CASH ACCOUNT TRUST
497, 1999-10-07
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                      MONEY MARKET PORTFOLIO RETAIL SHARES
                      MONEY MARKET PORTFOLIO PREMIER SHARES
                   MONEY MARKET PORTFOLIO INSTITUTIONAL SHARES

                       STATEMENT OF ADDITIONAL INFORMATION

                                September 1, 1999
                           As Revised October 6, 1999

                               CASH ACCOUNT TRUST
               222 South Riverside Plaza, Chicago, Illinois 60606
                                 1-800-231-8568

This combined Statement of Additional Information contains information about the
Retail  Shares  ("Retail   Shares"),   Premier  Shares  ("Premier  Shares")  and
Institutional Shares ("Institutional Shares") (collectively, the "Shares"), each
a class of the Money Market Portfolio (the "Portfolio")  offered by Cash Account
Trust (the "Trust").  Cash Account Trust is an open-end  diversified  management
investment  company.  The Trust currently  offers three  investment  portfolios,
including  the Money Market  Portfolio.  This  combined  Statement of Additional
Information  is not a  prospectus  and  should be read in  conjunction  with the
appropriate  prospectus of the Shares of the Portfolio  dated September 1, 1999.
The prospectus  may be obtained  without charge from the Trust at the address or
telephone  number  on this  cover or the  firm  from  which  this  Statement  of
Additional  Information  was  received  and is also  available  along with other
related  materials  at the SEC's  Internet  web site  (http://www.sec.gov).  The
Annual  Report  for  the  Shares  of the  Portfolio,  dated  April  30,  1999 is
incorporated  by  reference  into  and is  hereby  deemed  to be a part  of this
Statement of Additional Information.





TABLE OF CONTENTS

     INVESTMENT RESTRICTIONS................................................2
     INVESTMENT MANAGER AND SHAREHOLDER SERVICES............................6
     PORTFOLIO TRANSACTIONS.................................................9
     PURCHASE AND REDEMPTION OF SHARES......................................9
     DIVIDENDS, NET ASSET VALUE AND TAXES..................................13
     PERFORMANCE...........................................................15
     OFFICERS AND TRUSTEES.................................................16
     SPECIAL FEATURES......................................................18
     SHAREHOLDER RIGHTS....................................................20
     APPENDIX -- RATINGS OF INVESTMENTS....................................22




<PAGE>



INVESTMENT RESTRICTIONS
The Trust has adopted for the Portfolio certain  investment  restrictions  which
cannot be changed for the Portfolio without approval by holders of a majority of
its outstanding  voting shares. As defined in the Investment Company Act of 1940
(the "1940 Act), this means the lesser of the vote of (a) 67% of the Portfolio's
shares present at a meeting where more than 50% of the outstanding shares of the
Portfolio  are  present  in  person  or by  proxy;  or (b) more  than 50% of the
Portfolio's  outstanding  shares.  Except as otherwise  noted,  the  portfolio's
investment  objective  and  other  policies  may be  changed,  without a vote of
shareholders.

The Portfolio may not:

         (1)      Purchase  securities of any issuer (other than obligations of,
                  or guaranteed by, the United States  Government,  its agencies
                  or  instrumentalities)  if, as a  result,  more than 5% of the
                  value  of  the   Portfolio's   assets  would  be  invested  in
                  securities of that issuer.

         (2)      Purchase  more  than  10% of any  class of  securities  of any
                  issuer.  All debt securities and all preferred stocks are each
                  considered as one class.

         (3)      Make loans to others  (except  through  the  purchase  of debt
                  obligations  or repurchase  agreements in accordance  with its
                  investment objective and policies).

