<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 14, 1997.
1933 ACT REGISTRATION NO. 2-51992
1940 ACT REGISTRATION NO. 811-2527
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-1A
<TABLE>
<CAPTION>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
<S> <C>
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 43 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 43 [X]
</TABLE>
(Check appropriate box or boxes)
----------------
ZURICH MONEY FUNDS
(formerly named Kemper Money Funds)
(Exact name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, 60606
Illinois
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 537-7000
Philip J. Collora, Vice President and With a copy to:
Secretary Cathy G. O'Kelly
David A. Sturms
Zurich Money Funds
222 South Riverside Plaza Vedder, Price, Kaufman & Kammholz
Chicago, Illinois 60606-5808 222 North LaSalle Street
(Name and Address of Agent for Service) Chicago, Illinois 60601
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[X] on November 15, 1997 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ZURICH MONEY FUNDS
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER OF FORM N-1A LOCATION IN PROSPECTUS
- ------------------------ ----------------------
<S> <C>
1.Cover Page................................. Cover Page
2.Synopsis................................... Summary; Summary of Expenses
3.Condensed Financial Information............ Financial Highlights; Performance
4.General Description of Registrant.......... Summary; Capital Structure; How the Funds
Work; Investment Objectives, Policies and
Risk Factors
5.Management of the Fund..................... Summary; Investment Manager; How to Make a
Purchase
5A.Management's Discussion of Fund Perfor-
mance....................................... Inapplicable
6.Capital Stock and Other Securities......... Summary; Capital Structure; Dividends and
Taxes;
How to Make a Purchase; Investment
Objectives, Policies and Risk Factors
7.Purchase of Securities Being Offered....... Summary; How to Make a Purchase; Net Asset
Value;
Investment Manager; Special Features;
Account
Services Directory
8.Redemption or Repurchase................... Summary; How to Make a Redemption; Special
Features;
Account Services Directory
9.Pending Legal Proceedings.................. Inapplicable
</TABLE>
<PAGE>
Zurich Money Funds
PROSPECTUS
November 15, 1997
ZURICH MONEY FUNDS
222 SOUTH RIVERSIDE PLAZA,
CHICAGO, ILLINOIS 60606-5808
1-800-537-6001.
The Funds are designed for investors who seek maximum current income to the ex-
tent consistent with stability of principal. Each Fund invests exclusively in
high quality money market instruments.
. ZURICH MONEY MARKET FUND
. ZURICH GOVERNMENT MONEY FUND
. ZURICH TAX-FREE MONEY FUND
This prospectus contains information about each Fund that a prospective in-
vestor should know before investing and should be retained for future refer-
ence. A Statement of Additional Information dated November 15, 1997 has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. It is available upon request without charge from the Funds at the
address above or by calling 1-800-537-6001.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERN-
MENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR EN-
DORSED BY, ANY BANK. THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary..................................................................... 1
Summary of Fund Expenses.................................................... 3
Financial Highlights........................................................ 4
How the Funds Work.......................................................... 6
Investment Objectives, Policies and Risk Factors............................ 6
Net Asset Value--Determining Share Price.................................... 13
How To Make a Purchase ..................................................... 14
How To Make a Redemption ................................................... 16
Exchanging Shares........................................................... 20
Special Features............................................................ 22
Dividends and Taxes......................................................... 24
Investment Manager.......................................................... 27
Performance................................................................. 28
Capital Structure........................................................... 30
Account Services Directory.................................................. 31
</TABLE>
<PAGE>
SUMMARY
INVESTMENT OBJECTIVES
Zurich Money Funds (the "Trust") is an open-end, diversified, management in-
vestment company offering a choice of three investment funds ("Funds"). Each
Fund is designed to provide you with professional management of your short-term
investment dollars; the dollars that you want to be very liquid and accessible
when special opportunities arise or that you want to know are in high quality
investments.
Each Fund invests in high quality short-term money market instruments consis-
tent with its specific objective.
. THE ZURICH MONEY MARKET FUND seeks maximum current income to the extent con-
sistent with stability of principal from a portfolio primarily of commercial
paper and bank obligations.
. THE ZURICH GOVERNMENT MONEY FUND seeks maximum current income to the extent
consistent with stability of principal from a portfolio of obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
. THE ZURICH TAX-FREE MONEY FUND seeks maximum current income that is exempt
from federal income taxes to the extent consistent with stability of principal
from a portfolio of municipal securities.
Each Fund may use a variety of investment techniques in seeking its objective
including the purchase of repurchase agreements and variable rate securities.
Each Fund seeks to maintain a net asset value of $1.00 per share; however,
there is no assurance that the objective of any Fund will be achieved or that
any Fund will be able to maintain a net asset value of $1.00 per share. See
"How the Funds Work" and "Investment Objectives, Policies and Risk Factors."
INVESTMENT MANAGER
Zurich Kemper Investments, Inc. ("ZKI") is the investment manager for the
Funds and provides the Funds with continuous professional investment supervi-
sion. ZKI is paid an annual investment management fee, payable monthly, on a
graduated basis ranging from .50% of the first $215 million of average daily
net assets of the Trust to .25% of average daily net assets of the Trust over
$800 million. See "Investment Manager."
1
<PAGE>
BUYING AND SELLING SHARES
You may buy and sell shares of each Fund at net asset value with no sales
charge. The minimum initial investment is $1,000 and the minimum subsequent in-
vestment is $100 ($50 under an automatic investment plan). Accounts may be
opened using the account application available from the Funds. Shares may be
purchased by mailing a check, by wire transfer or in person in downtown Chicago
and Kansas City. Please see "How To Make a Purchase" for more information on
how easy it is to invest. Shares may be sold or redeemed by written request or
by using one of the Funds' expedited redemption procedures. See "How To Make a
Redemption" for specific details.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested in additional shares of the same Fund, unless you elect to be paid
by check. See "Dividends and Taxes."
SPECIAL FEATURES
A number of features are available to account holders, including: the Zurich
Money-PLUS AccountSM, a cash management program offering a combination of fea-
tures including a no minimum checking account and a VISA(R) check card and
Electronic Funds Transfer Programs. See "Special Features" and "Account Serv-
ices Directory" for a description of these and other features.
2
<PAGE>
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES*
<TABLE>
<S> <C>
Sales Load on Purchases.................................................... None
Sales Load on Reinvested Dividends......................................... None
Deferred Sales Load........................................................ None
Redemption Fees............................................................ None
Exchange Fee............................................................... None
</TABLE>
- -----------
*Table does not include $3.00 monthly small account fee. See "How to Make a
Redemption."
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
ZURICH ZURICH
MONEY ZURICH TAX-FREE
MARKET GOVERNMENT MONEY
FUND MONEY FUND FUND
------ ---------- --------
<S> <C> <C> <C>
Management Fees...................................... .27% .27% .27%
12b-1 Fees........................................... None None None
Other Expenses....................................... .18% .17% .10%
---- ---- ----
Total Operating Expenses............................. .45% .44% .37%
</TABLE>
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming a 5% an-
nual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---- ------ ------- ------- --------
<C> <S> <C> <C> <C> <C>
Money Market.............................. $ 5 $14 $25 $57
Government................................ $ 5 $14 $25 $55
Tax-Free.................................. $ 4 $12 $21 $47
</TABLE>
The purpose of the table above is to assist you in understanding the various
costs and expenses that an investor in a Fund will bear directly or indirect-
ly. Investment dealers and other firms may independently charge shareholders
additional fees. The Example assumes a 5% annual rate of return pursuant to
requirements of the Securities and Exchange Commission. This hypothetical rate
of return is not intended to be representative of past or future performance
of any Fund. The Example should not be considered to be a representation of
past or future expenses. Actual expenses may be greater or less than those
shown.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below show financial information for each Fund, expressed in terms
of one share outstanding throughout the period. The information in the tables
is covered by the report of the Funds' independent auditors. The report is con-
tained in the Funds' Registration Statement and is available from the Funds.
The financial statements contained in the Funds' 1997 Annual Report to Share-
holders are incorporated herein by reference and may be obtained by writing or
calling the Funds.
ZURICH MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $1.00 1.00 1.00
- -----------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .05
- -----------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00
- -----------------------------------------------------------------------------
TOTAL RETURN: 5.27% 5.34 5.34
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .45% .50 .52
- -----------------------------------------------------------------------------
Net investment income 5.14% 5.20 5.19
- -----------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year
(in thousands) $4,361,935 4,225,775 4,025,098
- -----------------------------------------------------------------------------
ZURICH GOVERNMENT MONEY FUND
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $1.00 1.00 1.00
- -----------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .05
- -----------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00
- -----------------------------------------------------------------------------
TOTAL RETURN: 5.26% 5.34 5.36
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .44% .46 .46
- -----------------------------------------------------------------------------
Net investment income 5.13% 5.20 5.21
- -----------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year
(in thousands) $671,139 672,041 603,601
- -----------------------------------------------------------------------------
ZURICH TAX-FREE MONEY FUND
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00 1.00 1.00
- -----------------------------------------------------------------------------
Net investment income and dividends declared .03 .03 .03
- -----------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00
- -----------------------------------------------------------------------------
TOTAL RETURN: 3.39% 3.44 3.53
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .37% .39 .40
- -----------------------------------------------------------------------------
Net investment income 3.33% 3.38 3.46
- -----------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $771,315 729,018 760,143
- -----------------------------------------------------------------------------
</TABLE>
NOTE: Ratios have been determined on an annualized basis. Total return is not
annualized. The Zurich Money Market Fund's total return for the year ended July
31, 1995 includes the effect of a capital contribution from the investment man-
ager. Without the capital contribution, the total return would have been 4.62%.
4
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------
.03 .03 .04 .07 .08 .09 .07
- ---------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------
3.20 2.96 4.45 7.19 8.50 9.03 7.03
- ---------------------------------------------------------------------------------
.52 .52 .49 .46 .45 .49 .50
- ---------------------------------------------------------------------------------
3.14 2.92 4.42 6.94 8.16 8.71 6.79
- ---------------------------------------------------------------------------------
4,148,789 4,499,930 5,664,194 7,553,950 7,603,418 6,638,489 4,893,284
- ---------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------
.03 .03 .04 .07 .08 .09 .07
- ---------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------
3.20 2.97 4.50 6.95 8.45 8.96 6.88
- ---------------------------------------------------------------------------------
.47 .45 .43 .43 .43 .49 .51
- ---------------------------------------------------------------------------------
3.15 2.94 4.44 6.65 8.08 8.79 6.66
- ---------------------------------------------------------------------------------
707,368 694,303 926,328 1,126,417 845,347 514,303 177,812
- ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 10, 1987
YEAR ENDED JULY 31, TO JULY 31,
1994 1993 1992 1991 1990 1989 1988
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------
.02 .02 .04 .05 .06 .06 .04
- ------------------------------------------------------------------------------
1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------
2.33 2.39 3.57 5.07 5.81 6.21 4.33
- ------------------------------------------------------------------------------
.41 .39 .39 .38 .40 .39 .45
- ------------------------------------------------------------------------------
2.30 2.36 3.49 4.92 5.64 6.12 4.68
- ------------------------------------------------------------------------------
792,131 758,630 796,272 788,253 693,307 529,670 190,933
- ------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
HOW THE FUNDS WORK
Zurich Money Funds are designed to provide you with professional management
of short-term investment dollars. They are designed for investors who seek
maximum current income consistent with stability of principal plus liquidity.
To help meet these objectives, you are provided with a choice of separate in-
vestment funds ("Funds"): the Zurich Money Market Fund (the "Money Market
Fund"), the Zurich Government Money Fund (the "Government Money Fund") and the
Zurich Tax-Free Money Fund (the "Tax-Free Money Fund"). Because each Fund com-
bines its shareholders' money, it can buy and sell large blocks of securities,
which reduces transaction costs and maximizes yields. Each Fund is managed by
investment professionals who analyze market trends to take advantage of chang-
ing conditions and who seek to minimize risk by diversifying each Fund's in-
vestments.
Each Fund seeks to maintain a net asset value of $1.00 per share. Thus, the
Funds are designed for investors who want to avoid the fluctuations of princi-
pal commonly associated with equity and long-term bond investments. The fluc-
tuations of these other types of investments are often represented by the
movement of various unmanaged market indexes, such as the Dow Jones Industrial
Average. In addition, although there can be no guarantee that a Fund will
achieve its objective or that it will maintain a net asset value of $1.00 per
share, each Fund has maintained a $1.00 net asset value since its inception.
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
MONEY MARKET FUND
THE MONEY MARKET FUND SEEKS MAXIMUM CURRENT INCOME TO THE EXTENT CONSISTENT
WITH STABILITY OF PRINCIPAL. The Fund pursues its objective by investing ex-
clusively in the following types of U.S. Dollar denominated money market in-
struments that mature in 12 months or less:
.Obligations of, or guaranteed by, the U.S. Government, its agencies or in-
strumentalities.
.Bank certificates of deposit (including time deposits) or bankers' accept-
ances limited to domestic banks (including their foreign branches) and Cana-
dian chartered banks having total assets in excess of $1 billion.
.Commercial paper obligations rated A-1 or A-2 by Standard & Poor's Corpora-
tion ("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc.
("Moody's") or issued by companies with an unsecured debt issue outstanding
currently rated Aa by Moody's or AA by S&P or higher and investments in other
corporate obligations such as publicly traded bonds, debentures and notes
rated Aa by Moody's or AA by S&P or higher. For a description of these rat-
ings, see "Appendix--Ratings of Investments" in the Statement of Additional
Information.
6
<PAGE>
Investment Objectives and Policies--continued
.Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. Repurchase agreements are discussed below.
To the extent the Money Market Fund purchases Eurodollar certificates of de-
posit issued by London branches of U.S. banks, or commercial paper issued by
foreign entities, consideration will be given to their marketability, to pos-
sible restrictions on international currency transactions and to regulations
imposed by the domicile country of the foreign issuer. Eurodollar certificates
of deposit are not subject to the same regulatory requirements as certificates
issued by U.S. banks and associated income may be subject to the imposition of
foreign taxes.
The Money Market Fund may invest in commercial paper which is issued by ma-
jor corporations without registration under the Securities Act of 1933 in re-
liance on the exemption from registration afforded by Section 3(a)(3) thereof.
Such commercial paper may be issued only to finance current transactions and
must mature in nine months or less. Trading of such commercial paper is con-
ducted primarily by institutional investors through investment dealers, and
individual investor participation in the commercial paper market is very lim-
ited.
The Fund may also invest in commercial paper issued in reliance on the so-
called "private placement" exemption from registration afforded by Section
4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2) paper
is restricted as to disposition under the federal securities laws, and gener-
ally is sold to institutional investors such as the Fund who agree that they
are purchasing the paper for investment and not with a view to public distri-
bution. Any resale by the purchaser must be in an exempt transaction. Section
4(2) paper normally is resold to other institutional investors like the Fund
through or with the assistance of the issuer or investment dealers who make a
market in the Section 4(2) paper, thus providing liquidity. The Fund's invest-
ment manager considers the legally restricted but readily saleable Section
4(2) paper to be liquid; however, pursuant to procedures approved by the Board
of Trustees of the Trust, if a particular investment in Section 4(2) paper is
not determined to be liquid, that investment will be included within the 10%
limitation on illiquid securities discussed under "The Funds" below. The
Fund's investment manager monitors the liquidity of its investments in Section
4(2) paper on a continuous basis.
The Money Market Fund may concentrate more than 25% of its assets in bank
certificates of deposit or banker's acceptances of United States banks in ac-
cordance with its investment objective and policies. Accordingly, the Fund may
be more adversely affected by changes in market or economic conditions and
other circumstances affecting the banking industry than it would be if the
Fund's assets were not so concentrated.
7
<PAGE>
Investment Objectives and Policies--continued
GOVERNMENT MONEY FUND
THE GOVERNMENT MONEY FUND SEEKS MAXIMUM CURRENT INCOME TO THE EXTENT CONSIS-
TENT WITH STABILITY OF PRINCIPAL. The Fund pursues its objective by investing
exclusively in the following securities that mature within 12 months or less.
.U.S. Treasury bills, notes, bonds and other obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
.Repurchase agreements of the obligations described above.
Some securities issued by U.S. Government agencies or instrumentalities are
supported only by the credit of the agency or instrumentality, such as those
issued by the Federal Home Loan Bank, and others have an additional line of
credit with the U.S. Treasury, such as those issued by the Federal National
Mortgage Association, Farm Credit System and Student Loan Marketing Associa-
tion. Short-term U.S. Government obligations generally are considered to be the
safest short-term investment. The U.S. Government guarantee of the securities
owned by the Fund, however, does not guarantee the net asset value of its
shares, which the Fund seeks to maintain at $1.00 per share. Also, with respect
to securities supported only by the credit of the issuing agency or instrumen-
tality or by an additional line of credit with the U.S. Treasury, there is no
guarantee that the U.S. Government will provide support to such agencies or in-
strumentalities and such securities may involve risk of loss of principal and
interest.
TAX-FREE MONEY FUND
THE TAX-FREE MONEY FUND SEEKS MAXIMUM CURRENT INCOME THAT IS EXEMPT FROM FED-
ERAL INCOME TAXES TO THE EXTENT CONSISTENT WITH STABILITY OF PRINCIPAL. The
Fund pursues its objective primarily through a professionally managed, diversi-
fied portfolio of short-term high quality tax-exempt municipal obligations.
Under normal market conditions at least 80% of the Fund's total assets will,
as a fundamental policy, be invested in obligations issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, the
income from which is exempt from federal income tax ("Municipal Securities").
In compliance with the position of the staff of the Securities and Exchange
Commission, the Fund does not consider "private activity" bonds as described in
"Dividends and Taxes--Tax-Free Money Fund" as Municipal Securities for purposes
of the 80% limitation. This is a fundamental policy so long as the staff main-
tains its position, after which it would become non-fundamental.
Dividends representing net interest income received by the Tax-Free Money
Fund on Municipal Securities will be exempt from federal income tax when dis-
tributed to the Fund's shareholders. Such dividend income may be subject to
state and local taxes. See "Dividends and Taxes--Tax-Free Money Fund." The
Fund's assets will consist of Municipal Securities, temporary investments as
described below and cash. The Fund considers short-term Municipal Securities to
be those that mature in one year or less.
8
<PAGE>
Investment Objectives and Policies--continued
The Tax-Free Money Fund will invest only in Municipal Securities which at the
time of purchase:
. are rated within the two highest ratings for Municipal Securities (Aaa or Aa)
assigned by Moody's or (AAA or AA) assigned by S&P;
. are guaranteed or insured by the U.S. Government as to the payment of princi-
pal and interest;
. are fully collateralized by an escrow of U.S. Government securities acceptable
to the Fund's investment manager;
. have at the time of purchase a Moody's short-term municipal securities rating
of MIG-2 or higher or a municipal commercial paper rating of P-2 or higher, or
S&P's municipal commercial paper rating of A-2 or higher;
. are unrated, if longer term Municipal Securities of that issuer are rated
within the two highest rating categories by Moody's or S&P; or
. are determined to be at least equal in quality to one or more of the above
ratings in the discretion of the Fund's investment manager.
Municipal Securities generally are classified as "general obligation" or
"revenue" issues. General obligation bonds are secured by the issuer's pledge
of its full credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular fa-
cility or class of facilities or, in some cases, from the proceeds of a special
excise tax or other specific revenue source such as the user of the facility
being financed. Industrial development bonds held by the Fund are in most cases
revenue bonds and are not payable from the unrestricted revenues of the issuer.
Among other types of instruments, the Fund may purchase tax-exempt commercial
paper, warrants and short-term municipal notes such as tax anticipation notes,
bond anticipation notes, revenue anticipation notes, construction loan notes
and other forms of short-term loans. Such notes are issued with a short-term
maturity in anticipation of the receipt of tax payments, the proceeds of bond
placements or other revenues. A more detailed discussion of Municipal Securi-
ties and the Moody's and S&P ratings outlined above is contained in the State-
ment of Additional Information. As indicated above and under "Dividends and
Taxes--Tax-Free Money Fund," the Fund may invest in "private activity" bonds.
