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Tax-Exempt California Money Market Fund
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DEAR SHAREHOLDERS:
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We are pleased to submit to you the Tax-Exempt California Money
Market Fund semiannual report for the six months
ended March 31, 1995.
In your Fund's annual report dated September 30, 1994, we indicated that an
upward trend in short-term rates was anticipated. The economy has strengthened,
and the Federal Reserve has validated our outlook by tightening monetary
conditions. As a result, we feel short-term interest rates are at attractive
levels and may trend higher.
In this context, your Fund's role as an integral component of your savings and
investment plans will take on additional importance. Your Fund has continued to
meet its investment objective by owning high quality investments that provide
stability of principal, especially during periods of market uncertainty, and
competitive money market dividends, that are exempt from Federal and State of
California income taxes.
We look forward to meeting the challenges which the economy and investment
markets may present in the months ahead. As always, we are dedicated to
providing our shareholders with solid investment results.
Thank you for your investment in the Tax-Exempt California Money Market Fund. We
look forward to serving your investment needs in the years to come.
Sincerely,
[SIG]
Frank J. Rachwalski
Vice President and Portfolio Manager
April 5, 1995
PORTFOLIO RESULTS
For the six months ended March 31, 1995, the Tax-Exempt California Money Market
Fund had a net annualized yield of 3.03% and a tax-equivalent yield of 5.31%.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share.
STATISTICAL NOTE
The Fund's net annualized yield for the six month period ended March 31, 1995 is
the annualized sum of the daily dividend rates for the period. The tax
equivalent yield is based upon the Fund's yield and a 42.9% combined Federal and
State of California marginal tax-rate. These yields are historical and may not
represent future yields, which will fluctuate. Income may be subject to local
taxes.
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Tax-Exempt California Money Market Fund
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PORTFOLIO OF INVESTMENTS
March 31, 1995
(Value in thousands)
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<TABLE>
<CAPTION>
Value
<S> <C>
(A)VARIABLE RATE DEMAND SECURITIES
Alameda
Revenue Bonds
5.25% $ 3,000
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Anaheim
Police Facilities Refinancing Project
4.00% 1,900
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Auburn
Union School District
4.15% 3,625
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Costa Mesa
Arts Center
4.30% 4,000
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Educational Facilities Authority
4.40% 5,700
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Foothill/Eastern Transportation Corridor Agency
4.15% 3,500
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Fremont
Fire Station Financing Project
4.25% 3,900
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Health Facilities Financing Authority
Children's Hospital of Orange County
3.95% 1,000
Pooled Loan Program
4.15% 1,010
Scripps Memorial Hospitals
4.15% 1,480
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Irvine
East Investment Company Revenue
4.25% 1,870
Public Facilities and Infrastructure Authority
4.90% 2,500
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Kern County
Community College District
4.45% 2,000
High School District
4.10% 4,100
Public Facilities Project
3.95% 2,400
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Lancaster
Redevelopment Agency
4.10% 1,000
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<CAPTION>
Value
<S> <C>
Los Angeles
Housing Authority
4.05% $ 2,800
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Los Angeles County
Multifamily Housing Revenue
3.90% 4,000
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Monterey County
Peninsula Water Management District
4.10% 4,500
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Palm Springs
Community Redevelopment Agency
4.10% 4,630
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Riverside County
Industrial Development Authority
4.25% 1,300
Public Facilities Project
4.15% 2,700
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Roseville
Finance Authority
4.05% 2,000
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Sacramento County
Multifamily Housing Revenue
4.25% 4,700
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San Diego
Housing Authority
La Cima Apartments
4.10% 1,000
Paseo Point Apartments
4.00% 2,600
Multifamily Housing Revenue
4.00% 3,300
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Santa Ana
School District
4.60% 3,000
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Ventura County
Triunfo Sanitation District
4.20% 1,000
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TOTAL VARIABLE RATE DEMAND
SECURITIES-83.7%
(average maturity: 6 days) 80,515
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</TABLE>
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3
Tax-Exempt California Money Market Fund
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<TABLE>
<CAPTION>
Value
<S> <C>
OTHER SECURITIES
California
Health Facilities Financing Authority
4.50%, 8/01/95 $ 1,000
Pollution Control Financing Authority
4.20%-4.25%, 4/19/95-5/15/95 3,300
Public Capital Improvements Financing Authority
4.30%, 6/15/95 4,500
Revenue Anticipation Notes
4.19%, 6/28/95 2,304
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Los Angeles County
Transportation Commission
4.00%, 4/07/95 4,000
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<CAPTION>
Value
<S> <C>
TOTAL OTHER SECURITIES--15.7%
(average maturity: 53 days) $ 15,104
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TOTAL INVESTMENTS--99.4%
(average maturity: 13 days) 95,619
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CASH AND OTHER ASSETS,
LESS LIABILITIES--.6% 587
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NET ASSETS--100% $ 96,206
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</TABLE>
NOTES TO PORTFOLIO 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 demand securities are payable within five business days and
are backed by credit support agreements from banks or insurance
institutions. The rates shown are the current rates at March 31, 1995.
See accompanying Notes to Financial Statements.