         (4)      Borrow money except as a temporary  measure for  extraordinary
                  or  emergency  purposes  and  then  only  in an  amount  up to
                  one-third of the value of its total  assets,  in order to meet
                  redemption  requests  without  immediately  selling  any money
                  market  instruments  (any such  borrowings  under this section
                  will not be  collateralized).  If, for any reason, the current
                  value of the  Portfolio's  total  assets falls below an amount
                  equal to three times the amount of its indebtedness from money
                  borrowed, the Portfolio will, within three days (not including
                  Sundays and holidays),  reduce its  indebtedness to the extent
                  necessary.   The  Portfolio   will  not  borrow  for  leverage
                  purposes.

         (5)      Make short sales of securities,  or purchase any securities on
                  margin  except to obtain  such  short-term  credits  as may be
                  necessary for the clearance of transactions.

         (6)      Write, purchase or sell puts, calls or combinations thereof.

         (7)      Purchase or retain the  securities of any issuer if any of the
                  officers, trustees or directors of the Trust or its investment
                  adviser  owns   beneficially  more  than  1/2  of  1%  of  the
                  securities of such issuer and together own more than 5% of the
                  securities of such issuer.

         (8)      Invest for the purpose of exercising  control or management of
                  another issuer.

         (9)      Invest in  commodities  or commodity  futures  contracts or in
                  real estate (or real estate limited partnerships), although it
                  may invest in securities  which are secured by real estate and
                  securities of issuers which invest or deal in real estate.

         (10)     Invest in interests in oil, gas or other  mineral  exploration
                  or development  programs or leases,  although it may invest in
                  the  securities  of issuers  which  invest in or sponsor  such
                  programs.

         (11)     Underwrite  securities  issued by others  except to the extent
                  the  Portfolio may be deemed to be an  underwriter,  under the
                  federal securities laws, in connection with the disposition of
                  portfolio securities.

         (12)     Issue senior securities as defined in the 1940 Act.

         (13)     Concentrate 25% or more of the value of the Portfolio's assets
                  in any one industry; provided, however, that (a) the Portfolio
                  reserves  freedom of action to invest up to 100% of its assets
                  in  obligations  of,  or

                                       2
<PAGE>

                  guaranteed by, the United States  Government,  its agencies or
                  instrumentalities  in accordance with its investment objective
                  and policies and (b) the Portfolio will invest at least 25% of
                  its assets in obligations  issued by banks in accordance  with
                  its investment objective and policies.  However, the Portfolio
                  may, in the discretion of its investment adviser,  invest less
                  than 25% of its assets in obligations issued by banks whenever
                  the Portfolio assumes a temporary defensive posture.

With regard to restriction  #13, for purposes of  determining  the percentage of
the  Portfolio's  total assets  invested in securities  of issuers  having their
principal business activities in a particular industry,  asset backed securities
will be classified  separately,  based on the nature of the  underlying  assets.
Currently, the following categories are used: captive auto, diversified,  retail
and consumer loans, captive equipment and business,  business trade receivables,
nuclear fuel and capital and mortgage lending.

If a percentage  restriction  is adhered to at the time of  investment,  a later
increase or decrease in percentage  beyond the specified  limit resulting from a
change in values or net assets will not be considered a violation. The Portfolio
has no present  intention of borrowing  during the coming year as permitted  for
the Portfolio by investment restriction number 4. In any event, borrowings would
only be made as permitted by such restrictions.  In addition,  the Portfolio may
not, as a non-fundamental  policy that may be changed without  shareholder vote:

                  (i)      Purchase  securities of other  investment  companies,
                           except in  connection  with a merger,  consolidation,
                           reorganization or acquisition of assets.

INVESTMENT POLICIES AND TECHNIQUES

Descriptions  in  this  Statement  of  Additional  Information  of a  particular
investment  practice  or  technique  in which  the  Portfolio  may  engage  or a
financial  instrument which the Portfolio may purchase are meant to describe the
spectrum of investments that Scudder Kemper  Investments,  Inc. (the "Adviser"),
in  its  discretion,  might,  but is  not  required  to,  use  in  managing  the
Portfolio's assets. The Adviser may, in its discretion, at any time, employ such
practice,  technique or  instrument  for one or more funds but not for all funds
advised by it.  Furthermore,  it is possible  that  certain  types of  financial
instruments  or  investment  techniques  described  herein may not be available,
permissible,  economically  feasible or effective for their intended purposes in
all markets. Certain practices,  techniques, or instruments may not be principal
activities of the Portfolio,  but, to the extent employed,  could,  from time to
time, have a material impact on the Portfolio's performance.

