<PAGE> 1
KEMPER
MONEY FUNDS
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED JULY 31, 1996
" . . . when there was a likelihood of
rising rates...the average maturities on the funds
had been reduced...This puts us in a position to
capture higher rates if
they are available."
[KEMPER MUTUAL FUNDS LOGO]
<PAGE> 2
Contents
3
Performance Update
6
Portfolio Statistics
7
Portfolio of
Investments
14
Report of
Independent Auditors
15
Financial Statements
17
Notes to
Financial Statements
18
Financial Highlights
At a Glance
- --------------------------------------------------------------------------------
Yield Comparison+
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED JULY 31, 1996
[LIPPER GRAPH]
<TABLE>
<S> <C>
Kemper Money Market Fund 5.20%
First Tier Money Money Fund Average* 4.93%
Kemper Government Money Fund 5.20%
Government Money Fund Average* 4.81%
Kemper Tax-Free Money Fund 3.38%
Tax-Exempt Fund Average* 3.02%
</TABLE>
Note: The tax equivalent yield for Kemper Tax-Free Money Fund was 5.37%.
The tax-equivalent yield for Kemper Tax-Free Money Fund is based on a marginal
federal income tax rate of 37.1%. Income from Kemper Tax-Free Money Fund may be
subject to state and local taxes and, for some investors, a portion of income
may be subject to the alternative minimum tax.
An investment in money market funds is neither insured nor guaranteed by the
U.S. Government, and there can be no assurance that a fund will be able to
maintain a stable net asset value of $1.00 per share.
+The 12 month yield reflects the sum of the daily dividends for the portfolios
during the annual period.
*The funds are compared to their respective IBC Financial Data categories: First
Tier Money Fund Average consists of all non-institutional taxable money market
funds investing in only first tier (highest rating) securities and tracked by
IBC Financial Data; Government Money Fund Average includes all non-institutional
government money market funds tracked by IBC Financial Data; Tax-Exempt Money
Fund Average consists of all non-institutional tax-free money market funds
tracked by IBC Financial Data.
- --------------------------------------------------------------------------------
Kemper Money Funds
Lipper Rankings
- --------------------------------------------------------------------------------
Compared to all other funds in the respective Lipper category**
<TABLE>
<CAPTION>
1-YEAR 5-YEAR 10-YEAR 20-YEAR
- ------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER
MONEY #27 OF #17 OF #5 OF #1 OF
MARKET FUND 282 FUNDS 176 FUNDS 105 FUNDS 24 FUNDS
- ------------------------------------------------------
KEMPER
GOVERNMENT #7 OF #6 OF #2 OF
MONEY FUND 112 FUNDS 72 FUNDS 40 FUNDS N/A
- ------------------------------------------------------
KEMPER
TAX-FREE #8 OF #7 OF
MONEY FUND 133 FUNDS 91 FUNDS N/A N/A
- ------------------------------------------------------
</TABLE>
**Lipper Analytical Services, Inc. rankings are based upon changes in net asset
value with all dividends reinvested for the periods indicated as of 7/31/96.
Rankings are historical and do not reflect future performance. The Lipper
categories that are used for comparison are as follows: Kemper Money Market Fund
compared to the Lipper Money Market Instrument Fund category, Kemper Government
Money Fund compared to the Lipper Government Money Market Fund category and
Kemper Tax-Free Money Fund compared to the Lipper Tax-Exempt Money Market Fund
category.
Terms To Know
AVERAGE MATURITY The weighted average number of days in which each security in
the portfolio matures.
GROSS DOMESTIC PRODUCT (GDP) The dollar value of all goods and services produced
in the United States. Market observers track the change in GDP as a measure of
how fast the economy is growing.
FEDERAL FUNDS RATE The interest rate banks charge each other for overnight loans
that are needed to meet reserve requirements. The federal funds rate is often
considered the most sensitive indicator of the direction of interest rates.
<PAGE> 3
PERFORMANCE UPDATE
[RACHWALSKI PHOTO]
SHORT-TERM INTEREST RATES FELL AND THEN ROSE, CAUSING INVESTORS TO CONTINUE TO
MARVEL AT THE RESILIENCE OF THE ECONOMIC EXPANSION. IN A YEAR OF OFTEN
CONFLICTING MARKET DIRECTION, PORTFOLIO MANAGER FRANK RACHWALSKI DISCUSSES HOW
KEMPER MONEY FUNDS KEPT PACE -- AND OUTPERFORMED THE AVERAGE OF THEIR MONEY
MARKET FUND PEERS.
Frank Rachwalski is senior vice president of Zurich Kemper Investments, Inc. and
vice president and portfolio manager of Kemper Money Funds since its inception.