The Tax-Free Money Fund may purchase securities which provide for the right
to resell them to an issuer, bank or dealer at an agreed upon price or yield
within a specified period prior to the maturity date of such securities. Such a
right to resell is referred to as a "Standby Commitment." Securities may cost
more with Standby Commitments than without them. Standby Commitments will be
entered into solely to facilitate portfolio liquidity. A Standby Commitment may
be exercised before the maturity date of the related Municipal Security if the
Fund's investment manager
9
<PAGE>
Investment Objectives and Policies--continued
revises its evaluation of the creditworthiness of the underlying security or of
the entity issuing the Standby Commitment. The Fund's policy is to enter into
Standby Commitments only with issuers, banks or dealers that are determined by
the Fund's investment manager to present minimal credit risks. If an issuer,
bank or dealer should default on its obligation to repurchase an underlying se-
curity, the Fund might be unable to recover all or a portion of any loss sus-
tained from having to sell the security elsewhere. For purposes of valuing the
Fund's securities at amortized cost, the stated maturity of Municipal Securi-
ties subject to Standby Commitments is not changed.
The Tax-Free Money Fund may purchase high quality Certificates of Participa-
tion in trusts that hold Municipal Securities. A Certificate of Participation
gives the Fund an undivided interest in the Municipal Security in the propor-
tion that the Fund's interest bears to the total principal amount of the Munic-
ipal Security. These Certificates of Participation may be variable rate or
fixed rate with remaining maturities of one year or less. A Certificate of Par-
ticipation may be backed by an irrevocable letter of credit or guarantee of a
financial institution that satisfies rating agencies as to the credit quality
of the Municipal Security supporting the payment of principal and interest on
the Certificate of Participation. Payments of principal and interest would be
dependent upon the underlying Municipal Security and may be guaranteed under a
letter of credit to the extent of such credit. The quality rating by a rating
service of an issue of Certificates of Participation is based primarily upon
the rating of the Municipal Security held by the trust and the credit rating of
the issuer of any letter of credit and of any other guarantor providing credit
support to the issue. The Fund's investment manager considers these factors as
well as others, such as any quality ratings issued by the rating services iden-
tified above, in reviewing the credit risk presented by a Certificate of Par-
ticipation and in determining whether the Certificate of Participation is ap-
propriate for investment by the Fund. It is anticipated by the Fund's invest-
ment manager that, for most publicly offered Certificates of Participation,
there will be a liquid secondary market or there may be demand features en-
abling the Fund to readily sell its Certificates of Participation prior to ma-
turity to the issuer or a third party. As to those instruments with demand fea-
tures, the Fund intends to exercise its right to demand payment from the issuer
of the demand feature only upon a default under the terms of the Municipal Se-
curity, as needed to provide liquidity to meet redemptions, or to maintain a
high quality investment portfolio.
The Tax-Free Money Fund may purchase and sell Municipal Securities on a when-
issued or delayed delivery basis. A when-issued or delayed delivery transaction
arises when securities are bought or sold for future payment and delivery to
secure what is considered to be an advantageous price and yield to the Fund at
the time it enters into the transaction. In determining the maturity of portfo-
lio securities purchased on a when-issued or delayed delivery basis, the Fund
will consider them to have been purchased on the date when it committed itself
to the purchase.
10
<PAGE>
Investment Objectives and Policies--continued
A security purchased on a when-issued basis, like all securities held by the
Tax-Free Money Fund, is subject to changes in market value based upon changes
in the level of interest rates and investors' perceptions of the creditworthi-
ness of the issuer. Generally such securities will appreciate in value when in-
terest rates decline and decrease in value when interest rates rise. Therefore
if, in order to achieve higher interest income, the Fund remains substantially
fully invested at the same time that it has purchased securities on a when-is-
sued basis, there will be a greater possibility that the market value of the
Fund's assets will vary from $1.00 per share, since the value of a when-issued
security is subject to market fluctuation and no interest accrues to the pur-
chaser prior to settlement of the transaction. See "Net Asset Value--Determin-
ing Share Price."
The Fund will only make commitments to purchase Municipal Securities on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but the Fund reserves the right to sell these securities before
the settlement date if deemed advisable. The sale of these securities may re-
sult in the realization of gains that are not exempt from federal income tax.
In seeking to achieve its investment objective, the Tax-Free Money Fund may
invest all or any part of its assets in Municipal Securities that are indus-
trial development bonds. Moreover, although the Fund does not currently intend
to do so on a regular basis, it may invest more than 25% of its assets in Mu-
nicipal Securities that are repayable out of revenue streams generated from ec-
onomically related projects or facilities, if such investment is deemed neces-
sary or appropriate by the Fund's investment manager. To the extent that the
Fund's assets are concentrated in Municipal Securities payable from revenues on
economically related projects and facilities, the Fund will be subject to the
risks presented by such projects to a greater extent than it would be if the
Fund's assets were not so concentrated.
From time to time, as a defensive measure or when acceptable short-term Mu-
nicipal Securities are not available, the Tax-Free Money Fund may invest in
taxable "temporary investments" which include:
.obligations of the U.S. Government, its agencies or instrumentalities;
.debt securities rated within the two highest grades by Moody's or S&P;
.commercial paper rated in the two highest grades by either of such rating
services;
.certificates of deposit of domestic banks with assets of $1 billion or more;
and
.any of the foregoing temporary investments subject to repurchase agreements
(Repurchase agreements are discussed below).
11
<PAGE>
Investment Objectives and Policies--continued
Interest income from temporary investments is taxable to shareholders as or-
dinary income. Although the Fund is permitted to invest in taxable securities,
it is the Fund's primary intention to generate income dividends that are not
subject to federal income taxes. See "Dividends and Taxes." For a description
of the ratings, see "Appendix--Ratings of Investments" in the Statement of Ad-
ditional Information.
THE FUNDS
In addition to the specific investment objective and policies listed above,
each Fund limits its investments to securities that meet the requirements of
Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"). See "Net
Asset Value--Determining Share Price."
Each Fund may invest in instruments that have interest rates that adjust pe-
riodically or that "float" continuously according to formulae intended to min-
imize fluctuation in values of the instruments ("Variable Rate Securities").
The interest rate on a Variable Rate Security is ordinarily determined by ref-
erence to or is a percentage of an objective standard such as a bank's prime
rate, the 90-day U.S. Treasury bill rate, or the rate of return on commercial
paper or bank certificates of deposit. Generally, the changes in the interest
rate on Variable Rate Securities reduce the fluctuation in the market value of
such securities. Accordingly, as interest rates decrease or increase, the po-
tential for capital appreciation or depreciation is less than for fixed-rate
obligations. Some Variable Rate Securities ("Variable Rate Demand Securities")
have a demand feature entitling the purchaser to resell the securities at an
amount approximately equal to amortized cost or the principal amount thereof
plus accrued interest. As is the case for other Variable Rate Securities, the
interest rate on Variable Rate Demand Securities varies according to some ob-
jective standard intended to minimize fluctuation in the values of the instru-
ments. Each Fund determines the maturity of Variable Rate Securities in accor-
dance with Securities and Exchange Commission rules which allow the Fund to
consider certain of such instruments as having maturities shorter than the ma-
turity date on the face of the instrument.
Each Fund may invest in repurchase agreements, which are instruments under
which a Fund acquires ownership of a security from a broker-dealer or bank
that agrees to repurchase the security at a mutually agreed upon time and
price (which price is higher than the purchase price), thereby determining the
yield during the Fund's holding period. Maturity of the securities subject to
repurchase may exceed one year. In the event of a bankruptcy or other default
of a seller of a repurchase agreement, a Fund might incur expenses in enforc-
ing its rights, and could experience losses, including a decline in the value
of the underlying securities and loss of income. A Fund will not purchase il-
liquid securities, including time deposits and repurchase agreements maturing
in more than seven days, if, as a result thereof, more than 10% of such Fund's
net assets valued at the time of the transaction would be invested in such se-
curities.
12
<PAGE>
Investment Objectives and Policies--continued
A Fund may not borrow money except as a temporary measure for extraordinary
or emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without immediately
selling any portfolio securities. Any such borrowings under this provision will
not be collateralized. If for any reason the current value of the Fund's total
assets falls below an amount equal to three times the amount of its indebted-
ness from money borrowed, the Fund will, within three business days, reduce its
indebtedness to the extent necessary. No Fund will borrow for leverage purpos-
es.
Certain investment restrictions have been adopted for each Fund and are pre-
sented in the Statement of Additional Information and together with the invest-
ment objective and policies of such Fund, cannot be changed without approval by
holders of a majority of its outstanding voting shares. As defined in the 1940
Act, this means the lesser of the vote of (a) 67% of the shares of such Fund
present at a meeting where more than 50% of the outstanding shares are present
in person or by proxy; or (b) more than 50% of the outstanding shares of the
Fund.
NET ASSET VALUE--DETERMINING SHARE PRICE
The price you pay when you buy shares in a Fund and the price you receive if
you redeem is the net asset value computed after we receive your order to buy
or redeem in proper form (as described under "How To Make a Purchase"). The net
asset value per share of each Fund is calculated by dividing the total value of
the assets of the Fund, minus its liabilities, by the total number of its
shares outstanding.
The net asset value per share of each Fund is determined on each day the New
York Stock Exchange is open for trading, at 11:00 a.m., 1:00 p.m. and 3:00 p.m.
Central time for the Money Market and Government Money Funds and at 11:00 a.m.
and 3:00 p.m. Central time for the Tax-Free Money Fund. Each Fund seeks to
maintain a net asset value of $1.00 per share.
Each Fund values its portfolio instruments at amortized cost in accordance
with Rule 2a-7 under the 1940 Act, which means that they are valued at their
acquisition cost (as adjusted for amortization of premium or discount) rather
than at current market value. Calculations are made to compare the value of
each Fund's investments valued at amortized cost with market-based value. Mar-
ket-based valuations are obtained by using actual quotations provided by market
makers, estimates of market value, or values obtained from yield data relating
to classes of money market instruments published by reputable sources at the
mean between the bid and asked prices for the instruments. If a deviation of
1/2 of 1% or more were to occur between a Fund's net asset value per share cal-
culated by reference to market-based values and a Fund's $1.00 per share net
asset value, or if there were any other deviation that the Board of Trustees
believed would result in a material dilution to shareholders or purchasers, the
Board of Trustees would promptly consider what action, if any,
13
<PAGE>
Net Asset Value--continued
should be initiated. In order to value its investments at amortized cost, the
Funds purchase only securities with a maturity of one year or less and main-
tain a dollar-weighted average portfolio maturity of 90 days or less. In addi-
tion, the Funds limit their portfolio investments to securities that meet the
quality and diversification requirements of Rule 2a-7.
HOW TO MAKE A PURCHASE
Whether you're opening an account or adding to it, we hope that you'll find
that we've made your shareholder transactions easy. Shares of each Fund are
sold at their net asset value with no sales charge. To open an account you
should use the account application available from the Funds and choose one of
the methods outlined in the following table. Call 1-800-537-6001 if you have
questions or need assistance.
Minimum Investment Amounts-- subject to change at any time in management's
discretion
<TABLE>
- ------------------------------------------
<S> <C>
INITIAL INVESTMENT $1,000
For Individual Retirement Accounts $ 250
SUBSEQUENT PURCHASE $ 100
For Individual Retirement Accounts $ 50
Automatic Purchase Plan* $ 50
</TABLE>
- -----------
*See "Special Features" for more information regarding Automatic Purchase
Plan.
HOW TO MAKE A PURCHASE
<TABLE>
<CAPTION>
INITIAL INVESTMENT SUBSEQUENT INVESTMENT
($1,000 OR MORE) ($100 OR MORE)
- --------------------------------------------------------------------------------
<S> <C> <C>
BY MAIL . Complete the Account . Make your check payable
Application and mail it to ZMF and mail it to:
with your check (payable Zurich Kemper Service Company
to ZMF) to: Transfer Agency Division
Zurich Kemper Service Company P.O. Box 419154
Transfer Agency Division Kansas City, MO 64141-6154
P.O. Box 419356
Kansas City, MO 64141-6356 . To exchange by mail,
send your request to:
Zurich Money Funds
P.O. Box 419557
Attention: Exchange Dept.
Kansas City, MO 64141-6557
- --------------------------------------------------------------------------------
BY PHONE . Call 1-888-ZURICH-1 . Call 1-888-ZURICH-1
(987-4241) to exchange (987-4241) to exchange
from a Zurich YieldWise from a Zurich YieldWise
Money Fund or a Kemper Money Fund or a Kemper
Funds account. Funds account.
</TABLE>
- -------------------------------------------------------------------------------
table continued
14
<PAGE>
How To Make a Purchase--continued
INITIAL INVESTMENT ($1,000 OR SUBSEQUENT INVESTMENT ($100 OR
MORE) MORE)
- --------------------------------------------------------------------------------
IN PERSON . In downtown Chicago, you can . In downtown Chicago, you can
make a direct investment at make a direct investment at
our Service Center at 222 our Service Center at 222
South Riverside Plaza. In South Riverside Plaza. In
Kansas City, you can make a Kansas City, you can make a
direct investment at 811 direct investment at 811
Main Street, 7th Floor. Main Street, 7th Floor.
- --------------------------------------------------------------------------------
BY WIRE . To open an account through
TRANSFER wire transfer of Federal . Instruct your bank to wire
(Federal Funds, call 1-800-537-6001. your investment, together
Funds) . Provide your account with your name and account
registration instruction to number, the name of the Fund
the service representative. with the appropriate Fund
You will be provided with bank account number, and the
your new account number over name in which your account
the phone. is registered, to:
. The Fund accepts wires at no Zurich Money Funds, United
charge, although your bank Missouri Bank of Kansas
may charge you for this City, N.A. ABA #1010-0069-
service. 5 Zurich Money Market
. Instruct your bank to wire Fund: 98-0103-346-8, or
your investment, together Zurich Government Money
with your name and new Fund: 98-0116-259-4, or
account number, to: Zurich Tax-Free Money
Fund: 98-0001-577-6
Zurich Money Funds: United . The Fund accepts wires at no
Missouri Bank of Kansas charge, although your bank
City, N.A. ABA # 1010- may charge you for this
0069-5 Zurich Money Market service.
Fund: 98-0103-346-8, or
Zurich Government Money
Fund: 98-0116-259-4, or
Zurich Tax-Free Money
Fund: 98-0001-577-6
- --------------------------------------------------------------------------------
BY ELECTRONIC . Unavailable for opening an Please see "Special Features"
FUNDS account. for more information on
TRANSFER these services.
(Automated Clearing House funds) . EZ-Transfer
. Automatic Purchase Plan ($50
minimum)
. Payroll Direct Deposit
. Government Direct Deposit
All transactions are via the
Automated Clearing House
("ACH") System.
15
<PAGE>
How To Make a Purchase--continued
OTHER INFORMATION
Purchases by check or other negotiable bank draft will be invested as of
3:00 p.m. Central time on the next business day after receipt and will begin
earning dividends the following calendar day. Purchases by check drawn on a
foreign bank will normally be effective after the check clears. See "Purchase
and Redemption of Shares" in the Statement of Additional Information.
Purchase by wire of Federal Funds (i.e., monies credited to a bank's account
with its regional Federal Reserve Bank) will be effected at the next deter-
mined net asset value. Purchases will receive that day's dividend if effected
at or prior to 1:00 p.m. Central time for the Money Market and the Government
Money Funds, and by 11:00 a.m. Central time for the Tax-Free Money Fund, oth-
erwise such shares will receive the dividend for the next calendar day if ef-
fected at 3:00 p.m. Central time.
The Funds reserve the right to withdraw all or any part of the offering made
by this prospectus or to reject purchase orders. The Funds also reserve the
right at any time to waive or increase the minimum investment requirements.
All orders to purchase shares are subject to acceptance by the Funds and are
not binding until confirmed or accepted in writing. Any purchase that would
result in total account balances for a single shareholder in excess of $3 mil-
lion is subject to prior approval by the Funds. Share certificates are issued
only on request to the Funds and may not be available for certain types of ac-
count registrations. Investments may also be made in the Funds through broker-
dealers and others, who may charge a commission or other fee for their servic-
es. A $10 service fee will be charged when a check for the purchase of shares
is returned because of insufficient or uncollected funds or a stop payment or-
der.
If you elect to redeem shares of a Fund purchased by check or through EZ-
Transfer or Automatic Purchase Plan the Fund may delay transmittal of redemp-
tion proceeds until it has determined that collected funds have been received
for the purchase of such shares, which may be up to 10 calendar days from re-
ceipt by the Fund of the purchase amount. See "How to Make a Redemption."
HOW TO MAKE A REDEMPTION
You can access all or part of your account by redeeming your shares. Your
shares will be redeemed at the next determined net asset value after your re-
quest has been received in proper form. If processed at 3:00 p.m. Central
time, you will receive that day's dividend on the shares you sold. If you re-
deem all your shares of a Fund, you will receive the net asset value of such
shares and all declared but unpaid dividends on such shares. You may use any
of the methods outlined in the following table to sell your shares.
16
<PAGE>
How To Make A Redemption--continued
HOW TO MAKE A REDEMPTION
<TABLE>
<C> <S>
BY REDEMPTION CHECK . All Redemption Checks should be for a minimum of $500.
Redemption Checks written in an amount less than $500
will be charged a $10 service fee.
. Redemption Checks should not be used to close your
account since the account normally includes accrued but
unpaid dividends.
. You may not use this privilege to redeem shares held in
certificated form.
- -------------------------------------------------------------------------------
BY PHONE . Telephone requests may be made by calling 1-888-ZURICH-1
(987-4241) Monday-Friday, 7 a.m. to 6 p.m. CST and
Saturday, 8 a.m. to 3 p.m. CST or use 24-hour Zurich
InfoLine (888) 987-8678. You may receive the proceeds
via:
. check by mail to the address to which your account is
registered, or
. electronic funds transfer (minimum $1,000 and maximum
$50,000) to a pre-authorized bank account.
See "Special Features--EZ-Transfer."
. You may exchange to Zurich YieldWise Money Fund or
Kemper Funds. See "Exchanging Shares."
- -------------------------------------------------------------------------------
BY WIRE . You need to have signed up for the wire transfer
privilege and have the forms on file with the
Shareholder Service Agent before using it. Minimum wire:
$1,000
. Telephone requests may be made by calling 1-888-ZURICH-1
(987-4241) or in writing, subject to the limitations on
liability described under "General" below.
. Proceeds will be sent only to the bank or trust company
you have designated on the account application.
. You may not use this privilege to redeem shares held in
certificated form.
- -------------------------------------------------------------------------------
BY MAIL . Complete a written request that includes the following
information: each account owner's name, your account
number, the amount to be redeemed, and the signature of
each owner exactly as it appears on the account,
including any special capacity of the registered owner.
See "Signature Guarantee Requirements" below.
. Mail the written request to Zurich Kemper Service
Company, Transfer Agency Division, P.O. Box 419557,
Kansas City, Missouri 64141-6557.
</TABLE>
SIGNATURE GUARANTEE REQUIREMENTS
If the proceeds of a redemption are $50,000 or less and the proceeds are pay-
able to the shareholder of record at the address of record, normally a tele-
phone request or a written request by any one account holder without a signa-
ture guarantee is sufficient for redemptions by individual or joint account
holders, and trust, executor and guardian account holders (excluding custodial
accounts for gifts and transfers to mi-
17
<PAGE>
How To Make a Redemption--continued
nors), provided the trustee, executor or guardian is named in the account reg-
istration. Other institutional account holders and guardian account holders of
custodial accounts for gifts and transfers to minors may exercise the special
privilege of redeeming shares by telephone request or written request without
signature guarantee subject to the same conditions as individual account hold-
ers and subject to the limitations on liability described under "General" be-
low, provided that the privilege has been pre-authorized by the institutional
account holder or guardian account holder by written instruction to Zurich
Kemper Service Company (the "Shareholder Service Agent") with signatures guar-
anteed. All other redemption requests must include a signature guaranteed by a
commercial bank, trust company, savings and loan association, federal savings
bank, member firm of a national securities exchange or other eligible finan-
cial institution. If any share certificates were issued, they must also be
signed with signature(s) guaranteed. Additional documentation may be request-
ed, and a signature guarantee is normally required, from institutional and fi-
duciary account holders such as corporations, custodians (e.g., under the Uni-
form Transfers to Minors Act), executors, administrators, trustees or guardi-
ans. The privilege of redeeming shares by telephone request or by written re-
quest without a signature guarantee may not be used to redeem shares held in
certificated form and may not be used if the shareholder's account has had an
address change within 30 days of the redemption request.