The Trust is a money  market  mutual fund  designed to provide its  shareholders
with professional  management of short-term  investment  dollars. It is a series
investment  company that is able to provide  investors with a choice of separate
investment  portfolios.  The Trust currently offers three investment portfolios:
the  Money  Market  Portfolio,  the  Government  Securities  Portfolio  and  the
Tax-Exempt  Portfolio.  It is designed for  investors  who seek maximum  current
income   consistent  with  stability  of  capital.   It  pools   individual  and
institutional  investors'  money that it uses to buy high  quality  money market
instruments.  Because each  portfolio  combines its  shareholders'  money,  each
portfolio can buy and sell large blocks of securities, which reduces transaction
costs and maximizes yields.

Money Market Portfolio.
The  Portfolio is managed to maintain a net asset value of $1.00 per share.  The
Portfolio is managed by investment  professionals  who analyze  market trends to
take  advantage  of  changing  conditions  and  who  seek  to  minimize  risk by
diversifying  the  Portfolio's  investments.  The  Portfolio's  investments  are
subject to price fluctuations  resulting from rising or declining interest rates
and are  subject to the  ability  of the  issuers  of such  investments  to make
payment at maturity.  However, because of their short maturities,  liquidity and
high quality ratings,  high quality money market  instruments,  such as those in
which the Portfolio  invests,  are  generally  considered to be among the safest
available.  Thus,  the Portfolio is designed for investors who want to avoid the
fluctuations  of principal  commonly  associated  with equity or long-term  bond
investments.  There can be no  guarantee  that the  Portfolio  will  achieve its
objective or that it will maintain a net asset value of $1.00 per share.

The Portfolio  pursues its objective by investing  exclusively  in the following
types of U.S.  Dollar-denominated  money  market  instruments  that mature in 12
months or less:
1.   Obligations of, or guaranteed by, the U.S. or Canadian  governments,  their
     agencies or instrumentalities.

                                       3
<PAGE>

2.   Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
     banks  (including  their  foreign  branches) and Canadian  chartered  banks
     having total assets in excess of $1 billion.
3.   Bank  certificates  of deposit,  time deposits or bankers'  acceptances  of
     foreign  banks  (including  their U.S. and foreign  branches)  having total
     assets in excess of $10 billion.
4.   Commercial paper, notes, bonds, debentures,  participation  certificates or
     other debt obligations that (i) are rated high quality by Moody's Investors
     Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
     Phelps,  Inc. ("Duff");  or (ii) if unrated,  are determined to be at least
     equal in quality to one or more of the above  ratings in the  discretion of
     the Portfolio's investment manager.  Currently, only obligations in the top
     two  categories  are  considered to be rated high quality.  The two highest
     rating categories of Moody's, S&P and Duff for commercial paper are Prime-1
     and  Prime-2,  A-1 and A-2 and Duff 1 and Duff 2,  respectively.  For other
     debt  obligations,  the two highest rating categories for such services are
     Aaa and Aa, AAA and AA and AAA and AA,  respectively.  For a description of
     these ratings, see "Appendix-- Ratings of Investments" in this Statement of
     Additional Information.
5.   Repurchase agreements of obligations that are suitable for investment under
     the categories set forth above. Repurchase agreements are discussed below.

In addition,  the Portfolio  limits its  investments to securities that meet the
quality  and  diversification  requirements  of Rule 2a-7  under the  Investment
Company Act of 1940 (the "1940 Act").

