<PAGE> 1
- --------------------------------------------------------------------------------
DEAR SHAREHOLDERS:
- --------------------------------------------------------------------------------
We are pleased to provide you with the Cash Equivalent Fund annual report for
the year ended July 31, 1996. Your Fund's management greatly appreciates your
decision to invest in Cash Equivalent Fund. During the past year, each of the
Fund's Portfolios--Money Market, Government Securities and Tax-Exempt,
registered solid performance and achieved its objective of providing maximum
current income from high quality money market securities while maintaining
stability of principal.
ECONOMIC REVIEW AND OUTLOOK
Recent strengths in the U.S. economy suggest that interest rates are not likely
to decline. We feel that the economy's growth path, while moderate, will
continue above the trend for the rest of 1996. Moreover, the trend for inflation
in the near future appears to remain subdued. In this context, we anticipate a
period of rate stability with a rising probability of higher rate levels as the
year progresses.
We look forward to meeting the challenges which the economy and the financial
markets will present in the months ahead. As always, we are dedicated in our
attempt to provide our shareholders with excellent investment results.
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,
John W. Stuebe
John W. Stuebe
Vice President and Portfolio Manager
August 12, 1996
John Stuebe is First Vice President of Zurich Kemper Investments, Inc. and Vice
President and Portfolio Manager of Cash Equivalent Fund. Mr. Stuebe holds a B.S.
degree in Finance from the University of Illinois and a M.S. degree in Economics
from DePaul University.
PORTFOLIO RESULTS
For the year ended July 31, 1996, the Fund's three Portfolios had the following
net annualized yields:
The Money Market Portfolio had a net annualized yield of 4.82%.
The Government Securities Portfolio had a net annualized yield of 4.87%.
The Tax-Exempt Portfolio had a net annualized yield of 3.06% and a
tax-equivalent yield of 4.86%.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that a Portfolio will be able to
maintain a stable net asset value of $1.00 per share.
NOTES
Each Portfolio's net annualized yield for the year ended July 31, 1996 is the
annualized sum of the daily dividend rates for the period. The tax-equivalent
yield for the Tax-Exempt Portfolio is based on a marginal federal income tax
rate of 37.1%. Income from the Tax-Exempt Portfolio may be subject to state and
local taxes, and, for some investors, a portion of income may be subject to the
alternative minimum tax. 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.
<PAGE> 2
Cash Equivalent Fund 2
-----------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE OBLIGATIONS Value
<S> <C>
BANKING--2.5%
---------------------------------------------------------
Sumitomo Bank Capital Markets, Inc.
5.52% - 5.53%, 8/5/96 - 8/19/96 $ 49,916
---------------------------------------------------------
(a)Wells Fargo & Co.
5.58%, 9/18/96 20,002
---------------------------------------------------------
69,918
BUSINESS LOANS--24.2%
---------------------------------------------------------
Astro Capital Corp.
5.50% - 5.53%, 8/30/96 - 9/10/96 34,830
---------------------------------------------------------
Broadway Capital Corp.
5.47%, 8/1/96 10,000
---------------------------------------------------------
CSW Credit, Inc.
5.46%, 8/28/96 14,939
---------------------------------------------------------
CXC Incorporated
5.42%, 8/12/96 24,959
---------------------------------------------------------
Clipper Receivables Corp.
5.40%, 8/23/96 24,918
---------------------------------------------------------
(a)Emprise I Corporation
5.70%, 9/23/96 25,000
---------------------------------------------------------
Enterprise Funding Corp.
5.35% - 5.45%, 8/1/96 - 8/15/96 49,963
---------------------------------------------------------
(a)Finova Capital Corporation
5.58%, 8/15/96 35,000
---------------------------------------------------------
First Brands Commercial Inc.
5.45%, 8/12/96 14,975
---------------------------------------------------------
(a)Heller Financial, Inc.
5.61% - 5.66%, 8/1/96 - 10/1/96 35,007
---------------------------------------------------------
Jet Funding Corporation
5.54%, 9/30/96 39,637
---------------------------------------------------------
Madison Funding Corp.
5.44%, 8/20/96 24,928
---------------------------------------------------------
Monte Rosa Capital Corp.
5.41%, 8/12/96 24,959
---------------------------------------------------------
National Fleet Funding Corp.
5.44% - 5.49%, 8/21/96 - 8/23/96 34,892
---------------------------------------------------------
Orix America, Inc.
5.31% - 5.50%, 8/1/96 - 9/4/96 52,415
---------------------------------------------------------
Prudential Funding Corp.
5.38%, 8/12/96 24,959
---------------------------------------------------------
Receivables Capital Corp.
5.44%, 8/12/96 9,983
---------------------------------------------------------
(a)Sanwa Business Credit Corp.
5.55% - 5.57%, 8/5/96 - 8/16/96 50,000
---------------------------------------------------------
<CAPTION>
Value
<S> <C>
Sony Capital Corp.