ADDITIONAL INFORMATION
. REDEMPTION BY WIRE. Requests for wire transfer redemptions received by the
Shareholder Service Agent prior to 11:00 a.m. Central time will result in
shares being redeemed that day and normally a wire transfer will be sent to
the designated account that day. Dividends for that day will not be earned.
The Funds are not responsible for the efficiency of the federal wire system or
the account holder's financial services firm or bank. You are responsible for
any charges your firm or bank makes for sending or receiving wire transfers.
To change the designated account to receive wire redemption proceeds, send a
written request to the Shareholder Service Agent with signatures guaranteed as
described above. This privilege will be terminated if the Shareholder Service
Agent receives written notice from any account holder of revocation of this
authority.
. REDEMPTION BY REDEMPTION CHECK. If you select the checkwriting method of re-
demption on your account application, you will normally receive drafts ("Re-
demption Checks") within 2 weeks of opening your account which you may use to
draw on your Fund account, but not to close it. When a Redemption Check is
presented for payment, a sufficient number of full and fractional shares in
your account will be redeemed at the next determined net asset value to cover
the amount of the Redemption Check. This will enable you to continue earning
daily dividends until the Fund receives the Redemption Check.
18
<PAGE>
How To Make a Redemption--continued
You may write Redemption Checks payable to the order of any person in any
amount not more than $5 million. Unless one signer is authorized on the ac-
count application, Redemption Checks must be signed by all account holders. If
the Shareholder Service Agent receives written notice by any owner revoking
the authorization to sign individually, all account owners will be required to
sign. Redemption Checks must be signed exactly as the account is registered.
The Funds may refuse to honor Redemption Checks whenever the right of redemp-
tion has been suspended or postponed, or whenever the account is otherwise im-
paired. A $10 service fee will be charged when a Redemption Check is presented
to redeem Fund shares in excess of the value of your Fund account or in an
amount less than $500; when a Redemption Check is presented that would require
redemption within 10 days of shares that were purchased by check or through
EZ-Transfer or Automatic Purchase Plan; or when you request "stop payment" of
a Redemption Check by telephone or in writing. A "stop payment" request may be
made by calling 1-888 ZURICH-1 (987-4241).
GENERAL
If shares of a Fund to be redeemed were purchased by check or through EZ-
Transfer or Automatic Purchase Plan (see "Special Features--Electronic Funds
Transfer Programs") the Fund may delay transmittal of redemption proceeds un-
til it has determined that collected funds have been received for the purchase
of such shares, which will be up to 10 days from receipt by the Fund of the
purchase amount. Shareholders may not use wire transfer or Redemption Check
features until the shares being redeemed have been owned for at least 10 days
and shareholders may not use such procedures to redeem shares held in certifi-
cated form. There is no such delay when the shares being redeemed were origi-
nally purchased by wiring Federal Funds.
If shares being redeemed were acquired from an exchange of shares of a mu-
tual fund that were offered subject to a contingent deferred sales charge as
described in the prospectus for that other fund, the redemption of such shares
by a Fund may be subject to a contingent deferred sales charge as explained in
such prospectus.
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individ-
ual and institutional accounts and pre-authorized telephone redemption trans-
actions for certain institutional accounts. Shareholders may choose these
privileges on the Account Application or by contacting the Shareholder Service
Agent for appropriate instructions. Please note that the telephone exchange
privilege is automatic unless the shareholder refuses it on the account appli-
cation. The Trust or its agents may be liable for losses, expenses or costs
arising out of fraudulent or unauthorized telephone requests pursuant to these
privileges, unless the Trust or its agent reasonably believe, based upon rea-
sonable verification procedures, that the telephonic instructions are genuine.
The SHAREHOLDER WILL BEAR THE RISK OF LOSS, including loss resulting from
fraudulent or
19
<PAGE>
unauthorized transactions, as long as the reasonable verification procedures
are followed. The verification procedures include recording instructions, re-
quiring certain identifying information before acting upon instructions and
sending written confirmations.
During periods when it is difficult to contact the Shareholder Service Agent
by telephone, it may be difficult to use the telephone redemption privilege or
the wire redemption privilege, although you can still redeem by mail. The
Funds reserve the right to terminate or modify the redemption by check, phone
or wire privileges at any time.
Because of the high cost of maintaining small accounts, THE FUNDS MAY ASSESS
A MONTHLY FEE OF $3 ON ANY ACCOUNT WITH A BALANCE BELOW $1,000 FOR 30 CONSECU-
TIVE DAYS. The fee will not apply to accounts enrolled in an automatic invest-
ment program or to IRAs. See "How To Make a Purchase".
EXCHANGING SHARES
Diversification is at the heart of most effective investment planning.
That's why we make it easy for you to exchange your shares of Zurich Money
Funds for shares of Zurich YieldWise Money Fund or shares of Kemper Funds.
Please remember that money market shares you acquire by dividend reinvestment
may be exchanged into a Kemper Mutual Fund with no sales charge; though money
fund shares you purchase are subject to the applicable sales charge when ex-
changed.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged. Ex-
changes are made based on relative dollar values of the shares involved in the
exchange. We don't charge you a service fee for an exchange; however, dealers
or other firms may charge for their services. To exchange shares, call us or
contact your financial adviser to obtain prospectuses of Zurich YieldWise
Money Fund or the Kemper Funds in which you are interested. You may make an
exchange by mail or by telephone:
BY TELEPHONE
Once you've completed the authorization section on the account application
and we have it on file, exchange requests may be made by calling 1-888-ZURICH-
1 (987-4241), subject to the limitations on liability described under "How To
Make a Redemption--General." During periods when it is difficult to contact
the Shareholder Service Agent by telephone, it may be difficult to use the
telephone exchange privilege.
BY MAIL
Send your request to:
Zurich Money Funds
P.O. Box 419557
Attention: Exchange Department
Kansas City, Missouri 64141-6557
20
<PAGE>
Exchanging Shares--continued
Exchanges will be effected by redemption of shares of the fund held and pur-
chase of shares of the other fund. For federal income tax purposes, any such
exchange constitutes a sale upon which a gain or loss may be realized, depend-
ing upon whether the value of the shares being exchanged is more or less than
the shareholder's adjusted cost basis. Any certificates for shares must be de-
posited prior to any exchange of such shares. The exchange privilege is not a
right and may be suspended, terminated or modified at any time. Except as oth-
erwise permitted by applicable regulation, 60 days prior written notice of any
termination or material change will be provided.
AUTOMATIC EXCHANGE PLAN
With an account balance of $1,000 or more, shareholders may authorize the au-
tomatic exchange of a specified amount ($100 minimum) of such shares for shares
of a Kemper Fund. If selected, exchanges will be made automatically until the
privilege is terminated by the shareholder or the Fund. Exchanges are subject
to the terms and conditions described above under "Exchanging Shares," except
that there is no minimum investment requirement for the Kemper Fund acquired on
exchange. This privilege may not be used for the exchange of shares held in
certificated form.
Subject to the limitations described in this section, Class A shares (or the
equivalent) of the following Kemper Mutual Funds may be exchanged for each
other at their relative net asset values: Kemper Technology Fund, Kemper Total
Return Fund, Kemper Growth Fund, Kemper Small Capitalization Equity Fund, Kem-
per Income and Capital Preservation Fund, Kemper Municipal Bond Fund, Kemper
Diversified Income Fund, Kemper High Yield Series, Kemper U.S. Government Secu-
rities Fund, Kemper International Fund, Kemper State Tax-Free Income Series,
Kemper Adjustable Rate U.S. Government Fund, Kemper Blue Chip Fund, Kemper
Global Income Fund, Kemper Target Equity Fund (series are subject to a limited
offering period), Kemper Intermediate Municipal Bond Fund, Kemper Cash Reserves
Fund, Kemper U.S. Mortgage Fund, Kemper Short-Intermediate Government Fund,
Kemper Value Plus Growth Fund, Kemper Value Fund, Inc., Kemper Horizon Fund,
Kemper Quantitative Equity Fund, Kemper Europe Fund, Kemper Asian Growth Fund
and Kemper Aggressive Growth Fund ("Kemper Mutual Funds") and certain "Money
Market Funds" (Zurich Money Funds, Cash Equivalent Fund, Tax-Exempt California
Money Market Fund, Cash Account Trust, Investors Municipal Cash Fund and In-
vestors Cash Trust). In addition, shares of Zurich Money Funds may be exchanged
for shares of Zurich YieldWise Money Fund. Shares of Money Market Funds and
Kemper Cash Reserves Fund that were acquired by purchase (not including shares
acquired by dividend reinvestment) are subject to the applicable sales charge
on exchange with Kemper Funds. Shares purchased by check or through EXPRESS-
Transfer or Bank Direct Deposit may not be exchanged until they have been owned
for at least 15 days. In addition, shares of Kemper Funds, other than a Money
Market Fund and Kemper Cash Reserves Fund, acquired by exchange from
21
<PAGE>
Exchanging Shares--continued
another fund may not be exchanged thereafter until they have been owned for 15
days. Series of Kemper Target Equity Fund will be available on exchange only
during the Offering Period for such series as described in the prospectus for
such series. Cash Equivalent Fund, Tax-Exempt California Money Market Fund,
Cash Account Trust, Investors Municipal Cash Fund and Investors Cash Trust are
available on exchange but only through a financial services firm having a
services agreement with Zurich Kemper Distributors, Inc. with respect to such
funds. Exchanges may only be made for funds that are available for sale in the
shareholder's state of residence. Currently, Tax-Exempt California Money Mar-
ket Fund is available for sale only in California and the portfolios of In-
vestors Municipal Cash Fund are available for sale only in certain states.
SPECIAL RETIREMENT PLANS
Shareholders of the Money Market Fund who have purchased shares because they
are participants in tax-exempt retirement plans of ZKI and its affiliates may
exchange their shares for Class I shares of any "Kemper Mutual Fund" listed
above to the extent that they are available through their plan. Conversely,
shareholders of Class I shares may exchange their shares for shares of the
Money Market Fund if the shareholders of Class I shares have purchased shares
because they are participants in tax-exempt retirement plans of ZKI and its
affiliates. Exchanges will be made at the shares' relative net asset values
through their plan. Exchanges are subject to the limitations set forth above.
SPECIAL FEATURES
ZURICH MONEY-PLUS ACCOUNTSM
The Zurich Money-PLUS AccountSM is a cash management program offering a com-
bination of features and benefits. The program includes checkwriting (no mini-
mum dollar amount) and a VISA(R) Gold Check Card (a debit card). The INVESTORS
MONEYCARDSM VISA(R) is issued by Investors Fiduciary Trust Company ("IFTC").
Currently, the fee for this service is $65 a year with charges for additional
checks. There is a fee of $1.00 per transaction for use of Automated Teller
Machines. The minimum initial account balance required to be eligible for this
privilege is $5,000. You may use only the checks provided through the Zurich
Money-PLUS AccountSM. Any check for an amount in excess of the funds available
for redemption from the shareholder's account will be returned and will sub-
ject the account to additional service fees. If you have the INVESTORS
MONEYCARDSM VISA(R) and request an expedited wire transfer redemption, the
wire will be sent on the next business day following the request. Fees and
features of the Zurich Money-PLUS AccountSM are subject to modification. This
program is available only to those who are residents of the United States.
Shareholders should contact the Shareholder Service Agent at 1-800-537-6001
for more information.
22
<PAGE>
Special Features--continued
ELECTRONIC FUNDS TRANSFER PROGRAMS
For your convenience, the Funds have established several investment and re-
demption programs using electronic funds transfer which are described below.
There is currently no charge by the Funds for these programs. Shareholders
should contact the Shareholder Service Agent at 1-888-ZURICH-1 (987-4241) for
more information.
.EZ-TRANSFER With just one easy phone call, EZ-Transfer quickly and conve-
niently transfers money (minimum $100 and maximum $50,000) from your bank, sav-
ings and loan or credit union account to purchase shares in a Fund. You can
also redeem shares (minimum $100 and maximum $50,000) from your Fund account
and transfer the proceeds to your bank, savings and loan or credit union check-
ing account. When you choose to participate in the EZ-Transfer program, you
designate the bank, savings and loan or credit union account which will be deb-
ited or credited under the program. After you have received a notice confirming
that this service has been added to your Fund account, please allow a minimum
of 20 days for bank notification and processing. By choosing to participate in
this program, you authorize the Shareholder Service Agent to rely upon tele-
phone instructions from any person to transfer the specified amounts between
your Fund account and your predesignated bank, savings and loan or credit union
account, subject to the limitations on liability under "How To Make a Redemp-
tion--General." The Shareholder Service Agent will then purchase or redeem suf-
ficient full and fractional shares in your account to satisfy the request. Once
you are enrolled in EZ-Transfer, you can initiate a transaction by simply call-
ing Zurich Shareholder Services toll free at 1-888-ZURICH-1 (987-4241) Monday
through Friday, 8:00 a.m. to 3:00 p.m. Central time or by calling Zurich Info
Line at 1-888-987-8678 24 hours a day. See "How To Make a Redemption--General"
for information on our 10 day hold policy. Any account holder may terminate
this privilege by sending written notice to Zurich Money Funds, P.O. Box
419415, Kansas City, Missouri 64141-6415. Termination will become effective as
soon as the Shareholder Service Agent has had a reasonable time to act upon the
request. EZ-Transfer cannot be used with passbook savings accounts. This pro-
gram may not be used for tax-deferred plans such as Individual Retirement Ac-
counts (IRAs).
. AUTOMATIC PURCHASE PLAN You may establish an automatic investment program
with your Fund account. With Automatic Purchase Plan, monthly investments (max-
imum $50,000) are made automatically from your account at a bank, savings and
loan, or credit union into your Fund account. By signing up for this privilege,
you authorize the Trust and its agents to take money out of your predesignated
bank, savings and loan or credit union account and invest that money in your
Fund account. Any account owner may terminate this privilege simply by sending
written notice to Zurich Money Funds, P.O. Box 419415, Kansas City, Missouri
64141-6415. Termination will become effective as soon as the Shareholder Serv-
ice Agent
23
<PAGE>
Special Features--continued
has had a reasonable time to act upon the request. This privilege may not be
used with passbook savings accounts.
. AUTOMATIC CHECK DEPOSIT You may conveniently invest in the Funds through
Payroll Direct Deposit or Government Direct Deposit. You can arrange to have
all or a portion of your net pay or government check automatically invested in
your Fund account each payment period. You may terminate your participation in
these programs by giving written notice to your employer or the government
agency, as appropriate. (A reasonable time to act is required.) The Funds are
not responsible for the efficiency of your employer or the government agency
making the payment or any financial institution transmitting payment.
To use these features, the participating financial institution must be af-
filiated with the ACH System. This ACH affiliation permits the Shareholder
Service Agent to electronically transfer money between your bank account or
employer's payroll bank in the case of Payroll Direct Deposit or the U.S. Gov-
ernment in the case of Government Direct Deposit, and your Fund account. Your
financial institution's crediting policies for these transferred funds may
vary. These features may be amended or terminated at any time by the Funds.
OTHER SPECIAL FEATURES
Information about the following special features is contained in the State-
ment of Additional Information. Additional information may also be obtained by
contacting Zurich Shareholder Services at 1-888-ZURICH-1 (987-4241).
--Automatic Withdrawal Programs
--Tax Sheltered Retirement Programs
DIVIDENDS AND TAXES
DIVIDEND PAYMENT
To help keep your account growing, dividends from any Fund are automatically
reinvested in additional shares of that Fund, unless you request payment by
check on your account application or make such a request later. Dividends are
declared daily and paid monthly.
Dividends are normally reinvested on the 25th of each month if a business
day, otherwise on the prior business day. If you've chosen to receive divi-
dends in cash, checks will be mailed monthly to you or any person you desig-
nate. Shareholders may request this option by contacting the Shareholder Serv-
ice Agent (see "How To Buy Shares").
Each Fund will reinvest dividend checks (and future dividends) in shares of
that same Fund if checks are returned as undeliverable. Dividends and other
distributions of a Fund in the aggregate amount of $10 or less are automati-
cally reinvested in shares of the same Fund unless you request that such pol-
icy not be applied to your account.
24
<PAGE>
Dividends and Taxes--continued
DIVIDEND EXCHANGE PRIVILEGE
Upon written request to the Shareholder Service Agent, a shareholder may
elect to have Fund dividends invested without sales charge in shares of a Kem-
per Fund offering this privilege at the net asset value of the other fund. See
"Exchanging Shares" for a list of these Kemper Funds. To use this privilege of
investing Fund dividends in shares of a Kemper Fund, shareholders must maintain
a minimum account value of $1,000 in the Zurich Money Funds. Share certificates
will only be issued on request.
TAXABLE FUNDS
The Money Market Fund and the Government Money Fund each intend to continue
to qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code (the "Code") and if so qualified will not be subject to federal
income taxes to the extent its earnings are distributed. Dividends derived from
interest and short-term capital gains are taxable as ordinary income whether
received in cash or reinvested in additional shares. Dividends from these Funds
do not qualify for the dividends received deduction available to corporate
shareholders.
TAX-FREE MONEY FUND
The Tax-Free Money Fund intends to continue to qualify under the Code as a
regulated investment company and, if so qualified, will not be liable for fed-
eral income taxes to the extent its earnings are distributed. This Fund also
intends to meet the requirements of the Code applicable to regulated investment
companies distributing tax-exempt interest dividends and, accordingly, divi-
dends representing net interest received on Municipal Securities will not be
includable by shareholders in their gross income for federal income tax purpos-
es, except to the extent such interest is subject to the alternative minimum
tax as discussed below. Dividends representing taxable net investment income
(such as net interest income from temporary investments in obligations of the
U.S. Government) and net short-term capital gains, if any, are taxable to
shareholders as ordinary income. All taxpayers will be required to disclose on
their federal income tax returns the amount of tax-exempt interest earned dur-
ing the year, including exempt-interest dividends from the Tax-Free Money Fund.
Net interest on certain "private activity bonds" issued on or after August 8,
1986 is treated as an item of tax preference and may, therefore, be subject to
both the individual and corporate alternative minimum tax. To the extent pro-
vided by regulations to be issued by the Secretary of the Treasury, exempt-in-
terest dividends from the Tax-Free Money Fund are to be treated as interest on
private activity bonds in proportion to the interest income the Fund receives
from private activity bonds, reduced by allowable deductions. For the 1996 cal-
endar year, 20% of the net interest income of the Tax-Free Money Fund was de-
rived from "private activity bonds."
25
<PAGE>
Dividends and Taxes--continued
Exempt-interest dividends, except to the extent of interest from "private ac-
tivity bonds," are not treated as a tax preference item. For a corporate share-
holder, however, such dividends will be included in determining such corporate
shareholder's "adjusted current earnings." Seventy-five percent of the excess,
if any, of "adjusted current earnings" over the corporate shareholder's other
alternative minimum taxable income with certain adjustments will be a tax pref-
erence item. Corporate shareholders are advised to consult their tax advisers
with respect to alternative minimum tax consequences.
Individuals whose modified income exceeds a base amount will be subject to
federal income tax on up to 85% of their Social Security benefits. Modified in-
come includes adjusted gross income, tax-exempt interest, including exempt-in-
terest dividends from the Tax-Free Money Fund, and 50% of Social Security
benefits.
The tax exemption of dividends from the Tax-Free Money Fund for federal in-
come tax purposes does not necessarily result in exemption under the income or
other tax laws of any state or local taxing authority. The laws of the several
states and local taxing authorities vary with respect to the taxation of such
income and shareholders of the Fund are advised to consult their own tax ad-
viser as to the status of their accounts under state and local tax laws.
THE FUNDS
Dividends declared in October, November or December to shareholders of record
as of a date in one of those months and paid during the following January are
treated as paid on December 31 of the calendar year in which declared for fed-
eral income tax purposes. Each Fund may adjust its schedule for dividend rein-
vestment for the month of December to assist it in complying with reporting and
minimum distribution requirements contained in the Code.