The  Portfolio  will normally  invest at least 25% of its assets in  obligations
issued by banks;  provided,  however, the Portfolio may in the discretion of the
Portfolio's investment manager temporarily invest less than 25% of its assets in
such obligations whenever the Portfolio assumes a defensive posture. Investments
by the Portfolio in Eurodollar certificates of deposit issued by London branches
of U.S.  banks, or obligations  issued by foreign  entities,  including  foreign
banks,  involve  risks that are  different  from  investments  in  securities of
domestic  branches of U.S.  banks.  These risks may include  future  unfavorable
political  and economic  developments,  possible  withholding  taxes on interest
payments, seizure of foreign deposits,  currency controls,  interest limitations
or other  governmental  restrictions  that might affect  payment of principal or
interest. The market for such obligations may be less liquid and, at times, more
volatile than for securities of domestic  branches of U.S. banks.  Additionally,
there may be less public  information  available  about  foreign banks and their
branches.  The  profitability of the banking industry is dependent  largely upon
the  availability  and  cost of  funds  for the  purpose  of  financing  lending
operations under prevailing money market conditions. General economic conditions
as  well  as  exposure  to  credit  losses   arising  from  possible   financial
difficulties  of borrowers  play an important part in banking  operations.  As a
result of Federal  and state laws and  regulations,  domestic  banks are,  among
other things, required to maintain specified levels of reserves,  limited in the
amounts  they can loan to a single  borrower  and  subject to other  regulations
designed  to  promote  financial  soundness.  However,  not all  such  laws  and
regulations apply to the foreign branches of domestic banks. Foreign branches of
foreign banks are not regulated by U.S. banking  authorities,  and generally are
not bound by accounting,  auditing and financial reporting standards  comparable
to U.S. banks. Bank obligations held by the Portfolio do not benefit  materially
from insurance from the Federal Deposit Insurance  Corporation.
 .
The Portfolio may invest in commercial paper issued by major  corporations under
the  Securities  Act of 1933 in  reliance  on the  exemption  from  registration
afforded by Section 3(a)(3) thereof. Such commercial paper may be issued only to
finance current  transactions and must mature in nine months or less. Trading of
such commercial paper is conducted primarily by institutional  investors through
investment dealers and individual investor participation in the commercial paper
market is very limited. The Portfolio also may invest in commercial paper issued
in reliance on the so-called  "private  placement"  exemption from  registration
that is afforded by Section 4(2) of the  Securities  Act of 1933  ("Section 4(2)
paper").  Section 4(2) paper is restricted as to  disposition  under the federal
securities  laws, and generally is sold to  institutional  investors such as the
Portfolio who agree that they are  purchasing  the paper for  investment and not
with a view to public  distribution.  Any resale by the purchaser  must be in an
exempt transaction. Section 4(2) paper normally is resold to other institutional
investors  like the  Portfolio  through or with the  assistance of the issuer or
investment  dealers  who make a market in Section  4(2)  paper,  thus  providing
liquidity.  The Portfolio's  investment manager considers the legally restricted
but  readily  saleable  Section  4(2) paper to be liquid;  however,  pursuant to
procedures  approved  by the Board of  Trustees  of the Trust,  if a  particular
investment in Section 4(2) paper is not determined to be liquid, that investment
will be included  within the 10%  limitation  on illiquid  securities  discussed
below.  The  Portfolio's  investment  manager  monitors  the  liquidity  of  the
Portfolio's investments in Section 4(2) paper on a continuous basis.

