same):
Shares sold 5,752,934 5,434,790 728,317 808,318 753,317 816,602
- --------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 207,091 200,429 32,576 29,447 24,739 25,523
- --------------------------------------------------------------------------------------------------------------
5,960,025 5,635,219 760,893 837,765 778,056 842,125
- --------------------------------------------------------------------------------------------------------------
Shares redeemed (5,759,348) (5,758,910) (692,453) (941,532) (809,181) (874,113)
- --------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) FROM
CAPITAL SHARE TRANSACTIONS AND
TOTAL INCREASE (DECREASE) IN NET
ASSETS 200,677 (123,691) 68,440 (103,767) (31,125) (31,988)
- --------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 4,025,098 4,148,789 603,601 707,368 760,143 792,131
- --------------------------------------------------------------------------------------------------------------
END OF YEAR $4,225,775 4,025,098 672,041 603,601 729,018 760,143
- --------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE FUNDS Kemper Money Funds (the Trust) is an open-end
management investment company organized as a
business trust under the laws of Massachusetts
currently offering three series of shares. Kemper
Money Market Fund invests primarily in short-term
high quality obligations of major banks and
corporations. Kemper Government Money Fund invests
exclusively in obligations issued or guaranteed by
the U.S. Government, its agencies or
instrumentalities and repurchase agreements
thereon. Kemper Tax-Free Money Fund invests in
short-term high quality municipal securities.
- --------------------------------------------------------------------------------
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 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.
EXPENSES. Expenses arising in connection with a
Fund are allocated to that Fund. Other Trust
expenses are allocated among the Funds 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 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
for Kemper Money Market Fund and Kemper Government
Money Fund and at 11:00 a.m. and 3:00 p.m. Chicago
time for Kemper Tax-Free Money Fund. Each 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 taxable realized gains
(losses) on portfolio securities, minus all
expenses of the Fund.
FEDERAL INCOME TAXES. Each 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.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH MANAGEMENT AGREEMENT. The Trust has a management
AFFILIATES 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 year
ended July 31, 1996, the Trust incurred management
fees of $14,913,000.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Funds' transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the Trust. Under the agreement,
KSvC received shareholder services fees of
$6,709,000 for the year ended July 31, 1996.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Trust are also officers or directors of ZKI.
During the year ended July 31, 1996, the Trust made
no payments to its officers and incurred trustees'
fees of $65,000 to independent trustees.
17
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER MONEY MARKET FUND
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992
<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 .05 .03 .03 .04
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.34% 5.34 3.20 2.96 4.45
RATIOS TO AVERAGE NET ASSETS
Expenses .50% .52 .52 .52 .49
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 5.20% 5.19 3.14 2.92 4.42
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of year (in thousands) $4,225,775 4,025,098 4,148,789 4,499,930 5,664,194
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Kemper Money Market Fund'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%.
<TABLE>
<CAPTION>
KEMPER GOVERNMENT MONEY FUND
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992
<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 .05 .03 .03 .04
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.34% 5.36 3.20 2.97 4.50
RATIOS TO AVERAGE NET ASSETS
Expenses .46% .46 .47 .45 .43
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 5.20% 5.21 3.15 2.94 4.44
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of year (in thousands) $672,041 603,601 707,368 694,303 926,328
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
KEMPER TAX-FREE MONEY FUND
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992
<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 .03 .02 .02 .04
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3.44% 3.53 2.33 2.39 3.57
RATIOS TO AVERAGE NET ASSETS
Expenses .39% .40 .41 .39 .39
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 3.38% 3.46 2.30 2.36 3.49
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of year (in thousands) $729,018 760,143 792,131 758,630 796,272
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF
1996 DIVIDENDS All of the dividends from Kemper Money Market Fund
and Kemper Government Money Fund are taxable as
ordinary income. All of the dividends from Kemper
Tax-Free Money Fund 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 Funds to the Internal Revenue Service in
accordance with U.S. Treasury Department
Regulations.
19
<PAGE>
KEMPER MONEY FUNDS
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(i) Financial statements included in Part A of the Registration
Statement: Financial Highlights.
(ii) Financial statements included in Part B of the Registration
Statement:
Statements of assets and liabilities--July 31, 1996.
Statements of operations for the year ended July 31, 1996.
Statements of changes in net assets for each of the two years in
the period ended July 31, 1996.
Portfolios of investments--July 31, 1996.
Notes to financial statements.
Schedules II, III, IV and V are omitted as the required information is
not present.
Schedule I has been omitted as the required information is presented in
the portfolios of investments at
July 31, 1996.
(b) Exhibits
<TABLE>
<C> <S>
99.B1(a) Amended and Restated Agreement and Declaration of Trust.(1)
Written Instrument Amending the Agreement and Declaration of
99.B1(b) Trust.(1)
Written Instrument Amending the Agreement and Declaration of
99.B1(c) Trust.(1)
Written Instrument Amending the Agreement and Declaration of
99.B1(d) Trust.
99.B2 By-Laws.(1)
99.B3 Inapplicable.
99.B4(a) Text of Share Certificate.(1)
99.B4(b) Written Instrument Changing Name of Series of the Trust.
99.B5 Investment Management Agreement.
99.B6(a) Underwriting Agreement.
99.B6(b) Selling Group Agreement.(1)
99.B7 Inapplicable.
99.B8(a) Custody Agreement.(1)
99.B9(a) Agency Agreement.(1)
99.B9(b) Supplement to Agency Agreement.
99.B10 Inapplicable.
99.B11 Report and Consent of Independent Auditors.
99.B12 Inapplicable.
99.B13 Inapplicable.
99.B14(a) Kemper Retirement Plan Prototype.(1)
99.B14(b) Model Individual Retirement Account.(1)
99.B15 Inapplicable.
99.B16 Performance Calculations.(2)
99.B18 Inapplicable.
99.B24 Powers of Attorney.(3)
27.1 Financial Data Schedule for Money Market Fund
27.2 Financial Data Schedule for Government Money Fund
27.3 Financial Data Schedule for Tax-Free Money Fund
99.485(b) Representation of Counsel (Rule 485 (b)).
</TABLE>
--------
(1) Incorporated herein by reference to Amendment No. 41 on Form N-1A
filed on November 16, 1995.
(2) Incorporated herein by reference to Amendment No. 40 on Form N-1A
filed on or about October 31, 1994.
(3) Incorporated herein by reference to Amendment No. 41 on Form N-1A
filed on November 16, 1995, except for the Power of Attorney of
Dominique P. Morax, which is filed herewith.
C-1
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of October 31, 1996, there were 230,504 holders of record of the Money
Market Fund, 26,257 holders of record of the Government Money Fund and 17,811
holders of record of the Tax-Free Money Fund.
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust (Exhibit
1 hereto, which is incorporated herein by reference) provides in effect that
the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the
Agreement and Declaration of Trust does not protect any person against any
liability to the Registrant or its shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question as to
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
C-2
<PAGE>
ITEM 28 (a) BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information pertaining to business and other connections of the
Registrant's investment adviser is hereby incorporated by reference to the
section of the Prospectus captioned "Investment Manager," and to
the section of the Statement of Additional Information captioned "Investment
Manager."