Each Fund is required by law to withhold 31% of taxable dividends paid to
certain shareholders who do not furnish a correct taxpayer identification num-
ber (in the case of individuals, a social security number) and in certain other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts
are required by law to withhold 20% of the taxable portion of any distribution
that is eligible to be "rolled over." The 20% withholding requirement does not
apply to distributions from IRAs or any part of a distribution that is trans-
ferred directly to another qualified retirement plan, 403(b)(7) account, or
IRA. Shareholders should consult their tax advisers regarding the 20% withhold-
ing requirement.
You will receive a monthly statement giving complete details of dividend re-
investment and purchase and redemption transactions during the month. Tax in-
formation will be provided annually. You should retain copies of your monthly
account statements or year-end statements for tax reporting purposes. However,
those who have incomplete records may obtain historical account transaction in-
formation at a reasonable fee.
26
<PAGE>
When more than one shareholder resides at the same address, certain reports
and communications to be delivered to such shareholders may be combined in the
same mailing package, and certain duplicate reports and communications may be
eliminated. Similarly, account statements to be sent to such shareholders may
be combined in the same mailing package or consolidated into a single state-
ment. However, a shareholder may request that the foregoing policies not be ap-
plied to the shareholder's account.
INVESTMENT MANAGER
Zurich Kemper Investments, Inc. ("ZKI"), 222 South Riverside Plaza, Chicago,
Illinois 60606-5808, is the investment manager of the Funds and provides the
Funds with continuous professional investment supervision. ZKI has been engaged
in the management of investment funds for more than forty-nine years and is one
of the largest investment managers in the country. ZKI and its affiliates pro-
vide investment advice and manage investment portfolios for the Zurich Money
Funds, Zurich YieldWise Money Fund, Kemper Funds, affiliated insurance compa-
nies, and other corporate, pension, profit-sharing and individual accounts rep-
resenting approximately $89 billion under management, including $12 billion in
money market fund assets. ZKI acts as investment manager for 32 open-end and
seven closed-end investment companies, with 86 separate investment portfolios,
representing more than 3 million shareholder accounts. ZKI is an indirect sub-
sidiary of Zurich Insurance Company, a leading internationally recognized pro-
vider of insurance and financial services in property/casualty and life insur-
ance, reinsurance and structured financial solutions as well as asset manage-
ment. The Zurich family of companies manages over $150 billion in assets world-
wide.
Zurich Insurance Company ("Zurich") has entered into a definitive agreement
with Scudder, Stevens & Clark, Inc. ("Scudder") pursuant to which Zurich will
acquire approximately 70% of Scudder. Upon completion of the transaction,
Scudder will change its name to Scudder Kemper Investments, Inc. ("SKI"), and
ZKI will be operated either as a subsidiary of SKI or as part of SKI. Consumma-
tion of the transaction is subject to a number of contingencies. Because the
transaction would constitute an assignment of the Trust's investment management
agreement with ZKI under the Investment Company Act of 1940, ZKI is seeking ap-
proval of a new agreement. The Trust's board has approved a new agreement for
each Fund subject to shareholder approval. If the contingencies are timely met,
the transaction is expected to close in the fourth quarter of 1997. Zurich will
own 69.5% of SKI and senior employees of SKI will hold the remaining 30.5%. SKI
will be headquartered in New York City and the chief executive officer of SKI
will be Edmond D. Villani, Scudder's president and chief executive officer. Mr.
Villani will also join Zurich's Corporate Executive Board. A transition team
comprised of representatives from ZKI, Zurich, and Scudder has been formed to
make recommendations regarding combining the operations of Scudder and ZKI.
27
<PAGE>
Performance--continued
Responsibility for overall management of the Funds rests with the Board of
Trustees and officers of the Trust. Professional investment supervision is pro-
vided by ZKI. The investment management agreement provides that ZKI shall act
as the Funds' investment adviser, manage their investments and provide the
Funds with various services and facilities.
Frank J. Rachwalski, Jr. is the portfolio manager of the Funds. He has served
in this capacity since the Funds commenced operations. Mr. Rachwalski joined
ZKI in January, 1973 and is currently a Senior Vice President of ZKI and a Vice
President of the Trust. He received a B.B.A. and an M.B.A. from Loyola Univer-
sity, Chicago, Illinois.
For the services and facilities furnished, the Trust pays an annual invest-
ment management fee, payable monthly, on a graduated basis ranging from .50% of
the first $215 million of average daily net assets of the Trust, to .25% of av-
erage daily net assets of the Trust over $800 million.
Zurich Kemper Distributors, Inc., 222 South Riverside Plaza, Chicago, Illi-
nois 60606-5808, an affiliate of ZKI, is the principal underwriter of the Funds
and acts as agent of the Funds in the sale of their shares.
Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas
City, Missouri 64105, as custodian, and State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110, as sub-custodian, have cus-
tody of all securities and cash of the Funds. They attend to the collection of
principal and income, and payment for and collection of proceeds of securities
bought and sold by the Funds. IFTC is also the Funds' transfer and dividend-
paying agent. Pursuant to a services agreement with IFTC, Zurich Kemper Service
Company, 811 Main Street, Kansas City, Missouri 64105, an affiliate of ZKI,
serves as Shareholder Service Agent of the Funds.
PERFORMANCE
The Funds may advertise several types of performance information, including
"yield," "effective yield," "total return," "average annual total return" and,
for the Tax-Free Money Fund only, "tax equivalent yield." Please remember that
performance information is based upon historical earnings and is not represen-
tative of future performance. The yield of a Fund refers to the net investment
income generated by a hypothetical investment in the Fund over a specific sev-
en-day period. This net investment income is then annualized, which means that
the net investment income generated during the seven-day period is assumed to
be generated each week over an annual period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but the net in-
vestment income earned by the investment is assumed to be compounded weekly
when annualized. The effective yield will be
28
<PAGE>
Performance--continued
slightly higher than the yield due to this compounding effect. Average annual
total return and total return measure both net investment income and any real-
ized or unrealized appreciation or depreciation of a Fund's investments, assum-
ing reinvestment of all dividends. Average annual total return represents the
average annual percentage change over the period and total return represents
the aggregate percentage or dollar value change over the period. Tax equivalent
yield is the yield that a taxable investment must generate in order to equal
the Tax-Free Money Fund's yield for an investor in a stated federal income tax
bracket (normally assumed to be the maximum tax rate). Tax equivalent yield is
based upon, and will be higher than, the portion of the Tax-Free Money Fund's
yield that is tax-exempt.
The performance of a Fund may be compared to that of other money market mu-
tual funds or mutual fund indexes as reported by independent mutual fund re-
porting services such as Lipper Analytical Services, Inc. ("Lipper"). A Fund's
performance and its relative size may be compared to other money market mutual
funds as reported by IBC Financial Data, Inc.'s Money Fund Report(R) or Money
Market Insight(R), reporting services on money market funds. Investors may want
to compare a Fund's performance to that of various bank products as reported by
BANK RATE MONITOR(TM), a financial reporting service that weekly publishes av-
erage rates of bank and thrift institution money market deposit accounts and
interest bearing checking accounts or various certificate of deposit indexes.
The performance of a Fund also may be compared to that of U.S. Treasury bills
and notes. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured. In addition, investors may
want to compare a Fund's performance to the Consumer Price Index either di-
rectly or by calculating its "real rate of return," which adjusts its return
for the effects of inflation.
Information may be quoted from publications such as Morningstar, Inc., The
Wall Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago
Tribune, USA Today, Institutional Investor and Registered Representative. The
Funds may depict the historical performance of the securities in which a Fund
may invest over periods reflecting a variety of market or economic conditions
either alone or in comparison with alternative investments, performance indexes
of those investments or economic indicators. Each Fund may also describe its
portfolio holdings and depict its size or relative size compared to other mu-
tual funds, the number and make-up of its shareholder base and other descrip-
tive factors concerning the Fund.
Each Fund's returns will fluctuate. Shares of the Funds are not insured. Ad-
ditional information concerning a Fund's performance appears in the Statement
of Additional Information.
29
<PAGE>
CAPITAL STRUCTURE
Zurich Money Funds is an open-end, diversified, management investment compa-
ny, organized as a business trust under the laws of Massachusetts on August 9,
1985. Effective February 1, 1996, the name of the Trust was changed from Kemper
Money Market Fund to Kemper Money Funds, and effective April 14, 1997, the name
of the Trust was changed from Kemper Money Funds to Zurich Money Funds. Effec-
tive November 29, 1985, the Money Market Fund, pursuant to a reorganization,
succeeded to the assets and liabilities of Kemper Money Market Fund, Inc., a
Maryland corporation organized on September 19, 1974. Effective November 14,
1986, the Government Money Fund succeeded to the assets and liabilities of Kem-
per Government Money Market Fund, a business trust organized under the laws of
Massachusetts on August 9, 1985.
Effective November 29, 1985, Kemper Government Money Market Fund succeeded to
the assets and liabilities of Kemper Government Money Market Fund, Inc., a
Maryland corporation organized November 3, 1981. The Tax-Free Money Fund com-
menced public offering of its shares on September 10, 1987. The Trust may issue
an unlimited number of shares of beneficial interest, all having no par value.
While only shares of the three previously described Funds are presently being
offered, the Board of Trustees may authorize the issuance of additional series
if deemed desirable, each with its own investment objective, policies and re-
strictions. Since the Trust may offer multiple series, it is known as a "series
company." Shares of a Fund have equal noncumulative voting rights and equal
rights with respect to dividends, assets and liquidation of such Fund. Shares
are fully paid and nonassessable when issued, are transferable without restric-
tion and have no preemptive or conversion rights. The Trust is not required to
hold annual shareholders' meetings and does not intend to do so. However, it
will hold special meetings as required or deemed desirable for such purposes as
electing trustees, changing fundamental policies or approving an investment
management agreement. Subject to the Agreement and Declaration of Trust of the
Trust, shareholders may remove trustees. Shareholders will vote by Fund and not
in the aggregate except when voting in the aggregate is required under the 1940
Act, such as for the election of trustees.
30
<PAGE>
ACCOUNT SERVICES DIRECTORY
To avoid delays in the future, it is a good idea to sign up for account
services and features at the time an account is opened.
TO OPEN A NEW ACCOUNT
If you would like to open a new account or need a question answered, call a Zu-
rich Money Fund Specialist between 8 a.m. and 6 p.m. Central time at 1-800-
537-6001.
CURRENT ACCOUNT ASSISTANCE
If you have a question about a current account, call a Shareholder Services
Representative between 7 a.m. and 6 p.m. Central time, Monday through Friday,
and between 8 a.m. and 3 p.m. Central time on Saturday at 1-888-ZURICH-1 (987-
4241).
For better service, please have your account number and your most recent state-
ment at hand. For a special phone line for hearing impaired shareholders with a
TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD), call 1-800-972-3006.
24-HOUR ACCOUNT INFORMATION
From a touch-tone phone, you can use Zurich InfoLine (1-888-987-8678), our au-
tomated account information service, to obtain the following information 24
hours a day:
. ACCOUNT BALANCE . LAST DIVIDEND PAID
. CURRENT YIELD . TRANSACTION CONFIRMATION
. PRE-AUTHORIZED TRANSFERS TO AND FROM A BANK ACCOUNT
CHECKWRITING
You can write any number of checks for $500 or more against your available ac-
count balance. See Zurich MoneyPlus AccountSM for a no-minimum checking option.
AUTOMATIC CHECK DEPOSIT
You can save time by signing up for direct deposit of Payroll or Government
checks into your Zurich Money Funds account. Ask your employer about how to ar-
range this with all or part of your paycheck. Government Direct Deposit forms
are available by calling 1-888-ZURICH-1 (987-4241).
AUTOMATIC INVESTING
If you already directly deposit your paycheck into a bank account, you may want
to consider using Automatic Purchase Plan to help set aside some money for the
future. You specify the frequency and amount of your investment, and Zurich
will automatically have money from your personal checking or savings account
transferred to your Zurich Money Funds account. And this service may be changed
at any time . . . even deferred for a few months if you need to.
31
<PAGE>
MONEY-BY-PHONE
You can make transfers from your money market account to your bank account with
just a phone call if you sign up for EZ-Transfer. This feature also allows you
to transfer money to your Zurich Money Funds account over-the-phone. These
transfers generally take 1-2 days, depending on the time of day that you call
Shareholder Services.
You can also request an expedited (same day) wire transfer from your money mar-
ket account to your bank if you call before 11 a.m. Central time ($1,000 mini-
mum redemption)
AUTOMATIC BILL-PAYING
The Automatic Withdrawal feature can be used to pay a regular, important bill
such as a mortgage or car payment. You designate when and how much, and Zurich
will make the payment directly from your money market account.
MONEYPLUS ACCOUNTSM
A powerful money management feature that makes it easy and economical to use
your Zurich Money Funds for day-to-day transactions. For a $65 annual fee, you
get unlimited checkwriting and a VISA Gold Check Card to use for debit and ATM
transactions. For special forms to sign-up for this add-on feature, call 1-800-
537-6001. For customer service on the VISA card, call 1-800-346-8904.
EXCHANGES WITH KEMPER FUNDS AND ZURICH YIELDWISE MONEY FUND
You can exchange with Kemper Funds and Zurich YieldWise Money Fund by calling
Shareholder Services between 8 a.m. and 3 p.m. Central time, Monday through
Friday at 1-888-ZURICH-1 (987-4241).
32
<PAGE>
[LOGO]
ZURICH
Zurich Kemper Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606-5808
Telephone 1-800-537-6001
ZMF-1(11/97)
[LOGO] ZKD1-711044
<PAGE>
ZURICH MONEY FUNDS
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
LOCATION IN STATEMENT OF
ITEM NUMBER OF FORM N-1A ADDITIONAL INFORMATION
------------------------ ------------------------
<C> <S>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Inapplicable
13. Investment Objectives and Policies....... Investment Restrictions;
Municipal Securities;
Appendix
14. Management of the Fund................... Investment Manager; Officers
and Trustees
15. Control Persons and Principal Holders of
Securities............................... Officers and Trustees
16. Investment Advisory and Other Services... Investment Manager; Officers
and Trustees
17. Brokerage Allocation and Other Practices. Portfolio Transactions
18. Capital Stock and Other Securities....... Shareholder Rights
19. Purchase, Redemption and Pricing of Secu-
rities Purchase and Redemption of
Being Offered............................ Shares;
Dividends, Net Asset Value and
Taxes
20. Tax Status............................... Dividends, Net Asset Value and
Taxes
21. Underwriters............................. Investment Manager
22. Calculations of Performance Data......... Performance
23. Financial Statements..................... Financial Statements
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 15, 1997
ZURICH MONEY FUNDS
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606-5808
(800) 537-6001
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the prospectus of Zurich Money Funds (the "Trust")
dated November 15, 1997. The prospectus may be obtained without charge by
calling or writing Zurich Money Funds.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Restrictions............................................. B-1
Municipal Securities................................................ B-4
Investment Manager.................................................. B-5
Portfolio Transactions.............................................. B-6
Purchase and Redemption of Shares................................... B-7
Dividends, Net Asset Value and Taxes................................ B-8
Performance......................................................... B-9
Officers and Trustees............................................... B-14
Special Features.................................................... B-16
Shareholder Rights.................................................. B-17
Appendix--Ratings of Investments.................................... B-18
</TABLE>
The financial statements appearing in the Funds' 1997 Annual Report to
Shareholders are incorporated herein by reference. The Funds' Annual Report
accompanies this Statement of Additional Information.
ZMF-13 11/97
LOGO
printed on recycled paper
<PAGE>
INVESTMENT RESTRICTIONS
The Zurich Money Market Fund (the "Money Market Fund"), Zurich Government
Money Fund (the "Government Money Fund") and Zurich Tax-Free Money Fund (the
"Tax-Free Money Fund") have adopted certain investment restrictions which,
together with the investment objective and policies of each Fund, cannot be
changed without approval by holders of a majority of such Fund's outstanding
voting shares. As defined in the Investment Company Act of 1940, this means
the lesser of the vote of (a) 67% of the shares of the Fund present at a
meeting where more than 50% of the outstanding shares of the Fund are present
in person or by proxy; or (b) more than 50% of the outstanding shares of the
Fund.
THE MONEY MARKET FUND may not:
(1) Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds or industrial revenue bonds (except
through the purchase of debt obligations in accordance with its investment
objective and policies).
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the value of the Fund's
assets would be invested in securities of that issuer.
(3) Purchase more than 10% of any class of securities of any issuer. All debt
securities and all preferred stocks are each considered as one class.
(4) Invest more than 5% of the Fund's total assets in securities of issuers
which with their predecessors have a record of less than three years
continuous operation, and equity securities of issuers which are not readily
marketable.
(5) Enter into repurchase agreements if, as a result thereof, more than 10% of
the Fund's total assets valued at the time of the transaction would be subject
to repurchase agreements maturing in more than seven days.
(6) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and
policies).
(7) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
money market instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three business days,
reduce its indebtedness to the extent necessary. The Fund will not borrow for
leverage purposes.
(8) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the clearance
of transactions.
(9) Write, purchase or sell puts, calls or combinations thereof.
(10) Concentrate more than 25% of the value of its assets in any one industry;
provided, however, that the Fund reserves freedom of action to invest up to
100% of its assets in certificates of deposit or bankers' acceptances when
management considers it to be in the best interests of the Fund in attaining
its investment objective.
(11) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Trust or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more
than 5% of the securities of such issuer.
B-1
<PAGE>
(12) Invest more than 5% of the Fund's total assets in securities restricted
as to disposition under the federal securities laws (except commercial paper
issued under Section 4(2) of the Securities Act of 1933).
(13) Invest for the purpose of exercising control or management of another
issuer.
(14) Invest in commodities or commodity futures contracts or in real estate,
although it may invest in securities which are secured by real estate and
securities of issuers which invest or deal in real estate.
(15) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
(16) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
(17) Underwrite securities issued by others except to the extent the Fund may
be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities.
(18) Issue senior securities as defined in the Investment Company Act of 1940.
THE GOVERNMENT MONEY FUND may not:
(1) Purchase securities or make investments other than in accordance with its
investment objective and policies.
(2) Enter into repurchase agreements if, as a result thereof, more than 10% of
the Fund's total assets valued at the time of the transaction would be subject
to repurchase agreements maturing in more than seven days.
(3) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and
policies).
(4) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three business days,
reduce its indebtedness to the extent necessary. The Fund will not borrow for
leverage purposes.
(5) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the clearance
of transactions.
(6) Underwrite securities issued by others except to the extent the Fund may
be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of Fund securities.
(7) Issue senior securities as defined in the Investment Company Act of 1940.
THE TAX-FREE MONEY FUND may not:
(1) Purchase securities if as a result of such purchase 25% or more of the
Fund's total assets would be invested in any one industry or in any one state.
Municipal Securities and obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities are not considered an industry
for purposes of this restriction.
(2) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities) if as a
result more than 5% of the value of the Fund's assets would be invested in the
B-2
<PAGE>
securities of such issuer. For purposes of this limitation, the Fund will
regard the entity which has the primary responsibility for the payment of
interest and principal as the issuer.
(3) Invest more than 5% of the Fund's total assets in industrial development
bonds sponsored by companies which with their predecessors have less than
three years' continuous operation.
(4) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and
policies).
(5) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
money market instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its
indebtedness from money borrowed, the Fund will, within three business days,
reduce its indebtedness to the extent necessary. The Fund will not borrow for
leverage purposes.
(6) Make short sales of securities or purchase securities on margin, except to
obtain such short-term credits as may be necessary for the clearance of
transactions.
(7) Write, purchase or sell puts, calls or combinations thereof, although the
Fund may purchase Municipal Securities subject to Standby Commitments in
accordance with its investment objective and policies.
(8) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Trust or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more
than 5% of the securities of such issuer.
(9) Invest more than 5% of the Fund's total assets in securities restricted as
to disposition under the federal securities laws (except commercial paper
issued under Section 4(2) of the Securities Act of 1933).
(10) Invest for the purpose of exercising control or management of another
issuer.
(11) Invest in commodities or commodity futures contracts or in real estate
except that the Fund may invest in Municipal Securities secured by real estate
or interests therein.
(12) Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in Municipal Securities of
issuers which invest in or sponsor such programs.
(13) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
(14) Underwrite securities issued by others except to the extent the Fund may
be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities.
(15) Issue senior securities as defined in the Investment Company Act of 1940.