                                       4
<PAGE>

The   Portfolio   may  invest  in  high   quality   participation   certificates
("certificates")   representing  undivided  interests  in  trusts  that  hold  a
portfolio of receivables from consumer and commercial credit transactions,  such
as transactions  involving consumer revolving credit card accounts or commercial
revolving credit loan facilities.  The receivables would include amounts charged
for goods and services, finance charges, late charges and other related fees and
charges.  Interest  payable on the  certificates may be fixed or may be adjusted
periodically  or  "float"  continuously  according  to a formula  based  upon an
objective  standard such as the 30-day  commercial  paper rate  ("Variable  Rate
Securities").  A trust may have the benefit of a letter of credit from a bank at
a level  established to satisfy rating  agencies as to the credit quality of the
assets  supporting  the payment of principal  and interest on the  certificates.
Payments of principal and interest on the  certificates  would be dependent upon
the underlying  receivables in the trust and may be guaranteed under a letter of
credit to the extent of such credit.  The quality  rating by a rating service of
an issue of  certificates  is based  primarily upon the value of the receivables
held by the trust and the  credit  rating of the  issuer of any letter of credit
and  of  any  other  guarantor  providing  credit  support  to  the  trust.  The
Portfolio's  investment manager considers these factors as well as others,  such
as any  quality  ratings  issued by the rating  services  identified  above,  in
reviewing the credit risk presented by a certificate and in determining  whether
the  certificate is appropriate  for investment by the Portfolio.  Collection of
receivables in the trust may be affected by various  social,  legal and economic
factors affecting the use of credit and repayment  patterns,  such as changes in
consumer  protection  laws,  the  rate of  inflation,  unemployment  levels  and
relative  interest  rates.  It is  anticipated  that for most  publicly  offered
certificates  there  will be a liquid  secondary  market  or there may be demand
features  enabling  the  Portfolio  to readily  sell its  certificates  prior to
maturity to the issuer or a third party.  While the Portfolio may invest without
limit in  certificates,  it is currently  anticipated that such investments will
not exceed 25% of the Portfolio's assets.

The Portfolio may invest in Variable Rate Securities,  instruments  having rates
of  interest  that  are  adjusted  periodically  or  that  "float"  continuously
according  to  formulae  intended  to  minimize  fluctuation  in  values  of the
instruments.  The  interest  rate of  Variable  Rate  Securities  ordinarily  is
determined by reference to or is a percentage of an objective standard such as a
bank's prime rate, the 90-day U.S.  Treasury Bill rate, or the rate of return on
commercial paper or bank certificates of deposit.  Generally, the changes in the
interest rate on Variable Rate  Securities  reduce the fluctuation in the market
value of such securities.  Accordingly,  as interest rates decrease or increase,
the  potential  for  capital  appreciation  or  depreciation  is less  than  for
fixed-rate  obligations.  Some Variable Rate  Securities  ("Variable Rate Demand
Securities")  have a demand  feature  entitling  the  purchaser  to  resell  the
securities at an amount  approximately  equal to amortized cost or the principal
amount  thereof plus accrued  interest.  As is the case for other  Variable Rate
Securities,  the  interest  rate  on  Variable  Rate  Demand  Securities  varies
according to some  objective  standard  intended to minimize  fluctuation in the
values of the  instruments.  The Portfolio  determines  the maturity of Variable
Rate  Securities  in  accordance  with Rule 2a-7,  which allows the Portfolio to
consider  certain of such  instruments  as having  maturities  shorter  than the
maturity date on the face of the instrument.

The Portfolio may invest in repurchase  agreements,  which are instruments under
which the Portfolio  acquires  ownership of a security from a  broker-dealer  or
bank that agrees to repurchase  the security at a mutually  agreed upon time and
price (which price is higher than the purchase price),  thereby  determining the
yield during the Portfolio's holding period.  Maturity of the securities subject
to repurchase may exceed one year. In the event of a bankruptcy or other default
of a seller of a repurchase  agreement,  the  Portfolio  might have  expenses in
enforcing its rights,  and could experience  losses,  including a decline in the
value of the underlying securities and loss of income.

The Portfolio will not purchase illiquid securities, including time deposits and
repurchase  agreements maturing in more than seven days if, as a result thereof,
more  than  10% of  the  Portfolio's  net  assets  valued  at  the  time  of the
transaction would be invested in such securities.

