<PAGE> 1
[ZURICH LOGO]
ZURICH MONEY FUNDS
ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED JULY 31, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SUBJECT PAGE
<S> <C>
FUND OBJECTIVES 1
- ------------------------------------------------------------------------
PERFORMANCE SUMMARY 2
- ------------------------------------------------------------------------
VARIABLES AFFECTING PERFORMANCE 5
- ------------------------------------------------------------------------
PERFORMANCE UPDATE 6
- ------------------------------------------------------------------------
TERMS TO KNOW 8
- ------------------------------------------------------------------------
PORTFOLIO COMPOSITION 9
- ------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS 10
- ------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS 26
- ------------------------------------------------------------------------
FINANCIAL STATEMENTS 28
- ------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 34
- ------------------------------------------------------------------------
TRUSTEES AND OFFICERS 38
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 3
1
FUND OBJECTIVES
Zurich Money Funds is an open-end, diversified, management investment company
offering a choice of three investment funds. Each fund invests in high quality
short-term money market instruments consistent with its specific objective as
outlined below. Each Fund seeks to maintain a net asset value of $1.00 per share
however, there is no assurance that a $1.00 value will be maintained. An
investment in money market funds is neither insured nor guaranteed by the U.S.
Government.
- -------------------------------------------------------------------------------
ZURICH MONEY MARKET FUND
- -------------------------------------------------------------------------------
This fund seeks maximum current income to the extent consistent with stability
of principal by investing primarily in commercial paper, securities of the U.S.
Government, its agencies, and bank certificates of deposit.
- -------------------------------------------------------------------------------
ZURICH GOVERNMENT MONEY FUND
- -------------------------------------------------------------------------------
This fund seeks maximum current income to the extent consistent with stability
of principal by investing exclusively in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
- -------------------------------------------------------------------------------
ZURICH TAX-FREE MONEY FUND
- -------------------------------------------------------------------------------
This fund seeks maximum current income that is exempt from federal income taxes
to the extent consistent with stability of principal from a portfolio of
short-term, high quality tax-exempt municipal securities.
<PAGE> 4
2
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
ZURICH MONEY MARKET FUND
YIELD COMPARISON [LINE GRAPH]
Zurich Money Market
Fund is compared to FUND YIELD VS. FIRST TIER MONEY MARKET FUNDS
its IBC Financial Data
category -- The First 8/6/97 through 7/29/97
Tier Money Market Fund Weekly 7-Day Average Yield
Average which consists
of all Fund 1st Tier Money
non-institutional Yield Market Funds
taxable money market
funds investing in 8/96 5.06% 4.78%
only first tier 9/96 5.08% 4.75%
(highest rating) 11/96 5.04% 4.75%
securities tracked by 1/97 5.13% 4.75%
IBC Financial Data. 3/97 5.1% 4.74%
Returns are historical 5/97 5.31% 4.93%
and do not guarantee 7/97 5.29% 4.93%
future results. Fund
yields fluctuate.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. TOP 9% #27 of 295 funds over 1 year
rankings are based TOP 12% #22 of 180 funds over 5 years
upon changes in net TOP 5% #5 of 105 funds over 10 years
asset value with all TOP FUND #1 of 28 funds over 20 years
dividends reinvested
for the periods
indicated as of
7/31/97. Rankings are
historical and do not
reflect future
performance. The
Lipper category used
for comparison is the
Lipper Money Market
Instrument Fund
category.
[LINE GRAPH]
10-YEAR PERFORMANCE
This chart shows the 10-YEAR PERFORMANCE
value of a
hypothetical $10,000 Performance of a $10,000 Hypothetical Investment
investment in Zurich
Money Market Fund over 8/87 $10,000
the past 10 fiscal 7/88 10,703
years with all 7/89 11,669
dividends reinvested. 7/90 12,661
The returns shown are 7/91 13,571
historical and do not 7/92 14,174
represent future 7/93 14,593
performance. 7/94 15,060
7/95 15,864
7/96 16,716
7/97 17,597
<PAGE> 5
3
ZURICH GOVERNMENT MONEY FUND
- --------------------------------------------------------------------------------
YIELD COMPARISON [LINE GRAPH]
Zurich Government
Money Fund is compared FUND YIELD VS. GOVERNMENT MONEY MARKET FUNDS
to its IBC Financial
Data category -- The 8/6/96 through 7/29/97
Government Money Weekly 7-Day Average Yield
Market Fund Average
which consists of all Fund Government Money
non-institutional Yield Market Funds
government money
market funds tracked 8/96 5.09% 4.74%
by IBC Financial Data. 9/96 5.11 4.67
Returns are historical 11/96 5.03 4.67
and do not guarantee 1/97 5.09 4.66
future results. Fund 3/97 5.14 4.69
yields fluctuate. 5/97 5.31 4.84
7/97 5.26 4.84
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. Top 4% #5 of 118 funds over 1 year
rankings are based Top 6% #5 of 81 funds over 5 years
upon changes in net Top 5% #2 of 43 funds over 10 years
asset value with all
dividends reinvested
for the periods
indicated as of
7/31/97. Rankings are
historical and do not
reflect future
performance. The
Lipper category used
for comparison is the
Lipper Government
Money Market Fund
category.
10-YEAR PERFORMANCE [LINE GRAPH]
This chart shows the
value of a 10-YEAR PERFORMANCE
hypothetical $10,000
investment in Zurich Performance of a $10,000 Hypothetical Investment
Government Money Fund
over the past 10 8/87 $10,000
fiscal years, with all 7/88 10,688
dividends reinvested. 7/89 11,646
The returns shown are 7/90 12,630
historical and do not 7/91 13,507
represent future 7/92 14,115
performance. 7/93 14,535
7/94 15,000
7/95 15,804
7/96 16,653
7/97 17,529
<PAGE> 6
4
ZURICH MONEY FUNDS PERFORMANCE SUMMARY, CONTINUED
- --------------------------------------------------------------------------------
ZURICH TAX-FREE MONEY FUND
YIELD COMPARISON [LINE GRAPH]
Zurich Tax-Free Money
Fund is compared to FUND YIELD VS. TAX-FREE MONEY MARKET FUNDS
its IBC Financial Data
category -- The 8/5/96 through 7/29/97
Tax-Free Money Market Weekly 7-Day Average Yield
Fund Average which
consists of all Fund 1st Tier Money
non-institutional Yield Market Funds
tax-free money market
funds tracked by IBC 8/96 3.3 2.92
Financial Data. 9/96 3.35 2.99
Returns are historical 11/96 3.26 2.93
and do not guarantee 1/97 3.21 2.87
future results. Fund 3/97 3.07 2.75
yields fluctuate. 5/97 3.67 3.25
Income from Zurich 7/97 3.46 3.06
Tax-Free Money Fund
may be subject to
state and local taxes
and the alternate
minimum tax.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. Top 3% #4 of 138 funds over 1 year
rankings are based Top 8% #8 of 98 funds over 5 years
upon changes in net
asset value with all
dividends reinvested
for the periods
indicated as of
7/31/97. Rankings are
historical and do not
reflect future
performance. The
Lipper category used
for comparison is the
Lipper Tax-Free Money
Market Fund category.