If a Fund adheres to a percentage restriction at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values or net assets will not be considered a violation. The
Funds did not borrow money, as permitted by investment restrictions number 7
(Money Market Fund), number 4 (Government Money Fund) and number 5 (Tax-Free
Money Fund), in the latest fiscal year; and they have no present intention of
borrowing during the coming year. In any event, borrowings would only be as
permitted by such restrictions. The Tax-Free Money Fund may invest more than
25% of its total assets in industrial development bonds.
B-3
<PAGE>
MUNICIPAL SECURITIES
Municipal Securities which the Tax-Free Money Fund may purchase include,
without limitation, debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as airports, bridges, highways, housing, hospitals, mass transportation,
public utilities, schools, streets, and water and sewer works. Other public
purposes for which Municipal Securities may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
obtaining funds to loan to other public institutions and facilities.
Municipal Securities, such as industrial development bonds, are issued by or
on behalf of public authorities to obtain funds for purposes including
privately operated airports, housing, conventions, trade shows, ports, sports,
parking or pollution control facilities or for facilities for water, gas,
electricity or sewage and solid waste disposal. Such obligations, which may
include lease arrangements, are included within the term Municipal Securities
if the interest paid thereon qualifies as exempt from federal income tax.
Other types of industrial development bonds, the proceeds of which are used
for the construction, equipment, repair or improvement of privately operated
industrial or commercial facilities, may constitute Municipal Securities,
although current federal tax laws place substantial limitations on the size of
such issues.
Municipal Securities generally are classified as "general obligation" or
"revenue." General obligation notes are secured by the issuer's pledge of its
full credit and taxing power for the payment of principal and interest.
Revenue notes are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source. Industrial development bonds
which are Municipal Securities are in most cases revenue bonds and generally
do not constitute the pledge of the credit of the issuer of such bonds.
Examples of Municipal Securities that are issued with original maturities of
one year or less are short-term tax anticipation notes, bond anticipation
notes, revenue anticipation notes, construction loan notes, pre-refunded
municipal bonds, warrants and tax-free commercial paper.
Tax anticipation notes typically are sold to finance working capital needs of
municipalities in anticipation of receiving property taxes on a future date.
Bond anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under the Federal Revenue Sharing Program. Construction loan
notes are instruments insured by the Federal Housing Administration with
permanent financing by "Fannie Mae" (the Federal National Mortgage
Association) or "Ginnie Mae" (the Government National Mortgage Association) at
the end of the project construction period. Pre-refunded municipal bonds are
bonds which are not yet refundable, but for which securities have been placed
in escrow to refund an original municipal bond issue when it becomes
refundable. Tax-free commercial paper is an unsecured promissory obligation
issued or guaranteed by a municipal issuer. The Tax-Free Money Fund may
purchase other Municipal Securities similar to the foregoing, which are or may
become available, including securities issued to pre-refund other outstanding
obligations of municipal issuers.
The federal bankruptcy statutes relating to the adjustments of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or
consent of creditors, which proceedings could result in material adverse
changes in the rights of holders of obligations issued by such subdivisions or
authorities.
B-4
<PAGE>
Litigation challenging the validity under state constitutions of present
systems of financing public education has been initiated or adjudicated in a
number of states, and legislation has been introduced to effect changes in
public school finances in some states. In other instances there has been
litigation challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or federal law which ultimately could
affect the validity of those Municipal Securities or the tax-free nature of
the interest thereon.
INVESTMENT MANAGER
INVESTMENT MANAGER. Zurich Kemper Investments, Inc. ("ZKI") is the Funds'
investment manager. ZKI is wholly owned by ZKI Holding Corp. ZKI Holding Corp.
is a more than 90% owned subsidiary of Zurich Holding Company of America,
Inc., which is a wholly owned subsidiary of Zurich Insurance Company, a
leading internationally recognized provider of insurance and financial
services in property/casualty and life insurance, reinsurance and structured
financial solutions as well as asset management. Pursuant to an investment
management agreement, ZKI acts as each Fund's investment adviser, manages its
investments, administers its business affairs, furnishes office facilities and
equipment, provides clerical, bookkeeping and administrative services,
provides shareholder and information services and permits any of its officers
or employees to serve without compensation as trustees or officers of the
Trust if elected to such positions. The Trust pays the expenses of its
operations, including the fees and expenses of independent auditors, counsel,
custodian and transfer agent and the cost of share certificates, reports and
notices to shareholders, costs of calculating net asset value, brokerage
commissions or transaction costs, taxes, registration fees, the fees and
expenses of qualifying the Fund and its shares for distribution under federal
and state securities laws and membership dues in the Investment Company
Institute or any similar organization. Trust expenses generally are allocated
among the Funds on the basis of relative net assets at the time of allocation,
except that expenses directly attributable to a particular Fund are charged to
that Fund.
The investment management agreement continues in effect from year to year for
each Fund so long as its continuation is approved at least annually (a) by a
majority of the trustees who are not parties to such agreement or interested
persons of any such party except in their capacity as trustees of the Trust
and (b) by the shareholders of each Fund or the Board of Trustees. If
continuation is not approved for a Fund, the investment management agreement
nevertheless may continue in effect for the Funds for which it is approved and
ZKI may continue to serve as investment manager for the Fund for which it is
not approved to the extent permitted by the Investment Company Act of 1940.
The agreement may be terminated at any time upon 60 days notice by either
party, or by a majority vote of the outstanding shares of a Fund with respect
to that Fund, and will terminate automatically upon assignment. Shareholders
of each Fund will vote separately upon continuation of the investment
management agreement and upon other matters affecting only an individual Fund.
Additional Funds may be subject to a different agreement. The agreement
provides that ZKI shall not be liable for any error of judgment or of law, or
for any loss suffered by the Funds in connection with the matters to which the
agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of ZKI in the performance of its obligations
and duties, or by reason of its reckless disregard of its obligations and
duties under the agreement.
For the services and facilities furnished, the Trust pays an annual investment
management fee, payable monthly, on a graduated basis of .50% of the first
$215 million of average daily net assets of the Trust, .375% on the next $335
million, .30% on the next $250 million and .25% of average daily net assets of
the Trust over $800 million. ZKI has agreed to reimburse the Trust should all
operating expenses of the Trust, including the investment management fee of
ZKI but excluding taxes, interest, extraordinary expenses and brokerage
commissions or transaction costs, exceed 1 1/2% of the first $30 million of
average net assets of the Trust and 1% of average net assets over $30 million
on an annual basis. The investment management fee and the expense limitation
are
B-5
<PAGE>
computed based upon the combined average daily net assets of the Funds and are
allocated among such Funds based upon the relative net assets of each Fund.
For its services as investment adviser and manager and for facilities
furnished during the fiscal years ended July 31 indicated, the Funds incurred
investment management fees as shown.
<TABLE>
<CAPTION>
FUND 1997 1996 1995
- ---- ----------- ----------- -----------
<S> <C> <C> <C>
Money Market................................ $11,666,000 $11,134,000 $10,924,000
Government Money............................ $ 1,894,000 $ 1,747,000 $ 1,637,000
Tax-Free Money.............................. $ 2,068,000 $ 2,032,000 $ 2,072,000
</TABLE>
PRINCIPAL UNDERWRITER. Zurich Kemper Distributors, Inc. ("ZKDI"), an affiliate
of ZKI, is the principal underwriter for shares of the Funds and acts as agent
of the Funds in the sale of their shares. The Funds pay the cost for the
prospectus and shareholder reports to be set in type and printed for existing
shareholders, and ZKDI pays for the printing and distribution of copies
thereof used in connection with the offering of shares to prospective
investors. ZKDI also pays for supplementary sales literature and advertising
costs. Terms of continuation, termination and assignment under the
underwriting agreement are identical to those described above with regard to
the investment management agreement, except that termination other than upon
assignment requires six months notice and shares are voted in the aggregate
and not by Fund whenever shareholders vote with respect to such agreement.
Certain officers or trustees of the Trust are also directors or officers of
ZKI and ZKDI as indicated under "Officers and Trustees."
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri 64105, as custodian,
and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodian, have custody of all securities and cash
of the Funds. They attend to the collection of principal and income, and
payment for and collection of proceeds of securities bought and sold by the
Funds. IFTC is also the Funds' transfer and dividend-paying agent. Pursuant to
a services agreement with IFTC, Zurich Kemper Service Company ("ZKSvC"), an
affiliate of ZKI, serves as "Shareholder Service Agent." IFTC receives, as
transfer agent, and pays to ZKSvC, annual account fees of a maximum of $8 per
account plus account set-up, transaction, maintenance and out-of-pocket
expense reimbursement. For the fiscal year ended July 31, 1997, IFTC remitted
shareholder service fees in the amount of $6,391,000 to ZKSvC as Shareholder
Service Agent.
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Funds' independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Funds' annual financial statements, review certain
regulatory reports and the Funds' federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to
do so by the Funds. Shareholders will receive annual audited financial
statements and semi-annual unaudited financial statements.
LEGAL COUNSEL. Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601, serves as legal counsel to the Fund.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken principally to pursue the objective of
each Fund in relation to movements in the general level of interest rates, to
invest money obtained from the sale of Fund shares, to reinvest proceeds from
maturing portfolio securities and to meet redemptions of Fund shares. This may
increase or decrease the yield of a Fund depending upon management's ability
to correctly time and execute such transactions. Since a Fund's assets are
invested in securities with short maturities, its portfolio will turn over
several times a year. Securities with maturities of less than one year are
excluded from required portfolio turnover rate calculations, so each Fund's
portfolio turnover rate for reporting purposes is zero.
B-6
<PAGE>
ZKI and its affiliates furnish investment management services for the Kemper
Funds, Zurich Money Funds, Zurich YieldWise Money Fund and other clients
including affiliated insurance companies. These entities may share some common
research and trading facilities. At times investment decisions may be made to
purchase or sell the same investment security for a Fund and for one or more
of the other clients of ZKI or its affiliates. When two or more of such
clients are simultaneously engaged in the purchase or sale of the same
security through the same trading facility, the transactions are allocated as
to amount and price in a manner considered equitable to each.
ZKI, in effecting purchases and sales of portfolio securities for the account
of each Fund, will implement the Funds' policy of seeking the best execution
of orders. Consistent with this policy, orders for portfolio transactions are
placed with broker-dealer firms giving consideration to the quality, quantity
and nature of the firm's professional services which include execution,
financial responsibility, responsiveness clearance procedures, wire service
quotations and statistical and other research information provided to the Fund
and ZKI and its affiliates. Subject to seeking best execution of an order,
brokerage is allocated on the basis of all services provided. Any research
benefits derived are available for all clients, including clients of
affiliated companies. Since it is only supplementary to ZKI's own research
efforts and must be analyzed and reviewed by ZKI's staff, the receipt of
research information is not expected to materially reduce expenses. The Funds
expect that purchases and sales of portfolio securities usually will be
principal transactions. Portfolio securities will normally be purchased
directly from the issuer or from an underwriter or market maker for the
securities. There are normally no brokerage commissions paid by the Funds for
such purchases and none were paid by any Fund during the Funds' last three
fiscal years. Purchases from underwriters include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and asked prices.
PURCHASE AND REDEMPTION OF SHARES
Shares of each Fund are sold at their net asset value next determined after an
order and payment are received in the form described in the Funds' prospectus.
There is no sales charge. The minimum initial investment in any Fund is $1,000
and the minimum subsequent investment is $100 but such minimum amounts may be
changed at any time. See the prospectus for certain exceptions to these
minimums. The Funds may waive the minimum for purchases by trustees,
directors, officers or employees of the Trust or ZKI and its affiliates and
the $3 monthly fee assessed on accounts below $1,000. An investor wishing to
open an account should use the Account Application Form available from the
Funds and choose one of the methods of purchase described in the Funds'
prospectus. An order for the purchase of shares that is accompanied by a check
drawn on a foreign bank (other than a check drawn on a Canadian bank in U.S.
Dollars) will not be considered in proper form and will not be processed
unless and until the Fund determines that it has received payment of the
proceeds of the check. The time required for such a determination will vary
and cannot be determined in advance.
Upon receipt by the Shareholder Service Agent, of a request for redemption in
proper form, shares will be redeemed by a Fund at the applicable net asset
value as described in the Funds' prospectus. A shareholder may elect to use
either the regular or expedited redemption procedures.
The Funds may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange ("Exchange") is
closed other than customary weekend and holiday closings or during any period
in which trading on the Exchange is restricted, (b) during any period when an
emergency
B-7
<PAGE>
exists as a result of which (i) disposal of a Fund's investments is not
reasonably practicable, or (ii) it is not reasonably practicable for the Fund
to determine the value of its net assets, or (c) for such other periods as the
Securities and Exchange Commission may by order permit for the protection of
the Funds' shareholders.
Although it is the Trust's present policy to redeem in cash, if the Board of
Trustees determines that a material adverse effect would be experienced by the
remaining shareholders if payment were made wholly in cash, the Trust will pay
the redemption price in whole or in part by a distribution of portfolio
securities in lieu of cash, in conformity with the applicable rules of the
Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
occurs, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition could incur
certain transaction costs. Such a redemption would not be as liquid as a
redemption entirely in cash. The Trust has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940 pursuant to which the Trust is
obligated to redeem shares of a Fund solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder of record.
DIVIDENDS, NET ASSET VALUE AND TAXES
DIVIDENDS. Dividends are declared daily and paid monthly. Shareholders will
receive dividends in additional shares of the same Fund unless they elect to
receive cash. Dividends will be reinvested monthly at the net asset value
normally on the 25th of each month if a business day, otherwise on the prior
business day. The Funds will pay shareholders who redeem their entire accounts
all unpaid dividends at the time of redemption not later than the next dividend
payment date.
Each Fund calculates its dividends based on its daily net investment income.
For this purpose, the net investment income of a Fund consists of (a) accrued
interest income plus or minus amortized discount or premium (excluding market
discount for the Tax-Free Money Fund), (b) plus or minus all short-term
realized gains and losses on portfolio assets and (c) minus accrued expenses
allocated to the Fund. Expenses of the Funds are accrued each day. While each
Fund's investments are valued at amortized cost, there will be no unrealized
gains or losses on portfolio securities. However, should the net asset value of
a Fund deviate significantly from market value, the Board of Trustees could
decide to value the portfolio securities at market value and then unrealized
gains and losses would be included in net investment income above.
NET ASSET VALUE. As described in the prospectus, each Fund values its portfolio
instruments at amortized cost, which does not take into account unrealized
capital gains or losses. This involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument. Calculations are made to compare the value of a Fund's
investments valued at amortized cost with market values. Market valuations are
obtained by using actual quotations provided by market makers, estimates of
market value, or values obtained from yield data relating to classes of money
market instruments published by reputable sources at the mean between the bid
and asked prices for the instruments. If a deviation of 1/2 of 1% or more were
to occur between the net asset value per share calculated by reference to
market values and a Fund's $1.00 per share net asset value, or if there were
any other
B-8
<PAGE>
deviation that the Board of Trustees of the Trust believed would result in a
material dilution to shareholders or purchasers, the Board of Trustees would
promptly consider what action, if any, should be initiated. If a Fund's net
asset value per share (computed using market values) declined, or were
expected to decline, below $1.00 (computed using amortized cost), the Board of
Trustees of the Trust might temporarily reduce or suspend dividend payments in
an effort to maintain the net asset value at $1.00 per share. As a result of
such reduction or suspension of dividends or other action by the Board of
Trustees, an investor would receive less income during a given period than if
such a reduction or suspension had not taken place. Such action could result
in investors receiving no dividends for the period during which they held
shares and receiving, upon redemption, a price per share lower than that which
they paid. On the other hand, if a Fund's net asset value per share (computed
using market values) were to increase, or were anticipated to increase, above
$1.00 (computed using amortized cost), the Board of Trustees of the Trust
might supplement dividends in an effort to maintain the net asset value at
$1.00 per share.
TAXES. Interest on indebtedness which is incurred to purchase or carry shares
of a mutual fund portfolio which distributes exempt-interest dividends during
the year is not deductible for federal income tax purposes. Further, the Tax-
Free Money Fund may not be an appropriate investment for persons who are
"substantial users' of facilities financed by industrial development bonds
held by the Tax-Free Money Fund or are "related persons' to such users; such
persons should consult their tax advisers before investing in the Tax-Free
Money Fund.
The "Superfund Act of 1986" (the "Superfund Act") imposes a separate tax on
corporations at a rate of 0.12 percent of the excess of such corporation's
"modified alternative minimum taxable income" over $2 million. A portion of
tax-exempt interest, including exempt-interest dividends from the Tax-Free
Money Fund, may be includible in modified alternative minimum taxable income.
Corporate shareholders are advised to consult their tax advisers with respect
to the consequences of the Superfund Act.
PERFORMANCE
As reflected in the prospectus, the historical performance calculation for a
Fund may be shown in the form of "yield," "effective yield," "total return,"
"average annual total return" and, for the Tax-Free Money Fund only, "tax
equivalent yield." These various measures of performance are described below.
Each Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. Under that
method, the current yield quotation is based on a seven-day period and is
computed for each Fund as follows. The first calculation is net investment
income per share, which is accrued interest on portfolio securities, plus or
minus amortized discount or premium (excluding market discount for the Tax-
Free Money Fund), less accrued expenses. This number is then divided by the
price per share (expected to remain constant at $1.00) at the beginning of the
period ("base period return"). The result is then divided by 7 and multiplied
by 365 and the resulting yield figure is carried to the nearest one-hundredth
of one percent. Realized capital gains or losses and unrealized appreciation
or depreciation of investments are not included in the calculation.
Each Fund's effective yield is determined by taking the base period return
(computed as described above) and calculating the effect of assumed
compounding. The formula for the effective yield is: (base period return +
1)/3//6//5///7/ - 1.
Average annual total return ("AATR") is found for a specific period by first
taking a hypothetical $1,000 investment ("initial investment") on the first
day of the period and computing the "redeemable value" of that investment at
the end of the period. The redeemable value is then divided by the initial
investment, and this quotient is taken to
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<PAGE>
the Nth root (N representing the number of years in the period) and 1 is
subtracted from the result, which is then expressed as a percentage. The
calculation assumes that all dividends have been reinvested at net asset value
on the reinvestment dates.
Total return is not calculated according to a standard formula, except when
calculated for the "Financial Highlights" table in the financial statements.
Total return is calculated similarly to AATR but is not annualized. It may be
shown as a percentage or the increased dollar value of the hypothetical
investment over the period.
All performance information shown below is for periods ended July 31, 1997.
<TABLE>
<CAPTION>
*TAX- AATR TOTAL TOTAL TOTAL
YIELD EFFECTIVE YIELD EQUIVALENT YIELD AATR 5 AATR RETURN RETURN RETURN
FUND 7 DAYS 7 DAYS 7 DAYS 1 YR. YRS. 10 YRS. 1 YR. 5 YRS. 10 YRS.
- ---- ------ --------------- ---------------- ----- ---- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Zurich Money Market..... 5.28% 5.42% -- 5.27% 4.42% 5.81% 5.27% 24.15% 75.97%
Zurich Government Money. 5.25 5.39 -- 5.26 4.43 5.77 5.26 24.19 75.29
Zurich Tax-Free Money... 3.47 3.53 5.52% 3.39 3.02 4.05** 3.39 16.03 48.04**
</TABLE>
- -------
* Based upon a marginal federal income tax rate of 37.1%.
**Since 9/10/87.
The tax equivalent yield of the Tax-Free Money Fund is computed by dividing
that portion of the Fund's yield (computed as described above) which is tax-
exempt by (one minus the stated federal income tax rate) and adding the result
to that portion, if any, of the yield of the Fund that is not tax-exempt. For
additional information concerning tax-exempt yields, see "Tax-Exempt versus
Taxable Yield" below.
Each Fund's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in a Fund will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
which the investment in a Fund is held, but also on such matters as Fund
expenses.
Money market mutual funds allow smaller investors to participate in the money
market and to receive money market yields that previously were available only
to those investors with large sums of money. Prior to the introduction of the
first money market mutual funds, small investors wanting to manage their cash
reserves had a limited choice of bank products available with a predetermined
set of interest rates such as passbook savings accounts and checking accounts.
Currently, there are hundreds of money market funds managing billions of
dollars for millions of investors. Zurich Money Funds is one of the largest
money market funds.
