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TAX-EXEMPT NEW YORK MONEY MARKET FUND
ANNUAL REPORT TO SHAREHOLDERS
MARCH 31, 1997
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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, 1997.
Your fund's management greatly appreciates your decision to invest in
Tax-Exempt New York Money Market Fund. During the past year, the fund
registered solid performance and achieved its objective of providing maximum
current income exempt from Federal, State of New York and New York City income
taxes, while maintaining stability of principal.
ECONOMIC REVIEW AND OUTLOOK
The economic recovery is continuing, and based on recent statistics, its
momentum appears to be strengthening. Labor markets have firmed, consumer
confidence is high and quarterly measures of the Gross Domestic Product are
above trend for a non-inflationary expansion. In fact, the Federal Reserve
System tightened monetary conditions in March for the first time since February
1995. Looking forward, we anticipate uninterrupted, moderate economic growth,
coupled with subdued but rising inflationary pressures. In this context, we
expect upward interest rate trends.
Money market funds, such as Tax-Exempt New York Money Market Fund, should offer
the opportunity for attractive yields and should continue to be an excellent
place to invest your money.
Your fund's management thanks you for the vote of confidence you have shown
through your investment and continues its dedication to performance. We look
forward to serving your investment needs for years to come.
Sincerely,
Frank Rachwalski
Frank Rachwalski
Vice President and Portfolio Manager
April 3, 1997
Frank Rachwalski is Vice President of Zurich Kemper Investments, Inc. and Vice
President and Portfolio Manager of Tax-Exempt New York Money Market Fund. Mr.
Rachwalski holds B.B.A. and M.B.A. degrees from Loyola University.
PORTFOLIO RESULTS
For the year ended March 31, 1997, the Tax-Exempt New York Money Market Fund
had a net yield of 2.99% and a tax-equivalent yield of 5.29%.
(1)
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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 yield for the year ended March 31, 1997, is the sum of the daily
dividend rates for the period. Yields are historical and may not represent
future yields, which will fluctuate.
The tax-equivalent yield is based upon the fund's yield and a 43.5% combined
Federal and State of New York and New York City marginal income tax rate.
Income from the Tax-Exempt New York Money Market Fund may be subject to local
taxes.
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.
(2)
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<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
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PORTFOLIO OF INVESTMENTS
March 31, 1997
(Value in thousands)
=================================================================
<S> <C>
Value
(a) VARIABLE RATE DEMAND SECURITIES
New York State
Energy Research and Development Authority:
Brooklyn Union Gas Project
3.30% $2,500
Niagara Mohawk Power Corporation Project
3.83% 14,400
Housing Finance Agency:
Hospital for Special Surgery
3.15% 1,000
Liberty View Apartments
3.05% 300
Mount Sinai School of Medicine
3.35% 100
Normandie Court I
3.40% 1,500
Trackside Homes Phase III
3.45% 200
Job Development Authority
3.55% 820
Local Government Assistance Corporation
3.35% 1,500
Medical Care Facilities Finance Agency:
Lenox Hill Hospital Project
3.40% 700
Pooled Equipment Loan Program
3.25% 300
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Babylon
Industrial Development Agency
3.45% 1,200
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Dutchess County
Industrial Development Agency
3.55% 100
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Franklin County
Industrial Development Agency
3.50% 300
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Metropolitan Transportation Authority
3.40% 1,500
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Mount Pleasant
Industrial Development Agency
3.30% 700
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</TABLE>
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<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
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PORTFOLIO OF INVESTMENTS
March 31, 1997
(Value in thousands)
===============================================================
<S> <C>
Value
New York City
General Obligation
3.67% $15,100
Housing Development Corporation:
Columbus Gardens Project
3.35% 1,500
East 96th Street Project
3.30% 1,300
James Tower
3.30% 100
100 Jane Street
3.40% 700
Queenswood Apartments
3.50% 1,500
Tribeca Towers
3.30% 400
West 43rd Street
3.40% 700
Municipal Water Finance Authority
3.70% 2,600
Trust for Cultural Resources
3.20% 1,500
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Onondaga County
Industrial Development Agency
3.15% 400
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St. Lawrence County
Industrial Development Agency
3.45% 500
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Schenectady County
Industrial Development Agency
3.25% 100
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TOTAL VARIABLE RATE DEMAND SECURITIES - 88.3%
(average maturity: 3 days) 53,520
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OTHER SECURITIES
New York State
Dormitory Authority:
Memorial Sloan-Kettering Cancer Center
3.35% - 3.40%, 4/10/97 - 5/13/97 1,700
Second Short-Term Revenue Notes
3.55%, 5/12/97 158
Environmental Facilities Corporation
3.30%, 5/15/97 1,000
General Obligation
3.05% - 3.45%, 4/1/97 - 5/13/97 2,700
Power Authority
3.35% - 3.45%, 5/8/97 - 5/14/97 900
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</TABLE>
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<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
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PORTFOLIO OF INVESTMENTS
March 31, 1997
(Value in thousands)
===================================================================
<S> <C>
Value
Nassau County
Bond Anticipation Notes
4.00%, 8/15/97 $1,067
Tax Anticipation Notes
3.55%, 9/25/97 401
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TOTAL OTHER SECURITIES - 13.1%
(average maturity: 51 days) 7,926
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TOTAL INVESTMENTS - 101.4%
(average maturity: 9 days) 61,446
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LIABILITIES, LESS OTHER ASSETS - (1.4)% (871)
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NET ASSETS - 100% $60,575
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</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, 1997.
See accompanying Notes to Financial Statements.