PERFORMANCE SINCE [LINE GRAPH]
INCEPTION
This chart shows the LIFE OF FUND PERFORMANCE
value of a
hypothetical $10,000 Performance of a $10,000 Hypothetical Investment
investment in Zurich
Tax-Free Money Fund 9/87 $10,000
since inception on 7/88 10,432
9/10/87, with all 7/89 11,080
dividends reinvested. 7/90 11,724
The returns shown are 7/91 12,318
historical and do not 7/92 12,759
represent future 7/93 13,064
performance. 7/94 13,368
7/95 13,840
7/96 14,319
7/97 14,805
<PAGE> 7
5
VARIABLES AFFECTING
PERFORMANCE
================================================================================
================================================================================
Zurich Kemper Investments provides professional management of your short-term
investment dollars. We invest in high-quality, short-term securities that are
consistent with each fund's specific objectives.
Our primary goal is to provide competitive yields while maintaining preservation
of principal and a high degree of liquidity. The specific securities our
portfolio managers select have a major impact on reaching our goal. However,
they must continuously analyze other variables which affect share price
stability and fund performance. Traditionally, there are three important
variables which are factored into the decision-making process:
================================================================================
MONETARY POLICY
================================================================================
Monetary Policy is managed by the Federal Reserve Board (the "Fed") and has a
direct impact on short-term interest rates. If the Fed determines that inflation
is climbing, it will enact a policy to decrease or "tighten" the money supply.
With less money available, money lenders can command higher interest rates on
the money market securities they sell. If the Fed determines the economy is
heading toward a recession, it will increase or "ease" the money supply. With
more money for borrowers to access, the interest rates for money market
securities decline.
================================================================================
INTEREST RATES
================================================================================
Interest Rates will affect yields because as investments mature, the cash
received will be reinvested at current money market rates which could be either
higher or lower. Reinvesting at higher interest rates generally means higher
yields for money funds and reinvesting at lower rates generally means lower
yields.
================================================================================
AVERAGE LENGTH OF MATURITY
================================================================================
Average Length of Maturity affects the timing of reinvesting cash from maturing
investments. If interest rates are expected to rise, decreasing the portfolio's
average length of maturity would enable the Fund to purchase higher-yielding
money market securities sooner. Conversely, if rates were expected to decrease,
the Fund would lock into money market securities with a longer length of
maturity in order to maintain higher yields longer.
(ALSO SEE "TERMS TO KNOW" SECTION)
<PAGE> 8
6
PERFORMANCE UPDATE
===============================================================================
AN INTERVIEW WITH PORTFOLIO MANAGER FRANK RACHWALSKI
===============================================================================
[RACHWALSKI PHOTO] While the "hot" topic of discussion among
investment analysts was whether or not the Federal
Reserve Board would continue to raise interest
rates, there were no signs of inflation as the
economy continued to grow at a moderate rate.
Portfolio manager Frank Rachwalski discusses the
market and Zurich Money Funds' performance during
the past twelve months.
---------------------------------------------------
FRANK RACHWALSKI IS SENIOR VICE PRESIDENT OF ZURICH KEMPER INVESTMENTS, INC. AND
PORTFOLIO MANAGER OF ZURICH MONEY FUNDS. RACHWALSKI HOLDS A B.B.A. AND AN M.B.A.
DEGREE FROM LOYOLA UNIVERSITY.
Q FRANK, THIS HAS BEEN AN INTERESTING YEAR FOR THE ECONOMY. WHAT DID WE
SEE HAPPENING AND HOW DID THESE EVENTS AFFECT INTEREST RATES?
A During the past 12 months, we had an economy which showed renewed growth
and this led to expectations of higher inflation and interest rates. In
fact, the Federal Reserve Board acted on their concern about growth in
the economy by eventually raising interest rates in March of 1997. Since it is
extremely rare that you get an isolated movement in Fed policy -- for example,
just a one time tightening or easing -- the expectation was that it would be
followed with incremental interest rate increases. However, we only experienced
very moderate levels of inflation and by the 2nd quarter in 1997, we saw a
little slowing of the economy. Because of this softening in the marketplace, the
Fed ultimately decided to leave interest rates alone throughout the remainder of
our fiscal year which ended on July 31, 1997.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period of the report, as stated on the cover. The
manager's views are subject to change at any time, based on market and other
conditions.
<PAGE> 9
7
Q IN LIGHT OF WHAT HAPPENED WITH THE ECONOMY DURING THE LAST 12 MONTHS,
WHAT WAS YOUR STRATEGY FOR MANAGING THE FUNDS?
A In analyzing the economic trends, we expected that short-term interest
rates were going to remain flat or rise. Because of this we kept with a
very conservative or short maturity policy. Our average maturity range
of 20 to 50 days was short compared to our peer group and this gave us the
flexibility to react to rate changes.
Q BASED ON THIS POLICY, HOW DID THE MONEY FUNDS PERFORM?
A Overall, we continued to have excellent performance. We were correct in
our judgment about interest rates and by keeping short average
maturities, were able to capitalize on the rate hike in March while
maintaining our ability to react to future changes.
Q FRANK, AS A FINAL THOUGHT, WHAT DO YOU SEE HAPPENING IN THE COMING
MONTHS AND HOW WILL THIS INFLUENCE YOUR MANAGEMENT POLICIES?
A The economy is in very good shape for continued growth. In fact, we
would expect the third and fourth quarters to show stronger growth than
the second quarter. Up to now, we've had a very good experience with low
inflation, but with the unemployment rate being so low, this could trigger a
higher inflation level. We feel that with the potential for upward pressures on
interest rates, our defensive maturity policy will continue to be appropriate.
It will give us the ability to capture rising rates, if and when they go up.
<PAGE> 10
8
TERMS TO KNOW
===============================================================================
===============================================================================
NET ASSET
VALUE (NAV) Net Asset Value is the value of all your fund's assets,
minus any liabilities, divided by the number of
outstanding shares (shares owned by all shareholders).
Unlike other mutual funds, money market funds are managed
to maintain a net asset value of $1.00 per share though
there can be no assurance that value will be maintained.
MATURITY Maturity is the time remaining before an issuer is
scheduled to repay the principal amount on a debt
security. Money market instruments are debt securities.
WEIGHTED
AVERAGE
MATURITY In order to determine the average length of maturity of a
fund's securities, it is important to consider that a
fund has different amounts of money invested in many
different securities, each of which may have a different
maturity date. Therefore, larger and longer-term
investments have greater impact on the fund and its
overall average maturity. To accurately reflect the
impact each security has on a fund, it is standard
industry practice to perform a statistical calculation
that considers the amount invested in each security. This
"weighting" allows for calculating an accurate average.