Zurich Kemper Investments, Inc., investment adviser of the Registrant, is
investment adviser of:
Kemper Mutual Funds:
Kemper Technology Fund
Kemper Total Return Fund
Kemper Growth Fund
Kemper Small Capitalization Equity Fund
Kemper Income and Capital Preservation Fund
Kemper Money Funds
Kemper National Tax-Free Income Series
Kemper Diversified Income Fund
Kemper High Yield Fund
Cash Equivalent Fund
Kemper U.S. Government Securities Fund
Kemper International Fund
Kemper Portfolios
Kemper State Tax-Free Income Series
Tax-Exempt California Money Market Fund
Kemper Adjustable Rate U.S. Government Fund
Kemper Blue Chip Fund
Kemper Global Income Fund
Kemper Target Equity Fund
Cash Account Trust
Investors Cash Trust
Tax-Exempt New York Money Market Fund
Kemper Value Plus Growth Fund
Kemper Quantitative Equity Fund
Kemper Horizon Fund
Kemper Europe Fund
Kemper Asian Growth Fund
Kemper Closed-End Funds:
Kemper High Income Trust
Kemper Intermediate Government Trust
Kemper Municipal Income Trust
Kemper Multi-Market Income Trust
Kemper Strategic Municipal Income Trust
The Growth Fund of Spain, Inc.
Kemper Strategic Income Fund
Zurich Kemper Investments, Inc. also furnishes investment advice to and
manages investment portfolios for other clients including Kemper Investors Fund
and Kemper International Bond Fund.
C-3
<PAGE>
Item 28(b)(i) Business and Other Connections of Officers and Directors of Zurich
Kemper Investments, Inc., the Investment Advisor
TIMBERS, STEPHEN B.
Director, President, Chief Executive Officer and Chief Investment Officer,
Zurich Kemper Investments, Inc.
Director, Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Chairman, Kemper Service Company
Director, Dreman Value Advisors, Inc.
Director, ZKI Agency, Inc.
Director, President, Kemper International Management, Inc. Trustee and
President, Kemper Funds
Director, The LTV Corporation
Governor, Investment Company Institute
NEAL, JOHN E.
Director, Zurich Kemper Investments, Inc. President, Kemper Funds Group, a
unit of Zurich Kemper Investments, Inc.
Director, President, Kemper Service Company
Director, Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Dreman Value Advisors, Inc.
Director, AKI Agency, Inc.
Director, Community Investment Corporation
Director, Continental Community Development Corporation
Director, K-P Greenway, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
Director, RespiteCare
Director, Urban Shopping Centers, Inc. Vice President, Kemper Funds
CHENG, LAURENCE W.
Director, Zurich Kemper Investments, Inc. President and Chief Executive
Officer, Zurich Investment Management Group
C-4
<PAGE>
MORAX, DOMINQUE P.
Director, Zurich Kemper Investments, Inc. Senior Vice President, Member
Extended Corporate Executive Board, Zurich Insurance Company Trustee,
Kemper Funds
CHAPMAN, II, WILLIAM E.
President, Kemper Retirement Plans Group, a unit of Zurich Kemper
Investments, Inc.
Director, Executive Vice President, Kemper Distributors, Inc.
VOGEL, VICTOR E.
Senior Executive Vice President, Zurich Kemper Investments, Inc.
Trustee, Zurich Kemper Investments, Inc. Profit Sharing Plan & Money
Purchase Pension Plan
BEIMFORD, JR., JOSEPH P.
Executive Vice President, Chief Investment Officer - Fixed Income, Zurich
Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Galaxy Offshore, Inc.
Vice President, Investors Cash Trust
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Global Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper International Bond Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Money Funds
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Municipal Income Trust
Vice President, Kemper National Tax-Free Income Series
Vice President, Kemper Portfolios
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Income Fund
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Kemper U.S. Government Securities Fund
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
COXON, JAMES H.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Vice President, Galaxy Offshore, Inc.
C-5
<PAGE>
Executive Vice President, Zurich Investment Management, Inc.
FERRO, DENNIS H.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Managing Director-Equities, Zurich Investment Management Limited
Vice President, Kemper International Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Target Equity Fund
Vice President, The Growth Fund of Spain, Inc.
Vice President, Kemper Europe Fund
GREENAWALT, JAMES L.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, President, Kemper Distributors, Inc.
Director, President, ZKI Agency, Inc.
JOHNS, GORDON K.
Executive Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Global Income Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper International Bond Fund
Vice President, Kemper International Management, Inc.
Managing director, Zurich Investment Management Limited
Vice President, Kemper Multi-Market Income Trust
Director, Thames Heritage Parade Limited
LANGBAUM, GARY A.
Executive Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Total Return Fund
Vice President, Kemper Investors Fund
MANZONI, JR,. CHARLES R.
Executive Vice President, Secretary & General Counsel, Zurich Kemper
Investments, Inc.
Vice President, Kemper Funds
Secretary, ZKI Agency, Inc.
MURRIHY, MAURA J.
Executive Vice President, Zurich Kemper Investments, Inc.
REYNOLDS, STEVEN H.
Executive Vice President, Chief Investment Officer - Equities, Zurich
Kemper Investments, Inc.
Vice President, Kemper Technology Fund
Vice President, Kemper Total Return Fund
Vice President, Kemper Growth Fund
Vice President, Kemper Small Capitalization Equity Fund
Vice President, Kemper International Fund
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Value Plus Growth Fund
Vice President, Kemper Quantitative Equity Fund
Vice President, Kemper Target Equity Fund
Vice President, Kemper Horizon Fund
Vice President, Kemper Investors Fund
Vice President, The Growth Fund of Spain, Inc.
Vice President, Kemper Europe Fund
C-6
<PAGE>
ROBERTS, SCOTT A.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Executive Vice President, Zurich Investment Management Inc.
SILIGMUELLER, DALE S.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Executive Vice President, Kemper Service Company
WEISS, ROBERT D.
Executive Vice President, Zurich Kemper Investments, Inc.
Executive Vice President, Zurich Investment Management, Inc.
BUKOWSKI, DANIEL J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Quantitative Equity Fund
Vice President, Kemper Value Plus Growth Fund
Vice President, Kemper Investors Fund
BUTLER, DAVID H.
Senior Vice President, Zurich Kemper Investments, Inc.
CERVONE, DAVID M.
Senior Vice President, Zurich Kemper Investments, Inc.
CESSINE, ROBERT S.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Investors Fund
CHESTER, TRACY McCORMICK
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Target Equity Fund
CIARLELLI, ROBERT W.
Senior Vice President, Zurich Kemper Investments, Inc.
Executive Vice President, Kemper Service Company
COLLECCHIA, FRANK E.
Senior Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Investment Management, Inc.
Senior Investment Officer, Federal Kemper Life Assurance Company
Senior Investment Officer, Fidelity Life Association
Vice President, Galaxy Offshore, Inc.
Senior Investment Officer, Kemper Investors Life Insurance Company
COLLORA, PHILIP J.
Senior Vice President and Assistant Secretary, Zurich Kemper
Investments, Inc.
Vice President and Secretary, Kemper Funds
C-7
<PAGE>
Assistant Secretary, Kemper International Management, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
Assistant Secretary, Dreman Value Advisors, Inc.
Assistant Secretary, ZKI Agency, Inc.
DUDASIK, PATRICK H.
Senior Vice President, Zurich Kemper Investments, Inc.
Executive Vice President, Chief Financial Officer and Treasurer,
Dreman Value Advisors, Inc.
Vice President and Treasurer, Zurich Investment Management, Inc.
Treasurer and Chief Financial Officer, Kemper Distributors, Inc.