5.43%, 8/6/96 $ 19,985
---------------------------------------------------------
Stellar Capital Corporation
5.43% - 5.47%, 8/7/96 - 9/12/96 44,851
---------------------------------------------------------
Windmill Funding Corp.
5.40% - 5.44%, 8/15/96 - 8/28/96 49,847
---------------------------------------------------------
Working Capital Management Co., L.P.
5.48%, 8/13/96 24,955
---------------------------------------------------------
671,002
CAPITAL AND EQUIPMENT LENDING--3.4%
---------------------------------------------------------
Deere (John) Capital Corporation
5.42%, 8/22/96 24,922
---------------------------------------------------------
Golden Manager's Acceptance Corp.
5.40%, 8/21/96 34,895
---------------------------------------------------------
IBM Credit Corp.
5.98%, 5/29/97 24,952
---------------------------------------------------------
SRD Finance Inc.
5.44%, 8/8/96 9,989
---------------------------------------------------------
94,758
COMMUNICATIONS AND MEDIA--.9%
---------------------------------------------------------
Electronic Data Systems Corp.
5.35%, 8/2/96 24,996
---------------------------------------------------------
CONSUMER LENDING--10.1%
---------------------------------------------------------
American Express Credit Corp.
5.36%, 8/14/96 24,952
---------------------------------------------------------
(a)American Honda Finance Corporation
5.55%, 8/12/96 25,000
---------------------------------------------------------
(a)Chrysler Financial Corporation
5.88%, 8/15/96 10,006
---------------------------------------------------------
Countrywide Funding Corporation
5.43%, 8/27/96 24,903
---------------------------------------------------------
Ford Motor Credit Company
(a) 5.33%, 8/5/96 11,000
5.39%, 8/27/96 24,903
---------------------------------------------------------
(b)GMAC Mortgage Corporation of Pennsylvania
5.68%, 8/30/96 29,863
---------------------------------------------------------
(a)Household Finance Corp.
5.47%, 8/28/96 25,000
---------------------------------------------------------
Mitsubishi Motors Credit of America, Inc.
5.47% - 5.48%, 8/1/96 - 8/5/96 34,994
---------------------------------------------------------
New Center Asset Trust
5.41%, 8/26/96 24,907
---------------------------------------------------------
</TABLE>
<PAGE> 3
Cash Equivalent Fund 3
--------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a)PHH Corporation Value
<S> <C>
5.37%, 8/26/96 $ 9,997
---------------------------------------------------------
Sears Roebuck Acceptance Corp.
5.42%, 9/12/96 34,780
---------------------------------------------------------
280,305
CONSUMER PRODUCTS AND SERVICES--.9%
---------------------------------------------------------
Coca-Cola Enterprises Inc.
5.45%, 8/6/96 24,981
---------------------------------------------------------
DIVERSIFIED FINANCE--8.4%
---------------------------------------------------------
APEX Funding Corp.
5.66%, 10/31/96 9,859
---------------------------------------------------------
Associates Corporation of North America
5.44%, 8/26/96 49,813
---------------------------------------------------------
Dynamic Funding Corporation
5.50% - 5.59%, 8/5/96 - 8/9/96 39,960
---------------------------------------------------------
General Electric Capital Corp.
5.41%, 8/19/96 49,866
---------------------------------------------------------
Norwest Financial, Inc.
5.41%, 8/14/96 24,951
---------------------------------------------------------
Old Line Funding Corp.
5.40% - 5.43%, 8/20/96 - 9/4/96 34,878
---------------------------------------------------------
STRAIT Capital Corporation
5.43%, 9/3/96 24,876
---------------------------------------------------------
234,203
FINANCIAL SERVICES--7.2%
---------------------------------------------------------
(a)Bear Stearns Companies Inc.
5.52% - 5.53%, 8/6/96 - 8/19/96 30,000
---------------------------------------------------------
(a)CS First Boston, Inc.
5.51%, 8/14/96 10,000
---------------------------------------------------------
(a)Goldman, Sachs & Co.
5.47%, 8/25/96 35,000
---------------------------------------------------------
(a)(b)Lehman Brothers Holdings Inc.
5.59%, 8/21/96 40,000
---------------------------------------------------------
Morgan Stanley Group Inc.
5.40%, 8/13/96 24,955
---------------------------------------------------------
Nomura Holding America Inc.
5.47%, 8/5/96 24,985
---------------------------------------------------------
Salomon Inc.
6.00% - 6.42%, 1/17/97 - 4/21/97 33,879
---------------------------------------------------------
198,819
HEALTH CARE AND PRODUCTS--1.2%
---------------------------------------------------------
American Home Food Products Inc.