The weighted average maturity reflects a fund's
sensitivity to interest rate changes and is used to
measure risk.
YIELD Yield is the amount of net investment income (income
minus expenses including management fees) your investment
has produced over a specific period, expressed as a
percentage of your investment. Capital gains and losses,
which are infrequent in a money market fund, are not
included.
7-DAY
AVERAGE
YIELD Every money market fund calculates its yield according to
a standardized method prescribed by the Securities and
Exchange Commission. Each day's yield is an average taken
over a 7-day period. This average helps to minimize the
effect of daily fluctuations in fund income.
<PAGE> 11
9
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
==============================================================================
ZURICH MONEY MARKET FUND On 7/31/97*
==============================================================================
<S> <C> <C>
[PIE CHART]
Commercial paper 74%
------------------------------------------------
Domestic CD's 9
------------------------------------------------
Repurchase agreements 15
------------------------------------------------
U.S. Government agency notes 2
------------------------------------------------
100%
------------------------------------------------
================================================
WEIGHTED AVERAGE MATURITY
================================================
Zurich Money Market Fund 27 days
------------------------------------------------
First Tier Money Fund Average+ 62 days
==============================================================================
ZURICH GOVERNMENT MONEY FUND On 7/31/97*
==============================================================================
[PIE CHART]
Federal agencies 50%
------------------------------------------------
Repurchase agreements 50
------------------------------------------------
100%
================================================
WEIGHTED AVERAGE MATURITY
================================================
Zurich Government Money Fund 22 days
------------------------------------------------
Government Money Fund Average+ 49 days
==============================================================================
ZURICH TAX-FREE MONEY FUND On 7/31/97*
==============================================================================
[PIE CHART]
Tax-exempt commercial paper 56%
------------------------------------------------
Variable rate demand notes 39
------------------------------------------------
Tender securities 1
------------------------------------------------
General market obligations 4
------------------------------------------------
100%
================================================
WEIGHTED AVERAGE MATURITY
================================================
Zurich Tax-Free Money Fund 27 days
------------------------------------------------
Tax-Free Money Fund Average+ 47 days
</TABLE>
* Portfolio composition and holdings are subject to change.
+ The Funds 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-Free Money Fund Average consists of all non-institutional tax-free money
market funds tracked by IBC Financial Data.
<PAGE> 12
10
ZURICH MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
July 31, 1997 (value in thousands)
<TABLE>
<CAPTION>
CORPORATE OBLIGATIONS
----------------------------------------------------------------------------------
BANKING -- 4.3% RATE MATURITY VALUE
----------------------------------------------------------------------------------
<S> <C> <C> <C>
(a)Bankers Trust New York Corp. 5.70% 8/1/97 $ 28,497
----------------------------------------------------------------------------------
Credit Lyonnais N.A. Inc. 5.71% 10/21/97 59,240
----------------------------------------------------------------------------------
Sumitomo Bank
Capital Markets, Inc. 5.70% - 5.74% 8/11/97 - 8/19/97 99,775
----------------------------------------------------------------------------------
187,512
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
BUSINESS LOANS -- 24.9%
----------------------------------------------------------------------------------
Ace Overseas Corp. 5.74% - 5.75% 9/2/97 - 9/8/97 59,664
----------------------------------------------------------------------------------
Astro Capital Corp. 5.64% - 5.70% 10/1/97 - 10/15/97 49,460
----------------------------------------------------------------------------------
Banner Receivable Corp. 5.68% - 5.83% 8/4/97 - 10/17/97 64,391
----------------------------------------------------------------------------------
(a)Beta Finance Inc. 5.70% 8/1/97 25,000
----------------------------------------------------------------------------------
Broadway Capital Corp. 5.58% - 5.68% 8/8/97 - 9/22/97 54,840
----------------------------------------------------------------------------------
Corporate Receivables Corp. 5.64% - 5.65% 8/6/97 - 8/20/97 39,914
----------------------------------------------------------------------------------
Eureka Securitization, Inc. 5.65% - 5.68% 8/25/97 - 9/16/97 34,835
----------------------------------------------------------------------------------
FP Funding Corp. 5.67% - 5.83% 8/22/97 - 10/2/97 64,536
----------------------------------------------------------------------------------
Gotham Capital Corp. 5.59% - 5.70% 8/7/97 - 10/16/97 74,631
----------------------------------------------------------------------------------
International
Securitization Corp. 5.64% 8/1/97 25,000
----------------------------------------------------------------------------------
Jet Funding Corp. 5.67% 10/31/97 24,647
----------------------------------------------------------------------------------
Madison Funding Corp. 5.66% - 5.75% 8/5/97 - 8/21/97 74,890
----------------------------------------------------------------------------------
Monte Rosa Capital Corp. 5.53% 8/28/97 24,897
----------------------------------------------------------------------------------
National Fleet Funding Corp. 5.56% 8/13/97 39,926
----------------------------------------------------------------------------------
Ranger Funding Corp. 5.66% - 5.67% 8/27/97 - 9/8/97 49,751
----------------------------------------------------------------------------------
Sheffield Receivables Corp. 5.56% 8/15/97 24,946
----------------------------------------------------------------------------------
Sigma Finance, Inc. 5.61% - 5.68% 9/19/97 - 10/6/97 74,365
----------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
11
<TABLE>
<CAPTION>
RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
Strategic Asset Funding
Corp. 5.57% 8/22/97 $ 49,838
-------------------------------------------------------------------------
Variable Funding
Capital Corp. 5.57% - 5.64% 8/4/97 - 9/16/97 69,785
-------------------------------------------------------------------------
WCP Funding Inc. 5.66% 8/22/97 39,869
-------------------------------------------------------------------------
Windmill Funding Corp. 5.58% 9/18/97 49,631
-------------------------------------------------------------------------
Working Capital
Management Co. 5.68% 10/6/97 - 10/20/97 69,199
-------------------------------------------------------------------------
1,084,015
-------------------------------------------------------------------------
CAPITAL AND EQUIPMENT LENDING -- 14.8%
-------------------------------------------------------------------------
American Honda Finance
Corp. 5.57% - 5.61% 8/7/97 - 10/2/97 34,752
(a)5.69% 8/8/97 24,991
-------------------------------------------------------------------------
BTM Capital Corp. 5.68% - 5.86% 8/7/97 - 10/15/97 44,689
-------------------------------------------------------------------------