Treasurer and Chief Financial Officer, Kemper Service Company
Director and Treasurer, Zurich Investment Management, Inc.
DUFFY, JEROME L.
Senior Vice President, Zurich Kemper Investments, Inc.
Treasurer, Kemper Funds
FINK, THOMAS M.
Senior Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Investment Management, Inc.
GALLAGHER, MICHAEL L.
Senior Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Kemper Service Company
GOERS, RICHARD A.
Senior Vice President, Zurich Kemper Investments, Inc.
GREENWALD, MARSHALL L.
Senior Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Investment Management, Inc.
HARRINGTON, MICHAEL E.
Senior Vice President, Zurich Kemper Investments, Inc.
KLEIN, GEORGE
Senior Vice President, Zurich Kemper Investments, Inc.
Director, Executive Vice President, Zurich Investment Management, Inc.
KLEIN, MARTY
Senior Vice President, Zurich Kemper Investments, Inc.
KORTH, FRANK D.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Technology Fund
McNAMARA, MICHAEL A.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Fund
Vice President, Kemper High Yield Fund
C-8
<PAGE>
Vice President, Kemper Investors Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
MOORE, C. PERRY
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, ZKI Agency, Inc.
MIER, CHRISTOPHER J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper National Tax-Free Income Series
Vice President, Kemper Municipal Income Trust
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Municipal Income Trust
RABIEGA, CRAIG F.
Senior Vice President, Zurich Kemper Investments, Inc.
First Vice President, Kemper Service Company
RACHWALSKI, JR. FRANK J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Investors Cash Trust
Vice President, Kemper Investors Fund
Vice President, Kemper Money Funds
Vice President, Kemper Portfolios
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
REGNER, THOMAS M.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Horizon Fund
Vice President, Kemper Investors Fund
RESIS, JR., HARRY E.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
SCHUMACHER, ROBERT T.
Senior Vice President, Zurich Kemper Investments, Inc.
SILVIA, JOHN E.
Senior Vice President, Zurich Kemper Investments, Inc.
SMITH, JR., EDWARD BYRON
Senior Vice President, Zurich Kemper Investments, Inc.
SWANSON, DAVID
Senior Vice President, Zurich Kemper Investments, Inc.
C-9
<PAGE>
THOUIN-LEERKAMP, EDITH A.
Senior Vice President, Zurich Kemper Investments, Inc.
Director-European Equities, Zurich Investment Management Limited
Vice President, Kemper Europe Fund
VANDENBERG, RICHARD
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper U.S. Government Securities Fund
Vice President, Kemper Portfolios
Vice President, Kemper Adjustable Rate U.S. Government Fund
VINCENT, CHRISTOPHER T.
Senior Vice President, Zurich Kemper Investments, Inc.
First Vice President, Zurich Investment Management, Inc.
WONNACOTT, LARRY R.
Senior Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Investment Management, Inc.
BAZAN, KENNETH M.
First Vice President, Zurich Kemper Investments Inc.
Director, K-P Greenway, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
BOEHM, JONATHAN J.
First Vice President, Zurich Investments Management, Inc.
Senior Vice President, Kemper Service Company
BURROW, DALE R.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Strategic Municipal Income Trust
BYRNES, ELIZABETH A.
First Vice President, Zurich Investments Management, Inc.
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Intermediate Government Trust
CHIEN, CHRISTINE
First Vice President, Zurich Kemper Investments, Inc.
CHRISTIANSEN, HERBERT A.
First Vice President, Zurich Kemper Investments, Inc.
First Vice President, Kemper Service Company
COHEN, JERRI I.
First Vice President, Zurich Kemper Investments, Inc.
DeMAIO, CHRIS C.
First Vice President, Zurich Kemper Investments, Inc.
Vice President and Chief Accounting Officer, Kemper Service
Company
C-10
<PAGE>
DEXTER, STEPHEN P.
First Vice President, Zurich Kemper Investments, Inc.
DOYLE, DANIEL J.
First Vice President, Zurich Kemper Investments, Inc.
FENGER, JAMES E.
First Vice President, Zurich Kemper Investments, Inc.
HALE, DAVID D.
First Vice President, Zurich Kemper Investments, Inc.
HORTON, ROBERT J.
First Vice President, Zurich Kemper Investments, Inc.
INNES, BRUCE D.
First Vice President, Zurich Kemper Investments, Inc.
Co-President, International Association of Corporate and
Professional Recruiters
JACOBS, PETER M.
First Vice President, Zurich Kemper Investments, Inc.
KEELEY, MICHELLE M.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Portfolios
KIEL, CAROL L.
First Vice President, Zurich Kemper Investments, Inc.
KNAPP, WILLIAM M.
First Vice President, Zurich Kemper Investments, Inc.
LAUGHLIN, ANN M.
First Vice President, Zurich Kemper Investments, Inc.
LENTZ, MAUREEN P.
First Vice President, Zurich Kemper Investments, Inc.
McCRINDLE-PETRARCA, SUSAN
First Vice President, Zurich Kemper Investments, Inc.
MINER, EDWARD
First Vice President, Zurich Kemper Investments, Inc.
MURRAY, SCOTT S.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Service Company
NORRIS, JOHNSTON A.
First Vice President, Zurich Kemper Investments, Inc.
C-11
<PAGE>
PANOZZO, ROBERTA L.
First Vice President, Zurich Kemper Investments, Inc.
RADIS, STEVE A.
First Vice President, Zurich Kemper Investments, Inc.
RATEKIN, DIANE E.
First Vice President, Assistant General Counsel and Assistant
Secretary, Zurich Kemper Investments, Inc.
Assistant Secretary, Kemper Distributors, Inc.
STUEBE, JOHN W.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
TEPPER, SHARYN A.
First Vice President, Zurich Kemper Investments, Inc.
TRUTTER, JONATHAN W.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
WETHERALD, ROBERT F.
First Vice President, Zurich Kemper Investments, Inc.
WILLSON, STEPHEN R.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Strategic Municipal Income Trust
WITTNEBEL, MARK E.
First Vice President, Zurich Kemper Investments, Inc.
ADAMS, DONALD
Vice President, Zurich Kemper Investments, Inc.
ALLEN, PATRICIA L.
Vice President, Zurich Kemper Investments, Inc.
ANDREASEN, AMY
Vice President, Zurich Kemper Investments, Inc.
ANTONAK, GEORGE A.
Vice President, Zurich Kemper Investments, Inc.
BALASUBRAMANIAM, KALAMADI
Vice President, Zurich Kemper Investments, Inc.
BARRY, JOANN M.
Vice President, Zurich Kemper Investments, Inc.
C-12
<PAGE>
BIEBERLY, CHRISTINE A.
Vice President, Zurich Kemper Investments, Inc.
BODEM, RICHARD A.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Service Company
BUCHANAN, PAMELA S.
Vice President, Zurich Kemper Investments, Inc.
BURKE, MARY PAT
Vice President, Zurich Kemper Investments, Inc.
BURSHTAN, DAVID H.
Vice President, Zurich Kemper Investments, Inc.
CARNEY, ANNE T.
Vice President, Zurich Kemper Investments, Inc.
CACCIOLA, RONALD
Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Investment Management, Inc.
CARTER, PAUL J.
Vice President, Zurich Kemper Investments, Inc.
COHEN, JERRI I.
Vice President, Zurich Kemper Investments, Inc.