Rachwalski holds a B.B.A. and an M.B.A. degree from Loyola University.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period of the report, as stated on the cover. The
manager's views are subject to change at any time, based on market and other
conditions.
Q FRANK, LET'S BEGIN WITH A REVIEW OF THE INTEREST RATE ENVIRONMENT IN THE
LAST 12 MONTHS (FROM AUGUST 1, 1995, TO JULY 31, 1996).
A It was a year of transition. In the first half of the fiscal year, interest
rates were declining, aided by two cuts by the Federal Reserve Board (Fed). The
Fed reduced rates to stimulate what had been sluggish economic growth.
In fact, the rate reductions worked -- the economy began to pick up speed. But
by March, investors had swung from worrying about the health of the economy to
worrying that it was growing so fast that it could overheat. The Fed is known to
consider 2.5% to 3% an acceptable, non-inflationary rate of growth for the
country's gross domestic product (GDP). Growth beyond that range -- and the
economy was reported to have grown at 4.2% in the second quarter -- heightens
expectations that intervention is needed to force a slowdown.
So, from March through the end of July, investors anticipated rising
short-term interest rates. No action was taken by the Fed, however, based on its
expectations of slower growth in the second half of the year.
Q HOW DID THIS TURNABOUT IN THE DIRECTION OF INTEREST RATES AFFECT YOUR
MANAGEMENT OF KEMPER MONEY FUNDS?
A Our strategy was to adjust the average maturities of the funds to
coordinate with our interest rate outlook. Our general practice has been to
conservatively manage the funds' average maturities in a range of 25 to 60 days.
At the beginning of the reporting period, when we expected interest rates to
decline, we extended average maturities to a range of 40 to 45 days, attempting
to lock in the higher rates for as long as possible. But in March, when there
was a likelihood of rising rates, we took the opposite approach, reducing
average maturities to a range of 35 to 40 days. By July, -- when there was no
doubting the economic expansion was underway -- the average maturities on the
funds had been reduced to approximately 30 days. This puts us in a position to
capture higher rates if they are available.
Q FRANK, KEMPER MONEY FUNDS HAVE CONSISTENTLY OUTPERFORMED THE AVERAGE OF
THEIR PEERS IN RANKINGS PUBLISHED BY LIPPER ANALYTICAL SERVICES, INC. (SEE PAGE
2). WHAT DO YOU ATTRIBUTE THIS SUCCESS TO?
A I've just described our adjustment of the funds this year in response to
often conflicting market information. The experience that our team has,
3
<PAGE> 4
PERFORMANCE UPDATE
having taken part in several interest rate cycles, has prepared them to know
how to react to certain changes in the markets. In fact, the members of our
investment team have an average of almost 15 years of investment experience.
Also, we are very selective when buying securities in order to capture value
from high quality securities.
Q SO, KEMPER MONEY FUNDS END THE FISCAL YEAR POSITIONED FOR RISING INTEREST
RATES.
WHAT'S YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A When we look at the recent solid levels of job creation, growth in personal
income and prospects for trade with improving foreign economies, we think the
economy will continue to expand. Assuming the growth continues at the pace we
expect, we'd look for the Federal Reserve Board to increase short-term interest
rates by 0.25% to 0.50% at some point in the fourth quarter. Based on this
scenario and to take full advantage of higher rates, we will remain defensive
with shorter maturities.
Q WHAT ABOUT RISKS TO THIS OUTLOOK?
A The obvious risk is that our expectation of continued strong economic
growth is incorrect and rates fail to rise. On the positive side, being
defensive with shorter maturities will provide the opportunity and flexibility
to quickly lengthen if our outlook changes. But based on positive economic
data we have observed, we rate the probability of weak economic growth low.
4
<PAGE> 5
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS*
FOR PERIODS ENDED JULY 31, 1996
<TABLE>
<CAPTION>
1-YEAR 5-YEAR 10-YEAR LIFE OF FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
KEMPER MONEY MARKET FUND 5.34% 4.26% 5.89% 7.93% (SINCE 11/25/74)
- ----------------------------------------------------------------------------------------------
KEMPER GOVERNMENT MONEY FUND 5.34 4.28 5.83 6.80 (SINCE 11/30/81)
- ----------------------------------------------------------------------------------------------
KEMPER TAX-FREE MONEY FUND 3.44 3.06 N/A 4.09 (SINCE 9/10/87)
- ----------------------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns fluctuate.
*Average annual total return measures net investment income and capital gain or
loss from portfolio investments as an annualized average assuming reinvestment
of all dividends. For additional information, see the Prospectus and Statement
of Additional Information and the Financial Highlights at the end of this
report.