5.45%, 8/15/96 34,927
---------------------------------------------------------
<CAPTION>
Value
<S> <C>
MANUFACTURING AND INDUSTRIAL--2.2%
---------------------------------------------------------
IBM Corporation
5.26%, 2/28/97 $ 9,986
---------------------------------------------------------
Whirlpool Corporation
5.47%, 8/22/96 49,842
---------------------------------------------------------
59,828
UTILITIES--6.3%
---------------------------------------------------------
AES Shady Point, Inc.
5.50%, 9/4/96 14,923
---------------------------------------------------------
Brazos River Authority, Texas
5.43%, 8/8/96 50,000
---------------------------------------------------------
GTE Corporation
5.41% - 5.46%, 8/7/96 - 8/30/96 49,869
---------------------------------------------------------
Gulf Coast Waste Authority, Texas
5.43%, 9/9/96 34,000
---------------------------------------------------------
Nynex Corporation
5.41%, 8/8/96 24,974
---------------------------------------------------------
173,766
---------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--67.3%
(average maturity: 28 days) 1,867,503
---------------------------------------------------------
BANK OBLIGATIONS
CERTIFICATES OF DEPOSIT
(a)FCC National Bank
5.36%, 8/1/96 14,998
---------------------------------------------------------
(a)First National Bank of Boston
5.36%, 8/1/96 14,994
---------------------------------------------------------
Harris Trust & Savings Bank
6.10%, 6/17/97 9,995
---------------------------------------------------------
(a)Key Bank of Maine
5.44%, 8/14/96 19,992
---------------------------------------------------------
MBNA America Bank N.A.
5.41% - 5.42%, 8/21/96 - 9/12/96 50,000
---------------------------------------------------------
(a)Mercantile Bankshares Corporation
5.61%, 8/19/96 15,005
---------------------------------------------------------
NationsBank N.A.
5.72%, 4/30/97 14,994
---------------------------------------------------------
(a)PNC Bank N.A.
5.40% - 5.41% 8/5/96 - 8/20/96 49,987
---------------------------------------------------------
TOTAL BANK OBLIGATIONS--6.9%
(average maturity: 52 days) 189,965
---------------------------------------------------------
</TABLE>
<PAGE> 4
Cash Equivalent Fund 4
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(c)REPURCHASE AGREEMENTS Value
<S> <C>
(Dated 6/96 and 7/96, collateralized by
Federal Home Loan Mortgage Corporation,
Federal National Mortgage Association,
Government National Mortgage Association and
U.S. Treasury securities)
- ---------------------------------------------------------
Chase Securities, Inc.
(held at The Chase Manhattan Bank, N.A.)
5.41%, 8/14/96 - 8/23/96 $ 100,000
- ---------------------------------------------------------
Goldman, Sachs & Co.
(held at The Bank of New York)
5.40% - 5.65%, 8/1/96 - 9/11/96 315,000
- ---------------------------------------------------------
Lehman Government Securities Inc.
(held at The Chase Manhattan Bank, N.A.)
5.36% - 5.42%, 8/6/96 - 9/10/96 225,000
- ---------------------------------------------------------
Salomon Brothers Inc.
(held at The Bank of New York)
5.40%, 9/13/96 25,000
- ---------------------------------------------------------
<CAPTION>
Value
<S> <C>
TOTAL REPURCHASE AGREEMENTS--24.0%
(average maturity: 25 days) $ 665,000
- ---------------------------------------------------------
U.S. TREASURY NOTES--1.6%
(average maturity: 183 days)
5.06%, 1/31/97 45,522
- ---------------------------------------------------------
TOTAL INVESTMENTS--99.8%
(average maturity: 31 days) 2,767,990
- ---------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.2% 6,605
- ---------------------------------------------------------
NET ASSETS--100% $2,774,595
- ---------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 5
Cash Equivalent Fund 5
-----------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
U.S. TREASURY NOTES--4.6%
(average maturity: 183 days)
5.08%, 1/31/97 $ 73,839
---------------------------------------------------------
SHORT-TERM NOTES
(Issued or guaranteed by U.S. Government
agencies or instrumentalities)
---------------------------------------------------------
(a)Agency for International Development
Government of Israel
5.75%, 8/6/96 5,663
---------------------------------------------------------
(a)Export-Import Bank of the United States
Cathay Pacific Airways Limited
5.69%, 8/13/96 20,101
KA Leasing, Ltd.