(a)Caterpillar Financial
Services Corp. 5.58% 8/28/97 30,000
-------------------------------------------------------------------------
Eiger Capital Corp. 5.56% 8/18/97 34,909
-------------------------------------------------------------------------
Ford Motor Credit Co. 5.53% 8/6/97 24,981
-------------------------------------------------------------------------
(a)General Motors
Acceptance Corp. 5.75% 8/1/97 24,992
-------------------------------------------------------------------------
Golden Manager's
Acceptance Corp. 5.56% - 5.58% 8/12/97 - 8/26/97 64,836
-------------------------------------------------------------------------
Mitsubishi Motors Credit
of America, Inc. 5.61% - 5.74% 8/12/97 - 9/15/97 114,264
-------------------------------------------------------------------------
SRD Finance Inc. 5.60% - 5.71% 8/7/97 - 9/18/97 199,261
-------------------------------------------------------------------------
Sanwa Business Credit
Corp. (a)5.69% 8/18/97 29,998
5.58% 8/20/97 19,941
-------------------------------------------------------------------------
647,614
</TABLE>
<PAGE> 14
12
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
CAPTIVE BUSINESS
LENDING -- 5.3% RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(a) FINOVA Capital Corp. 5.73% 8/13/97 $ 66,500
-------------------------------------------------------------------------
Oakland-Alameda County
Coliseum, California 5.70% 9/9/97 20,000
-------------------------------------------------------------------------
Orix America, Inc. 5.68% - 5.81% 8/4/97 - 10/8/97 119,482
-------------------------------------------------------------------------
Philip Morris Capital
Corp. 5.80% 8/1/97 25,000
-------------------------------------------------------------------------
230,982
-------------------------------------------------------------------------
CONSUMER LENDING -- 4.1%
-------------------------------------------------------------------------
Countrywide Funding Corp. 5.55% - 5.60% 8/29/97 - 9/5/97 49,758
-------------------------------------------------------------------------
(a,b)GMAC Mortgage
Corporation of
Pennsylvania 5.87% 8/1/97 45,000
-------------------------------------------------------------------------
(a) Household Finance
Corp. 5.69% 8/1/97 45,000
-------------------------------------------------------------------------
NS Finance, Inc. 5.64% 10/2/97 19,808
-------------------------------------------------------------------------
(a) Sears Roebuck
Acceptance Corp. 5.74% 10/2/97 10,001
-------------------------------------------------------------------------
Transamerica Finance
Corp. 5.94% 8/15/97 10,003
-------------------------------------------------------------------------
179,570
-------------------------------------------------------------------------
DIVERSIFIED FINANCE -- 7.8%
-------------------------------------------------------------------------
APEX Funding Corp. 5.70% - 5.71% 8/26/97 - 9/2/97 64,712
-------------------------------------------------------------------------
(a) CIT Group Holdings,
Inc. 5.62% 8/1/97 39,991
-------------------------------------------------------------------------
Dynamic Funding Corp. 5.64% 8/14/97 64,868
-------------------------------------------------------------------------
(a) Heller Financial, Inc. 5.75% - 5.83% 8/15/97 - 9/22/97 59,522
-------------------------------------------------------------------------
Old Line Funding Corp. 5.64% - 5.67% 8/1/97 - 9/12/97 44,869
-------------------------------------------------------------------------
STRAIT Capital Corp. 5.68% - 5.79% 8/29/97 - 9/30/97 64,489
-------------------------------------------------------------------------
338,451
</TABLE>
<PAGE> 15
13
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
FINANCIAL
SERVICES -- 9.8% RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Bear Stearns Companies
Inc. 5.69% 8/6/97 - 8/19/97 $ 55,000
-------------------------------------------------------------------------
(a) CS First Boston, Inc. 5.67% 8/1/97 40,000
-------------------------------------------------------------------------
(a) Goldman Sachs Group,
L.P. 5.63% 8/17/97 55,000
-------------------------------------------------------------------------
(a,b)Lehman Brothers
Holdings Inc. 5.68% 8/20/97 75,000
-------------------------------------------------------------------------
(a) Merrill Lynch & Co.,
Inc. 5.64% 8/8/97 - 8/18/97 49,996
-------------------------------------------------------------------------
(a) Morgan Stanley Group
Inc. 5.57% 8/18/97 25,000
-------------------------------------------------------------------------
Nomura Holding America
Inc. 5.80% - 5.86% 10/14/97 - 10/27/97 64,160
-------------------------------------------------------------------------
Salomon Inc. (a)5.74% 9/4/97 30,000
6.13% 11/19/97 34,364
-------------------------------------------------------------------------
428,520
-------------------------------------------------------------------------
HEALTH CARE -- .7%
-------------------------------------------------------------------------
Columbia/HCA
Healthcare Corp. 5.65% 8/18/97 29,921
-------------------------------------------------------------------------
UTILITIES -- 1.8%
Brazos River Authority,
Texas 5.63% 10/14/97 55,000
-------------------------------------------------------------------------
GTE Corp. 5.56% 8/1/97 25,000
-------------------------------------------------------------------------
80,000
-------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS -- 73.5%
(AVERAGE MATURITY: 30 DAYS) 3,206,585
</TABLE>
<PAGE> 16
14
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(a)AmSouth Bank of
Alabama 5.59% 8/7/97 $ 29,996
-------------------------------------------------------------------------
(a)Bankers Trust Co. 5.69% 8/1/97 26,494
-------------------------------------------------------------------------
(a)Comerica Bank 5.67% 8/1/97 49,984
-------------------------------------------------------------------------
(a)CoreStates Bank N.A. 5.66% 8/4/97 45,000
-------------------------------------------------------------------------
(a)First National Bank of
Boston 5.63% - 5.67% 8/1/97 - 10/23/97 49,984
-------------------------------------------------------------------------
(a)Key Bank, N.A. 5.64% 8/1/97 34,999
-------------------------------------------------------------------------
MBNA America Bank N.A. 5.69% 8/4/97 45,000
-------------------------------------------------------------------------
(a)Morgan Guaranty Trust 5.63% 8/1/97 19,994
-------------------------------------------------------------------------
(a)Old Kent Bank 5.69% 8/1/97 49,995
-------------------------------------------------------------------------
(a)PNC Bank, N.A. 5.60% 8/1/97 39,992
-------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT -- 9.0%
(AVERAGE MATURITY: 6 DAYS) 391,438
-------------------------------------------------------------------------
</TABLE>
<PAGE> 17
15
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
(c) REPURCHASE AGREEMENTS RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(DATED 5/97 AND 7/97, COLLATERALIZED BY FEDERAL HOME LOAN
MORTGAGE CORP. AND FEDERAL NATIONAL MORTGAGE ASSOCIATION SECURITIES)
Chase Securities, Inc.
(held at The Chase
Manhattan Bank) 5.55% 8/18/97 - 9/11/97 $ 115,000
-------------------------------------------------------------------------
Goldman, Sachs & Co.
(held at The Bank of New
York) 5.62% 8/6/97 25,000
-------------------------------------------------------------------------
Nomura Securities
International, Inc.
(held at The Bank of New
York) 5.80% 8/7/97 - 8/11/97 100,000
-------------------------------------------------------------------------
Salomon Brothers, Inc.