Investors have an extensive choice of money market funds and money market
deposit accounts and the information below may be useful to investors who wish
to compare the past performance of the Money Market Fund, the Government Money
Fund and the Tax-Free Money Fund with that of their competitors. Past
performance cannot be a guarantee of future results.
As indicated in the prospectus (see "Performance"), the performance of the
Funds may be compared to that of other mutual funds tracked by Lipper
Analytical Services, Inc. ("Lipper"). Lipper performance calculations include
the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. A Fund's performance also may be compared to
other money market funds reported by IBC Financial Data, Inc.'s Money Fund
Report(R), or Money Market Insight(R), reporting services on money market
funds. As reported by IBC, all investment results represent total return
(annualized results for the period net of management fees and expenses) and
one year investment results are effective annual yields assuming reinvestment
of dividends.
Lipper and IBC reported the following results for the Money Market Fund and
the Government Money Fund.
B-10
<PAGE>
LIPPER ANALYTICAL SERVICES, INC. IBC
<TABLE>
<CAPTION>
MONEY MARKET
FUND'S
RANKING VS
MONEY MARKET
PERIOD ENDED 9/30/97 INSTRUMENT FUNDS
- -------------------- ------------------
<S> <C>
1 Year.................. 22 of 298
3 Months................ 26 of 316
1 Month................. 25 of 314
<CAPTION>
GOVERNMENT
MONEY FUND'S
RANKING VS
U.S. GOVERNMENT
PERIOD ENDED 9/30/97 MONEY MARKET FUNDS
- -------------------- ------------------
<S> <C>
1 Year.................. 5 of 120
3 Months................ 6 of 122
1 Month................. 10 of 122
</TABLE>
<TABLE>
<CAPTION>
ZURICH
MONEY AVERAGE YIELD
MARKET ALL TAXABLE
PERIOD ENDED FUND'S MONEY MARKET
9/30/97 YIELD FUNDS
- ------------ ---------- -------------
<S> <C> <C>
1 Year............ 5.30% 5.04%
1 Month........... 5.24 5.02
7 Days*........... 5.25 5.04
<CAPTION>
ZURICH
GOVERNMENT AVERAGE YIELD
MONEY ALL TAXABLE
PERIOD ENDED FUND'S GOVERNMENT
9/30/97 YIELD MONEY FUNDS
- ------------ ---------- -------------
<S> <C> <C>
1 Year............ 5.29% 4.85%
1 Month........... 5.12 4.84
7 Days*........... 5.16 4.86
</TABLE>
According to IBC, for the one-year period ended September 30, 1997, the Money
Market Fund ranked by yield #19 among 212 General Purpose Money Funds (this
category does not include money market funds whose shares are marketed
primarily to institutional investors). According to IBC, for the one-year
period ended September 30, 1997, the Government Money Fund ranked by yield #5
among 179 Taxable Government Money Funds (this category does not include
taxable government money funds whose shares are marketed primarily to
institutional investors). For the one year period ended September 30, 1997, the
Tax-Free Money Fund ranked by yield #3 among 114 Tax-Free Money Funds (this
category does not include tax-free money funds whose shares are marketed
primarily to institutional investors or state specific tax-free money funds).
The Money Market Fund ranked #5 among 85 General Purpose Money Funds with a
ten-year history according to IBC as of September 30, 1997. The Government
Money Fund ranked #2 among 53 Government Money Funds with a ten-year history
according to IBC as of September 30, 1997. The Tax-Free Money Fund ranked #5
among 51 Tax-Free Money Funds with a 10-year history according to IBC as of
September 30, 1997. The number of shareholder accounts in the Funds were
approximately 275,899 at September 30, 1997, including 231,459 in the Money
Market Fund, 27,548 in the Government Money Fund, and 16,892 in the Tax-Free
Money Fund. The value of shares in the Funds as of September 30, 1997 was
approximately $6 billion, including $4.5 billion in the Money Market Fund,
$674.1 million in the Government Money Fund and $785.7 million in the Tax-Free
Money Fund. The Money Market Fund was the 33rd largest in total assets of 780
Taxable Money Market Funds reported by IBC as of September 30, 1997.
The following investment comparisons are based upon information reported by
Lipper and IBC. In the comparison of the Tax-Free Money Fund's performance
versus the comparison yields, the performance of that Fund has been adjusted on
a taxable equivalent basis assuming a marginal federal tax rate of 37.1% (see
"Tax-Exempt versus Taxable Yield" below for more information concerning taxable
equivalent performance).
LIPPER ANALYTICAL SERVICES, INC. IBC
<TABLE>
<CAPTION>
TAX-FREE MONEY
FUND'S RANKING VS
TAX-EXEMPT
PERIOD ENDED 9/30/97 MONEY MARKET FUNDS
- -------------------- ------------------
<S> <C>
1 Year................... 4 of 138
3 Months................. 4 of 139
1 Month.................. 6 of 140
</TABLE>
<TABLE>
<CAPTION>
ZURICH AVERAGE YIELD
TAX-FREE ALL TAX-FREE
PERIOD ENDED MONEY MONEY MARKET
9/30/97 FUND FUNDS
------------ -------- -------------
<S> <C> <C>
1 Year............. 3.40% 3.09%
1 Month............ 3.43 3.15
7 Days**........... 3.55 3.35
</TABLE>
B-11
<PAGE>
<TABLE>
<CAPTION>
LIPPER ZURICH LIPPER
TAX-EXEMPT TAX-FREE MONEY
ZURICH MONEY FUND MARKET
TAX- MARKET TAXABLE INSTRUMENT
FREE FUND EQUIVALENT FUNDS
PERIOD FUND AVERAGE BASIS* AVERAGE
- ------ ------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
1 Year Ended
9/30/97 3.40% 3.02% 5.41% 4.86%
</TABLE>
<TABLE>
<CAPTION>
ZURICH
TAX- AVERAGE
FREE FUND YIELD ALL
TAXABLE TAXABLE
PERIOD ENDED EQUIVALENT MONEY MARKET
9/30/97 BASIS* FUNDS
- ------------ ---------- ------------
<S> <C> <C>
1 Year............. 5.41% 5.04%
1 Month............ 5.45 5.02
7 Days............. 5.64 5.04
</TABLE>
- -------
*Source: Zurich Kemper Investments (not reported by IBC).
For the ten, five and one year periods ended September 30, 1997, Lipper ranked
the Money Market Fund #5 of 105, #20 of 181 and #22 of 298, respectively,
among Money Market Instrument Funds. Lipper also ranked the Money Market Fund
#1 in such category for the periods shown below.
<TABLE>
<CAPTION>
NUMBER
OF
FUNDS
IN PERIOD
ATEGORYC PERIOD ENDING
- -------- -------- --------
<S> <C> <C>
41......................................................... 3 Years 12/31/80
23......................................................... 5 Years 12/31/80
50......................................................... 3 Years 12/31/81
34......................................................... 5 Years 12/31/81
110......................................................... 3 Years 12/31/84
81......................................................... 4 Years 12/31/84
66......................................................... 5 Years 12/31/84
109......................................................... 4 Years 12/31/85
80......................................................... 5 Years 12/31/85
142......................................................... 5 Years 12/31/88
39......................................................... 10 Years 12/31/88
54......................................................... 10 Years 12/31/89
33......................................................... 12 Years 12/31/89
64......................................................... 10 Years 12/31/90
79......................................................... 10 Years 12/31/91
31......................................................... 15 Years 12/31/92
36......................................................... 15 Years 12/31/93
</TABLE>
As indicated in the prospectus, a Fund's performance also may be compared on a
before or after-tax basis to various bank products, including the average rate
of bank and thrift institution money market deposit accounts, interest bearing
checking accounts and certificates of deposit as reported in the BANK RATE
MONITOR National Index(TM) of 100 leading bank and thrift institutions as
published by the BANK RATE MONITOR(TM), N. Palm Beach, Florida 33408. The
rates published by the BANK RATE MONITOR National Index(TM) are averages of
the personal account rates offered on the Wednesday prior to the date of
publication by 100 large banks and thrifts in the top ten Consolidated
Standard Metropolitan Statistical Areas.
With respect to money market deposit accounts and interest bearing checking
accounts, account minimums range upward from $2,000 in each institution and
compounding methods vary. Interest bearing checking accounts generally offer
unlimited check writing while money market deposit accounts generally restrict
the number of checks that may be written. If more than one rate is offered,
the lowest rate is used. Rates are determined by the financial institution and
are subject to change at any time specified by the institution. Generally, the
rates offered for these products take market conditions and competitive
product yields into consideration when set. Bank
B-12
<PAGE>
products represent a taxable alternative income producing product. Bank and
thrift institution deposit accounts may be insured. Shareholder accounts in
the Funds are not insured. Bank passbook savings accounts compete with money
market mutual fund products with respect to certain liquidity features but may
not offer all of the features available from a money market mutual fund, such
as check writing. Bank passbook savings accounts normally offer a fixed rate
of interest while the yield of the Funds fluctuates. Bank checking accounts
normally do not pay interest but compete with money market mutual fund
products with respect to certain liquidity features (e.g., the ability to
write checks against the account). Bank certificates of deposit may offer
fixed or variable rates for a set term. (Normally, a variety of terms are
available.) Withdrawal of these deposits prior to maturity will normally be
subject to a penalty. In contrast, shares of the Funds are redeemable at the
net asset value (normally, $1.00 per share) next determined after a request is
received, without charge.
The table below compares the seven day annualized yields of the Money Market
Fund and the Government Money Fund at September 24, 1997 with the rates for
money market deposit accounts, interest bearing checking accounts and 6-month
maturity certificates of deposit reported for September 24, 1997 for the BANK
RATE MONITOR National Index(TM) for each of the ten Consolidated Standard
Metropolitan Statistical Areas that are covered by that index and for all
areas combined. The information provided below is historical and is not
representative of future performance of any type of bank product or of any
Fund. The rates reported by the BANK RATE MONITOR(TM) are not necessarily
representative of the rates offered by banks outside of the scope of report.
Furthermore, rate information for one area of the country is not necessarily
representative of rates in other areas. The rates provided for the bank
accounts assume no compounding and are for the lowest minimum deposit required
to open an account. Higher rates may be available for large deposits.
<TABLE>
<CAPTION>
MONEY MARKET INTEREST 6-MONTH GOVERNMENT
DEPOSIT ACCOUNTS CHECKING CERTIFICATES OF MONEY MARKET MONEY FUND
AREA STATED RATE STATED RATE DEPOSIT RATE FUND YIELD YIELD
- ---- ---------------- ----------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
New York................ 2.53% 1.46% 4.51% 5.26% 5.08%
Los Angeles............. 2.28 1.01 5.12 5.26 5.08
Chicago................. 3.02 1.69 5.35 5.26 5.08
San Francisco........... 2.28 1.01 5.09 5.26 5.08
Philadelphia............ 2.32 1.11 4.24 5.26 5.08
Detroit................. 2.88 1.52 5.04 5.26 5.08
Boston.................. 2.68 1.22 5.05 5.26 5.08
Houston................. 2.82 1.42 4.96 5.26 5.08
Dallas.................. 2.68 1.19 4.81 5.26 5.08
Washington.............. 2.97 1.82 4.71 5.26 5.08
NATIONAL INDEX.......... 2.65 1.35 4.89 5.26 5.08
</TABLE>
Since January, 1984, the Money Market Fund has had a higher yield than the
BANK RATE MONITOR National Index(TM) for both money market deposit accounts
and for interest bearing checking accounts for 717 out of 717 weeks through
September 24, 1997.
Investors may also want to compare a Fund's performance to that of U.S.
Treasury bills or notes because such instruments represent alternative income
producing products. Treasury obligations are issued in selected denominations.
Rates of U.S. Treasury obligations are fixed at the time of issuance and
payment of principal and interest is backed by the full faith and credit of
the U.S. Treasury. The market value of such instruments will generally
fluctuate inversely with interest rates prior to maturity and will equal par
value at maturity. Generally, the values of obligations with shorter
maturities will fluctuate less than those with longer maturities. Each Fund's
yield will fluctuate. Also, while each Fund seeks to maintain a net asset
value per share of $1.00, there is no assurance that it will be able to do so.
B-13
<PAGE>
TAX-FREE VERSUS TAXABLE YIELD. You may want to determine which investment--
tax-free or taxable--will provide you with a higher after-tax return. To
determine the taxable equivalent yield, simply divide the yield from the tax-
free investment by the sum of [1 minus your marginal tax rate]. The tables
below are provided for your convenience in making this calculation for
selected tax-free yields and taxable income levels. These yields are presented
for purposes of illustration only and are not representative of any yield that
the Tax-Free Money Fund may generate. Both tables are based upon current law
as to the 1997 federal tax rate schedules.
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS
UNDER $121,200
<TABLE>
<CAPTION>
YOUR A TAX-EXEMPT YIELD OF:
TAXABLE INCOME MARGINAL 2% 3% 4% 5% 6% 7%
FEDERAL TAX IS EQUIVALENT TO A TAXABLE
SINGLE JOINT RATE YIELD OF:
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$24,650-$59,750 $41,200-$99,600 28.0% 2.78 4.17 5.56 6.94 8.33 9.72
- ---------------------------------------------------------------------------
Over $59,750 Over $99,600 31.0 2.90 4.35 5.80 7.25 8.70 10.14
- ---------------------------------------------------------------------------
</TABLE>
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS OVER
$121,200*
<TABLE>
<CAPTION>
YOUR A TAX-EXEMPT YIELD OF:
TAXABLE INCOME MARGINAL 2% 3% 4% 5% 6% 7%
FEDERAL TAX IS EQUIVALENT TO A TAXABLE
SINGLE JOINT RATE YIELD OF:
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$59,750-$124,650 $99,600-$151,750 31.9% 2.94 4.41 5.87 7.34 8.81 10.28
- --------------------------------------------------------------------------------
$124,650-$271,050 $151,750-$271,050 37.1 3.18 4.77 6.36 7.95 9.54 11.13
- --------------------------------------------------------------------------------
Over $271,050 Over $271,050 40.8 3.38 5.07 6.76 8.45 10.14 11.82
- --------------------------------------------------------------------------------
</TABLE>
*This table assumes a decrease of $3.00 of itemized deductions for each $100
of adjusted gross income over $121,200. For a married couple with adjusted
gross income between $181,800 and $304,300 (single between $121,200 and
$243,700), add 0.7% to the above Marginal Federal Tax Rate for each personal
and dependency exemption. The taxable equivalent yield is the tax-exempt
yield divided by: 100% minus the adjusted tax rate. For example, if the table
tax rate is 37.1% and you are married with no dependents, the adjusted tax
rate is 38.5% (37.1% + 0.7% + 0.7%). For a tax-exempt yield of 6%, the
taxable equivalent yield is about 9.8% (6% / (100% - 38.5%)).
OFFICERS AND TRUSTEES
The officers and trustees of the Trust, their birthdates, their principal
occupations and their affiliations, if any, with ZKI and ZKDI are as follows
(The number following each person's title is the number of investment
companies managed by ZKI and its affiliates for which he or she holds similar
positions):
DAVID W. BELIN (6/20/28), Trustee (26), 2000 Financial Center, 7th and Walnut,
Des Moines, Iowa; Member, Belin Lamson McCormick Zumbach Flynn, P.C.
(attorneys).
LEWIS A. BURNHAM (1/8/33), Trustee (26), 16410 Avila Boulevard, Tampa,
Florida; Director, Management Consulting Services, McNulty & Company;
formerly, Executive Vice President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY (3/8/37), Trustee (26), 7515 Pelican Bay Blvd., Naples,
Florida; Retired; formerly, Executive Vice President, A. O. Smith Corporation
(diversified manufacturer).
ROBERT B. HOFFMAN (12/11/36), Trustee (26), 800 North Lindbergh Boulevard, St.
Louis, Missouri; Senior Vice President and Chief Financial Officer, Monsanto
Company (chemical products); formerly, Vice President, FMC
B-14
<PAGE>
Corporation (manufacturer of machinery and chemicals); prior thereto, Director,
Executive Vice President and Chief Financial Officer, Staley Continental, Inc.
(food products).
DONALD R. JONES (1/17/30), Trustee (26), 182 Old Wick Ln., Inverness, Illinois;
Retired; Director, Motorola, Inc. (manufacturer of electronic equipment and
components); formerly, Executive Vice President and Chief Financial Officer,
Motorola, Inc.
SHIRLEY D. PETERSON, (9/3/41), Trustee (26), 401 Rosemont Avenue, Frederick,
Maryland; President, Hood College; formerly, partner, Steptoe & Johnson
(attorneys); prior thereto, Commissioner, Internal Revenue Service; prior
thereto, Assistant Attorney General, U.S. Department of Justice; Director,
Bethlehem Steel Corp.
WILLIAM P. SOMMERS (7/22/33), Trustee (26), 333 Ravenswood Avenue, Menlo Park,
California; President and Chief Executive Officer, SRI International (research
and development); formerly, Executive Vice President, Iameter (medical
information and educational service provider); formerly, Senior Vice President
and Director, Booz, Allen & Hamilton, Inc. (management consulting firm)
(retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
STEPHEN B. TIMBERS (8/8/44), President and Trustee* (39), 222 South Riverside
Plaza, Chicago, Illinois; President, Chief Executive Officer, Chief Investment
Officer and Director, ZKI; Director, ZKDI, Zurich Kemper Value Advisors, Inc.
and LTV Corporation; formerly, President and Chief Operating Officer of Kemper
Corporation.
CHARLES R. MANZONI, JR. (1/23/47), Vice President* (39), 222 South Riverside
Plaza, Chicago, Illinois; Executive Vice President, Secretary and General
Counsel of ZKI; Secretary, ZKI Holding Corp.; Secretary, ZKI Agency, Inc.;
formerly, Partner, Gardner, Carton & Douglas (attorneys).
JOHN E. NEAL (3/9/50), Vice President* (39), 222 South Riverside Plaza,
Chicago, Illinois; President, Kemper Funds Group, a unit of ZKI; Director, ZKI,
Zurich Kemper Value Advisors, Inc. and ZKDI.
ROBERT C. PECK, JR. (10/1/46), Vice President* (16), 222 South Riverside Plaza,
Chicago, Illinois; Executive Vice President and Chief Investment Officer--Fixed
Income, ZKI; formerly, Executive Vice President and Chief Investment Officer
with an unaffiliated investment management firm from 1988 to June 1997.
JEROME L. DUFFY (6/29/36), Treasurer* (39), 222 South Riverside Plaza, Chicago,
Illinois; Senior Vice President, ZKI.
PHILIP J. COLLORA (11/15/45), Vice President and Secretary* (39), 222 South
Riverside Plaza, Chicago, Illinois; Attorney, Senior Vice President and
Assistant Secretary, ZKI.
ELIZABETH C. WERTH (10/1/47), Assistant Secretary* (32), 222 South Riverside
Plaza, Chicago, Illinois; Vice President, ZKI; Vice President and Director of
State Registrations, ZKDI.
FRANK RACHWALSKI, Jr. (3/26/45), Vice President* (9), 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President, ZKI.
*Interested persons of the Funds as defined in the Investment Company Act of
1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds. The table below shows amounts paid or
accrued to those trustees who are not designated "interested
B-15
<PAGE>
persons" during the Trust's 1997 fiscal year except that the information in
the last column is for calendar year 1996.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM TRUST AND
AGGREGATE COMPENSATION FUND COMPLEX
NAME OF TRUSTEE FROM TRUST PAID TO TRUSTEES**
- --------------- ----------------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
David W. Belin*.......... $13,900 $143,400
Lewis A. Burnham......... $ 6,900 $ 88,800
Donald L. Dunaway*....... $12,400 $141,200
Robert B. Hoffman........ $ 7,100 $ 92,100
Donald R. Jones.......... $ 7,200 $ 92,100
Shirley D. Peterson...... $ 6,800 $ 89,800
William P. Sommers....... $ 6,600 $ 87,500
</TABLE>
- -------
* Includes current fees deferred and interest pursuant to deferred
compensation agreements with the Trust. Deferred amounts accrue interest
monthly at a rate equal to the yield of Zurich Money Funds--Zurich Money
Market Fund. Total deferred amounts and interest accrued through July 31,
1997 are $133,800 for Mr. Belin and $76,300 for Mr. Dunaway.
** Includes compensation for service on twenty-four funds managed by ZKI with
41 fund portfolios. Each trustee currently serves as a trustee of 26 funds
managed by ZKI with 47 fund portfolios.