ESOLA, CHARLES J.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Service Company
FRIHART, THORA A.
Vice President, Zurich Kemper Investments, Inc.
GERACI, AUGUST L.
Vice President, Zurich Kemper Investments, Inc.
GOLAN, JAMES S.
Vice President, Zurich Kemper Investments, Inc.
GOODWIN, JUDITH C.
Vice President, Zurich Kemper Investments, Inc.
GRAY, PATRICK
Vice President, Zurich Kemper Investments, Inc.
GROOTENDORST, TONYA
Vice President, Zurich Kemper Investments, Inc.
HECHT, MARC L.
Vice President, Zurich Kemper Investments, Inc.
Assistant Secretary, ZKI Agency, Inc.
C-13
<PAGE>
HUM, CHI H.
Vice President, Zurich Kemper Investments, Inc.
HUOT, LISA L.
Vice President, Zurich Kemper Investments, Inc.
JASINSKI, R. ANTHONY
Vice President, Zurich Kemper Investments, Inc.
KARWOWSKI, KENNETH F.
Vice President, Zurich Kemper Investments, Inc.
KENNEDY, PATRICK J.
Vice President, Zurich Kemper Investments, Inc.
KOCH, DEBORAH L.
Vice President, Zurich Kemper Investments, Inc.
KOURY, KATHRYN E.
Vice President, Zurich Kemper Investments, Inc.
KOWALCZYK, MARK A.
Vice President, Zurich Kemper Investments, Inc.
Vice President, ZKI Agency, Inc.
FRANZ, KATHY J.
Vice President, Zurich Kemper Investments, Inc.
KRUEGER, PAMELA D.
Vice President, Zurich Kemper Investments, Inc.
KYCE, JOYCE
Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Service Company
LASKA, ROBERTA E.
Vice President, Zurich Kemper Investments, Inc.
LAUTZ, STEPHEN
Vice President, Zurich Kemper Investments, Inc.
LeFEBVRE, THOMAS J.
Vice President, Zurich Kemper Investments, Inc.
McGOVERN, KAREN B.
Vice President, Zurich Kemper Investments, Inc.
MILLER, GARY L.
Vice President, Zurich Kemper Investments, Inc.
MILLIGAN, BRIAN J.
Vice President, Zurich Kemper Investments, Inc.
C-14
<PAGE>
MULLEN, TERRENCE
Vice President, Zurich Kemper Investments, Inc.
MURPHY, THOMAS M.
Vice President, Zurich Kemper Investments, Inc.
NEVILLE, BRIAN P.
Vice President, Zurich Kemper Investments, Inc.
NORMAN, JR., DONALD L.
Vice President, Zurich Kemper Investments, Inc.
NOWAK, GREGORY J.
Vice President, Zurich Kemper Investments, Inc.
PANOZZO, ALBERT R.
Vice President, Zurich Kemper Investments, Inc.
PAXTON, THOMAS
Vice President, Zurich Kemper Investments, Inc.
PONTECORE, SUSAN E.
Vice President, Zurich Kemper Investments, Inc.
QUADRINI, LISA L.
Vice President, Zurich Kemper Investments, Inc.
RANDALL, JR., WALTER R.
Vice President, Zurich Kemper Investments, Inc.
ROBINSON, DEBRA A.
Vice President, Zurich Kemper Investments, Inc.
RODGERS, JOHN B.
Vice President, Zurich Kemper Investments, Inc.
ROKOSZ, PAUL A.
Vice President, Zurich Kemper Investments, Inc.
ROSE, KATIE M.
Vice President, Zurich Kemper Investments, Inc.
RUDIN, MICHELLE I.
Vice President, Zurich Kemper Investments, Inc.
SHULTZ, KAREN D.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Service Company
SMITH, ROBERT G.
Vice President, Zurich Kemper Investments, Inc.
SOPHER, EDWARD O.
Vice President, Zurich Kemper Investments, Inc.
C-15
<PAGE>
SPILLER, KATHLEEN A.
Vice President, Zurich Kemper Investments, Inc.
SPURLING, CHRIS
Vice President, Zurich Kemper Investments, Inc.
STROMM, LAWRENCE D.
Vice President, Zurich Kemper Investments, Inc.
THOMAS, JILL
Vice President, Zurich Kemper Investments, Inc.
VANDEMERKT, RICHARD J.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Service Company
WALKER, ANGELA
Vice President, Zurich Kemper Investments, Inc.
WATKINS, JAMES K.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Service Company
WERTH, ELIZABETH C.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Distributors, Inc.
Assistant Secretary, Kemper Open-End Mutual Funds
WILNER, MITCHELL
Vice President, Zurich Kemper Investments, Inc.
WIZER, BARBARA K.
Vice President, Zurich Kemper Investments, Inc.
ZURAWSKI, CATHERINE N.
Vice President, Zurich Kemper Investments, Inc.
C-16
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and acts as principal underwriter of the Kemper Mutual
Funds, Kemper Investors Fund, Kemper International Bond Fund and the Kemper-
Dreman Funds.
(b) Information on the officers and directors of Kemper Distributors,
Inc., principal underwriter for the Registrant is set forth below. The principal
business address is 222 South Riverside Plaza, Chicago, Illinois 60606.
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
---- ---------------- ----------
<S> <C> <C>
James L. Greenawalt Director, President None
William E. Chapman, II Director, Executive Vice President None
John E. Neal Director Vice President
Stephen B. Timbers Director President, Trustee
Patrick H. Dudasik Financial Principal, Treasurer
and Chief Financial Officer None
Linda A. Bercher Senior Vice President None
Terry Cunningham Senior Vice President None
John H. Robinson, Jr. Senior Vice President None
Henry J. Schulthesz Senior Vice President None
Thomas V. Bruns Vice President None
Carlene D. Merold Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Diane E. Ratekin Assistant Secretary None
</TABLE>
(c) Not applicable.
C-17
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents are maintained at the offices of the
Registrant, the offices of Registrant's investment adviser, Zurich Kemper
Investments, Inc. and the Registrant's principal underwriter, Kemper
Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606 or, in
the case of records concerning custodial functions, at the offices of the
custodian, Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street,
Kansas City, Missouri 64105 or, in the case of records concerning transfer
agency functions, at the offices of IFTC and of the shareholder service agent,
Kemper Service Company, 811 Main Street, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Not applicable.
C-18
<PAGE>
S I G N A T U R E S
-------------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago and State of Illinois, on the 6th day of
November, 1996.
KEMPER MONEY FUNDS
By /s/ Stephen B. Timbers
-----------------------------
Stephen B. Timbers, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on November 6, 1996 on behalf of
the following persons in the capacities indicated.
Signature Title
--------- -----
/s/ Stephen B. Timbers President
- -------------------------------------- (Principal
Stephen B. Timbers Executive Officer)
and Trustee
/s/ David W. Belin* Trustee
- --------------------------------------
/s/ Lewis A. Burnham* Trustee
- --------------------------------------
/s/ Donald L. Dunaway* Trustee
- --------------------------------------
/s/ Robert B. Hoffman* Trustee
- --------------------------------------
/s/ Donald R. Jones* Trustee
- --------------------------------------
/s/ Dominique P. Morax* Trustee
- --------------------------------------
/s/ Shirley D. Peterson* Trustee
- --------------------------------------
/s/ William P. Sommers* Trustee
- --------------------------------------
/s/ Jerome L. Duffy
- -------------------------------------- Treasurer
Jerome L. Duffy (Principal
Financial and
Accounting Officer)
*Philip J. Collora signs this document pursuant to powers of attorney filed with
the Registration Statement on Form N-1A of Registrant on November 16, 1995
(except for the Power of Attorney of Dominique P. Morax, which is filed
herewith).