The  Portfolio  may  not  borrow  money  except  as  a  temporary   measure  for
extraordinary or emergency purposes,  and then only in an amount up to one-third
of the value of its total assets,  in order to meet redemption  requests without
immediately  selling any portfolio  securities.  Any such borrowings  under this
provision will not be collateralized. The Portfolio will not borrow for leverage
purposes.

Repurchase  Agreements.  The Portfolio may enter into repurchase agreements with
any member  bank of the Federal  Reserve  System or any  domestic  broker/dealer
which  is  recognized  as  a  reporting  Government  securities  dealer  if  the
creditworthiness of the bank or broker/dealer has been determined by the Adviser
to be at least as high as that of other  obligations  the Portfolio may purchase
or to be at least equal to that of issuers of commercial  paper rated within the
two highest grades assigned by Moody's, S&P or Duff.

                                       5
<PAGE>

A repurchase agreement provides a means for the Portfolio to earn taxable income
on funds for periods as short as overnight. It is an arrangement under which the
purchaser  (i.e.,  the  Portfolio)  acquires a security  ("Obligation")  and the
seller agrees,  at the time of sale, to repurchase the Obligation at a specified
time and price.  Securities  subject  to a  repurchase  agreement  are held in a
segregated  account and the value of such  securities kept at least equal to the
repurchase  price on a daily basis.  The repurchase price may be higher than the
purchase price,  the difference  being income to the Portfolio,  or the purchase
and repurchase prices may be the same, with interest at a stated rate due to the
Portfolio  together  with the  repurchase  price on the date of  repurchase.  In
either case, the income to the Portfolio  (which is taxable) is unrelated to the
interest  rate  on the  Obligation  itself.  Obligations  will  be  held  by the
custodian or in the Federal Reserve Book Entry system.

For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan from
the  Portfolio  to  the  seller  of the  Obligation  subject  to the  repurchase
agreement and is therefore  subject to the  Portfolio's  investment  restriction
applicable  to  loans.  It is not  clear  whether  a court  would  consider  the
Obligation purchased by the Portfolio subject to a repurchase agreement as being
owned by the Portfolio or as being collateral for a loan by the Portfolio to the
seller. In the event of the commencement of bankruptcy or insolvency proceedings
with respect to the seller of the Obligation before repurchase of the Obligation
under a repurchase agreement,  the Portfolio may encounter delay and incur costs
before being able to sell the  security.  Delays may involve loss of interest or
decline in price of the Obligation.  If the court  characterized the transaction
as a loan and the Portfolio has not perfected an interest in the Obligation, the
Portfolio may be required to return the Obligation to the seller's estate and be
treated as an unsecured  creditor of the seller. As an unsecured  creditor,  the
Portfolio is at risk of losing some or all of the principal and income  involved
in the  transaction.  As with any unsecured  debt  obligation  purchased for the
Portfolio,  the Adviser  seeks to minimize the risk of loss  through  repurchase
agreements by analyzing the  creditworthiness  of the obligor,  in this case the
seller  of the  Obligation.  Apart  from the risk of  bankruptcy  or  insolvency
proceedings,  there is also the risk that the seller may fail to repurchase  the
Obligation,  in which case the Portfolio may incur a loss if the proceeds to the
Portfolio  of the sale to a third  party  are less  than the  repurchase  price.
However,  if the  market  value  of the  Obligation  subject  to the  repurchase
agreement  becomes less than the  repurchase  price  (including  interest),  the
Portfolio  will  direct  the  seller of the  Obligation  to  deliver  additional
securities so that the market value of all securities  subject to the repurchase
agreement  will equal or exceed the  repurchase  price.  It is possible that the
Portfolio will be  unsuccessful  in seeking to enforce the seller's  contractual
obligation to deliver additional securities.