YIELD COMPARISON
KEMPER MONEY MARKET FUND COMPARED TO FIRST TIER MONEY MARKET FUNDS
FROM 8/1/95 THROUGH 7/30/96
MONEY MARKET FUND
[LINE GRAPH]
<TABLE>
<CAPTION>
8/1/95 9/26 11/21 1/16 3/12 5/7 7/30/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.52 5.27 5.35 5.18 5.35 5.17 5.37 5.03 4.98 4.67 4.97 4.67 5.09 4.74
5.47 5.24 5.36 5.21 5.38 5.19 5.35 5.01 4.99 4.7 4.99 4.67
5.43 5.22 5.35 5.16 5.35 5.16 5.3 4.97 4.97 4.68 5.03 4.67
5.4 5.22 5.38 5.17 5.37 5.16 5.22 4.88 4.96 4.7 5.02 4.67
5.43 5.22 5.37 5.16 5.41 5.16 5.17 4.82 4.96 4.68 5.02 4.69
5.37 5.21 5.35 5.18 5.41 5.14 5.12 4.78 4.98 4.7 5.03 4.68
5.4 5.19 5.38 5.16 5.38 5.12 5.04 4.74 4.98 4.67 4.99 4.69
5.38 5.19 5.38 5.17 5.37 5.09 4.98 4.74 4.97 4.68 5.04 4.71
5.04 4.73
5.04 4.72
5.06 4.72
5.06 4.73
</TABLE>
Weekly 7-day average yield
The funds are compared to their respective IBC Financial Data category: The
First Tier Money Market Fund Average consists of all non-institutional taxable
money market funds investing in only first tier (highest rating) securities and
tracked by IBC Financial Data; Government Money Market Fund Average includes all
non-institutional government money market funds tracked by IBC Financial Data;
Tax-Exempt Money Fund Average consists of all non-institutional tax-free money
market funds tracked by IBC Financial Data.
KEMPER GOVERNMENT MONEY FUND COMPARED TO GOVERNMENT MONEY MARKET FUNDS
FROM 8/1/95 THROUGH 7/30/96
GOVERNMENT MONEY FUND
[LINE GRAPH]
<TABLE>
<CAPTION>
8/1/95 9/26 11/21 1/16 3/12 5/7 7/30/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.51 5.15 5.42 5.05 5.38 5.07 5.26 4.86 4.94 4.56 4.97 4.57 5.05 4.67
5.47 5.13 5.41 5.13 5.42 5.09 5.22 4.85 5 4.64 4.95 4.57
5.45 5.12 5.34 5.05 5.43 5.06 5.16 4.84 4.97 4.58 5.04 4.57
5.46 5.11 5.43 5.05 5.39 5.04 5.12 4.72 5.04 4.63 4.96 4.57
5.47 5.08 5.4 5.03 5.39 5.05 5.03 4.64 5.02 4.6 4.98 4.6
5.43 5.09 5.4 5.06 5.48 4.98 4.97 4.62 5 4.6 5.01 4.59
5.44 5.08 5.41 5.03 5.39 4.97 4.97 4.59 4.99 4.56 4.99 4.6
5.42 5.08 5.41 5.05 5.3 4.92 4.96 4.62 5 4.57 5.07 4.6
5.02 4.63
5.02 4.64
5.04 4.6
5.05 4.61
</TABLE>
Weekly 7-day average yield
KEMPER TAX-FREE MONEY FUND COMPARED TO TAX-EXEMPT MONEY MARKET FUNDS
FROM 7/31/95 THROUGH 7/29/96
TAX-FREE MONEY FUND
[LINE GRAPH]
<TABLE>
<CAPTION>
8/1/96 9/26 11/21 1/16 3/12 5/7 7/29/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.7 3.25 3.64 3.37 3.59 3.28 3.26 2.86 3.02 2.65 3.35 3.14
3.63 3.12 3.75 3.51 3.56 3.25 3.15 2.77 3.05 2.7 3.38 3.15 3.27 2.94
3.72 3.23 3.47 3.16 3.49 3.17 3.22 2.86 3.1 2.78 3.42 3.12
3.66 3.23 3.47 3.11 3.41 3.05 3.19 2.81 3.15 2.83 3.41 3.06
3.66 3.18 3.52 3.2 3.69 3.41 3.15 2.79 3.09 2.69 3.31 2.97
3.61 3.14 3.58 3.28 3.85 3.67 3.13 2.81 3.12 2.84 3.18 2.73
3.5 3.02 3.51 3.2 4.14 3.88 3.14 2.83 3.3 2.99 3.18 2.79
3.6 3.22 3.55 3.25 3.46 3.1 3.11 2.79 3.38 3.17 3.26 2.88
3.26 2.85
2.92 2.38
2.89 2.35
3.18 2.78
</TABLE>
Weekly 7-day average yield
Please note: the tax-equivalent yield for Kemper Tax-Free Money Fund was 5.20%
based on an annualized 7-day yield of 3.27% on 7/29/96 (at a marginal federal
income tax rate of 37.1%).