(held at The Bank of New
York) 5.55% - 5.70% 8/8/97 - 9/30/97 430,000
-------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS -- 15.4%
(AVERAGE MATURITY: 35 DAYS) 670,000
<CAPTION>
- --------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY NOTES
- --------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Federal National
Mortgage Association 5.36% 8/5/97 54,648
-------------------------------------------------------------------------
(a) Student Loan
Marketing Association 5.49% 8/5/97 43,895
-------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY NOTES -- 2.2%
(AVERAGE MATURITY: 4 DAYS) 98,543
-------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.1%
(AVERAGE MATURITY: 29 DAYS) 4,366,566
-------------------------------------------------------------------------
LIABILITIES, LESS CASH AND OTHER ASSETS -- (.1%) (4,631)
-------------------------------------------------------------------------
NET ASSETS -- 100% $ 4,361,935
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
<PAGE> 18
16
ZURICH GOVERNMENT MONEY FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1997 (VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
SHORT-TERM NOTES RATE MATURITY VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
(ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES)
(a)Agency for
International Development
Government of Israel 5.72% 8/5/97 $ 7,479
----------------------------------------------------------------------------------------
(a)Export-Import Bank of
the United States
Cathay Pacific Airways
Limited 5.75% 8/13/97 4,458
KA Leasing, Ltd. 5.75% 8/15/97 13,699
Kuwait Investment
Authority 5.75% 8/15/97 19,033
VARIG Brazilian Airlines 5.75% 10/15/97 5,618
----------------------------------------------------------------------------------------
Federal Home Loan Bank
(a)5.49% - 5.77% 8/2/97 - 8/24/97 24,099
5.99% 9/18/97 9,999
---------------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corp. 6.16% 9/1/97 6,297
---------------------------------------------------------------------------------------
Federal National Mortgage Association
(a)5.36% - 5.60% 8/1/97 - 8/24/97 62,702
6.10% 9/3/97 4,998
---------------------------------------------------------------------------------------
(a)Overseas Private
Investment Corp.
International Paper Co. 5.70% 8/15/97 5,400
Omolon 5.66% 8/5/97 27,750
---------------------------------------------------------------------------------------
(a)Student Loan Marketing
Association 5.48% 8/5/97 142,496
---------------------------------------------------------------------------------------
TOTAL SHORT-TERM NOTES -- 49.8%
(AVERAGE MATURITY: 9 DAYS) 334,028
</TABLE>
<PAGE> 19
17
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
(c) REPURCHASE AGREEMENTS RATE MATURITY VALUE
------------------------------------------------------------------------------
<S> <C> <C> <C>
(DATED 6/97 AND 7/97, COLLATERALIZED BY FEDERAL HOME LOAN
MORTGAGE CORP., FEDERAL NATIONAL MORTGAGE ASSOCIATION AND
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION SECURITIES)
Bear, Stearns & Co. Inc.
5.65% - 5.67% 8/4/97 - 8/6/97 $ 26,000
(b)5.65% -
5.69% 8/13/97 - 9/24/97 48,000
------------------------------------------------------------------------
Chase Securities, Inc.
(held at The Chase
Manhattan Bank) 5.63% - 5.65% 8/4/97 - 10/8/97 9,000
------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities Corp.
(held at The Bank of New
York) 5.62% 8/6/97 20,000
------------------------------------------------------------------------
Morgan Stanley & Co. Inc.
(held at The Bank of New
York) 5.55% - 5.60% 8/20/97 - 9/17/97 54,000
------------------------------------------------------------------------
Nikko Securities Co. International, Inc.
(held at The Bank of New
York) 5.57% 8/6/97 30,000
------------------------------------------------------------------------
Nomura Securities International, Inc.
(held at The Bank of
New York) 5.65% - 5.71% 8/6/97 - 9/10/97 48,000
------------------------------------------------------------------------
Salomon Brothers Inc.
(held at The Bank of New
York) 5.55% - 5.71% 8/20/97 - 10/28/97 100,000
------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS -- 49.9%
(AVERAGE MATURITY: 31 DAYS) 335,000
------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.7%
(AVERAGE MATURITY: 20 DAYS) 669,028
------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- .3% 2,111
------------------------------------------------------------------------
NET ASSETS -- 100% $ 671,139
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
<PAGE> 20
18
Zurich Tax-Free Money Fund
portfolio of investments
July 31, 1997 (value in thousands)
<TABLE>
<CAPTION>
(A) VARIABLE RATE DEMAND SECURITIES
ALABAMA RATE VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
Livingston,
Industrial Development Board 4.00% $ 3,900
CALIFORNIA
-------------------------------------------------------------------------
Kern County,
Community College District 4.10% 4,610
-------------------------------------------------------------------------
Los Angeles,
Harbor Improvement Corp. 3.95% 11,500
FLORIDA
-------------------------------------------------------------------------
Dade County, Aviation
Facilities Revenue 3.90% 7,900
GEORGIA
-------------------------------------------------------------------------
Cartersville,
Industrial Development
Revenue 4.05% 3,600
-------------------------------------------------------------------------
Fulton County, Development
Authority 3.80% 7,145
ILLINOIS
-------------------------------------------------------------------------
Development Finance
Authority 3.91% 28,665
-------------------------------------------------------------------------
Health Facilities Authority 3.75% 8,285
-------------------------------------------------------------------------
Hillside, Economic
Development Authority 3.85% 6,000
-------------------------------------------------------------------------
Mundelein,
Industrial Development
Revenue 3.85% 6,500
-------------------------------------------------------------------------
Springfield,
Industrial Development
Revenue 3.80% 6,500
-------------------------------------------------------------------------
Student Assistance
Commission 3.75% 6,700
-------------------------------------------------------------------------
Woodridge,
Industrial Development
Revenue 3.88% 4,100
</TABLE>
<PAGE> 21
19
<TABLE>
<CAPTION>
INDIANA RATE VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
Health Facility
Financing Authority 3.70% $6,645
-------------------------------------------------------------------------
Ossian, Economic Development
Revenue 3.80% 4,000
KANSAS
Kansas City, Pollution
Control Revenue 3.80% 4,350
KENTUCKY
Development Finance
Authority 3.75% 7,880
-------------------------------------------------------------------------
Lexington-Fayette,
Urban County Government
Industrial Building Revenue 4.05% 4,800
-------------------------------------------------------------------------
Mayfield,
Multi-City Lease Revenue 3.75% 6,000
-------------------------------------------------------------------------
Todd County,
Industrial Development
Revenue 3.80% 2,400
MINNESOTA
Minneapolis, Community
Development Agency 3.75% 5,000
-------------------------------------------------------------------------
Owatonna, Hospital Revenue 3.80% 6,805
MISSOURI
Kirksville, Industrial
Development Authority 4.00% 6,900
NEVADA
Department of Commerce 4.05% 4,650
NEW HAMPSHIRE
Business Finance Authority 3.80% 8,000
NEW MEXICO
Belen, Industrial
Development Revenue 3.80% 5,000
-------------------------------------------------------------------------
Farmington, Pollution
Control Revenue 3.71% 10,500
</TABLE>
<PAGE> 22
20
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
NORTH CAROLINA RATE VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
Medical Care Commission,
Retirement Community Revenue 3.70% $10,000
PENNSYLVANIA
-------------------------------------------------------------------------
Berks County, Redevelopment
Authority 4.29% 8,000
-------------------------------------------------------------------------
Emmaus, General Authority
Revenue 3.70% 20,200
-------------------------------------------------------------------------
Philadelphia, Authority for
Industrial Development 3.90% 13,750
TENNESSEE
-------------------------------------------------------------------------
Clarksville,
Public Building Authority 3.70% 7,000
-------------------------------------------------------------------------
Maury County,
Industrial Development Board 3.85% 2,500
TEXAS
Bexar County,
Housing Finance Corp. 4.23% 5,500
-------------------------------------------------------------------------