5.69%, 8/15/96 17,287
Kuwait Investment Authority
5.80%, 8/15/96 35,508
VARIG Brazilian Airlines
5.69%, 8/15/96 21,953
---------------------------------------------------------
Federal Farm Credit Banks
5.81%, 8/1/96 32,200
---------------------------------------------------------
Federal Home Loan Bank
(a) 5.43%, 8/2/96 25,605
5.36%, 10/11/96 9,897
---------------------------------------------------------
Federal Home Loan Bank
Downey Savings & Loan
5.58%, 11/14/96 5,413
---------------------------------------------------------
(a)Federal National Mortgage Association
5.59% - 5.85%, 8/1/96 - 8/6/96 86,979
---------------------------------------------------------
(a)Overseas Private Investment Corporation
International Paper Company
5.69%, 8/15/96 14,500
Omolon
5.64%, 8/6/96 19,500
---------------------------------------------------------
Student Loan Marketing Association
(a) 5.53% - 5.87%, 8/6/96 - 6/30/97 221,185
6.10%, 6/30/97 16,929
---------------------------------------------------------
Tennessee Valley Authority
5.18%, 1/15/97 3,011
---------------------------------------------------------
TOTAL SHORT-TERM NOTES--33.6%
(average maturity: 36 days) 535,731
---------------------------------------------------------
<CAPTION>
Value
<S> <C>
(c)REPURCHASE AGREEMENTS
(Dated 6/96 and 7/96, collateralized by
Federal Home Loan Mortgage Corporation,
Federal National Mortgage Association,
Government National Mortgage Association and
U.S. Treasury securities)
---------------------------------------------------------
Bear, Stearns & Co. Inc.
5.39% - 5.40%, 8/5/96 - 8/19/96 $ 90,000
---------------------------------------------------------
CS First Boston Inc.
(held at The Chase Manhattan Bank, N.A.)
5.35% - 5.80%, 8/1/96 - 8/5/96 62,500
---------------------------------------------------------
Chase Securities, Inc.
(held at The Chase Manhattan Bank, N.A.)
5.37% - 5.39%, 8/5/96 - 8/7/96 164,000
---------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities
Corporation
(held at The Chase Manhattan Bank, N.A.)
5.75%, 8/1/96 70,000
---------------------------------------------------------
Goldman, Sachs & Co.
(held at The Bank of New York)
5.40% - 5.42%, 9/4/96 - 9/18/96 147,000
---------------------------------------------------------
Lehman Government Securities Inc.
(held at The Chase Manhattan Bank, N.A.)
5.39% - 5.42%, 8/14/96 - 9/4/96 153,500
---------------------------------------------------------
Nikko Securities Co. International, Inc.
(held at The Bank of New York)
5.35% - 5.37%, 8/14/96 - 8/19/96 100,000
---------------------------------------------------------
Nomura Securities International, Inc.
(held at The Bank of New York)
5.40% - 5.41%, 8/14/96 - 8/19/96 125,000
---------------------------------------------------------
Salomon Brothers Inc.
(held at The Bank of New York)
5.43%, 8/7/96 70,000
---------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--61.6%
(average maturity: 14 days) 982,000
---------------------------------------------------------
TOTAL INVESTMENTS--99.8%
(average maturity: 30 days) 1,591,570
---------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.2% 2,558
---------------------------------------------------------
NET ASSETS--100% $1,594,128
---------------------------------------------------------
</TABLE>
<PAGE> 6
Cash Equivalent Fund 6
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a)VARIABLE RATE DEMAND SECURITIES Value
<S> <C>
ALABAMA
- ---------------------------------------------------------
Birmingham
Special Care Facilities Financing Authority
4.05% $ 3,960
ALASKA
- ---------------------------------------------------------
Industrial Development and Export Authority
4.20% 1,200
ARIZONA
- ---------------------------------------------------------
Health Facilities Authority
3.65% 12,000
CALIFORNIA
- ---------------------------------------------------------
Los Angeles
Harbor Improvement Corporation
3.70% 12,500
DELAWARE
- ---------------------------------------------------------
New Castle County
General Motors Corporation
3.70% 3,775
DISTRICT OF COLUMBIA
- ---------------------------------------------------------
General Obligation
3.75% 13,300
- ---------------------------------------------------------
National Children's Center, Inc.
