<PAGE> 1
TAX-EXEMPT NEW YORK MONEY MARKET FUND
ANNUAL REPORT TO SHAREHOLDERS
MARCH 31, 1996
<PAGE> 2
DEAR SHAREHOLDERS:
We are pleased to provide you with the Tax-Exempt New York Money Market Fund
annual report for the year ended March 31, 1996. The Fund registered solid
performance during this period. Please take a moment to review the Portfolio
results on page 2.
ECONOMIC REVIEW AND OUTLOOK
Recent developments in the U.S. economy and statements by Federal Reserve Board
chairman Alan Greenspan have indicated that interest rates are not headed any
lower. We feel that the economy's growth path, while moderate, has become more
stable than at the beginning of the year. The trend for inflation in the near
future appears to remain subdued.
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 yields 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 Tax-Exempt New York Money Market Fund. We
look forward to continuing to serve your investment needs in the years to come.
Sincerely,
/s/ Frank J. Rachwalski
Frank J. Rachwalski
Vice President and Portfolio Manager
April 8, 1996
Frank Rachwalski is Senior Vice President of Zurich Kemper Investments, 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.
(1)
<PAGE> 3
PORTFOLIO RESULTS
For the year ended March 31, 1996, the Tax-Exempt New York Money Market Fund
had a net annualized yield of 2.98% and a tax equivalent yield of 5.35%.*
NOTES
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.
The Fund's net annualized yield for the year ended March 31, 1996 is the
annualized sum of the daily dividend rates for the period. Yields are
historical and do not represent future yields, which will fluctuate.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period of the report as stated above. The manager's
views are subject to change at any time, based on market and other conditions.
* 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. Income may be subject to
local taxes and, for some investors, the alternative minimum tax.
(2)
<PAGE> 4
<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
- ---------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
March 31, 1996
(Value in thousands)
- ---------------------------------------------------------------------
Value
<S> <C>
(a)VARIABLE RATE DEMAND SECURITIES
New York State
Energy Research and Development Authority
3.80% $ 800
Housing Finance Agency:
Liberty View Apartments
3.45% 300
Mt. Sinai School of Medicine
3.55% 100
Normandie Court I
3.10% 500
Trackside Homes Phase III
3.35% 200
Job Development Authority
3.53% 865
Local Government Assistance Corporation
3.15% 400
Medical Care Facilities Finance Agency:
Lenox Hill Hospital
3.10% 400
Pooled Equipment Loan Program
3.35% 300
New York and New Jersey Port Authority
3.25% 300
- ---------------------------------------------------------------------
Babylon
Industrial Development Agency
3.35% 400
- ---------------------------------------------------------------------
Dutchess County
Industrial Development Agency
3.60% 100
- ---------------------------------------------------------------------
Franklin County
Industrial Development Agency
3.45% 300
- ---------------------------------------------------------------------
Metropolitan Transportation Authority
3.20% 400
- ---------------------------------------------------------------------
Mount Pleasant
Industrial Development Authority
3.25% 700
- ---------------------------------------------------------------------
New York City
General Obligation
3.42% 2,700
Housing Development Corporation:
Columbus Gardens
3.20% 400
East 96th Street
3.25% 300
James Tower Development
3.25% 200
</TABLE>
(3)
<PAGE> 5
<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
- ----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
March 31, 1996
(Value in thousands)
- ----------------------------------------------------------------------
Value
<S> <C>
Jane Street Development
3.30% $ 700
Queenswood Apartments
3.45% 300
Tribeca Towers
3.30% 400
Industrial Development Agency
3.60% 100
Municipal Water Finance Authority
3.75% 800
Trust for Cultural Resources:
American Museum of Natural History
3.15% 300
Carnegie Hall
3.40% 300
Museum of Broadcasting
3.45% 200
- ---------------------------------------------------------------------
Schenectady County
Industrial Development Agency
3.25% 100
- ---------------------------------------------------------------------
St. Lawrence County
Industrial Development Agency
3.20% 400
- ---------------------------------------------------------------------
Suffolk County
Industrial Development Agency
3.35% 400
- ---------------------------------------------------------------------
TOTAL VARIABLE RATE DEMAND SECURITIES - 73.7%
(average maturity: 3 days) 13,665
- ---------------------------------------------------------------------
OTHER SECURITIES
New York State
Dormitory Authority:
Memorial Sloan-Kettering Cancer Center
3.10% , 4/8/96 400
Second Short-Term Revenue Note
3.70% , 4/9/96 597
Energy Research and Development Authority:
Electric and Gas Corporation
3.65% , 12/1/96 600
Long Island Lighting Company
3.25% , 3/1/97 500
General Obligation
3.45% , 11/15/96 337
Power Authority of New York
3.25% , 5/14/96 500
- ---------------------------------------------------------------------
Nassau County
Revenue Anticipation Notes
3.40%, 3/5/97 501
</TABLE>
(4)
<PAGE> 6
<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
- -----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
March 31, 1996