Trinity River Authority 3.80% 9,200
VIRGINIA
-------------------------------------------------------------------------
Loudoun County, Industrial
Development Authority 3.90% 6,425
WASHINGTON
Port Angeles, Industrial
Development Corp. 4.00% 10,100
WISCONSIN
-------------------------------------------------------------------------
Eau Claire,
Solid Waste Disposal Revenue 3.75% 9,000
-------------------------------------------------------------------------
TOTAL VARIABLE RATE DEMAND SECURITIES -- 37.6%
(AVERAGE MATURITY: 6 DAYS) 290,010
</TABLE>
<PAGE> 23
21
<TABLE>
<CAPTION>
==============================================================================
OTHER SECURITIES
==============================================================================
- ------------------------------------------------------------------------------
ALASKA RATE MATURITY VALUE
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Valdez,
Marine Terminal Revenue 3.80% - 3.85% 08/08/97 - 10/08/97 $ 22,875
- ------------------------------------------------------------------------------
ARIZONA
- ------------------------------------------------------------------------------
Salt River Project,
Agricultural Improvement and
Power District 3.75% - 3.85% 08/08/97 - 11/14/97 23,200
- ------------------------------------------------------------------------------
COLORADO
- ------------------------------------------------------------------------------
Platte River Power Authority 3.80% - 3.90% 08/18/97 - 10/15/97 9,900
- ------------------------------------------------------------------------------
DISTRICT OF COLUMBIA
- ------------------------------------------------------------------------------
General Obligation 3.98% 09/30/97 - 10/08/97 14,005
- ------------------------------------------------------------------------------
FLORIDA
- ------------------------------------------------------------------------------
Jacksonville, Electric
Authority 3.85% 08/11/97 8,000
-----------------------------------------------------------------------------
Orange County 3.80% - 3.90% 08/11/97 - 08/12/97 14,700
-----------------------------------------------------------------------------
Sarasota County, Public
Hospital District 3.80% 09/18/97 7,450
-----------------------------------------------------------------------------
Sunshine State, Governmental
Financing Commission 3.80% 08/13/97 - 08/14/97 13,400
- ------------------------------------------------------------------------------
GEORGIA
- ------------------------------------------------------------------------------
Municipal Electric Authority 3.75% 08/12/97 5,100
-----------------------------------------------------------------------------
Municipal Gas Authority 3.80% 08/18/97 - 11/13/97 9,000
- ------------------------------------------------------------------------------
ILLINOIS
- ------------------------------------------------------------------------------
Chicago, General Obligation 3.75% 08/26/97 5,000
-----------------------------------------------------------------------------
Development Finance
Authority 4.15% 02/2/98 4,505
-----------------------------------------------------------------------------
Educational Facilities
Authority 3.80% 08/15/97 - 11/13/97 12,210
</TABLE>
<PAGE> 24
22
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
INDIANA RATE MATURITY VALUE
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Jasper County,
Pollution Control Revenue 3.80% - 3.90% 8/13/97 - 11/12/97 $ 26,350
-------------------------------------------------------------------------
Mount Vernon,
Pollution Control and Solid
Waste Disposal Revenue 3.80% 11/14/97 7,400
-------------------------------------------------------------------------
Sullivan,
Pollution Control Revenue 3.75% 11/12/97 3,400
- --------------------------------------------------------------------------
KANSAS
- --------------------------------------------------------------------------
Burlington, Pollution
Control Revenue 3.80% - 3.90% 8/12/97 - 11/13/97 12,850
- --------------------------------------------------------------------------
KENTUCKY
- --------------------------------------------------------------------------
Danville,
Multi-City Lease Revenue 3.85% 8/8/97 13,000
-------------------------------------------------------------------------
Pendleton County,
Multi-County Lease Revenue 3.80% 8/13/97 - 9/11/97 12,740
- --------------------------------------------------------------------------
MARYLAND
- --------------------------------------------------------------------------
Anne Arundel County,
Port Facilities Revenue 3.80% - 3.90% 8/12/97 - 10/14/97 21,400
- --------------------------------------------------------------------------
MISSOURI
- --------------------------------------------------------------------------
Environmental Improvement
and Energy Authority,
Pollution Control Revenue 3.75% 8/12/97 2,500
- --------------------------------------------------------------------------
NEW HAMPSHIRE
- --------------------------------------------------------------------------
Business Finance Authority 3.85% - 3.95% 8/13/97 - 10/21/97 6,500
</TABLE>
<PAGE> 25
23
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
NEW YORK RATE MATURITY VALUE
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Nassau County,
Revenue Anticipation Notes 3.85% 4/10/98 $ 8,021
-------------------------------------------------------------------------
New York City
General Obligation 4.02% 8/1/97 9,000
Municipal Water Finance
Authority 3.75% - 3.85% 8/11/97 - 11/6/97 13,000
- --------------------------------------------------------------------------
NORTH CAROLINA
- --------------------------------------------------------------------------
Eastern Municipal Power
Agency 3.75% - 3.80% 10/15/97 - 11/13/97 7,675
-------------------------------------------------------------------------
Municipal Power Agency 3.75% - 3.85% 8/13/97 - 11/12/97 19,500
- --------------------------------------------------------------------------
OHIO
- --------------------------------------------------------------------------
Air Quality Development
Authority 3.75% 8/11/97 - 8/12/97 14,300
- --------------------------------------------------------------------------
OKLAHOMA
- --------------------------------------------------------------------------
Oklahoma County, Industrial
Authority 3.95% 9/2/97 7,805
- --------------------------------------------------------------------------
PENNSYLVANIA
- --------------------------------------------------------------------------
Philadelphia, Gas Works
Revenue 3.85% 8/21/97 5,000
- --------------------------------------------------------------------------
TEXAS
- --------------------------------------------------------------------------
Austin,
Combined Utility Systems 3.80% 11/13/97 3,247
-------------------------------------------------------------------------
Brazoria County, Brazos
River Harbor Navigation
District 3.90% 8/12/97 6,100
-------------------------------------------------------------------------
Dallas, Area Rapid Transit 3.75% - 3.85% 8/14/97 - 10/15/97 11,600
-------------------------------------------------------------------------
Harris County, Health
Facilities Development
Corp. 3.90% 8/18/97 - 8/19/97 15,000
-------------------------------------------------------------------------
Houston, Water and Sewer
System 3.80% 11/13/97 6,000
-------------------------------------------------------------------------
</TABLE>
<PAGE> 26
24
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
TEXAS (CONTINUED) RATE MATURITY VALUE
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal Power Agency 3.70% - 3.85% 8/13/97 - 10/14/97 $ 29,125
-------------------------------------------------------------------------
Public Finance Authority 3.85% 8/14/97 11,000
-------------------------------------------------------------------------
San Antonio,
Electric and Gas Systems 3.75% - 3.85% 8/18/97 - 10/14/97 14,000
-------------------------------------------------------------------------
Tax and Revenue
Anticipation
Notes 3.95% 8/29/97 4,503
-------------------------------------------------------------------------
UTAH
-------------------------------------------------------------------------
Intermountain Power Agency 3.75% - 3.80% 10/14/97 - 11/13/97 7,800
-------------------------------------------------------------------------
Tooele County,
Waste Treatment Revenue 4.25% 9/11/97 6,500
-------------------------------------------------------------------------
VIRGINIA
-------------------------------------------------------------------------
Chesterfield County,
Industrial Development