3.65% 6,100
GEORGIA
- ---------------------------------------------------------
DeKalb County
Pollution Control Revenue
3.80% 5,000
- ---------------------------------------------------------
Fulton County
Development Authority
3.70% 7,515
- ---------------------------------------------------------
Wayne County
Solid Waste Management Authority
4.45% 4,400
ILLINOIS
- ---------------------------------------------------------
Alsip
Industrial Development Revenue
3.70% 3,750
- ---------------------------------------------------------
Chicago
O'Hare International Airport
Special Facility Revenue
3.65% 7,800
- ---------------------------------------------------------
<CAPTION>
Value
<S> <C>
Development Finance Authority
4.04% $ 15,800
- ---------------------------------------------------------
Havana
Industrial Development Revenue
3.90% 3,000
- ---------------------------------------------------------
Health Facilities Authority
3.70% 10,000
- ---------------------------------------------------------
Rockford
Industrial Project Revenue
3.89% 6,300
- ---------------------------------------------------------
Student Loan Revenue
3.75% 8,000
INDIANA
- ---------------------------------------------------------
Fort Wayne
Hospital Authority
3.60% 3,515
- ---------------------------------------------------------
Health Facility Financing Authority
3.86% 21,490
- ---------------------------------------------------------
Ossian
Economic Development
3.75% 5,000
- ---------------------------------------------------------
Rockport
Pollution Control Revenue
3.65% 10,000
- ---------------------------------------------------------
Seymour
Economic Development Revenue
4.25% 3,600
IOWA
- ---------------------------------------------------------
Higher Education Loan Authority
4.10% 9,700
KANSAS
- ---------------------------------------------------------
Kansas City
Pollution Control Revenue
3.80% 20,835
KENTUCKY
- ---------------------------------------------------------
Boone County
Industrial Development Revenue
3.90% 4,700
Pollution Control Revenue
3.55% 8,000
- ---------------------------------------------------------
Bowling Green
Industrial Building Revenue
4.25% 2,400
- ---------------------------------------------------------
</TABLE>
<PAGE> 7
Cash Equivalent Fund 7
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shelbyville Value
<S> <C>
Industrial Building Revenue
4.25% $ 3,500
MARYLAND
- ---------------------------------------------------------
Baltimore County
Multi-Family Housing Revenue
3.85% 10,994
MONTANA
- ---------------------------------------------------------
Forsyth
Pollution Control Revenue
3.85% 4,500
NEVADA
- ---------------------------------------------------------
Department of Business and Industry
3.85% 5,000
NEW YORK
- ---------------------------------------------------------
New York City
General Obligation
3.68% 22,400
NORTH CAROLINA
- ---------------------------------------------------------
Lenoir County
Pollution Control Financing Authority
3.90% 6,000
OREGON
- ---------------------------------------------------------
Economic Development Revenue
3.85% 4,500
PENNSYLVANIA
- ---------------------------------------------------------
Delaware County
Redevelopment Authority
4.60% 13,000
- ---------------------------------------------------------
Delaware Valley
Regional Finance Authority
3.70% 18,200
- ---------------------------------------------------------
Lehigh County
Industrial Development Authority
3.55% 10,300
SOUTH CAROLINA
- ---------------------------------------------------------
Richland County
Hospital Revenue
4.10% 5,300
- ---------------------------------------------------------
<CAPTION>
Value
<S> <C>
TENNESSEE
- ---------------------------------------------------------
Clarksville
Public Building Authority
3.65% $ 7,300
- ---------------------------------------------------------
Nashville and Davidson County
Multi-Family Housing Revenue
4.20% 5,000
- ---------------------------------------------------------
Smyrna Housing Association
Multi-Family Housing Revenue
4.20% 3,000
TEXAS
- ---------------------------------------------------------
Calhoun County
Industrial Development Authority
3.75% 21,500
UTAH
- ---------------------------------------------------------
Ogden City
Industrial Development Revenue
4.10% 3,750
VERMONT
- ---------------------------------------------------------
Economic Development Authority
4.15% 5,000
VIRGINIA
- ---------------------------------------------------------
Louisa County
Industrial Development Authority
3.65% 21,900
WASHINGTON
- ---------------------------------------------------------
Port Angeles
Industrial Development Corporation
4.25% 7,400
WISCONSIN
- ---------------------------------------------------------
Eau Claire
Solid Waste Disposal Revenue
3.75% 9,000
- ---------------------------------------------------------
TOTAL VARIABLE RATE
DEMAND SECURITIES--43.1%
(average maturity: 6 days) 401,184
- ---------------------------------------------------------
OTHER SECURITIES
ALASKA
- ---------------------------------------------------------
Valdez
Marine Terminal Revenue
3.40% - 3.80%, 8/8/96 - 9/11/96 19,700
- ---------------------------------------------------------
</TABLE>
<PAGE> 8
Cash Equivalent Fund 8
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ARIZONA Value
<S> <C>
- ---------------------------------------------------------
Salt River Project
Agricultural Improvement and Power District
3.40% - 3.70%, 8/9/96 - 9/20/96 $ 33,900
CALIFORNIA
- ---------------------------------------------------------
Revenue Anticipation Warrants
3.97%, 6/30/97 9,041
COLORADO
- ---------------------------------------------------------
Denver City and County
Airport System Revenue
3.75% - 3.95%, 8/8/96 - 8/13/96 39,505
- ---------------------------------------------------------
Platte River Power Authority
3.65%, 8/8/96 5,700
FLORIDA
- ---------------------------------------------------------
Orlando
Waste Water System Revenue
3.50%, 8/21/96 4,065
- ---------------------------------------------------------
Pinellas County
Educational Facilities Authority
3.50%, 8/12/96 7,700
