<PAGE> PAGE 1
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<PAGE> PAGE 2
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012 A00AA01 KEMPER SERVICE COMPANY
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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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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SIGNATURE JEROME L. DUFFY
TITLE TREASURER
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1996
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SUCH FINANCIAL STATEMENTS.
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<CIK> 0000310030
<NAME> CASH EQUIVALENT FUND
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<NAME> MONEY MARKET PORTFOLIO
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<CIK> 0000310030
<NAME> CASH EQUIVALENT FUND
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,366
<TOTAL-LIABILITIES> 8,366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,594,128
<SHARES-COMMON-STOCK> 1,594,128
<SHARES-COMMON-PRIOR> 1,785,098
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,594,128
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 99,325
<OTHER-INCOME> 0
<EXPENSES-NET> (13,821)
<NET-INVESTMENT-INCOME> 85,504
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (85,504)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,702,420
<NUMBER-OF-SHARES-REDEEMED> (5,978,554)
<SHARES-REINVESTED> 85,164
<NET-CHANGE-IN-ASSETS> (190,970)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,953
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,821
<AVERAGE-NET-ASSETS> 1,745,009
<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> .79
<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
1996 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> 03
<NAME> TAX EXEMPT PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 933,628
<INVESTMENTS-AT-VALUE> 933,628
<RECEIVABLES> 7,037
<ASSETS-OTHER> 3,244
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 943,909
<PAYABLE-FOR-SECURITIES> 9,041
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,304
<TOTAL-LIABILITIES> 12,345
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 931,564
<SHARES-COMMON-STOCK> 931,564
<SHARES-COMMON-PRIOR> 1,109,861
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 931,564
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 39,198
<OTHER-INCOME> 0
<EXPENSES-NET> (7,277)
<NET-INVESTMENT-INCOME> 31,921
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (31,921)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,741,602
<NUMBER-OF-SHARES-REDEEMED> (3,951,903)
<SHARES-REINVESTED> 32,004
<NET-CHANGE-IN-ASSETS> (178,297)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,163
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,277
<AVERAGE-NET-ASSETS> 1,035,792
<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> .70
<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 as of the date listed in Exhibit A
attached hereto ("Report Date"), 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 Report Date.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
September 18, 1996
Kemper Funds Exhibit A
July 31, 1996
Kemper Money Funds:
Kemper Money Market Fund
Kemper Government Money Fund
Kemper Tax-Free Money Fund
Cash Equivalent Fund:
Money Market Portfolio
Government Securities Portfolio
Tax-Exempt Portfolio