(Value in thousands)
- -----------------------------------------------------------------------
Value
<S> <C>
Tax Anticipation Notes
3.90% , 4/15/96 $ 200
- ----------------------------------------------------------------------
New York City
Revenue Anticipation Notes
3.45% - 3.90% , 4/11/96 - 6/28/96 1,102
- ----------------------------------------------------------------------
TOTAL OTHER SECURITIES - 25.6%
(average maturity: 137 days) 4,737
- ----------------------------------------------------------------------
TOTAL INVESTMENTS - 99.3%
(average maturity: 37 days) 18,402
- ----------------------------------------------------------------------
Other Assets, Less Liabilities - .7% 125
Net Assets - 100% $18,527
======================================================================
</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 and are backed by credit support agreements from banks or
insurance institutions. The rates shown are the current rates at March
31, 1996.
See accompanying Notes to Financial Statements.
(5)
<PAGE> 7
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, 1996, the related statements of operations for the year then ended
and changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the fiscal periods since 1992. These
financial statements and financial highlights are the responsibility of the
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, 1996, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significicant
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, 1996, 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 1992, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Chicago, Illinois
May 16, 1996
(6)
<PAGE> 8
<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
- ------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
(in thousands)
- ------------------------------------------------
<S> <C>
ASSETS
- ------------------------------------------------
Investments, at amortized cost $18,402
- ------------------------------------------------
Cash 86
- ------------------------------------------------
Interest receivable 99
- ------------------------------------------------
Total assets 18,587
- ------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------
Payable for:
Dividends 13
- ------------------------------------------------
Shares of the Fund redeemed 21
- ------------------------------------------------
Distribution services fee 7
- ------------------------------------------------
Other 19
- ------------------------------------------------
Total liabilities 60
- ------------------------------------------------
Net assets applicable to shares
outstanding $18,527
================================================
THE PRICING OF SHARES
- ------------------------------------------------
Shares outstanding 18,527
- ------------------------------------------------
Net asset value and
redemption price per share $1.00
================================================
</TABLE>
See accompanying Notes to Financial Statements.
(7)
<PAGE> 9
<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
- --------------------------------------------
STATEMENT OF OPERATIONS
Year ended March 31, 1996
(in thousands)
- --------------------------------------------
<S> <C>
Interest income $633
- --------------------------------------------
Expenses:
Management fee 37
- --------------------------------------------
Distribution services fee 84
- --------------------------------------------
Custodian and transfer agent
fees and related expenses 20
- --------------------------------------------
Registration costs 11
- --------------------------------------------
Professional fees 18
- --------------------------------------------
Reports to shareholders 14
- --------------------------------------------
Trustees' fees and other 8
- --------------------------------------------
192
- --------------------------------------------
Less expenses waived
by the investment manager (57)
- --------------------------------------------
Total expenses absorbed
by the Fund 135
- --------------------------------------------
Net investment income $498
============================================
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Years ended March 31, 1996 and 1995
- ------------------------------------------------------------------
1996 1995
----------------------------
(in thousands)
<S> <C> <C>
Operations:
Net investment income $ 498 $ 292
- ------------------------------------------------------------------
Dividends to shareholders
from net investment income (498) (292)
- ------------------------------------------------------------------
Capital share transactions
(dollar amounts and number
of shares are the same):
Shares sold 108,282 77,096
- ------------------------------------------------------------------
Shares issued in
reinvestment of dividends 497 282
- ------------------------------------------------------------------
108,779 77,378
Less shares redeemed 104,342 74,050
- ------------------------------------------------------------------
Net increase from capital
share transactions and total
increase in net assets 4,437 3,328
- ------------------------------------------------------------------
NET ASSETS:
Beginning of year 14,090 10,762
- ------------------------------------------------------------------
End of year $18,527 14,090
==================================================================
</TABLE>
See accompanying Notes to Financial Statements.
