<PAGE> 1
TAX-EXEMPT NEW YORK MONEY MARKET FUND
ANNUAL REPORT TO SHAREHOLDERS
MARCH 31, 1995
This report is not to be distributed unless preceded or accompanied by a
prospectus.
<PAGE> 2
DEAR SHAREHOLDERS:
We are pleased to submit to you the Tax-Exempt New York Money Market Fund
annual report for the year ended March 31, 1995.
In your Fund's semi-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 investment
plan 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, State of New York and New
York City income taxes.
We look forward to meeting the challenges which the economy and the financial
markets may present in the months ahead. As always, we are dedicated to
providing our shareholders with excellent investment results.
Thank you for your investment in the Tax-Exempt New York Money Market Fund. We
look forward to serving your investment needs in the years to come.
Sincerely,
Frank J. Rachwalski
Frank J. Rachwalski
Vice President and Portfolio Manager
April 5, 1995
Frank Rachwalski is Senior Vice President of Kemper Financial Services, Inc.
and Vice President and Portfolio Manager of Tax-Exempt New York Money Market
Fund. Mr. Rachwalski holds a B.B.A. and a M.B.A. degree from Loyola
University.
PORTFOLIO RESULTS
For the year ended March 31, 1995, the Tax-Exempt New York Money Market Fund
had a net annualized yield of 2.37% and a tax equivalent yield of 4.25%.
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 year 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 44.3% combined Federal, State and
City of New York marginal tax rate. These yields are historical and do not
represent future yields, which will fluctuate. Income may be subject to local
taxes and, for some investors, the alternative minimum tax.
<PAGE> 3
Tax-Exempt New York Money Market Fund
PORTFOLIO OF INVESTMENTS
March 31, 1995
(Value in thousands)
<TABLE>
<CAPTION>
Value
(a)Variable Rate Demand Securities
<S> <C>
Albany
Industrial Development Agency
4.88% $ 400
--------------------------------------------------------------
Babylon
Industrial Development Agency
4.00% 500
--------------------------------------------------------------
Dutchess County
Industrial Development Agency
4.40% 100
--------------------------------------------------------------
Erie County
Water Authority
3.95% 400
--------------------------------------------------------------
Franklin County
Industrial Development Agency
3.80% 300
--------------------------------------------------------------
Metropolitan Transportation Authority
3.90% 400
--------------------------------------------------------------
New York City
General Obligation
4.33% 1,600
Housing Development Corporation--
Columbus Gardens
4.10% 400
East 96th Street
3.95% 300
James Tower Development
3.95% 200
Queenswood Apartments
4.10% 300
Tribeca Towers
4.00% 400
Industrial Development Agency
4.40% 100
Trust for Cultural Resources--
American Museum of Natural History
3.90% 300
Carnegie Hall
3.85% 300
Museum of Broadcasting
4.10% 200
--------------------------------------------------------------
New York State
Housing Finance Agency--
Liberty View Apartments
3.80% 300
Mt. Sinai School of Medicine
3.80% 100
</TABLE>
(2)
<PAGE> 4
Tax-Exempt New York Money Market Fund
PORTFOLIO OF INVESTMENTS
March 31, 1995
(Value in thousands)
<TABLE>
<S> <C>
Housing Finance Agency--
Normandie Court I
4.05% $ 500
Trackside Homes Phase III
4.10% 200
Job Development Authority
3.80% 1,005
Local Government Assistance Corporation
3.85% 400
Medical Care Facilities Finance Agency--
Lenox Hill Hospital
3.70% 400
Pooled Equipment Loan Program
4.10% 300
New York and New Jersey Port Authority
4.10% 300
--------------------------------------------------------------
Schenectady County
Industrial Development Agency
3.95% 100
--------------------------------------------------------------
Suffolk County
Industrial Development Agency
4.05% 50
--------------------------------------------------------------
Total Variable Rate Demand Securities - 69.9%
(average maturity: 5 days) 9,855
--------------------------------------------------------------
Other Securities
Nassau County
Revenue and Tax Anticipation Notes
3.60% - 5.10%, 4/14/95 - 9/28/95 400
--------------------------------------------------------------
New York City
Municipal Water Finance Authority
3.90% - 4.30%, 4/13/95 - 5/23/95 800
Revenue Anticipation Notes
4.10%, 6/30/95 401
--------------------------------------------------------------
New York State
Dormitory Authority--
Memorial Sloan-Kettering Cancer Center
4.20%, 4/28/95 400
Second Short-Term Revenue Note
3.90%, 5/10/95 597
Energy Research and Development Authority--
Electric and Gas Corporation
3.55% - 4.60%, 4/12/95 - 12/01/95 600
Long Island Lighting Company
4.70%, 3/01/96 500
General Obligation
4.00%, 4/12/95 200
Mortgage Agency
4.05%, 4/01/95 400
--------------------------------------------------------------
</TABLE>
(3)
<PAGE> 5
Tax-Exempt New York Money Market Fund
PORTFOLIO OF INVESTMENTS
March 31, 1995
(Value in thousands)
<TABLE>
<S> <C>
Total Other Securities - 30.5%
(average maturity: 89 days) $ 4,298
--------------------------------------------------------------
Total Investments - 100.4%
(average maturity: 31 days) 14,153
--------------------------------------------------------------
Liabilities, Less Other Assets - (.4%) (63)