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Tax-Exempt California Money Market Fund
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STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
(in thousands)
<TABLE>
<S> <C>
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ASSETS
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Investments, at amortized cost $95,619
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Cash 325
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Receivable for:
Interest 436
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Securities sold 100
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Total assets 96,480
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LIABILITIES AND NET ASSETS
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Payable for:
Dividends 140
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Management fee 18
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Distribution services fee 26
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Custodian and transfer agent fees
and related expenses 17
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Other 73
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Total liabilities 274
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Net assets applicable to
shares outstanding $96,206
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THE PRICING OF SHARES
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Shares outstanding, no par value
(unlimited shares authorized) 96,206
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Net asset value and
redemption price per share $1.00
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</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six months ended March 31, 1995
(in thousands)
<TABLE>
<S> <C>
INTEREST INCOME $1,841
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EXPENSES:
Management fee 108
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Distribution services fee 162
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Custodian and transfer agent
fees and related expenses 61
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Professional fees 21
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Reports to shareholders 8
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Registration costs 3
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Trustees' fees and other 6
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Total expenses 369
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Net investment income $1,472
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</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Six months ended March 31, 1995 and
year ended September 30, 1994
(in thousands)
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<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,472 2,180
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Dividends to shareholders from
net investment income (1,472) (2,180)
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CAPITAL SHARE TRANSACTIONS (DOLLAR
AMOUNTS AND NUMBER OF SHARES
ARE THE SAME):
Shares sold 193,692 415,933
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Shares issued in reinvestment
of dividends 1,432 2,158
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195,124 418,091
Less shares redeemed 200,066 439,503
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Net decrease from capital share
transactions and total decrease in
net assets (4,942) (21,412)
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NET ASSETS:
Beginning of period 101,148 122,560
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End of period $ 96,206 101,148
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</TABLE>
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Tax-Exempt California Money Market Fund
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NOTES TO FINANCIAL STATEMENTS
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1. 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 the 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 on investments.
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, the Fund
determines its net asset value per share at 11:00 a.m. and 3:00 p.m. Chicago
time by dividing the total value of the Fund's investments and other assets,
less liabilities, by the number of Fund shares outstanding. The 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
The Fund has complied with the special provisions of the Internal Revenue Code
available to investment companies for the six months ended March 31, 1995.
2. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Fund has a management agreement with Kemper Financial Services, Inc. (KFS)
and pays a management fee at an annual rate of .22% of the first $500 million of
average daily net assets declining gradually to .15% of average daily net assets
in excess of $3 billion. During the six months ended March 31, 1995, the Fund
incurred a management fee of $108,000.
DISTRIBUTION AGREEMENT
The Fund also has a distribution, administration and underwriting agreement with
Kemper Distributors, Inc. (KDI). Before February 1, 1995, KFS was the Fund's
principal distributor, administrator and underwriter. For distribution services,
the Fund pays KDI an annual fee of .33% of average daily net assets of the Fund.
KDI has related service agreements with various firms to provide cash management
and other services for Fund shareholders. Under these agreements, KDI pays such
firms at an annual rate ranging from .15% to .33% of the average daily net
assets of those accounts that they maintain and service. During the six months
ended March 31, 1995, the Fund incurred a distribution services fee of $162,000,
of which KDI (as successor to KFS), pursuant to the related service agreements,
remitted $161,000 to various firms, including $122,000 paid to dealers
affiliated with KDI.
CUSTODIAN AND TRANSFER AGENT AGREEMENTS
The Fund has a custodian and a transfer agent agreement with Investors Fiduciary
Trust Company (IFTC), which was 50% owned by KFS until January 31, 1995, when
KFS completed the sale of IFTC to a third party. For the six months ended March
31, 1995, the Fund incurred custodian and
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6
TAX-EXEMPT CALIFORNIA MONEY MARKET FUND
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transfer agent fees of $34,000 (excluding related expenses). Pursuant to a
services agreement with IFTC, Kemper Service Company (KSvC), an affiliate of
KFS, is the shareholder service agent of the Fund. For the six months ended
March 31, 1995, IFTC remitted shareholder service fees of $30,000 to KSvC.
Kemper Clearing Corp. (KCC), an affiliate of KFS, pursuant to an agreement with
KSvC, performs bookkeeping, data processing and shareholder services
for KCC clients who are Fund shareholders. For the six months ended March 31,
1995, KCC earned $20,000 from KSvC for account maintenance fees.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the six months ended March 31, 1995, the Fund made no payments to its
officers and incurred trustees' fees of $6,000 to independent trustees.
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FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
Six months
ended
March 31, Year ended September 30,
1995 1994 1993 1992 1991
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<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
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Net investment income and dividends declared .02 .02 .02 .02 .04
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Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
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TOTAL RETURN (%): 1.52 1.97 1.88 2.64 4.02
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RATIOS TO AVERAGE NET ASSETS (%):
Expenses .75 .71 .69 .69 .66
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Net investment income 3.01 1.94 1.87 2.62 3.99
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SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $ 96,206 101,148 122,560 128,822 150,522
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</TABLE>
Note:
Ratios have been determined on an annualized basis. Total return is not
annualized.
<PAGE> 7
Tax-Exempt
California
Money Market
Fund
Semiannual Report
March 31, 1995
This report is not to be distributed unless preceded or accompanied by a
prospectus.
TAX-EXEMPT CALIFORNIA MONEY
MARKET FUND
120 South LaSalle Street, Chicago, IL 60603
238280 4/95 (LOGO)printed on recycled paper