INVESTMENT MANAGER AND SHAREHOLDER SERVICES
Investment Adviser. Scudder Kemper Investments, Inc. ("Scudder Kemper") 345 Park
Avenue, New York, New York, is the investment adviser for the Portfolio. Scudder
Kemper  is  approximately  70%  owned by  Zurich  Insurance  Company,  a leading
internationally  recognized  provider of  insurance  and  financial  services in
property/casualty  and life  insurance,  reinsurance  and  structured  financial
solutions as well as asset management. The balance of Scudder Kemper is owned by
Scudder Kemper's officers and employees.  Responsibility  for overall management
of each Fund rests with the Trust's Board of Trustees and officers.  Pursuant to
an investment  management  agreement (the  "Agreement"),  Scudder Kemper acts as
each Fund's Adviser, manages its investments,  administers its business affairs,
furnishes office facilities and equipment,  provides clerical and administrative
services,  provides  shareholder and information services and permits any of its
officers or employees to serve without  compensation  as trustees or officers of
the Trust if  elected to such  positions.  The Trust  pays the  expenses  of its
operations,  including the fees and expenses of independent  auditors,  counsel,
custodian  and transfer  agent and the cost of share  certificates,  reports and
notices to  shareholders,  costs of calculating  net asset value and maintaining
all accounting  records related  thereto,  brokerage  commissions or transaction
costs,  taxes,  registration fees, the fees and expenses of qualifying the Trust
and its shares for  distribution  under  federal and state  securities  laws and
membership dues in the Investment Company Institute or any similar organization.

The Agreement  provides that Scudder Kemper shall not be liable for any error of
judgment or of law, or for any loss suffered by the Trust in connection with the
matters to which the agreement  relates,  except a loss  resulting  from willful
misfeasance,  bad faith or gross negligence on the part of Scudder Kemper in the
performance  of its  obligations  and  duties,  or by  reason  of  its  reckless
disregard of its obligations and duties under the agreement.

In  certain  cases  the  investments  for the  Funds  are  managed  by the  same
individuals  who manage one or more other  mutual  funds  advised by the Adviser
that have similar  names,  objectives and  investment  styles as the Funds.  You
should be aware that the Funds are  likely to differ  from  these  other  mutual
funds in size, cash flow pattern and tax matters.  Accordingly, the holdings and
performance  of the Funds can be expected to vary from those of the other mutual
funds.

                                       6
<PAGE>

On December 31, 1997, pursuant to the terms of an agreement,  Scudder, Stevens &
Clark, Inc. ("Scudder"),  and Zurich Insurance Company ("Zurich"),  formed a new
global   investment   organization  by  combining  Scudder  with  Zurich  Kemper
Investments,  Inc.  ("ZKI") and Zurich  Kemper Value  Advisors,  Inc.  ("ZKVA"),
former  subsidiaries of Zurich.  ZKI was the former investment  adviser for each
Fund.  Upon completion of the  transaction,  Scudder changed its name to Scudder
Kemper  Investments,   Inc.  As  a  result  of  the  transaction,   Zurich  owns
approximately 70% of Scudder Kemper,  with the balance owned by Scudder Kemper's
officers and employees.

In certain  cases the  investments  for the  Portfolios  are managed by the same
individuals  who manage one or more other  mutual  funds  advised by the Adviser
that have similar names, objectives and investment styles as the Portfolios. You
should be aware that the Portfolios are likely to differ from these other mutual
funds in size, cash flow pattern and tax matters.  Accordingly, the holdings and
performance  of the  Portfolios  can be expected to vary from those of the other
mutual funds.

On September 7, 1998, the businesses of Zurich (including  Zurich's 70% interest
in the Adviser) and the financial services businesses of B.A.T Industries p.l.c.
("B.A.T")  were combined to form a new global  insurance and financial  services
company  known as Zurich  Financial  Services  Group.  By way of a dual  holding
company structure,  former Zurich shareholders initially owned approximately 57%
of Zurich Financial  Services Group,  with the balance initially owned by former
B.A.T shareholders.

Upon  consummation  of this  transaction,  each Fund's then  current  investment
management  agreement  with the  Adviser was deemed to have been  assigned  and,
therefore,  terminated. The Board approved the Agreement with the Adviser, which
is substantially identical to the prior investment management agreement,  except
for the dates of execution and  termination.  The Agreement  became effective on
September  7,  1998,  upon  the  termination  of  the  then  current  investment
management agreement, and was approved at a shareholder meeting held on December
17, 1998.