/s/ Philip J. Collora
-----------------------------
Philip J. Collora
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
REFERENCE
---------
<C> <S> <C>
99.B1(a) Amended and Restated Agreement and Declaration of Trust.(1)
99.B1(b) Written Instrument Amending the Agreement and Declaration of
Trust.(1)
99.B1(c) Written Instrument Amending the Agreement and Declaration of
Trust.(1)
99.B1(d) Written Instrument Amending the Agreement and Declaration of
Trust.
99.B2 By-Laws.(1)
99.B3 Inapplicable.
99.B4(a) Text of Share Certificate.(1)
99.B4(b) Written Instrument Changing Name of Series of the Trust.
99.B5 Investment Management Agreement.
99.B6(a) Underwriting Agreement.
99.B6(b) Selling Group Agreement.(1)
99.B7 Inapplicable.
99.B8(a) Custody Agreement.(1)
99.B9(a) Agency Agreement.(1)
99.B9(b) Supplement to Agency Agreement.
99.B10 Inapplicable.
99.B11 Report and Consent of Independent Auditors.
99.B12 Inapplicable.
99.B13 Inapplicable.
99.B14(a) Kemper Retirement Plan Prototype.(1)
99.B14(b) Model Individual Retirement Account.(1)
99.B15 Inapplicable.
99.B16 Performance Calculations.(2)
99.B18 Inapplicable.
99.B24 Powers of Attorney.(3)
27.1 Financial Data Schedule for Money Market Fund
27.2 Financial Data Schedule for Government Money Fund
27.3 Financial Data Schedule for Tax-Free Money Fund
99.485(b) Representation of Counsel (Rule 485 (b)).
</TABLE>
- --------
(1) Incorporated herein by reference to Amendment No. 41 on Form N-1A filed on
November 16, 1995.
(2) Incorporated herein by reference to Amendment No. 40 on Form N-1A filed on
or about October 31, 1994.
(3) Incorporated herein by reference to Amendment No. 41 on Form N-1A filed on
November 16, 1995, except for the Power of Attorney of Dominique P. Morax,
which is filed herewith.
<PAGE>
EXHIBIT B1(d)
KEMPER MONEY MARKET FUND
WRITTEN INSTRUMENT AMENDING THE
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
The undersigned, being a majority of the trustees of Kemper Money Market
Fund (the "Trust"), a business trust organized pursuant to an Agreement and
Declaration of Trust dated August 9, 1985, as amended and restated (the
"Declaration of Trust"), pursuant to Section 1 of Article I and Section 4 of
Article IX of the Declaration of Trust, do hereby change the name of the Trust
to "Kemper Money Funds." This instrument shall constitute an amendment to the
Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have this 1st day of February, 1996,
signed these presents.
/s/ Stephen B. Timbers
--------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
(signatures continue)
The address of the Trust is:
c/o Kemper Financial Services, Inc.
120 S. LaSalle Street
Chicago, IL 60603
<PAGE>
/s/ David W. Belin
---------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
---------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
---------------------------------
Donald L. Dunaway, Trustee
7515 Pelican Bay Boulevard, #903
Naples, Florida 33963
/s/ Robert B. Hoffman
---------------------------------
Robert B. Hoffman, Trustee
10045 Litzsinger Road
St. Louis, MO 63124-1131
/s/ Donald R. Jones
---------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
/s/ Shirley D. Peterson
---------------------------------
Shirley D. Peterson, Trustee
401 Rosemont Avenue
Frederick, MD 21701-8575
/s/ William P. Sommers
---------------------------------
William P. Sommers, Trustee
2181 Parkside Avenue
Hillsborough, California 94010
/s/ Stephen B. Timbers
---------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
Then personally appeared the afore-named David W. Belin, Lewis A. Burnham,
Donald L. Dunaway, Robert B. Hoffman, Donald R. Jones, Dominique P. Morax,
Shirley D. Peterson, William P. Sommers and Stephen B. Timbers who acknowledged
the foregoing instrument to be their free act and deed, before me this 1st day
of February, 1996.
/s/ Karen Ann Mostacchio
----------------------------------
NOTARY PUBLIC
<PAGE>
EXHIBIT B4(b)
KEMPER MONEY FUNDS
WRITTEN INSTRUMENT CHANGING
THE NAME OF SERIES OF THE TRUST
-------------------------------
The undersigned, being a majority of the trustees of Kemper Money Funds
(the "Trust"), a business trust organized pursuant to an Agreement and
Declaration of Trust dated August 9, 1985, as amended and restated (the
"Declaration of Trust"), pursuant to Section 1 of Article III of the Declaration
of Trust, do hereby change the name of each series of Shares of the Trust as
follows: the "Money Market Portfolio" is changed to the "Kemper Money Market
Fund," the "Government Securities Portfolio" is changed to the "Kemper
Government Money Fund" and the "Tax-Exempt Portfolio" is changed to the "Kemper
Tax-Free Money Fund." The relative rights and preferences of such series shall
continue to be as set forth in the Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have this 1st day of February, 1996
signed these presents.
/s/ Stephen B. Timbers
---------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
(signatures continue)
<PAGE>
/s/ David W. Belin
---------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
---------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
---------------------------------
Donald L. Dunaway, Trustee
7515 Pelican Bay Boulevard, #903
Naples, Florida 33963
/s/ Robert B. Hoffman
---------------------------------
Robert B. Hoffman, Trustee
10045 Litzsinger Road
St. Louis, MO 63124-1131
/s/ Donald R. Jones
---------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
/s/ Shirley D. Peterson
---------------------------------
Shirley D. Peterson, Trustee
401 Rosemont Avenue
Frederick, MD 21701-8575
/s/ William P. Sommers
---------------------------------
William P. Sommers, Trustee
2181 Parkside Avenue
Hillsborough, California 94010
---------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
<PAGE>
EXHIBIT B5
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 4th day of January, 1996 by and between KEMPER MONEY MARKET
FUND, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, the shares of beneficial
interest ("Shares") of which are registered under the Securities Act of 1933;
and
WHEREAS, the Fund is authorized to issue Shares in separate series with each
such series representing the interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund wants to retain the Adviser under this Agreement to render
investment advisory and management services to the portfolios of the Fund known
as the Money Market Portfolio, Government Securities Portfolio and Tax-Exempt
Portfolio (the "Initial Portfolios"), together with any other Fund portfolios
which may be established later and served by the Adviser hereunder, being herein
referred to collectively as the "Portfolios" and individually referred to as a
"Portfolio"; and
WHEREAS, the Adviser is willing to render such investment advisory and
management services for the Initial Portfolios;
NOW THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for
the Initial Portfolios or other Portfolios hereunder and to manage the
investment and reinvestment of the assets of such Portfolios in accordance with
applicable investment objectives and policies and limitations, and to administer
their affairs to the extent requested by and subject to the supervision of the
Board of Trustees of the Fund for the period and upon the terms herein set
forth. The investment of funds shall be subject to all applicable restrictions
of the Agreement and Declaration of Trust and By-laws of the Fund as may from
time to time be in force.