--------------------------------------------------------------
Net Assets - 100% $14,090
--------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate demand 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.
These securities 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.
(4)
<PAGE> 6
Tax-Exempt New York Money Market Fund
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Tax-Exempt New York Money Market Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Tax-Exempt New York Money Market
Fund as of March 31, 1995, 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 period then
ended, and the financial highlights for each of the fiscal periods since 1991.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of March 31, 1995, 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 Tax-Exempt New York Money Market Fund at March 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the fiscal periods since 1991, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 28, 1995
(5)
<PAGE> 7
Tax-Exempt New York Money Market Fund
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
---------------------------------------------------------------
Investments, at amortized cost $14,153
---------------------------------------------------------------
Interest receivable 84
---------------------------------------------------------------
Total assets 14,237
---------------------------------------------------------------
LIABILITIES AND NET ASSETS
---------------------------------------------------------------
Cash overdraft 103
---------------------------------------------------------------
Payable for:
Dividends 13
---------------------------------------------------------------
Shares of the Fund redeemed 9
---------------------------------------------------------------
Distribution fee 3
---------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 4
---------------------------------------------------------------
Other 15
---------------------------------------------------------------
Total liabilities 147
---------------------------------------------------------------
Net assets applicable to shares outstanding $14,090
===============================================================
THE PRICING OF SHARES
---------------------------------------------------------------
Shares outstanding, no par value
(unlimited shares authorized) 14,090
---------------------------------------------------------------
Net asset value and
redemption price per share $1.00
===============================================================
</TABLE>
See accompanying Notes to Financial Statements.
(6)
<PAGE> 8
Tax-Exempt New York Money Market Fund
STATEMENT OF OPERATIONS
Year Ended March 31, 1995
(in thousands)
<TABLE>
<S> <C>
Interest income $388
------------------------------------------------------------------------------
Expenses:
Management fee 26
------------------------------------------------------------------------------
Distribution fee 60
------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 19
------------------------------------------------------------------------------
Registration costs 3
------------------------------------------------------------------------------
Professional fees 16
------------------------------------------------------------------------------
Reports to shareholders 9
------------------------------------------------------------------------------
Trustees' fees and other 4
------------------------------------------------------------------------------
137
------------------------------------------------------------------------------
Less expenses absorbed by the investment manager (41)
------------------------------------------------------------------------------
Total expenses absorbed by the Fund 96
------------------------------------------------------------------------------
Net investment income $292
==============================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Years Ended March 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---------------------
(in thousands)
<S> <C> <C>
Operations:
Net investment income $ 292 147
-----------------------------------------------------------------------------
Dividends to shareholders from net investment income (292) (147)
-----------------------------------------------------------------------------
Capital share transactions (dollar amounts and
number of shares are the same):
Shares sold 77,096 42,888
-----------------------------------------------------------------------------
Shares issued in reinvestment of dividends 282 142
-----------------------------------------------------------------------------
77,378 43,030
-----------------------------------------------------------------------------
Less shares redeemed 74,050 40,692
-----------------------------------------------------------------------------
Net increase from capital share transactions and
total increase in net assets 3,328 2,338
-----------------------------------------------------------------------------
Net assets:
Beginning of year 10,762 8,424
-----------------------------------------------------------------------------
End of year $14,090 10,762
==============================================================================
</TABLE>
See accompanying Notes to Financial Statements.
