<PAGE> PAGE 1
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007 C020200 GOVERNMENT SECURITIES PORTFOLIO
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007 C020300 TAX EXEMPT PORTFOLIO
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<PAGE> PAGE 2
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<PAGE> PAGE 3
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013 B01AA01 CHICAGO
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013 B03AA01 60606
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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 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 15
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SIGNATURE PHILLIP J. COLLORA
TITLE SECRETARY
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINERS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
1998 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000310030
<NAME> CASH EQUIVALENT FUND
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<NAME> MONEY MARKET PORTFOLIO
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
1998 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> 02
<NAME> GOVERNMENT SECURITIES PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 388,174
<INVESTMENTS-AT-VALUE> 388,174
<RECEIVABLES> 2,306
<ASSETS-OTHER> 2,981
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 393,461
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,600
<TOTAL-LIABILITIES> 1,600
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 391,861
<SHARES-COMMON-STOCK> 391,861
<SHARES-COMMON-PRIOR> 404,037
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 391,861
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23,387
<OTHER-INCOME> 0
<EXPENSES-NET> (3,514)
<NET-INVESTMENT-INCOME> 19,873
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 19,873
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (19,873)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,401,622
<NUMBER-OF-SHARES-REDEEMED> (3,433,559)
<SHARES-REINVESTED> 19,761
<NET-CHANGE-IN-ASSETS> (12,176)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 834
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,514
<AVERAGE-NET-ASSETS> 415,277
<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> .85
<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
1998 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> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1998
<INVESTMENTS-AT-COST> 332,193
<INVESTMENTS-AT-VALUE> 332,193
<RECEIVABLES> 1,663
<ASSETS-OTHER> 645
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 334,501
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,074
<TOTAL-LIABILITIES> 1,074
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 333,427
<SHARES-COMMON-STOCK> 333,427
<SHARES-COMMON-PRIOR> 444,939
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 333,427
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,070
<OTHER-INCOME> 0
<EXPENSES-NET> 2,828
<NET-INVESTMENT-INCOME> 13,242
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 13,242
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13,242)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,244,764
<NUMBER-OF-SHARES-REDEEMED> (1,369,517)
<SHARES-REINVESTED> 13,241
<NET-CHANGE-IN-ASSETS> (111,512)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 945
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,828
<AVERAGE-NET-ASSETS> 428,955
<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> .66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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 period ended as of the date listed in Exhibit A
attached hereto ("Report Date"), we considered their internal
control, including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on the
internal control.
The management of the Funds is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's objective of
preparing financial statements for external purposes that are fairly
presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets
against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud
may occur and not be detected. Also, projection of any evaluation of
internal control 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 would not necessarily
disclose all matters in internal control 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 one or more of specific internal
control components does not reduce to a relatively low level the risk
that errors or fraud 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 and its operation, including controls
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 the
board of trustees and management and the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Chicago, Illinois
September 17, 1998
Kemper Funds Exhibit A
July 31, 1998
Kemper Horizon Funds-
Kemper Horizon 20+ Portfolio
Kemper Horizon 10+ Portfolio
Kemper Horizon 5 Portfolio
Kemper Target Equity Funds-
Kemper Retirement Fund Series I
Kemper Retirement Fund Series II
Kemper Retirement Fund Series III
Kemper Retirement Fund Series IV
Kemper Retirement Fund Series V
Kemper Retirement Fund Series VI
Kemper Retirement Fund Series VII
Kemper WorldWide 2004
Cash Equivalent Fund-
Money Market Portfolio
Government Securities Portfolio
Tax Exempt Portfolio
Zurich Money Funds-
Zurich Money Market Funds
Zurich Government Money Fund
Zurich Tax-Free Money Fund
Zurich Yieldwise Money Fund