<PAGE> 7
Tax-Exempt New York Money Market Fund
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REPORT OF INDEPENDENT AUDITORS
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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, 1997, 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 years since 1993. 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, 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
Tax-Exempt New York Money Market Fund at March 31, 1997, 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 years since 1993, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 16, 1997
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<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
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STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
(in thousands)
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<S> <C>
ASSETS
- -----------------------------------------------------------
Investments, at amortized cost $61,446
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Receivable for:
Interest 183
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Securities sold 20
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Total assets 61,649
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LIABILITIES AND NET ASSETS
- -----------------------------------------------------------
Cash overdraft 914
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Payable for:
Dividends 45
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Fund shares redeemed 13
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Distribution services fee 65
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Trustees' fees and other 37
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Total liabilities 1,074
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Net assets applicable to shares outstanding $60,575
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THE PRICING OF SHARES
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Shares outstanding 60,575
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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.
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<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
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STATEMENT OF OPERATIONS STATEMENT OF CHANGES IN NET ASSETS
Year ended March 31, 1997 Years ended March 31, 1997 and 1996
(in thousands) (in thousands)
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1997 1996
---------------------------
<S> <C> <C> <C> <C>
Operations:
Interest income $1,237 Net investment income $ 1,077 498
- ------------------------------------------------------ --------------------------------------------------------------------
Expenses: Dividends to shareholders
Management fee 80 from net investment income (1,077) (498)
- ------------------------------------------------------ --------------------------------------------------------------------
Distribution services fee 182 Capital share transactions
- ------------------------------------------------------ (dollar amounts and number
Custodian and transfer agent of shares are the same):
fees and related expenses 47 Shares sold 239,603 108,282
- ------------------------------------------------------ --------------------------------------------------------------------
Registration costs 5
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Shares issued in
Professional fees 15 reinvestment of dividends 1,034 497
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- ------------------------------------------------------ 240,637 108,779
Reports to shareholders 14
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Shares redeemed (198,589) (104,342)
Trustees' fees and other 8 --------------------------------------------------------------------
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Net increase from capital
Total expenses before expense share transactions and total
absorption 351 increase in net assets 42,048 4,437
- ------------------------------------------------------ --------------------------------------------------------------------
Less expenses absorbed
by the investment manager (191)
- ------------------------------------------------------
Total expenses paid Net assets:
by the Fund 160 Beginning of year 18,527 14,090
- ------------------------------------------------------ --------------------------------------------------------------------
Net investment income $1,077 End of year $ 60,575 18,527
====================================================== ====================================================================
</TABLE>
See accompanying Notes to Financial Statements.
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Tax-Exempt New York Money Market Fund
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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 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.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Fund has a management agreement with Zurich Kemper Investments, Inc. (ZKI)
and pays a management fee at an annual rate of .22% of the first $500 million
of average daily net assets declining to .15% of average daily net assets in
excess of $3 billion. During the year ended March 31, 1997, the Fund paid no
management fee after an expense absorption by ZKI.
DISTRIBUTION AGREEMENT
The Fund has an administration, shareholder services and distribution
agreement with Zurich Kemper Distributors, Inc. (ZKDI) (formerly known as
Kemper Distributors, Inc.). For its services as primary distributor, the Fund
pays ZKDI an annual fee of .50% of average daily net assets of the Fund. ZKDI
has related service agreements with various firms to provide cash management
and other services for Fund shareholders. Under these agreements, ZKDI pays
such firms at a maximum annual rate of .50% of average daily net assets of
those accounts they maintain and service. For the year ended March 31, 1997,
the Fund paid a distribution services fee of $71,000 after an expense
absorption by ZKI, and ZKDI remitted $142,000 to various firms pursuant to the
related service agreements.
SHAREHOLDER SERVICES AGREEMENT
Pursuant to a services agreement with the Fund's transfer agent, Zurich Kemper
Service Company (ZKSvC) (formerly known as Kemper Service Company) is the
shareholder service agent of the Fund. Under the agreement, ZKSvC received
shareholder services fees of $33,000 for the year ended March 31, 1997.
<PAGE> 11
Tax-Exempt New York Money Market Fund
- --------------------------------------------------------------------------------
================================================================================
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of ZKI.
During the year ended March 31, 1997, the Fund made no payments to its
officers and incurred trustees' fees of $7,000 to independent trustees.
EXPENSE ABSORPTION
During the year ended March 31, 1997, ZKI agreed to voluntarily absorb certain
expenses of the Fund. This expense absorption was in addition to ZKI's
temporary absorption of expenses that exceed .80% of average daily net assets
of the Fund. Under these arrangements, ZKI absorbed $191,000 of expenses.
<PAGE> 12
<TABLE>
<CAPTION>
Tax-Exempt New York Money Market Fund
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FINANCIAL HIGHLIGHTS
=====================================================================================================================
Year ended March 31,
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<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 .03 .02 .02 .02
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3.03% 3.03 2.40 1.63 1.90
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION:
Expenses .44% .80 .80 .80 .80
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 2.96% 2.95 2.44 1.61 1.88
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION:
Expenses .96% 1.14 1.15 1.25 1.53
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 2.44% 2.61 2.09 1.16 1.15
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end year (in thousands) $60,575 18,527 14,090 10,762 8,424
=====================================================================================================================
Note: ZKI has agreed to temporarily absorb certain expenses of the Fund.
=====================================================================================================================
</TABLE>
FEDERAL TAX STATUS OF 1997 DIVIDENDS
All of the dividends constitute tax-exempt interest which is not taxable for
federal income tax purposes; however, a portion of the dividends may be
includible in the alternative minimum tax calculation.
<PAGE> 13
Investment Manager
Zurich Kemper Investments, Inc.
Principal Underwriter
Zurich Kemper Distributors, Inc.
222 S. Riverside Plaza
Chicago, IL 60606
This report is not to be distributed unless preceded or accompanied by a
prospectus.