The Adviser accepts such employment and agrees during such period to render such
services, to furnish office facilities and equipment, to provide clerical,
bookkeeping and administrative services for the Fund, to provide shareholder and
information
<PAGE>
services, to permit any of its officers or employees to serve without
compensation as trustees or officers of the Fund if elected to such positions
and to assume the obligations herein set forth for the compensation herein
provided. The Adviser shall for all purposes herein provided be deemed to be an
independent contractor, and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund. It is understood and agreed that the Adviser, by
separate agreement with the Fund, may also act as underwriter for the Fund.
2. In the event that the Fund establishes one or more portfolios other than
the Initial Portfolios with respect to which it desires to retain the Adviser to
render investment advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render such services it
shall notify the Fund in writing whereupon such portfolio or portfolios shall
become a Portfolio or Portfolios hereunder.
3. For the services and facilities described in Section 1, the Fund will pay
to the Adviser at the end of each calendar month, an investment management fee
computed by applying the following annual rate to the combined average daily net
assets of the Portfolios:
<TABLE>
<CAPTION>
Annual Rate Average Daily Net Assets
----------- ------------------------
<S> <C>
.50 of 1% on the first $215 million
.375 of 1% on the next $335 million
.30 of 1% on the next $250 million
.25 of 1% on average net assets
over $800 million
</TABLE>
The fee as computed above shall be allocated to each Portfolio based upon the
relative average daily net assets of each Portfolio managed by the Adviser.
If expenses borne by the Portfolios which the Adviser manages in any fiscal year
(including the Adviser's fee, but excluding interest, taxes, fees incurred in
acquiring and disposing of portfolio securities and, to the extent permitted,
extraordinary expenses), exceed 1.5% of average daily net assets of the
Portfolios up to $30 million and 1% of average daily net assets of the
Portfolios over $30 million, the Adviser will reduce its fee or reimburse the
Fund for any excess. The expense limitation guarantee shall be allocated to each
Portfolio upon a fee
2
<PAGE>
reduction or reimbursement based upon the relative average daily net assets of
each Portfolio. If for any month the expenses of the Portfolios properly
chargeable to the income account shall exceed 1/12 of the percentage of daily
net assets allowable as expenses, the payment to the Adviser for that month
shall be reduced, and, if necessary, the Adviser shall make a refund payment to
the Fund so that the total net expense will not exceed such percentage. As of
the end of the Fund's fiscal year, however, the foregoing computations and
payments shall be readjusted so that the aggregate compensation payable to the
Adviser for the year is equal to the percentage set forth herein of the average
daily net assets as determined as described herein throughout the fiscal year,
diminished to the extent necessary so that the total of said expense item shall
not exceed the expense limitation. The aggregate of repayments, if any, by the
Adviser to the Fund for the year shall be the amount necessary to limit the said
net expense to said percentage.
The net asset value of each Portfolio shall be calculated in accordance with the
provisions of the Fund's prospectus or at such other time or times as the
trustees may determine in accordance with the provisions of the Investment
Company Act of 1940. On each day when net asset value is not calculated, the net
asset value of a Share of a Portfolio shall be deemed to be the net asset value
of such a Share as of the close of business on the last day on which such
calculation was made for the purpose of the foregoing computations.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively. The services
of the Adviser to the Fund under this Agreement are not to be deemed exclusive,
and the Adviser shall be free to render similar services or other services to
others so long as its services hereunder are not impaired thereby.
4. In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for any other
charges of the custodian and for calculating the net asset value of the Fund as
provided in the Prospectus of the Fund. The Adviser shall not be required to pay
and the Fund shall assume and pay the charges and expenses of its operations,
including compensation of the trustees (other than those affiliated with the
Adviser), charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent or any registrar of the Fund, costs of
acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by the Fund, costs of share certificates and of reports,
membership dues in the Investment Company Institute or any similar organization,
costs
3
<PAGE>
of reports and notices to shareholders, other like miscellaneous expenses and
all taxes and fees payable to federal, state or other governmental agencies on
account of the registration of securities issued by the Fund, filing of
corporate documents or otherwise. The Fund shall not pay or incur any obligation
for any management or administrative expenses for which the Fund intends to seek
reimbursement from the Adviser as herein provided without first obtaining the
written approval of the Adviser. The Adviser shall arrange, if desired by the
Fund, for officers or employees of the Adviser to serve, without compensation
from the Fund, as trustees, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law.
5. Subject to applicable statutes and regulations, it is understood that
trustees, officers, or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund otherwise than as a trustee, officer or agent.
6. The Adviser shall not be liable for any error of judgment or of law, or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except loss resulting from willful misfeasance bad faith or
gross negligence on the part of the Adviser in the performance of its
obligations and duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
7. This Agreement shall become effective on the date hereof and shall remain
in full force until December 1, 1996, unless sooner terminated as hereinafter
provided. This Agreement shall continue in force from year to year thereafter,
but only as long as such continuance is specifically approved at least annually
for each Portfolio in the manner required by the Investment Company Act of 1940;
provided, however, that if the continuation of this Agreement is not approved
for a Portfolio, the Adviser may continue to serve in such capacity for such
Portfolio in the manner and to the extent permitted by the Investment Company
Act of 1940 and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment, and
may be terminated at any time without the payment of any penalty with respect to
any or all Portfolios by the Fund or by the Adviser on sixty (60) days written
notice to the other party. The Fund may effect termination with respect to any
Portfolio by action of the Board of Trustees or by vote of a majority of the
outstanding shares of such Portfolio, accompanied by appropriate notice.
This Agreement may be terminated with respect to any Portfolio at any time
without the payment of any penalty by the Board of
4
<PAGE>
Trustees or by vote of a majority of the outstanding Shares of such Portfolio in
the event that it shall have been established by a court of competent
jurisdiction that the Adviser or any officer or director of the Adviser has
taken any action which results in a breach of the covenants of the Adviser set
forth herein.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
8. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
9. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
10. All parties hereto are expressly put on notice of the Kemper Money Market
Fund Agreement and Declaration of Trust and all amendments thereto, all of which
are on file with the Secretary of The Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund. With respect to any claim by Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund arising hereunder)
allocated to a particular Portfolio, whether in accordance with the express
terms hereof or otherwise, the Adviser shall have recourse solely against the
assets of that Portfolio to satisfy such claim and shall have no recourse
against the assets of any other Portfolio for such purpose.
11. This Agreement shall be construed in accordance with applicable federal law
and (except as to Section 10 hereof which shall be construed in accordance with
the laws of the Commonwealth of Massachusetts) the laws of the State of
Illinois.
5
<PAGE>
12. This agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed as of the day and year first above written.
KEMPER MONEY MARKET FUND
By: /s/ John E. Peters
----------------------------
Title: Vice President
ATTEST:
/s/ Philip J. Collora
- ------------------------------
Title: Secretary
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick Dudasik
----------------------------
Title: Senior Vice President
ATTEST:
/s/ David F. Dierenfeldt
- ------------------------------
Title: Assistant Secretary
6
<PAGE>
EXHIBIT B6(a)
UNDERWRITING AGREEMENT
AGREEMENT made as of this 4th day of January, 1996 between KEMPER MONEY
MARKET FUND a Massachusetts business trust (hereinafter called the "Fund"), and
KEMPER DISTRIBUTORS, INC., a Delaware corporation (hereinafter called the
"Underwriter");
WITNESSETH:
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the distribution of
shares of beneficial interest (hereinafter called "shares") of the Fund in
jurisdictions wherein shares of the Fund may legally be offered for sale;
provided, however, that the Fund in its absolute discretion may (a) issue or
sell shares directly to holders of shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; or (b) issue or
sell shares at net asset value to the shareholders of any other investment
company, for which the Underwriter shall act as exclusive distributor, who wish
to exchange all or a portion of their investment in shares of such other
investment company for shares of the Fund.