Authority 3.80% - 3.85% 8/8/97 - 10/8/97 16,350
-------------------------------------------------------------------------
Louisa County, Industrial
Development Authority 3.80% 8/13/97 2,400
-------------------------------------------------------------------------
Norfolk, Industrial
Development Authority 3.75% 8/11/97 5,000
-------------------------------------------------------------------------
TOTAL OTHER SECURITIES -- 62.0%
(AVERAGE MATURITY: 44 DAYS) 478,411
-------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.6%
(AVERAGE MATURITY: 29 DAYS) 768,421
-------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- .4% 2,894
-------------------------------------------------------------------------
NET ASSETS -- 100% $ 771,315
</TABLE>
<PAGE> 27
25
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,
1997. The dates shown represent the demand date or next interest rate change
date. Securities in the Zurich 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, 1997, the aggregate value of illiquid
securities was $120,000,000 in the Zurich Money Market Fund and $48,000,000
in the Zurich Government Money Fund, which represented 2.8% and 7.2%
respectively, 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.
<PAGE> 28
26
REPORT OF
INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES We have audited the accompanying statement of
AND SHAREHOLDERS assets and liabilities, including the portfolios of
ZURICH MONEY FUNDS investments, of Zurich Money Market Fund, Zurich
Government Money Fund and Zurich Tax-Free Money
Fund, comprising Zurich Money Funds (formerly
Kemper Money Funds), as of July 31, 1997, 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
1993. 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,
1997, by correspondence with the custodian. An
audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall
financial statement presentation. We believe that
our audits provide a reasonable basis for our
opinion.
<PAGE> 29
27
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 Zurich Money Funds at July 31, 1997,
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 1993, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 17, 1997
<PAGE> 30
28
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
ASSETS MONEY MARKET GOVERNMENT TAX-FREE
--------------------------------------------------------------------
<S> <C> <C> <C>
Investments, at amortized
cost:
Short-term securities $3,696,566 334,028 768,421
--------------------------------------------------------------------
Repurchase agreements 670,000 335,000 --
--------------------------------------------------------------------
Cash 15,221 -- --
--------------------------------------------------------------------
Receivable for:
Interest 8,670 4,809 3,655
--------------------------------------------------------------------
Fund shares sold 15,943 1,311 2,108
--------------------------------------------------------------------
Securities sold -- -- 95
--------------------------------------------------------------------
TOTAL ASSETS 4,406,400 675,148 774,279
--------------------------------------------------------------------
LIABILITIES AND NET ASSETS
--------------------------------------------------------------------
Cash overdraft -- 1,287 260
--------------------------------------------------------------------
Payable for:
Dividends 3,779 580 438
--------------------------------------------------------------------
Fund shares redeemed 38,469 1,695 1,797
--------------------------------------------------------------------
Management fee 985 151 172
--------------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 455 99 78
--------------------------------------------------------------------
Trustees' fees and other 777 197 219
--------------------------------------------------------------------
TOTAL LIABILITIES 44,465 4,009 2,964
-------------------------------------------------------------------
NET ASSETS APPLICABLE TO
SHARES OUTSTANDING $4,361,935 671,139 771,315
--------------------------------------------------------------------
THE PRICING OF SHARES
--------------------------------------------------------------------
Shares outstanding 4,361,935 671,139 771,315
--------------------------------------------------------------------
Net asset value and redemption
price per share $1.00 1.00 1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE> 31
29
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
NET INVESTMENT INCOME MONEY MARKET GOVERNMENT TAX-FREE
--------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $242,771 39,324 28,503
--------------------------------------------------------------------
Expenses:
Management fee 11,666 1,894 2,068
--------------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 7,039 1,045 630
--------------------------------------------------------------------
Reports to shareholders 433 79 71
--------------------------------------------------------------------
Registration costs 85 75 57
--------------------------------------------------------------------
Professional fees 86 14 16
--------------------------------------------------------------------
Trustees' fees and other 134 23 26
--------------------------------------------------------------------
Total expenses 19,444 3,130 2,868
--------------------------------------------------------------------
Net investment income $223,327 36,194 25,635
</TABLE>
<PAGE> 32
30
ZURICH MONEY FUNDS FINANCIAL STATEMENTS, CONTINUED
YEARS ENDED JULY 31, 1997 AND 1996
(IN THOUSANDS)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
----------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
----------------------------------------------------------------
<S> <C>
Net investment income
----------------------------------------------------------------
Net realized loss
----------------------------------------------------------------
Change in unrealized depreciation
----------------------------------------------------------------
Dividends to shareholders from net investment income
----------------------------------------------------------------
Capital share transactions
(dollar amounts and number of shares are the same):
Shares sold
----------------------------------------------------------------
Shares issued in reinvestment of dividends
================================================================
Shares redeemed
----------------------------------------------------------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS AND
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS
Beginning of year
----------------------------------------------------------------
END OF YEAR
</TABLE>
<PAGE> 33
31
<TABLE>
<CAPTION>
========================================================================
MONEY MARKET GOVERNMENT TAX-FREE
========================================================================
- ------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 223,327 214,849 36,194 33,708 25,635 25,511
- ------------------------------------------------------------------------
-- (28,328) -- -- -- --
- ------------------------------------------------------------------------
-- 28,328 -- -- -- --
- ------------------------------------------------------------------------
(223,327) (214,849) (36,194) (33,708) (25,635) (25,511)
- ------------------------------------------------------------------------
6,067,490 5,752,934 704,736 728,317 861,149 753,317
- ------------------------------------------------------------------------
215,732 207,091 34,766 32,576 25,063 24,739
- ------------------------------------------------------------------------
6,283,222 5,960,025 739,502 760,893 886,212 778,056
- ------------------------------------------------------------------------
(6,147,062) (5,759,348) (740,404) (692,453) (843,915) (809,181)
- ------------------------------------------------------------------------
136,160 200,677 (902) 68,440 42,297 (31,125)
========================================================================
4,225,775 4,025,098 672,041 603,601 729,018 760,143
- ------------------------------------------------------------------------
$ 4,361,935 4,225,775 671,139 672,041 771,315 729,018
</TABLE>
<PAGE> 34
32
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUNDS
Zurich 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. Zurich Money Market
Fund invests primarily in short-term high quality
obligations of major banks and corporations. Zurich
Government Money Fund invests exclusively in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and
repurchase agreements thereon. Zurich Tax-Free Money
Fund invests in short-term high quality municipal
securities.