- ---------------------------------------------------------
Sarasota County
Public Hospital District
3.85%, 8/13/96 5,850
- ---------------------------------------------------------
Sunshine State Governmental Financing
Commission
3.40% - 3.65%, 8/21/96 - 9/26/96 23,350
GEORGIA
- ---------------------------------------------------------
Municipal Electric Authority
3.60% - 3.75%, 8/15/96 - 9/11/96 23,650
- ---------------------------------------------------------
Municipal Gas Authority
3.70%, 8/13/96 7,115
ILLINOIS
- ---------------------------------------------------------
Chicago
General Obligation
3.60%, 9/10/96 2,500
- ---------------------------------------------------------
Development Finance Authority
3.50%, 8/21/96 7,300
- ---------------------------------------------------------
Educational Facilities Authority
3.30% - 3.60%, 8/12/96 - 9/27/96 21,509
- ---------------------------------------------------------
<CAPTION>
Value
INDIANA
<S> <C>
- ---------------------------------------------------------
Bond Bank
Advance Funding Program Notes
3.50%, 1/9/97 11,035
- ---------------------------------------------------------
Jasper County
Pollution Control Revenue
3.45%, 8/20/96 2,400
- ---------------------------------------------------------
Sullivan
Pollution Control Revenue
3.50%, 8/14/96 9,790
KANSAS
- ---------------------------------------------------------
Burlington
Pollution Control and Improvement Revenue
3.75%, 9/11/96 18,700
KENTUCKY
- ---------------------------------------------------------
Danville
Multi-City Lease Revenue
3.75%, 9/11/96 10,755
- ---------------------------------------------------------
Pendleton County
Multi-County Lease Revenue
3.75%, 9/11/96 24,040
MARYLAND
- ---------------------------------------------------------
Anne-Arundel County
Port Facilities Revenue
3.65%, 9/20/96 6,000
MICHIGAN
- ---------------------------------------------------------
Strategic Fund
3.65%, 9/12/96 10,000
MINNESOTA
- ---------------------------------------------------------
University of Minnesota
3.60%, 9/25/96 8,000
MISSISSIPPI
- ---------------------------------------------------------
Claiborne County
Pollution Control Revenue
3.75%, 9/11/96 8,375
NEBRASKA
- ---------------------------------------------------------
Public Power District
3.60%, 9/25/96 4,000
NEW HAMPSHIRE
- ---------------------------------------------------------
Business Finance Authority
3.60% - 3.70%, 8/14/96 - 8/21/96 16,500
- ---------------------------------------------------------
</TABLE>
<PAGE> 9
Cash Equivalent Fund 9
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at July 31, 1996
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK Value
<S> <C>
- ---------------------------------------------------------
Nassau County
Revenue Anticipation Notes
3.40%, 3/5/97 $ 10,020
- ---------------------------------------------------------
New York City
Municipal Water Finance Authority
3.60%, 9/20/96 4,800
- ---------------------------------------------------------
State Dormitory Authority
3.65%, 8/14/96 - 9/11/96 11,400
NORTH CAROLINA
- ---------------------------------------------------------
Municipal Power Agency
3.40% - 3.50%, 8/12/96 - 8/19/96 22,800
OHIO
- ---------------------------------------------------------
Air Quality Development Authority
3.60%, 9/19/96 3,450
PENNSYLVANIA
- ---------------------------------------------------------
Philadelphia School District
Tax and Revenue Anticipation Notes
4.00%, 6/30/97 11,049
TEXAS
- ---------------------------------------------------------
Austin
Combined Utility Systems
3.40% - 3.45%, 8/20/96 - 8/21/96 6,850
- ---------------------------------------------------------
Brazoria County
Brazos River Harbor Navigation District
3.65% - 3.75%, 8/8/96 - 9/25/96 17,500
- ---------------------------------------------------------
Houston
Water and Sewer System
3.45%, 8/20/96 8,500
- ---------------------------------------------------------
Lower Colorado River Authority
3.50%, 8/12/96 5,000
- ---------------------------------------------------------
Municipal Power Agency
3.45%, 8/20/96 2,000
- ---------------------------------------------------------
San Antonio
Electric and Gas Systems
3.25%, 9/12/96 16,000
- ---------------------------------------------------------
Tax and Revenue Anticipation Notes
3.94%, 8/30/96 8,505
- ---------------------------------------------------------
<CAPTION>
Value
UTAH
<S> <C>
- ---------------------------------------------------------
Intermountain Power Agency
3.50%, 8/14/96 - 8/21/96 28,900
VIRGINIA
- ---------------------------------------------------------
Chesterfield
Industrial Development Authority
3.60%, 9/19/96 9,000
- ---------------------------------------------------------
Louisa County
Industrial Development Authority
3.65%, 9/18/96 - 9/26/96 6,390
- ---------------------------------------------------------
Norfolk
Industrial Development Authority
3.65% - 3.70%, 8/8/96 - 8/12/96 11,000
- ---------------------------------------------------------
York County
Industrial Development Authority
3.75%, 9/11/96 6,000
WYOMING
- ---------------------------------------------------------
Converse County
Pollution Control Revenue
3.65%, 9/20/96 2,800
- ---------------------------------------------------------
TOTAL OTHER
SECURITIES--57.1%
(average maturity: 45 days) 532,444
- ---------------------------------------------------------
TOTAL INVESTMENTS--100.2%
(average maturity: 28 days) 933,628
- ---------------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(.2)% (2,064)
- ---------------------------------------------------------
NET ASSETS--100% $ 931,564
- ---------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 10
Cash Equivalent Fund 10
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIOS 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 securities. The rates shown are the current rates at July 31,
1996. The dates shown represent the demand date or the next interest rate change
date. Securities in the Tax-Exempt Portfolio shown without a date are payable
within five business days and are backed by credit support agreements from banks
or insurance institutions.