(8)
<PAGE> 10
Tax-Exempt New York Money Market Fund
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
Tax-Exempt New York Money Market Fund is an open-end management investment
company organized as a business trust under the laws of Massachusetts.
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 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 Funds investment 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
Each Fund has compiled 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 Fund has a management agreement with Zurich Kemper Investments, Inc. (ZKI)
(formerly known as Kemper Financial Services, Inc.) 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 year ended March 31, 1996, the Fund incurred a management
fee of $37,000.
DISTRIBUTION AGREEMENT
The Fund also has an administration, shareholder services and distribution
agreement with Kemper Distributors, Inc. (KDI). For its services as primary
distributor, the Fund pays KDI an annual fee of .50% 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 the average daily
net assets of those accounts they maintain and service. During the year ended
March 31, 1996, the Fund incurred a distribution services fee of $84,000, all of
which KDI remitted to various firms pursuant to the related service agreements,
including $18,000 to dealers affiliated with KDI.
(9)
<PAGE> 11
Tax-Exempt New York Money Market Fund
SHAREHOLDER SERVICES AGREEMENT
Pursuant to a services agreement with the Fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder service agent of the
Fund. Under the agreement, KSvC received shareholder services fees of
$19,000 for the year ended March 31, 1996.
EVEREN Clearing Corp. (ECC), formerly Kemper Clearing Corp., was an affiliate
of ZKI until September 13, 1995. Pursuant to an agreement with KSvC, ECC
performs bookkeeping, data processing and shareholder services for ECC clients
who are Fund shareholders. During the period from April 1, 1995 to September
13, 1995, ECC received $4,000 from KSvC for account maintenance fees.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of ZKI.
During the year ended March 31, 1996, the Fund made no payments to its officers
and incurred trustees' fees of $7,000 to independent trustees.
EXPENSE WAIVER
ZKI has agreed to temporarily waive its management fee and reimburse or pay
certain operating expenses to the extent they exceed 80% of average daily
net assets of the Fund. Under this agreement, ZKI waived $57,000 of expenses
during the year ended March 31, 1996.
(10)
<PAGE> 12
<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
- ----------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------
Year ended March 31,
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------
Net investment income and dividends declared .03 .02 .02 .02 .04
- -----------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------
Total Return 3.03% 2.40 1.63 1.90 3.77
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses after expense absorption .80% .80 .80 .80 .42
- -----------------------------------------------------------------------------------------------
Net investment income 2.95% 2.44 1.61 1.88 3.52
- -----------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS
Expenses 1.14% 1.15 1.25 1.53 1.45
- -----------------------------------------------------------------------------------------------
Net investment income 2.61% 2.09 1.16 1.15 2.49
- -----------------------------------------------------------------------------------------------
Supplemental Data:
Net assets at end of year (in thousands) $18,527 14,090 10,762 8,424 8,243
===============================================================================================
</TABLE>
NOTE:
ZKI has agreed to temporarily waive its management fee and reimburse or pay
certain operating expenses. The Other Ratios to Average Net Assets are computed
without this expense waiver or reimbursement.
FEDERAL TAX STATUS OF 1996 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
includible in the alternative minimum tax calculation.
(11)
<PAGE> 13
INVESTMENT MANAGER
Zurich Kemper Investments, Inc.
PRINCIPAL UNDERWRITER
Kemper Distributors, Inc.
120 South LaSalle Street
Chicago, IL 60603
This report is not to be distributed unless preceded or accompanied by a
prospectus. 1013840 4/96