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION. Investments are stated at
amortized cost, which approximates market value. In the
event that a deviation of 1/2 of 1% or more exists
between a Fund's $1.00 per share net asset value,
calculated at amortized cost, and the net asset value
calculated by reference to market-based values, or if
there is any other deviation that the Board of Trustees
believes would result in a material dilution to
shareholders or purchasers, the Board of Trustees will
promptly consider what action should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME.
Investment transactions are accounted for on the trade
date (date the order to buy or sell is executed).
Interest income is recorded on the accrual basis and
includes amortization of premium and discount on
investments.
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 Zurich
Money Market Fund and Zurich Government Money
<PAGE> 35
33
Fund and at 11:00 a.m. and 3:00 p.m. Chicago
time for Zurich 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
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 AFFILIATES
MANAGEMENT AGREEMENT. The Trust has a
management agreement with Zurich Kemper Investments,
Inc. (ZKI) and pays a management fee at an annual rate
of .50% of the first $215 million of average daily net
assets declining to .25% of average daily net assets in
excess of $800 million. During the year ended July 31,
1997, the Trust incurred management fees of
$15,628,000.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Funds' transfer agent,
Zurich Kemper Service Company (ZKSvC) (formerly known
as Kemper Service Company) is the shareholder service
agent of the Trust. Under the agreement, ZKSvC received
shareholder services fees of $6,391,000 for the year
ended July 31, 1997.
OFFICERS AND TRUSTEES. Certain officers or
trustees of the Trust are also officers or directors of
ZKI. During the year ended July 31, 1997, the Trust
made no payments to its officers and incurred trustees'
fees of $63,000 to independent trustees.
<PAGE> 36
34
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
ZURICH MONEY MARKET FUND
- ---------------------------------------------------------------------------------------------
Years ended July 31
- ---------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------
Net investment income
and dividends declared .05 .05 .05 .03 .03
- ---------------------------------------------------------------------------------------------
Net asset value, end
of year $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------
TOTAL RETURN 5.27% 5.34 5.34 3.20 2.96
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses .45% .50 .52 .52 .52
- ---------------------------------------------------------------------------------------------
Net investment
income 5.14% 5.20 5.19 3.14 2.92
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets at end of
year (in thousands) $ 4,361,935 4,225,775 4,025,098 4,148,789 4,499,930
</TABLE>
Note: Zurich 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%.
<PAGE> 37
35
----------------------------------------------------------------------------
ZURICH GOVERNMENT MONEY FUND
----------------------------------------------------------------------------
Years ended July 31
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
1997 1996 1995 1994 1993
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
Net investment
income and
dividends
declared .05 .05 .05 .03 .03
----------------------------------------------------------------------------
Net asset value,
end of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
TOTAL RETURN 5.26% 5.34 5.36 3.20 2.97
----------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Expenses .44% .46 .46 .47 .45
----------------------------------------------------------------------------
Net investment
income 5.13% 5.20 5.21 3.15 2.94
----------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------
SUPPLEMENTAL DATA
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets at end
of year
(in thousands) $671,139 672,041 603,601 707,368 694,303
</TABLE>
<PAGE> 38
36
FINANCIAL HIGHLIGHTS, CONTINUED
ZURICH TAX-FREE MONEY FUND
Years ended July 31
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE
1997 1996 1995 1994 1993
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
Net investment income
and dividends declared .03 .03 .03 .02 .02
----------------------------------------------------------------------------
Net asset value, end
of year $1.00 1.00 1.00 1.00 1.00
-----------------------------------------------------------------
TOTAL RETURN 3.39% 3.44 3.53 2.33 2.39
RATIOS TO AVERAGE NET ASSETS
----------------------------------------------------------------------------
Expenses .37% .39 .40 .41 .39
----------------------------------------------------------------------------
Net investment income 3.33% 3.38 3.46 2.30 2.36
SUPPLEMENTAL DATA
----------------------------------------------------------------------------
Net assets at end of
year (in thousands) $771,315 729,018 760,143 792,131 758,630
</TABLE>
<PAGE> 39
37
FEDERAL TAX STATUS OF 1997 DIVIDENDS
All of the dividends from Zurich Money Market
Fund and Zurich Government Money Fund are taxable as
ordinary income. All of the dividends from Zurich
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.
<PAGE> 40
38
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
STEPHEN B. TIMBERS CHARLES R. MANZONI, JR.
President and Trustee Vice President
DAVID W. BELIN JOHN E. NEAL
Trustee Vice President
LEWIS A. BURNHAM ROBERT C. PECK, JR.
Trustee Vice President
DONALD L. DUNAWAY FRANK J. RACHWALSKI, JR.
Trustee Vice President
ROBERT B. HOFFMAN PHILLIP J. COLLORA
Trustee Vice President
and Secretary
DONALD R. JONES JEROME L. DUFFY
Trustee Treasurer
SHIRLEY D. PETERSON ELIZABETH C. WERTH
Trustee Assistant Secretary
WILLIAM P. SOMMERS
Trustee
- --------------------------------------------------------------------------------
INVESTMENT MANAGER ZURICH KEMPER INVESTMENTS, INC.
PRINCIPAL UNDERWRITER ZURICH KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza
Chicago, IL 60606
www.zurichfunds.com
SHAREHOLDER SERVICE AGENT ZURICH KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
CUSTODIAN AND TRANSFER INVESTORS FIDUCIARY TRUST COMPANY
AGENT 127 West 10th Street
Kansas City, MO 64105
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL VEDDER, PRICE KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
<PAGE> 41
"INSIDE BACK COVER IS FULL SCREEN"
<PAGE> 42
This report must be preceded or
accompanied by a Zurich Money Funds prospectus.
[RECYCLED LOGO]
Printed in the U.S.A. on recycled paper.
ZMF-2 (9/97) 1036940 [ZURICH LOGO]