(b) Illiquid securities. At July 31, 1996, the aggregate value of illiquid
securities was $69,863,000 in the Money Market Portfolio, which represented 2.5%
of net assets.
(c) Repurchase agreements are fully collateralized by U.S. Government
securities. All collateral is held at the Fund's custodian bank, Investors
Fiduciary Trust Company, or at subcustodian banks, as indicated. The collateral
is monitored daily by the Fund so that its market value exceeds the carrying
value of the repurchase agreement.
See accompanying Notes to Financial Statements.
<PAGE> 11
Cash Equivalent Fund 11
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS
CASH EQUIVALENT FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the Money Market, Government Securities and
Tax-Exempt Portfolios, comprising Cash Equivalent Fund, as of July 31, 1996, and
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 July
31, 1996, by correspondence with the custodian and brokers. 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 each
of the Portfolios comprising Cash Equivalent Fund at July 31, 1996, the results
of their operations for the year then ended, the changes in their 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
September 18, 1996
<PAGE> 12
Cash Equivalent Fund 12
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
ASSETS PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Investments, at amortized cost:
Short-term securities $2,102,990 609,570 933,628
- ------------------------------------------------------------------------------------------------------------------------
Repurchase agreements 665,000 982,000 --
- ------------------------------------------------------------------------------------------------------------------------
Cash 11,482 3,473 3,244
- ------------------------------------------------------------------------------------------------------------------------
Receivable for:
Interest 6,138 7,276 6,267
- ------------------------------------------------------------------------------------------------------------------------
Fund shares sold 538 175 70
- ------------------------------------------------------------------------------------------------------------------------
Securities sold -- -- 700
- ------------------------------------------------------------------------------------------------------------------------
Total assets 2,786,148 1,602,494 943,909
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
Payable for:
Dividends 5,660 3,329 1,198
- ------------------------------------------------------------------------------------------------------------------------
Fund shares redeemed 3,512 3,585 1,394
- ------------------------------------------------------------------------------------------------------------------------
Securities purchased -- -- 9,041
- ------------------------------------------------------------------------------------------------------------------------
Management fee 398 230 167
- ------------------------------------------------------------------------------------------------------------------------
Distribution services fee 881 510 260
- ------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 452 344 90
- ------------------------------------------------------------------------------------------------------------------------
Other 650 368 195
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 11,553 8,366 12,345
- ------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,774,595 1,594,128 931,564
- ------------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------------------------------------------------------
Shares outstanding 2,774,595 1,594,128 931,564
- ------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 13
Cash Equivalent Fund 13
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year ended July 31, 1996
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
-----------------------------------------
INTEREST INCOME $ 183,353 99,325 39,198
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 5,401 2,953 2,163
- ---------------------------------------------------------------------------------------------------------------------------
Distribution services fee 12,127 6,631 3,418
- ---------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 10,212 3,791 1,398
- ---------------------------------------------------------------------------------------------------------------------------
Reports to shareholders 308 147 97
- ---------------------------------------------------------------------------------------------------------------------------
Registration costs 89 190 123
- ---------------------------------------------------------------------------------------------------------------------------
Professional fees 83 34 22
- ---------------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 110 75 56
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 28,330 13,821 7,277
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 155,023 85,504 31,921
- ---------------------------------------------------------------------------------------------------------------------------
Net realized loss on investments (22,662) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Change in unrealized depreciation on investments 22,662 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 155,023 85,504 31,921
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Years ended July 31, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
MONEY MARKET GOVERNMENT SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations, dividends and
capital share activity
Net investment income $ 155,023 167,290 85,504 78,031 31,921 34,140
- ----------------------------------------------------------------------------------------------------------------------------
Net realized loss (22,662) -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Change in unrealized depreciation 22,662 (22,662) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Capital contribution from investment
manager -- 22,662 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net
investment income (155,023) (167,290) (85,504) (78,031) (31,921) (34,140)
- ----------------------------------------------------------------------------------------------------------------------------
Capital share transactions (dollar
amounts and number of shares are the
same):
Shares sold 11,488,265 11,972,864 5,702,420 5,708,371 3,741,602 3,660,114
- ----------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 156,119 163,874 85,164 76,210 32,004 33,430
- ----------------------------------------------------------------------------------------------------------------------------
11,644,384 12,136,738 5,787,584 5,784,581 3,773,606 3,693,544
Shares redeemed (12,463,083) (11,930,689) (5,978,554) (5,537,494) (3,951,903) (3,720,584)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital
share transactions and total increase
(decrease) in net assets (818,699) 206,049 (190,970) 247,087 (178,297) (27,040)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 3,593,294 3,387,245 1,785,098 1,538,011 1,109,861 1,136,901
- ----------------------------------------------------------------------------------------------------------------------------
End of year $ 2,774,595 3,593,294 1,594,128 1,785,098 931,564 1,109,861
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 14
Cash Equivalent Fund 14
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
Cash Equivalent Fund is an open-end management investment company organized as a
business trust under the laws of Massachusetts currently offering three series
of shares (Portfolios). The Money Market Portfolio invests primarily in
short-term high quality obligations of major banks and corporations. The
Government Securities Portfolio invests exclusively in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements thereon. The Tax-Exempt Portfolio invests in short-term
high quality municipal securities.