2. The Underwriter hereby accepts appointment as agent for the distribution of
the shares of the Fund and agrees that it will use its best efforts with
reasonable promptness to sell such part of the authorized shares of the Fund
remaining unissued as from time to time shall be effectively registered under
the Securities Act of 1933 ("Securities Act"), at prices determined as
hereinafter provided and on terms hereinafter set forth, all subject to
applicable Federal and state laws and regulations and to the Agreement and
Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to keep effectively
registered under the Securities Act for sale as herein contemplated such shares
as the Underwriter shall reasonably request and as the Securities and Exchange
Commission shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund may terminate, suspend
or withdraw the offering of shares whenever, in its sole discretion, it deems
such action to be desirable.
<PAGE>
5. The Underwriter shall sell shares of the Fund to or through qualified
dealers or others in such manner, not inconsistent with the provisions hereof
and the then effective registration statement of the Fund under the Securities
Act (and related prospectus), as the Underwriter may determine from time to
time, provided that no dealer or other person shall be appointed or authorized
to act as agent of the Fund without the prior consent of the Fund. It is
mutually agreed that, in addition to sales made by it as agent of the Fund, the
Underwriter may, in its discretion, also sell shares of the Fund as principal to
persons with whom it does not have dealer selling group agreements.
6. Shares of the Fund offered for sale or sold by the Underwriter shall be so
offered or sold at a price per share determined in accordance with the then
current prospectus relating to the sale of such shares except as departure from
such prices shall be permitted by the rules and regulations of the Securities
and Exchange Commission; provided, however, that any public offering price for
shares of the Fund shall be the net value per share. The net asset value per
share shall be determined in the manner and at the times set forth in the then
current prospectus of the Fund relating to such shares.
7. The price the Fund shall receive for all shares purchased from the Fund
shall be the net asset value used in determining the public offering price
applicable to the sale of such shares.
8. The Underwriter shall issue and deliver on behalf of the Fund such
confirmations of sales made by it as agent pursuant to this agreement as may be
required. At or prior to the time of issuance of shares, the Underwriter will
pay or cause to be paid to the Fund the amount due the Fund for the sale of such
shares. Certificates shall be issued or shares registered on the transfer books
of the Fund in such names and denominations as the Underwriter may specify.
9. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as the Underwriter may
reasonably request (it being understood that the Fund shall not be required
without its consent to comply with any requirement which in its opinion is
unduly burdensome).
10. The Fund will furnish to the Underwriter from time to time such information
with respect to the Fund and its shares as the Underwriter may reasonably
request for use in connection with the sale of shares of the Fund. The
Underwriter agrees that it will not use or distribute or authorize the use,
distribution or
2
<PAGE>
dissemination by its dealers or others in connection with the sale of such
shares any statements, other than those contained in the Fund's current
prospectus, except such supplemental literature or advertising as shall be
lawful under Federal and state securities law and regulations, and that it will
furnish the Fund with copies of all such material.
11. The Underwriter shall order shares of the Fund from the Fund only to the
extent that it shall have received purchase orders therefor. The Underwriter
will not make, or authorize any dealers or others to make any short sales of
shares of the Fund.
12. The Underwriter, as agent of and for the account of the Fund, may
repurchase the shares of the Fund at such prices and upon such terms and
conditions as shall be specified in the current prospectus of the Fund.
13. In selling or reacquiring shares of the Fund for the account of the Fund,
the Underwriter will in all respects conform to the requirements of all state
and Federal laws and the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., relating to such sale or reacquisition, as the case
may be, and will indemnify and save harmless the Fund from any damage or expense
on account of any wrongful act by the Underwriter or any employee,
representative or agent of the Underwriter. The Underwriter will observe and be
bound by all the provisions of the Agreement and Declaration of Trust of the
Fund (and of any fundamental policies adopted by the Fund pursuant to the
Investment Company Act of 1940, notice of which shall have been given to the
Underwriter) which at the time in any way require, limit, restrict or prohibit
or otherwise regulate any action on the part of the Underwriter.
14. The Underwriter will require each dealer to conform to the provisions
hereof and the Registration Statement (and related prospectus) at the time in
effect under the Securities Act with respect to the public offering price of the
Fund's shares, and neither the Underwriter nor any such dealers shall withhold
the placing of purchases orders so as to make a profit thereby.
15. The Fund will pay or cause to the paid expenses (including the fees and
disbursements of its own counsel) and all taxes and fees payable to the Federal,
state or other governmental agencies on account of the registration or
qualifications of securities issued by the Fund or otherwise. The Fund will also
pay or cause to be paid expenses incident to the issuance of shares of
beneficial interest, such as the cost of share certificates, issue taxes, and
fees for the transfer agent. The Underwriter will pay all expenses (other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder, including,
3
<PAGE>
without limiting the generality of the foregoing, all expenses of printing and
distributing any prospectus and of preparing, printing and distributing or
disseminating any other literature, advertising and selling aids in connection
with the offering of the shares for sale (except that such expenses need not
include expenses incurred by the Fund in connection with the preparation,
typesetting, printing and distribution of any registration statement or report
or other communication to stockholders in their capacity as such) and expenses
of advertising in connection with such offering.
16. The agreement shall become effective on the date hereof and shall
continue in effect until December 1, 1996 and from year to year thereafter, but
only so long as such continuance is approved in the manner required by the
Investment Company Act of 1940. Either party hereto may terminate this agreement
on any date by giving the other party at least six months prior written notice
of such termination specifying the date fixed therefor. Without prejudice to any
other remedies of the Fund in any such event the Fund may terminate this
agreement at any time immediately upon any failure of fulfillment of any of the
obligations of the Underwriter hereunder.
17. This agreement shall automatically terminate in the event of its
assignment.
18. Any notice under this agreement shall be in writing, addressed and
delivered or mailed, postage postpaid, to the other party at such address as
such other party may designate for the receipt of such notice.
19. All parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust dated August 5, 1985 and all amendments thereto, all of
which are on file with the Secretary of The Commonwealth of Massachusetts, and
the limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund. With respect to any claim by Underwriter for recovery of any liability of
the Fund arising hereunder allocated to a particular series or portfolio
("Portfolio") of the Fund if there be more than one, whether in accordance with
the express terms hereof or otherwise, the Underwriter shall have recourse
solely against the assets of
4
<PAGE>
that Portfolio to satisfy such claim and shall have no recourse against the
assets of any other Portfolio for such purpose.
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this
agreement to be executed on its behalf by an officer thereunto duly authorized
and its seal to be affixed on the day and year first above written.
KEMPER MONEY MARKET FUND
By: /s/ John E. Peters
----------------------------
Title: Vice President
-------------------------
Attest: /s/ Philip J. Collora
-------------------------
Title: Secretary
--------------------------
KEMPER DISTRIBUTORS, INC.