As of October 31, 1997, the officers and trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of each Fund and no person owned
of record 5% or more of the outstanding shares of any Fund.
SPECIAL FEATURES
AUTOMATIC WITHDRAWAL PROGRAM. If you own $5,000 or more of a Fund's shares you
may provide for the payment from your account of any requested dollar amount
to be paid to you or your designated payee monthly, quarterly, semi-annually
or annually. The $5,000 minimum account size is not applicable to Individual
Retirement Accounts. Dividend distributions will be automatically reinvested
at net asset value. A sufficient number of full and fractional shares will be
redeemed to make the designated payment. Depending upon the size of the
payments requested, redemptions for the purpose of making such payments may
reduce or even exhaust the account. The program may be amended on thirty days
notice by the Fund and may be terminated at any time by the shareholder or the
Funds.
TAX-SHELTERED RETIREMENT PROGRAMS. The Shareholder Service Agent provides
retirement plan services and documents and can establish your account in any
of the following types of retirement plans:
. Individual Retirement Accounts (IRAs) with IFTC as custodian. This includes
Savings Incentive Match Plan for Employees of Small Employers ("SIMPLE"),
IRA accounts and Simplified Employee Pension Plan (SEP) IRA accounts and
prototype documents.
. 403(b) Custodial Accounts with IFTC as custodian. This type of plan is
available to employees of most non-profit organizations.
. Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum contribution per participant is the lesser of 25% of
compensation or $30,000.
Brochures describing the above plans as well as providing model defined
benefit plans, target benefit plans, 457 plans, 401(k) plans, SIMPLE 401(k)
plans and materials for establishing them are available from the Shareholder
Service Agent upon request. The brochures for plans with IFTC as custodian
describe the current fees payable to IFTC for its services as custodian.
Investors should consult with their own tax advisers before establishing a
retirement plan.
B-16
<PAGE>
SHAREHOLDER RIGHTS
The Trust generally is not required to hold meetings of its shareholders.
Under the Agreement and Declaration of Trust of the Trust ("Declaration of
Trust"), however, shareholder meetings will be held in connection with the
following matters: (a) the election or removal of trustees, if a meeting is
called for such purpose; (b) the adoption of any contract for which
shareholder approval is required by the Investment Company Act of 1940 ("1940
Act"); (c) any termination of the Trust to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other
than amendments changing the name of the Trust or any Fund, establishing a
Fund, supplying any omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision thereof); (e) as to
whether a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
shareholders, to the same extent as the stockholders of a Massachusetts
business corporation; and (f) such additional matters as may be required by
law, the Declaration of Trust, the By-laws of the Trust, or any registration
of the Trust with the Securities and Exchange Commission or any state, or as
the trustees may consider necessary or desirable. The shareholders also would
vote upon changes in fundamental investment objectives, policies or
restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of
his successor or until such trustee sooner dies, resigns, retires or is
removed by a majority vote of the shares entitled to vote (as described below)
or a majority of the trustees. In accordance with the 1940 Act (a) the Trust
will hold a shareholder meeting for the election of trustees at such time as
less than a majority of the trustees have been elected by shareholders, and
(b) if, as a result of a vacancy in the Board of Trustees, less than two-
thirds of the trustees have been elected by the shareholders, that vacancy
will be filled only by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting
shall be held upon the written request of the holders of not less than 10% of
the outstanding shares. Upon the written request of ten or more shareholders
who have been such for at least six months and who hold shares constituting at
least 1% of the outstanding shares of the Trust stating that such shareholders
wish to communicate with the other shareholders for the purpose of obtaining
the signatures necessary to demand a meeting to consider removal of a trustee,
the Trust has undertaken to disseminate appropriate materials at the expense
of the requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting
in person or by proxy of at least 30% of the shares entitled to vote on a
matter shall constitute a quorum. Thus, a meeting of shareholders of the Trust
could take place even if less than a majority of the shareholders were
represented on its scheduled date. Shareholders would in such a case be
permitted to take action which does not require a larger vote than a majority
of a quorum, such as the election of trustees and ratification of the
selection of auditors. Some matters requiring a larger vote under the
Declaration of Trust, such as termination or reorganization of the Trust and
certain amendments of the Declaration of Trust, would not be affected by this
provision; nor would matters which under the 1940 Act require the vote of a
"majority of the outstanding voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or any Fund) by notice to the shareholders without
shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Trust. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation, or instrument entered into or executed
by the Trust or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust and the
Trust will be covered by insurance which the trustees consider adequate to
cover foreseeable tort claims. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered by ZKI remote
and not material since it is limited to circumstances in which a disclaimer is
inoperative and the Trust itself is unable to meet its obligations.
B-17
<PAGE>
APPENDIX--RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2 AND PRIME-1, PRIME-2 COMMERCIAL PAPER RATINGS
Commercial paper rated by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements.
Long-term senior debt is rated "A" or better. The issuer has access to at
least two additional channels of borrowing. Basic earnings and cash flow have
an upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by it
in assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or industries and
an appraisal of speculative-type risks which may be inherent in certain areas;
(3) evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years; (7) financial strength of a
parent company and the relationships which exist with the issuer; and (8)
recognition by the management of obligations which may be present or may arise
as a result of public interest questions and preparations to meet such
obligations. Relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated Prime-1, 2 or 3.
MIG-1 AND MIG-2 MUNICIPAL NOTES
Moody's ratings for state and municipal notes and other short-term loans will
be designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term credit risk and long-term
risk. Factors affecting the liquidity of the borrower are uppermost in
importance in short-term borrowing, while various factors of the first
importance in bond risk are of lesser importance in the short run. Loans
designated MIG-1 are of the best quality, enjoying strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both. Loans designated
MIG-2 are of high quality, with margins of protection ample although not so
large as in the preceding group.
STANDARD & POOR'S CORPORATION BOND RATINGS
AAA. This is the highest rating assigned by Standard & Poor's Corporation to a
debt obligation and indicates an extremely strong capacity to pay principal
and interest.
AA. Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A. Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
AAA. Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
B-18
<PAGE>
AA. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
A. Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
B-19
<PAGE>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
ZURICH MONEY FUNDS
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(i) Financial statements included in Part A of the Registration
Statement: Financial Highlights.
(ii) Financial statements included in Part B of the Registration
Statement:
Statements of assets and liabilities--July 31, 1997.
Statements of operations for the year ended July 31, 1997.
Statements of changes in net assets for each of the two years in
the period ended July 31, 1997.
Portfolios of investments--July 31, 1997.
Notes to financial statements.
Schedules II, III, IV and V are omitted as the required information is
not present.
Schedule I has been omitted as the required information is presented in
the portfolios of investments at July 31, 1997.
(b) Exhibits
<TABLE>
<C> <S>
99.B1(a) Amended and Restated Agreement and Declaration of Trust.(1)
99.B1(b) Written Instrument Amending the Agreement and Declaration of
Trust.(1)
99.B1(c) Written Instrument Amending the Agreement and Declaration of
Trust.(1)
99.B1(d) Written Instrument Amending the Agreement and Declaration of
Trust.(3)
99.B1(e) Written Instrument Amending the Agreement and Declaration of
Trust
99.B2 By-Laws.(1)
99.B3 Inapplicable.
99.B4(a) Text of Share Certificate.(1)
99.B4(b) Written Instrument Changing Name of Series of the Trust.(3)
99.B4(c) Written Instrument Changing the Name of Series of the Trust.
99.B5 Investment Management Agreement.(3)
99.B6(a) Underwriting Agreement.(3)
99.B6(b) Selling Group Agreement.(1)
99.B7 Inapplicable.
99.B8(a) Custody Agreement.(1)
99.B9(a) Agency Agreement.(1)
99.B9(b) Supplement to Agency Agreement.(3)
99.B10 Inapplicable.
99.B11 Report and Consent of Independent Auditors.
99.B12 Inapplicable.
99.B13 Inapplicable.
99.B14(a) Kemper Retirement Plan Prototype.(1)
99.B14(b) Model Individual Retirement Account.(1)
99.B15 Inapplicable.
99.B16 Performance Calculations.(2)
99.B18 Inapplicable.
99.B24 Powers of Attorney.(1)
27.1 Financial Data Schedule for Money Market Fund
27.2 Financial Data Schedule for Government Money Fund
27.3 Financial Data Schedule for Tax-Free Money Fund
99.485(b) Representation of Counsel (Rule 485 (b)).
</TABLE>
--------
(1) Incorporated herein by reference to Amendment No. 41 on Form N-1A
filed on November 16, 1995.
(2) Incorporated herein by reference to Amendment No. 40 on Form N-1A
filed on or about October 31, 1994.
(3) Incorporated herein by reference to Amendment No. 42 on Form N-1A
filed on or about November 6, 1996.
C-1
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of October 31, 1997, there were 224,724 holders of record of the Money
Market Fund, 27,072 holders of record of the Government Money Fund and 16,666
holders of record of the Tax-Free Money Fund.
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust (Exhibit
1 hereto, which is incorporated herein by reference) provides in effect that
the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the
Agreement and Declaration of Trust does not protect any person against any
liability to the Registrant or its shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question as to
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
C-2
<PAGE>
ITEM 28(a) BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information pertaining to business and other connections of the
Registrant's investment advisers is hereby incorporated by reference to the
section of the Prospectus captioned "Investment Manager and Underwriter" and to
the section of the Statement of Additional Information captioned "Investment
Manager and Underwriter".
Zurich Kemper Investments, Inc., investment adviser of the Registrant, is
investment adviser of:
Kemper Mutual Funds:
Kemper Technology Fund
Kemper Total Return Fund
Kemper Growth Fund
Kemper Small Capitalization Equity Fund
Kemper Income and Capital Preservation Fund
Zurich Money Funds
Kemper National Tax-Free Income Series
Kemper Diversified Income Fund
Kemper High Yield Series
Cash Equivalent Fund
Kemper U.S. Government Securities Fund
Kemper International Fund
Kemper Portfolios
Kemper State Tax-Free Income Series
Tax-Exempt California Money Market Fund
Kemper Adjustable Rate U.S. Government Fund
Kemper Blue Chip Fund
Kemper Global Income Fund
Kemper Target Equity Fund
Cash Account Trust
Investors Cash Trust
Investors Municipal Cash Fund
Kemper Value Plus Growth Fund
Kemper Quantitative Equity Fund
Kemper Horizon Fund
Kemper Europe Fund
Kemper Asian Growth Fund
Kemper Aggressive Growth Fund
Zurich YieldWise Money Fund
Kemper Closed-End Funds:
Kemper High Income Trust
Kemper Intermediate Government Trust
Kemper Municipal Income Trust
Kemper Multi-Market Income Trust
Kemper Strategic Municipal Income Trust
The Growth Fund of Spain, Inc.
Kemper Strategic Income Fund
Zurich Kemper Investments, Inc. also furnishes investment advice to and
manages investment portfolios for other clients including Investors Fund Series
and Kemper International Bond Fund.
C-3
<PAGE>
Item 28(b)(i) Business and Other Connections of Officers and Directors of Zurich
Kemper Investments, Inc., the Investment Adviser
TIMBERS, STEPHEN B.
Director, President, Chief Executive Officer and Chief Investment Officer,
Zurich Kemper Investments, Inc.
Director, Zurich Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Chairman, Zurich Kemper Service Company
Director, Zurich Kemper Value Advisors, Inc.
Director, ZKI Agency, Inc.
Director, President, Kemper International Management, Inc. Trustee and
President, Kemper Funds
Director, The LTV Corporation
Governor, Investment Company Institute
NEAL, JOHN E.
Director, Zurich Kemper Investments, Inc.
President, Kemper Funds Group, a unit of Zurich Kemper Investments, Inc.
Director, President, Zurich Kemper Service Company
Director, Zurich Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Zurich Kemper Value Advisors, Inc.
Director, ZKI Agency, Inc.
Director, Community Investment Corporation
Director, Continental Community Development Corporation
Director, K-P Greenway, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
Director, RespiteCare
Director, Urban Shopping Centers, Inc.
Vice President, Kemper Funds
C-4
<PAGE>
CHAPMAN, II, WILLIAM E.
President, Kemper Retirement Plans Group, a unit of Zurich Kemper
Investments, Inc.
Director, Executive Vice President, Zurich Kemper Distributors, Inc.
Executive Vice President, Zurich Kemper Service Company
VOGEL, VICTOR E.
Senior Executive Vice President, Zurich Kemper Investments, Inc.
Trustee, Zurich Kemper Investments, Inc. Profit Sharing Plan & Money
Purchase Pension Plan
Executive Vice President, Zurich Kemper Service Company
BEIMFORD, JR., JOSEPH P.
Executive Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Galaxy Offshore, Inc.
Vice President, Investors Cash Trust
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Global Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper International Bond Fund
Vice President, Kemper Investors Fund
Vice President, Zurich Money Funds
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Municipal Income Trust
Vice President, Kemper National Tax-Free Income Series
Vice President, Kemper Portfolios
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Income Fund
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Kemper U.S. Government Securities Fund
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
C-5
<PAGE>
Managing Director, Zurich Investment Management, Inc.
DUDASIK, PATRICK H.
Executive Vice President and Chief Financial Officer, Zurich Kemper
Investments, Inc.
Executive Vice President, Chief Financial Officer and Treasurer,
Zurich Kemper Value Advisors, Inc.
Chief Financial Officer and Treasurer, Zurich Investment Management, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Distributors, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Service Company
Treasurer, ZKI Agency, Inc.
FROEHLICH, PH.D, ROBERT J.
Executive Vice President, Chief Investment Strategist, Zurich Kemper
Investments, Inc.
GREENAWALT, JAMES L.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, President, Zurich Kemper Distributors, Inc.
Director, President, ZKI Agency, Inc.
LANGBAUM, GARY A.
Executive Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Total Return Fund
Vice President, Kemper Investors Fund
MANZONI, JR., CHARLES R.
Executive Vice President, Secretary & General Counsel, Zurich Kemper
Investments, Inc.
Vice President, Kemper Funds
Secretary, ZKI Agency, Inc.
Secretary, Zurich Kemper Service Company
Secretary, Zurich Kemper Distributors, Inc.
Secretary, ZKI Holding Corporation
Secretary, Zurich Investment Management, Inc.
Secretary, Zurich Kemper Value Advisors, Inc.
MURRIHY, MAURA J.
Executive Vice President, Zurich Kemper Investments, Inc.
REYNOLDS, STEVEN H.
Executive Vice President, Chief Investment Officer - Equities, Zurich
Kemper Investments, Inc.
Vice President, Kemper Technology Fund
Vice President, Kemper Total Return Fund
Vice President, Kemper Growth Fund
Vice President, Kemper Small Capitalization Equity Fund
Vice President, Kemper International Fund
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Value Plus Growth Fund
Vice President, Kemper Quantitative Equity Fund
Vice President, Kemper Target Equity Fund
Vice President, Kemper Horizon Fund
Vice President, Kemper Investors Fund
Vice President, The Growth Fund of Spain, Inc.
Vice President, Kemper Europe Fund
C-6
<PAGE>
ROBERTS, SCOTT A.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Senior Managing Director, Zurich Investment Management Inc.
SILIGMUELLER, DALE S.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Executive Vice President, Zurich Kemper Service Company
WEISS, ROBERT D.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Senior Managing Director, Zurich Investment Management, Inc.
BUKOWSKI, DANIEL J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Quantitative Equity Fund
Vice President, Kemper Value Plus Growth Fund
Vice President, Kemper Investors Fund
BUTLER, DAVID H.
Senior Vice President, Zurich Kemper Investments, Inc.
CERVONE, DAVID M.
Senior Vice President, Zurich Kemper Investments, Inc.
CESSINE, ROBERT S.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Investors Fund
CHESTER, TRACY McCORMICK
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Target Equity Fund
CHIEN, CHRISTINE
Senior Vice President, Zurich Kemper Investments, Inc.
CIARLELLI, ROBERT W.
Senior Vice President, Zurich Kemper Investments, Inc.
Executive Vice President, Zurich Kemper Service Company
COLLORA, PHILIP J.
Senior Vice President and Assistant Secretary, Zurich Kemper
Investments, Inc.
Vice President and Secretary, Kemper Funds
C-7
<PAGE>
Assistant Secretary, Kemper International Management, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
Assistant Secretary, Zurich Kemper Value Advisors, Inc.
Assistant Secretary, ZKI Agency, Inc.
DUFFY, JEROME L.
Senior Vice President, Zurich Kemper Investments, Inc.
Treasurer, Kemper Funds
FENGER, JAMES E.
Senior Vice President, Zurich Kemper Investments, Inc.
FINK, THOMAS M.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
GALLAGHER, MICHAEL L.
Senior Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Kemper Service Company
GOERS, RICHARD A.
Senior Vice President, Zurich Kemper Investments, Inc.
GREENWALD, MARSHALL L.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
HARRINGTON, MICHAEL E.
Senior Vice President, Zurich Kemper Investments, Inc.
KEITH, GEORGE
Senior Vice President, Zurich Kemper Investments, Inc.
KLEIN, GEORGE
Senior Vice President, Zurich Kemper Investments, Inc.
Director, Managing Director, Zurich Investment Management, Inc.
KLEIN, MARTIN
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
KOCHER, GARY
Senior Vice President, Zurich Kemper Investments, Inc.
KORTH, FRANK D.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Technology Fund
McNAMARA, MICHAEL A.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Series
C-8
<PAGE>
Vice President, Investors Fund Series
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
MOELLER, JAMES V.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
MOORE, C. PERRY
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, ZKI Agency, Inc.
MIER, CHRISTOPHER J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper National Tax-Free Income Series
Vice President, Kemper Municipal Income Trust
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Municipal Income Trust
RABIEGA, CRAIG F.
Senior Vice President, Zurich Kemper Investments, Inc.
First Vice President, Zurich Kemper Service Company
RACHWALSKI, JR. FRANK J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Investors Cash Trust
Vice President, Kemper Investors Fund
Vice President, Zurich Money Funds
Vice President, Kemper Portfolios
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
RESIS, JR., HARRY E.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
SILVIA, JOHN E.
Senior Vice President, Zurich Kemper Investments, Inc.
SMITH, JR., EDWARD BYRON
Senior Vice President, Zurich Kemper Investments, Inc.
SWANSON, DAVID
Senior Vice President, Zurich Kemper Investments, Inc.
C-9
<PAGE>
VANDENBERG, RICHARD
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper U.S. Government Securities Fund
Vice President, Kemper Portfolios
Vice President, Kemper Adjustable Rate U.S. Government Fund
VINCENT, CHRISTOPHER T.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
WONNACOTT, LARRY R.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
BAZAN, KENNETH M.
First Vice President, Zurich Kemper Investments, Inc.
Director, K-P Greenway, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
BOEHM, JONATHAN J.
First Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Kemper Service Company
BURROW, DALE R.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Strategic Municipal Income Trust
BYRNES, ELIZABETH A.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Intermediate Government Trust
CHRISTIANSEN, HERBERT A.
First Vice President, Zurich Kemper Investments, Inc.
First Vice President, Zurich Kemper Service Company
COHEN, JERRI I.
First Vice President, Zurich Kemper Investments, Inc.
DeMAIO, CHRIS C.
First Vice President, Zurich Kemper Investments, Inc.
Vice President and Chief Accounting Officer, Zurich Kemper Service
Company
C-10
<PAGE>
DEXTER, STEPHEN P.
First Vice President, Zurich Kemper Investments, Inc.
DOYLE, DANIEL J.
First Vice President, Zurich Kemper Investments, Inc.
HALE, DAVID D.
First Vice President, Zurich Kemper Investments, Inc.
HAUSKEN, PHILIP D.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Distributors, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
HORTON, ROBERT J.
First Vice President, Zurich Kemper Investments, Inc.
INNES, BRUCE D.
First Vice President, Zurich Kemper Investments, Inc.
Co-President, International Association of Corporate and
Professional Recruiters
JACOBS, PETER M.
First Vice President, Zurich Kemper Investments, Inc.
KEELEY, MICHELLE M.
First Vice President, Zurich Kemper Investments, Inc.
KIEL, CAROL L.
First Vice President, Zurich Kemper Investments, Inc.
KNAPP, WILLIAM M.
First Vice President, Zurich Kemper Investments, Inc.