5
<PAGE> 6
PORTFOLIO STATISTICS
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION*
[PIE GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
KEMPER MONEY MARKET FUND ON 7/31/96
- -------------------------------------------------------------------
<S> <C>
COMMERCIAL PAPER 69%
- -------------------------------------------------------------------
DOMESTIC CDS 5
- -------------------------------------------------------------------
REPURCHASE AGREEMENTS 23
- -------------------------------------------------------------------
U.S. TREASURY AND AGENCY NOTES 3
- -------------------------------------------------------------------
TOTAL 100%
- -------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[PIE CHART]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
KEMPER GOVERNMENT MONEY FUND ON 7/31/96
- -------------------------------------------------------------------
<S> <C>
REPURCHASE AGREEMENTS 59%
- -------------------------------------------------------------------
FEDERAL AGENCIES 35
- -------------------------------------------------------------------
U.S. TREASURIES 6
- -------------------------------------------------------------------
TOTAL 100%
- -------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
[PIE CHART]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
KEMPER TAX-FREE MONEY FUND ON 7/31/96
- -------------------------------------------------------------------
<S> <C>
TAX-EXEMPT COMMERCIAL PAPER 50%
- -------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES 43
- -------------------------------------------------------------------
TENDER SECURITIES 2
- -------------------------------------------------------------------
GENERAL MARKET OBLIGATIONS 5
- -------------------------------------------------------------------
TOTAL 100%
- -------------------------------------------------------------------
</TABLE>
* The portfolio composition and holdings are subject to change.
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
ON 7/30/96
- -------------------------------------------------------------------
<S> <C>
KEMPER MONEY MARKET FUND 32 DAYS
- --------------------------------------------------------------------
FIRST TIER MONEY FUND AVERAGE++ 53
- --------------------------------------------------------------------
KEMPER GOVERNMENT MONEY FUND 32
- --------------------------------------------------------------------
GOVERNMENT MONEY FUND AVERAGE++ 44
- --------------------------------------------------------------------
KEMPER TAX-FREE MONEY FUND 27
- --------------------------------------------------------------------
TAX-FREE MONEY FUND AVERAGE++ 49
- --------------------------------------------------------------------
</TABLE>
++ The portfolios are compared to their respective IBC Financial
Data category: The First Tier Money Fund Average consists of all
non-institutional taxable money market funds investing in only
first tier (highest rating) securities and tracked by IBC
Financial Data; Government Money Fund Average includes all
non-institutional government money market funds tracked by IBC
Financial Data; Tax-Exempt Money Fund Average consists of all
non-institutional tax-free money market funds tracked by IBC
Financial Data. The tax-free averaged weighted maturities are as
of 7/29/96.
6
<PAGE> 7
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> 8
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> 9
PORTFOLIO OF INVESTMENTS
KEMPER GOVERNMENT MONEY FUND
INVESTMENTS AT JULY 31, 1996
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
<C> <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> 10
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> 11
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> 12
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> 13
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> 14
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> 15
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> 16
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> 17
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> 18
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> 19
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> 20
TRUSTEES & OFFICERS
TRUSTEES OFFICERS
STEPHEN B. TIMBERS J. PATRICK BEIMFORD, JR.
President and Trustee Vice President
DAVID W. BELIN CHARLES R. MANZONI, JR.
Trustee Vice President
LEWIS A. BURNHAM JOHN E. NEAL
Trustee Vice President
DONALD L. DUNAWAY FRANK J. RACHWALSKI, JR.
Trustee Vice President
ROBERT B. HOFFMAN PHILIP J. COLLORA
Trustee Vice President and
Secretary
DONALD R. JONES JEROME L. DUFFY
Trustee Treasurer
DOMINIQUE P. MORAX ELIZABETH C. WERTH
Trustee Assistant Secretary
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
1-800-621-1048
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER ZURICH KEMPER INVESTMENTS, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
120 S. LaSalle Street Chicago, IL 60603
http://www.kemper.com
(RECYCLE LOGO)
Printed on recycled paper.
This report is not to be distributed unless
preceded or accompanied by a Kemper Money
Funds prospectus.
KMF - 2 (9/96) KEMPER MUTUAL FUNDS LOGO
1020770
Printed in the U.S.A.
