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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 14
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<PAGE> PAGE 17
SIGNATURE JEROME L. DUFFY
TITLE TREASURER
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<TOTAL-LIABILITIES> 8,871
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,785,098
<SHARES-COMMON-STOCK> 1,785,098
<SHARES-COMMON-PRIOR> 1,538,011
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,785,098
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 91,010
<OTHER-INCOME> 0
<EXPENSES-NET> (12,979)
<NET-INVESTMENT-INCOME> 78,031
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 78,031
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (78,031)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,708,371
<NUMBER-OF-SHARES-REDEEMED> (5,537,494)
<SHARES-REINVESTED> 76,210
<NET-CHANGE-IN-ASSETS> 247,087
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (2,704)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (12,979)
<AVERAGE-NET-ASSETS> 1,602,110
<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> .008
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000310030
<NAME> CASH EQUIVALENT FUND
<SERIES>
<NUMBER> 3
<NAME> TAX EXEMPT PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 1,115,186
<INVESTMENTS-AT-VALUE> 1,115,186
<RECEIVABLES> 7,550
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,122,736
<PAYABLE-FOR-SECURITIES> 2,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,875
<TOTAL-LIABILITIES> 12,875
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,109,861
<SHARES-COMMON-STOCK> 1,109,861
<SHARES-COMMON-PRIOR> 1,136,901
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,109,861
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 41,541
<OTHER-INCOME> 0
<EXPENSES-NET> (7,401)
<NET-INVESTMENT-INCOME> 34,140
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 34,140
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (34,140)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,660,114
<NUMBER-OF-SHARES-REDEEMED> (3,720,584)
<SHARES-REINVESTED> 33,430
<NET-CHANGE-IN-ASSETS> (27,040)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (2,245)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (7,401)
<AVERAGE-NET-ASSETS> 1,082,965
<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> .007
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
SUPPLEMENTARY REPORT OF INDEPENDENT AUDITORS
Board of Trustees
Kemper Funds
In planning and performing our audit of the financial statements of
each of the Kemper Funds listed in Exhibit A attached hereto (the
"Funds") for the year ended July 31, 1995, we considered their
internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on their financial statements and
to comply with the requirements of Form N-SAR, not to provide
assurance on the internal control structure.
The management of the Funds is responsible for establishing and
maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an
internal control structure are to provide management with reasonable,
but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are
executed in accordance with management's authorization and recorded
properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure to future periods is
subject to the risk that it may become inadequate because of changes
in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
that might be material weaknesses under standards established by the
American Institute of Certified Public Accountants. A material
weakness is a condition in which the design or operation of the
specific internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the
internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined
above as of July 31, 1995.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
September 15, 1995
Kemper Funds Exhibit A
July 31, 1995
Kemper Money Market Fund - Money Market Portfolio
Kemper Money Market Fund - Government Securities Portfolio
Kemper Money Market Fund - Tax-Exempt Portfolio
Kemper Cash Equivalent Fund - Money Market Portfolio
Kemper Cash Equivalent Fund - Government Securities Portfolio
Kemper Cash Equivalent Fund - Tax-Exempt Portfolio
Kemper Portfolios:
Kemper Cash Reserve Fund
Kemper U.S. Mortgage Fund
Kemper Short-Intermediate Government Fund
Exhibit 77N
Cash Equivalent Fund
Form N-SAR for the period ended 7/31/95
File No. 811-2899
The arrangements described in Exhibit 77N for the period ended
1/31/95 were amended and continued until July, 1996.
MAM|W:\FUNDS\NSAR.EXH\CEF995.77N|092595