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 a Portfolio'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 and discount on investments.
Expenses
Expenses arising in connection with a Portfolio are allocated to that Portfolio.
Other Fund expenses are allocated among the Portfolios in proportion to their
relative net assets.
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, each Portfolio
determines its net asset value per share (NAV) by dividing the total value of
the Portfolio's investments and other assets, less liabilities, by the number of
Portfolio shares outstanding. The NAV is determined at 11:00 a.m., 1:00 p.m. and
3:00 p.m. Chicago time for the Money Market and Government Securities Portfolios
and at 11:00 a.m. and 3:00 p.m. Chicago time for the Tax-Exempt Portfolio. Each
Portfolio 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 taxable realized gains (losses) on portfolio securities, minus all
expenses of the Portfolio.
Federal income taxes
Each Portfolio 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 for the Money Market and Government Securities
Portfolios at an annual rate of .22% of the first $500 million of combined
average daily net assets of those Portfolios declining to .15% of combined
average daily net assets in excess of $3 billion. The Tax-Exempt Portfolio pays
a management fee at an annual rate of .22% of the first $500 million of average
daily net assets of such Portfolio declining to .15% of average daily net assets
in excess of $3 billion. During the year ended July 31, 1996,
<PAGE> 15
Cash Equivalent Fund 15
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
the Fund incurred management fees of $10,517,000.
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 .38% of average daily net assets
for the Money Market and Government Securities Portfolios and .33% of average
daily net assets for the Tax-Exempt Portfolio. For the year ended July 31, 1996,
the Fund incurred distribution fees of $22,176,000. 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 based on the
average daily net assets of those accounts that they maintain and service at an
annual rate ranging from .15% to .40% for the Money Market and Government
Securities Portfolios, and from .15% to .33% for the Tax-Exempt Portfolio.
During the year ended July 31, 1996, KDI paid fees of $22,549,000 to various
firms pursuant to the related service agreements.
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 $9,612,000 for the year
ended July 31, 1996.
Officers and trustees
Certain officers or trustees of the Fund are also officers or directors of ZKI.
During the year ended July 31, 1996, the Fund made no payments to its officers
and incurred trustees' fees of $71,000 to independent trustees.
<PAGE> 16
Cash Equivalent Fund 16
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
MONEY MARKET PORTFOLIO 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 .05 .05 .03 .03 .04
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 4.94% 4.95 2.82 2.60 4.09
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses .89% .87 .88 .85 .82
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 4.86% 4.84 2.78 2.57 4.01
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $2,774,595 3,593,294 3,387,245 3,616,636 3,916,708
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
The Money Market Portfolio's total return for the year ended July 31, 1995
includes the effect of a capital contribution from the investment manager.
Without the capital contribution, the total return would have been 4.28%.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
GOVERNMENT SECURITIES PORTFOLIO 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 .05 .05 .03 .03 .04
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.00% 4.96 2.82 2.60 4.12
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses .79% .81 .81 .78 .75
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 4.90% 4.87 2.72 2.57 4.06
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $1,594,128 1,785,098 1,538,011 2,825,357 3,000,890
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
TAX-EXEMPT PORTFOLIO 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 .03 .02 .02 .03
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3.11% 3.21 2.05 2.12 3.29
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses .70% .68 .68 .64 .64
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 3.08% 3.15 2.02 2.09 3.21
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $931,564 1,109,861 1,136,901 1,417,307 1,289,560
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 17
Cash Equivalent Fund 17
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF 1996 DIVIDENDS
All of the dividends from the Money Market and Government Securities Portfolios
are taxable as ordinary income. All of the dividends from the Tax-Exempt
Portfolio 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.
These dividends, whether received in cash or reinvested in shares, must be
included in your federal income tax return and must be reported by the Fund to
the Internal Revenue Service in accordance with U.S. Treasury Department
Regulations.
<PAGE> 18
Cash Equivalent
Fund
Annual Report
July 31, 1996
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.
1020180 8/96 (RECYCLE LOGO) printed on recycled paper