LASKA, ROBERTA E.
First Vice President, Zurich Kemper Investments, Inc.
LAUGHLIN, ANN M.
First Vice President, Zurich Kemper Investments, Inc.
LENTZ, MAUREEN P.
First Vice President, Zurich Kemper Investments, Inc.
McCRINDLE-PETRARCA, SUSAN
First Vice President, Zurich Kemper Investments, Inc.
MCGOVERN, KAREN
First Vice President, Zurich Kemper Investments, Inc.
MICHAEL, DIANNE
First Vice President, Zurich Kemper Investments, Inc.
MINER, EDWARD
First Vice President, Zurich Kemper Investments, Inc.
MURRAY, SCOTT S.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
NORRIS, JOHNSTON A.
First Vice President, Zurich Kemper Investments, Inc.
C-11
<PAGE>
PANOZZO, ROBERTA L.
First Vice President, Zurich Kemper Investments, Inc.
PONTECORE, SUSAN E.
First Vice President, Zurich Kemper Investments, Inc.
RADIS, STEVE A.
First Vice President, Zurich Kemper Investments, Inc.
RATEKIN, DIANE E.
First Vice President, Assistant General Counsel and Assistant
Secretary, Zurich Kemper Investments, Inc.
Assistant Secretary, Zurich Kemper Distributors, Inc.
SMITH, ROBERT G.
First Vice President, Zurich Kemper Investments, Inc.
STUEBE, JOHN W.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
TEPPER, SHARYN A.
First Vice President, Zurich Kemper Investments, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
TRUTTER, JONATHAN W.
First Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
WETHERALD, ROBERT F.
First Vice President, Zurich Kemper Investments, Inc.
WILLSON, STEPHEN R.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Strategic Municipal Income Trust
WITTNEBEL, MARK E.
First Vice President, Zurich Kemper Investments, Inc.
ADAMS, DONALD
Vice President, Zurich Kemper Investments, Inc.
ALLEN, PATRICIA L.
Vice President, Zurich Kemper Investments, Inc.
ANTONAK, GEORGE A.
Vice President, Zurich Kemper Investments, Inc.
BALASUBRAMANIAM, KALAMADI
Vice President, Zurich Kemper Investments, Inc.
BARRY, JOANN M.
Vice President, Zurich Kemper Investments, Inc.
BARSANTI, WILLIAM
Vice President, Zurich Kemper Investments, Inc.
C-12
<PAGE>
BIEBERLY, CHRISTINE A.
Vice President, Zurich Kemper Investments, Inc.
BODEM, RICHARD A.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
BRENNAN, ELEANOR R.
Vice President, Zurich Kemper Investments, Inc.
BUCHANAN, PAMELA S.
Vice President, Zurich Kemper Investments, Inc.
BURKE, MARY PAT
Vice President, Zurich Kemper Investments, Inc.
BURSHTAN, DAVID H.
Vice President, Zurich Kemper Investments, Inc.
CARNEY, ANNE T.
Vice President, Zurich Kemper Investments, Inc.
CACCIOLA, RONALD
Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
CARTER, PAUL J.
Vice President and Compliance Manager, Zurich Kemper Investments, Inc.
CECOLA, MARY
Vice President, Zurich Kemper Investments, Inc.
CRAWSHAW, SUSAN
Vice President, Zurich Kemper Investments, Inc.
ESOLA, CHARLES J.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
FRIHART, THORA A.
Vice President, Zurich Kemper Investments, Inc.
GERACI, AUGUST L.
Vice President, Zurich Kemper Investments, Inc.
GOLAN, JAMES S.
Vice President, Zurich Kemper Investments, Inc.
GRAY, PATRICK
Vice President, Zurich Kemper Investments, Inc.
GROOTENDORST, TONYA
Vice President, Zurich Kemper Investments, Inc.
HAMMAN, JR., JAMES S.
Vice President, Zurich Kemper Investments, Inc.
HECHT, MARC L.
Vice President, Zurich Kemper Investments, Inc.
Assistant Secretary, Zurich Kemper Distributors, Inc.
Assistant Secretary, ZKI Holding Corporation
Assistant Secretary, ZKI Agency, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
Assistant Secretary, Zurich Kemper Value Advisors, Inc.
C-13
<PAGE>
HUOT, LISA L.
Vice President, Zurich Kemper Investments, Inc.
JASINSKI, R. ANTHONY
Vice President, Zurich Kemper Investments, Inc.
KARWOWSKI, KENNETH F.
Vice President, Zurich Kemper Investments, Inc.
KENNEDY, PATRICK J.
Vice President, Zurich Kemper Investments, Inc.
KOCH, DEBORAH L.
Vice President, Zurich Kemper Investments, Inc.
KOURY, KATHRYN E.
Vice President, Zurich Kemper Investments, Inc.
KOWALCZYK, MARK A.
Vice President, Zurich Kemper Investments, Inc.
Vice President, ZKI Agency, Inc.
KRANZ, KATHY J.
Vice President, Zurich Kemper Investments, Inc.
KRUEGER, PAMELA D.
Vice President, Zurich Kemper Investments, Inc.
KYCE, JOYCE
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
LAUTZ, STEPHEN
Vice President, Zurich Kemper Investments, Inc.
LeFEBVRE, THOMAS J.
Vice President, Zurich Kemper Investments, Inc.
MARKLEY, DAVID
Vice President, Zurich Kemper Investments, Inc.
MATZA, LINDA
Vice President, Zurich Kemper Investments, Inc.
McGINN, MARTHA R.
Vice President, Zurich Kemper Investments, Inc.
MILLER, GARY L.
Vice President, Zurich Kemper Investments, Inc.
MILLIGAN, BRIAN J.
Vice President, Zurich Kemper Investments, Inc.
C-14
<PAGE>
MULLEN, TERRENCE
Vice President, Zurich Kemper Investments, Inc.
MURPHY, THOMAS M.
Vice President, Zurich Kemper Investments, Inc.
NEVILLE, BRIAN P.
Vice President, Zurich Kemper Investments, Inc.
NORMAN, JR., DONALD L.
Vice President, Zurich Kemper Investments, Inc.
NOWAK, GREGORY J.
Vice President, Zurich Kemper Investments, Inc.
PANOZZO, ALBERT R.
Vice President, Zurich Kemper Investments, Inc.
PAXTON, THOMAS
Vice President, Zurich Kemper Investments, Inc.
QUADRINI, LISA L.
Vice President, Zurich Kemper Investments, Inc.
RANDALL, JR., WALTER R.
Vice President, Zurich Kemper Investments, Inc.
ROBINSON, DEBRA A.
Vice President, Zurich Kemper Investments, Inc.
RODGERS, JOHN B.
Vice President, Zurich Kemper Investments, Inc.
ROKOSZ, PAUL A.
Vice President, Zurich Kemper Investments, Inc.
ROSE, KATIE M.
Vice President, Zurich Kemper Investments, Inc.
RUDIN, MICHELLE I.
Vice President, Zurich Kemper Investments, Inc.
SAENGER, MARYELLEN
Vice President, Zurich Kemper Investments, Inc.
SOPHER, EDWARD O.
Vice President, Zurich Kemper Investments, Inc.
C-15
<PAGE>
SPILLER, KATHLEEN A.
Vice President, Zurich Kemper Investments, Inc.
SPURLING, CHRIS
Vice President, Zurich Kemper Investments, Inc.
STROMM, LAWRENCE D.
Vice President, Zurich Kemper Investments, Inc.
THOMAS, JILL
Vice President, Zurich Kemper Investments, Inc.
TRUNSKY, JUDITH C.
Vice President, Zurich Kemper Investments, Inc.
VANDEMERKT, RICHARD J.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
WALKER, ANGELA
Vice President, Zurich Kemper Investments, Inc.
WATKINS, JAMES K.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
WERTH, ELIZABETH C.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Distributors, Inc.
Assistant Secretary, Kemper Open-End Funds
WILNER, MITCHELL
Vice President, Zurich Kemper Investments, Inc.
WIZER, BARBARA K.
Vice President, Zurich Kemper Investments, Inc.
ZURAWSKI, CATHERINE N.
Vice President, Zurich Kemper Investments, Inc.
C-16
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Zurich Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and acts as principal underwriter of the Kemper Funds,
Investors Fund Series and Kemper International Bond Fund.
(b) Information on the officers and directors of Zurich Kemper
Distributors, Inc., principal underwriter for the Registrant is set forth below.
The principal business address is 222 South Riverside Plaza, Chicago, Illinois
60606.
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
---- --------------------- -------------
<S> <C> <C>
James L. Greenawalt Director, President None
William E. Chapman, II Director, Executive Vice President None
John E. Neal Director Vice President
Stephen B. Timbers Director President/Trustee
Patrick H. Dudasik Financial Principal, Treasurer
and Chief Financial Officer None
Michael E. Harrington Executive Vice President None
Philip D. Hausken Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Charles R. Manzoni, Jr. Secretary Vice President
Marc L. Hecht Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
</TABLE>
(c) Not applicable.
C-17
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents are maintained at the offices of the Reg-
istrant, the offices of Registrant's investment adviser, Zurich Kemper Invest-
ments, Inc. and the Registrant's principal underwriter, Zurich Kemper
Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606 or, in
the case of records concerning custodial functions, at the offices of the
custodian, Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue,
Kansas City, Missouri 64105 or, in the case of records concerning transfer
agency functions, at the offices of IFTC and of the shareholder service agent,
Zurich Kemper Service Company, 811 Main Street, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Not applicable.
C-18
<PAGE>
S I G N A T U R E S
-------------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago and State of Illinois, on the 14th day
of November, 1997.
ZURICH MONEY FUNDS
By /s/ Stephen B. Timbers
-----------------------------
Stephen B. Timbers, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on November 14, 1997 on behalf of
the following persons in the capacities indicated.
Signature Title
--------- -----
/s/ Stephen B. Timbers President
- -------------------------------------- (Principal
Stephen B. Timbers Executive Officer)
and Trustee
/s/ David W. Belin* Trustee
- --------------------------------------
/s/ Lewis A. Burnham* Trustee
- --------------------------------------
/s/ Donald L. Dunaway* Trustee
- --------------------------------------
/s/ Robert B. Hoffman* Trustee
- --------------------------------------
/s/ Donald R. Jones* Trustee
- --------------------------------------
/s/ Shirley D. Peterson* Trustee
- --------------------------------------
/s/ William P. Sommers* Trustee
- --------------------------------------
/s/ Jerome L. Duffy
- -------------------------------------- Treasurer
Jerome L. Duffy (Principal
Financial and
Accounting Officer)
*Philip J. Collora signs this document pursuant to powers of attorney filed with
the Registration Statement on Form N-1A of Registrant on November 16, 1995.
/s/ Philip J. Collora
-----------------------------
Philip J. Collora
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
REFERENCE
---------
<C> <S>
99.B1(a) Amended and Restated Agreement and Declaration of Trust.(1)
99.B1(b) Written Instrument Amending the Agreement and Declaration of
Trust.(1)
99.B1(c) Written Instrument Amending the Agreement and Declaration of
Trust.(1)
99.B1(d) Written Instrument Amending the Agreement and Declaration of
Trust.(1)
99.B1(e) Written Instrument Amending the Agreement and Declaration of
Trust.
99.B2 By-Laws.(1)
99.B3 Inapplicable.
99.B4(a) Text of Share Certificate.(1)
99.B4(b) Written Instrument Changing Name of Series of The Trust.(3)
99.B4(c) Written Instrument Changing Name of Series of the Trust.
99.B5 Investment Management Agreement.(3)
99.B6(a) Underwriting Agreement.(3)
99.B6(b) Selling Group Agreement.(1)
99.B7 Inapplicable.
99.B8(a) Custody Agreement.(1)
99.B9(a) Agency Agreement.(1)
99.B9(b) Supplement to Agency Agreement.(3)
99.B10 Inapplicable.
99.B11 Report and Consent of Independent Auditors.
99.B12 Inapplicable.
99.B13 Inapplicable.
99.B14(a) Kemper Retirement Plan Prototype.(1)
99.B14(b) Model Individual Retirement Account.(1)
99.B15 Inapplicable.
99.B16 Performance Calculations.(2)
99.B18 Inapplicable.
99.B24 Powers of Attorney.(1)
27.1 Financial Data Schedule for Money Market Fund
27.2 Financial Data Schedule for Government Money Fund
27.3 Financial Data Schedule for Tax-Free Money Fund
99.485(b) Representation of Counsel (Rule 485 (b)).
</TABLE>
- --------
(1) Incorporated herein by reference to Amendment No. 41 on Form N-1A filed on
November 16, 1995.
(2) Incorporated herein by reference to Amendment No. 40 on Form N-1A filed on
or about October 31, 1994.
(3) Incorporated herein by reference to Amendment No. 42 on Form N-1A filed on
or about November 6, 1996.
<PAGE>
KEMPER MONEY FUNDS
WRITTEN INSTRUMENT AMENDING THE
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
The undersigned, being a majority of the trustees of Kemper Money Funds
(the "Trust"), a business trust organized pursuant to an Agreement and
Declaration of Trust dated August 9, 1985, as amended and restated (the
"Declaration of Trust"), pursuant to Section 1 of Article I and Section 4 of
Article IX of the Declaration of Trust, do hereby change the name of the Trust
to "Zurich Money Funds." This instrument shall constitute an amendment to the
Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have this 14th day of April, 1997
signed these presents.
/s/ Stephen B. Timbers
---------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
(signatures continue)
The address of the Trust is:
c/o Zurich Kemper Investments, Inc.
222 S. Riverside Plaza
Chicago, IL 60606
<PAGE>
/s/ David W. Belin
---------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
---------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
---------------------------------
Donald L. Dunaway, Trustee
7515 Pelican Bay Boulevard, #903
Naples, Florida 33963
/s/ Robert B. Hoffman
---------------------------------
Robert B. Hoffman, Trustee
10045 Litzsinger Road
St. Louis, MO 63124-1131
/s/ Donald R. Jones
---------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
/s/ Dominique P. Morax
________________________________
Dominique P. Morax, Trustee
Vordere Dorfstrasse 13
8803 Ruschlikon
Switzerland
/s/ Shirley D. Peterson
---------------------------------
Shirley D. Peterson, Trustee
401 Rosemont Avenue
Frederick, MD 21701-8575
/s/ William P. Sommers
---------------------------------
William P. Sommers, Trustee
2181 Parkside Avenue
Hillsborough, California 94010
---------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
<PAGE>
ZURICH MONEY FUNDS
WRITTEN INSTRUMENT CHANGING
THE NAME OF SERIES OF THE TRUST
-------------------------------
The undersigned, being a majority of the trustees of Zurich Money Funds
(the "Trust"), a business trust organized pursuant to an Agreement and
Declaration of Trust dated August 9, 1985, as amended and restated (the
"Declaration of Trust"), pursuant to Section 1 of Article III of the Declaration
of Trust, do hereby change the name of each series of Shares of the Trust as
follows: the "Kemper Money Market Fund" is changed to the "Zurich Money Market
Fund," the "Kemper Government Money Fund" is changed to the "Zurich Government
Money Fund" and the "Kemper Tax-Free Money Fund" is changed to the "Zurich Tax-
Free Money Fund." The relative rights and preferences of such series shall
continue to be as set forth in the Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have this 14th day of April, 1997
signed these presents.
/s/ Stephen B. Timbers
---------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
(signatures continue)
<PAGE>
/s/ David W. Belin
---------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
---------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
---------------------------------
Donald L. Dunaway, Trustee
7515 Pelican Bay Boulevard, #903
Naples, Florida 33963
/s/ Robert B. Hoffman
---------------------------------
Robert B. Hoffman, Trustee
10045 Litzsinger Road
St. Louis, MO 63124-1131
/s/ Donald R. Jones
---------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
/s/ Dominique P. Morax
________________________________
Dominique P. Morax, Trustee
Vordere Dorfstrasse 13
8803 Ruschlikon
Switzerland
/s/ Shirley D. Peterson
---------------------------------
Shirley D. Peterson, Trustee
401 Rosemont Avenue
Frederick, MD 21701-8575
/s/ William P. Sommers
---------------------------------
William P. Sommers, Trustee
2181 Parkside Avenue
Hillsborough, California 94010
---------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Zurich Money Funds
We have audited the accompanying statement of assets and liabilities, including
the portfolios of 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 1988. 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.
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 1988, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 17, 1997
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors and Reports to Shareholders" and to the
use of our report dated September 17, 1997 in the Registration Statement (Form
N-1A) of Zurich Money Funds filed with the Securities and Exchange Commission in
this Post-Effective Amendment No. 43 to the Registration Statement under the
Securities Act of 1933 (File No. 2-51992) and in this Amendment No. 43 to the
Registration Statement under the Investment Company Act of 1940 (File No.
811-2527).
ERNST & YOUNG LLP
Chicago, Illinois
November 11, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
1997 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> ZURICH MONEY FUNDS
<SERIES>
<NUMBER> 01
<NAME> ZURICH MONEY MARKET FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 4,366,566
<INVESTMENTS-AT-VALUE> 4,366,566
<RECEIVABLES> 24,613
<ASSETS-OTHER> 15,221
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,406,400
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,465
<TOTAL-LIABILITIES> 44,465
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,361,935
<SHARES-COMMON-STOCK> 4,361,935
<SHARES-COMMON-PRIOR> 4,225,775
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,361,935
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 242,771
<OTHER-INCOME> 0
<EXPENSES-NET> (19,444)
<NET-INVESTMENT-INCOME> 223,327
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 223,327
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (223,327)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,067,490
<NUMBER-OF-SHARES-REDEEMED> (6,147,062)
<SHARES-REINVESTED> 215,732
<NET-CHANGE-IN-ASSETS> 136,160
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,666
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,444
<AVERAGE-NET-ASSETS> 4,343,517
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
1997 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> ZURICH MONEY FUNDS
<SERIES>
<NUMBER> 02
<NAME> ZURICH GOVERNMENT MONEY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 669,028
<INVESTMENTS-AT-VALUE> 669,028
<RECEIVABLES> 6,120
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 675,148
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,009
<TOTAL-LIABILITIES> 4,009
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 671,139
<SHARES-COMMON-STOCK> 671,139
<SHARES-COMMON-PRIOR> 672,041
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 671,139
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39,324
<OTHER-INCOME> 0
<EXPENSES-NET> (3,130)
<NET-INVESTMENT-INCOME> 36,194
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 36,194
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (36,194)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 704,736
<NUMBER-OF-SHARES-REDEEMED> (740,404)
<SHARES-REINVESTED> 34,766
<NET-CHANGE-IN-ASSETS> (902)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,894
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,130
<AVERAGE-NET-ASSETS> 705,062
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
1997 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000055189
<NAME> ZURICH MONEY FUNDS
<SERIES>
<NUMBER> 03
<NAME> ZURICH TAX-FREE MONEY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 768,421
<INVESTMENTS-AT-VALUE> 768,421
<RECEIVABLES> 5,858
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 774,279
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,964
<TOTAL-LIABILITIES> 2,964
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 771,315
<SHARES-COMMON-STOCK> 771,315
<SHARES-COMMON-PRIOR> 729,018
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 771,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,503
<OTHER-INCOME> 0
<EXPENSES-NET> (2,868)
<NET-INVESTMENT-INCOME> 25,635
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,635
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,635)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 861,149
<NUMBER-OF-SHARES-REDEEMED> (843,915)
<SHARES-REINVESTED> 25,063
<NET-CHANGE-IN-ASSETS> 42,297
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,068
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,868
<AVERAGE-NET-ASSETS> 769,815
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
VEDDER PRICE VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601-1003
312-609-7500
FACSIMILE: 312-609-5005
A PARTNERSHIP INCLUDING VEDDER, PRICE,
KAUFMAN & KAMMHOLZ, P.C. WITH OFFICES IN
CHICAGO AND NEW YORK CITY
November 14, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Zurich Money Funds
------------------
To The Commission:
We are counsel to the above-referenced investment company (the "Fund") and
as such have participated in the preparation and review of Post-Effective
Amendment No. 43 to the Fund's registration statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485, we hereby represent that such amendment does not contain
disclosures which would render it ineligible to become effective pursuant to
paragraph (b) thereof.
Very truly yours,
/s/ VEDDER, PRICE, KAUFMAN & KAMMHOLZ
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
DAS/COK/ACS