(7)
<PAGE> 9
Tax-Exempt New York Money Market Fund
NOTES TO FINANCIAL STATEMENTS
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 and therefore no federal income tax provision
is required.
2. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Fund has a management agreement with Kemper Financial Services, Inc. (KFS).
For management services and facilities furnished, the Fund pays a fee on a
graduated annual basis ranging from .22 of 1% on the first $500 million of
average daily net assets to .15 of 1% of average daily net assets in excess of
$3 billion. During the year ended March 31, 1995, the Fund incurred a
management fee of $26,000.
DISTRIBUTION AGREEMENT
The Fund also has an administration, shareholder services and distribution
agreement (distribution agreement) with Kemper Distributors, Inc. (KDI).
(Before February 1, 1995, KFS was the distributor.) For its services as
distributor, the Fund pays KDI an annual fee of .50 to 1% 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 of .50 of 1% of the average
daily net assets of those accounts that they maintain and service. During the
year ended March 31, 1995, the Fund incurred a distribution fee of $60,000, all
of which KDI (and KFS as predecessor to KDI) remitted to various firms pursuant
to the related service agreements, including $30,000 to dealers affiliated with
KDI.
(8)
<PAGE> 10
Tax-Exempt New York Money Market Fund
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 year ended
March 31, 1995, the Fund incurred custodian transfer agent fees of $16,000
(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 year ended March 31, 1995, IFTC remitted shareholder
service fees of $14,000 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. During the year ended March 31, 1995, KCC
earned $5,000 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 year ended March 31, 1995, the Fund made no payments to its officers
and incurred trustees' fees of $3,000 to independent trustees.
EXPENSE ABSORPTION
KFS has agreed to temporarily absorb certain operating expenses to the extent
they exceed .80 of 1% of average daily net assets of the Fund. Under this
agreement, KFS absorbed $41,000 of expenses during the year ended
March 31, 1995.
(9)
<PAGE> 11
Tax-Exempt New York Money Market Fund
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Dec. 13,
1990
to
Year ended March 31, March 31,
1995 1994 1993 1992 1991
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .02 .02 .02 .04 .01
----------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------------------------------------------
Total Return (%): 2.40 1.63 1.90 3.77 .97
----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses after expense absorption .80 .80 .80 .42 .54
----------------------------------------------------------------------------------------------------------------
Net investment income 2.44 1.61 1.88 3.52 3.77
----------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.15 1.25 1.53 1.45 1.00
----------------------------------------------------------------------------------------------------------------
Net investment income 2.09 1.16 1.15 2.49 3.31
----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $14,090 10,762 8,424 8,243 2,108
================================================================================================================
</TABLE>
NOTE:
KFS has agreed to temporarily absorb certain operating expenses. The Other
Ratios to Average Net Assets are computed without this expense absorption.
Ratios have been determined on an annualized basis. Total return is not
annualized.
FEDERAL TAX STATUS OF 1995 DIVIDENDS
All of the dividends 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.
(10)
<PAGE> 12
INVESTMENT MANAGER
Kemper Financial Services
PRINCIPAL UNDERWRITER
Kemper Distributors, Inc.
120 South LaSalle Street
Chicago, IL 60603