By: /s/ Patrick H. Dudasik
----------------------------
Title: Chief Financial Officer
-------------------------
and Treasurer
Attest: /s/ David F. Dierenfeldt
--------------------------
Title: Secretary
--------------------------
5
<PAGE>
EXHIBIT B9(b)
SUPPLEMENT TO AGENCY AGREEMENT
Supplement to Agency Agreement ("Supplement") made as of April 1, 1995 and
between the registered investment company executing this document (the "Fund")
and Investors Fiduciary Trust Company ("Agent").
WHEREAS, the Fund and Agent are parties to an Agency Agreement ("Agency
Agreement"), as supplemented from time to time;
WHEREAS, Section 5.A. of the Agency Agreement provides that the fees
payable by the Fund to Agent thereunder shall be as set forth in a separate
schedule to be agreed to by the Fund and Agent; and
WHEREAS, the parties desire to reflect in this Supplement
the revised fee schedule for the Agency Agreement as in effect as
of the date hereof;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein provided, the parties agree as follows:
1. The revised fee schedule for services provided by Agent to the Fund
under the Agency Agreement as in effect as of the date hereof is set forth in
Exhibit A attached hereto.
2. This Supplement shall become a part of the Agency Agreement and subject
to its terms and shall supersede all previous fee schedules under such agreement
as of the date hereof.
IN WITNESS WHEREOF, the Fund and Agent have duly executed this Supplement
as of the day and year first set forth above.
KEMPER MONEY MARKET FUND
By: /s/ John E. Peters
----------------------------------
Title: Vice President
-------------------------------
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Stephen R. Hilliard
----------------------------------
Title: Executive Vice President
-------------------------------
<PAGE>
EXHIBIT A
---------
FEE SCHEDULE
------------
<TABLE>
<CAPTION>
Transfer Agency Function Fee Payable by Fund
------------------------ -------------------
<S> <C>
1. Annual open shareholder $8.00 per year per account.
account fee.
2. Annual closed shareholder $6.00 per year per account.
account fee.
3. Establishment of new shareholder $4.00 per new account.
account.
4. Payment of dividend. $.40 per dividend payment
per account.
5. Process non-ACH purchase or $.55 per transaction.
redemption of shares transaction.
6 Process ACH purchase or redemption $.15 per transaction.
of shares transaction.
7. Non-monetary transactions fee. $1.20 per year per open
account.
8. All other shareholder inquiry, $1.25 per transaction.
correspondence and research
transactions.
</TABLE>
The out-of-pocket expenses of IFTC will be reimbursed by Fund in accordance with
the provisions of Section 5 of the Agency Agreement.
<PAGE>
Exhibit 11
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Kemper Money Funds
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Kemper Money Market Fund, Kemper Government
Money Fund and Kemper Tax-Free Money Fund, comprising Kemper Money Funds
(formerly Kemper Money Market Fund), as of July 31, 1996, 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 1987. 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, 1996, 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 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 Funds comprising Kemper Money Funds at July 31, 1996, 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 1987, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, Illinois
September 18, 1996
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors and Reports to Shareholders" and to the
use of our report dated September 18, 1996 in the Registration Statement (Form
N-1A) and its incorporation by reference in the related prospectus of the Kemper
Money Funds (formerly Kemper Money Market Fund), filed with the Securities and
Exchange Commission in this Post-Effective Amendment No. 42 to the Registration
Statement under the Securities Act of 1933 (File No. 33-2-51992) and in this
Amendment No. 42 to the Registration Statement under the Investment Company Act
of 1940 (File No. 811-2527).
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, Illinois
November 6, 1996
<PAGE>
EXHIBIT B24
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints Charles F. Custer,
Stephen B. Timbers and Philip J. Collora and each of them, any of whom may act
without the joinder of the others, as his attorney-in-fact to sign and file on
his behalf individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits, applications and
other documents with the Securities and Exchange Commission or any other
regulatory authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Money Funds.
Signature Title Date
--------- ----- ----
/s/ Dominique P. Morax Trustee September 5, 1996
- ---------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JULY 31,
1996 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> KEMPER MONEY FUND
<SERIES>
<NUMBER> 01
<NAME> KEMPER MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 4,226,414
<INVESTMENTS-AT-VALUE> 4,226,414
<RECEIVABLES> 19,374
<ASSETS-OTHER> 2,675
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,248,463
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,688
<TOTAL-LIABILITIES> 22,688
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,225,775
<SHARES-COMMON-STOCK> 4,225,775
<SHARES-COMMON-PRIOR> 4,025,098
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,225,775
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 235,498
<OTHER-INCOME> 0
<EXPENSES-NET> (20,649)
<NET-INVESTMENT-INCOME> 214,849
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 214,849
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (214,849)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,752,934
<NUMBER-OF-SHARES-REDEEMED> (5,759,348)
<SHARES-REINVESTED> 207,091
<NET-CHANGE-IN-ASSETS> 200,677
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,134
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20,649
<AVERAGE-NET-ASSETS> 4,130,703
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JULY 31,
1996 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> KEMPER MONEY FUNDS
<SERIES>
<NUMBER> 02
<NAME> KEMPER GOVERNMENT MONEY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 667,143
<INVESTMENTS-AT-VALUE> 667,143
<RECEIVABLES> 3,988
<ASSETS-OTHER> 3,236
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 674,367
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,326
<TOTAL-LIABILITIES> 2,326
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 672,041
<SHARES-COMMON-STOCK> 672,041
<SHARES-COMMON-PRIOR> 603,601
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 672,041
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 36,715
<OTHER-INCOME> 0
<EXPENSES-NET> (3,007)
<NET-INVESTMENT-INCOME> 33,708
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 33,708
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (33,708)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 728,317
<NUMBER-OF-SHARES-REDEEMED> (692,453)
<SHARES-REINVESTED> 32,576
<NET-CHANGE-IN-ASSETS> 68,440
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,747
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,007
<AVERAGE-NET-ASSETS> 648,215
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JULY 31,
1996 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> KEMPER MONEY FUNDS
<SERIES>
<NUMBER> 03
<NAME> KEMPER TAX-FREE MONEY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 733,294
<INVESTMENTS-AT-VALUE> 733,294
<RECEIVABLES> 5,996
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 739,290
<PAYABLE-FOR-SECURITIES> 7,333
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,939
<TOTAL-LIABILITIES> 10,272
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 729,018
<SHARES-COMMON-STOCK> 729,018
<SHARES-COMMON-PRIOR> 760,143
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 729,018
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,455
<OTHER-INCOME> 0
<EXPENSES-NET> (2,944)
<NET-INVESTMENT-INCOME> 25,511
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,511)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 753,317
<NUMBER-OF-SHARES-REDEEMED> (809,181)
<SHARES-REINVESTED> 24,739
<NET-CHANGE-IN-ASSETS> (31,125)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,032
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,944
<AVERAGE-NET-ASSETS> 754,003
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 485(b)
[LETTERHEAD OF VEDDER PRICE]
November 4, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kemper Money Funds
------------------
To The Commission:
We are counsel to the above-referenced investment company (the "Fund") and
as such have participated in the preparation and review of Post-Effective
Amendment No. 42 to the Fund's registration statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485 and in reliance upon the oral approval of the staff of the
Commission, acting on behalf of the Commission, under Rule 485(b)(1)(ix) for
certain of the disclosures to be contained in the amendment, we hereby represent
that such amendment does not contain disclosures which would render it
ineligible to become effective pursuant to paragraph (b) thereof.
Very truly yours,
/s/ Vedder, Price, Kaufman & Kammholz
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