The  Agreement,  dated  September  7, 1998,  was approved by the trustees of the
Trust on August 11, 1998. The Agreement will continue in effect until  September
30, 1999 and from year to year  thereafter  only if its  continuance is approved
annually by the vote of a majority of those trustees who are not parties to such
Agreement or interested persons of the Adviser or the Trust, cast in person at a
meeting called for the purpose of voting on such approval,  and either by a vote
of the Trust's trustees or of a majority of the outstanding voting securities of
the Trust.  The  Agreement  may be  terminated  at any time  without  payment of
penalty  by  either  party on sixty  days'  written  notice,  and  automatically
terminate in the event of its assignment.

If  additional  Portfolios  become  subject  to the  Agreement,  the  provisions
concerning  continuation,  amendment and termination  shall be on a Portfolio by
Portfolio  basis and the  management  fee and the expense  limitations  shall be
computed  based upon the average daily net assets of all  Portfolios  subject to
the  agreement  and shall be  allocated  among  such  Portfolios  based upon the
relative net assets of such Portfolios.  Additional Portfolios may be subject to
a different  agreement.  Currently,  the Money Market Portfolio,  the Government
Securities Portfolio and the Tax-Exempt Portfolio are subject to the agreement.

For the services and facilities furnished to the Trust, the Trust pays a monthly
investment  management  fee on a  graduated  basis at 1/12 of 0.22% of the first
$500  million of combined  average  daily net assets of the Trust,  0.20% of the
next $500 million,  0.175% of the next $1 billion,  0.16% of the next $1 billion
and 0.15% of combined average daily net assets of the Trust over $3 billion. The
investment  management  fee is computed based on average daily net assets of the
Portfolios  subject to the agreement and allocated  among the  Portfolios  based
upon the  relative  net assets of each.  Pursuant to the  investment  management
agreement, the Portfolio paid the Adviser fees of $3,120,000 for the fiscal year
ended April 30, 1999;  $1,888,000  for the fiscal year ended April 30, 1998; and
$975,000  for the fiscal  year ended  April 30,  1997.  The  Adviser and certain
affiliates have agreed to limit certain  operating  expenses of the Portfolio to
the extent described in the prospectus. If expense limits had not been in effect
the Adviser would have received investment management fees from the Portfolio of
$4,086,000  for the fiscal year ended April 30, 1999;  $2,463,000 for the fiscal
year ended April 30, 1998,  and  $1,150,000  for the fiscal year ended April 30,
1997. The Adviser  absorbed  operating  expenses for the Portfolio of $2,233,000
for the fiscal year ended April 30,  1999;  $1,253,000  for the year ended April
30, 1998; $175,000 for the fiscal year ended April 30, 1997.

                                       7
<PAGE>

Certain  officers or trustees of the Trust are also directors or officers of the
Adviser and its affiliates as indicated under "Officers and Trustees."

Fund  Accounting  Agent.  Scudder  Fund  Accounting  Corporation  ("SFAC"),  Two
International Place,  Boston,  Massachusetts 02110, a subsidiary of the Adviser,
is  responsible  for  determining  the daily  net  asset  value per share of the
Portfolio and maintaining all accounting  records  related  thereto.  Currently,
SFAC  receives no fee for its  services to the  Portfolio;  however,  subject to
Board  approval,  at some  time in the  future,  SFAC may seek  payment  for its
services under this agreement.

Distributor  and  Administrator.  Pursuant to an underwriting  and  distribution
agreement  ("distribution  agreement"),  Kemper Distributors,  Inc. ("KDI"), 222
South  Riverside  Plaza,  Chicago,  Illinois 60606, an affiliate of the Adviser,
serves  as  distributor  and  principal  underwriter  for the  Trust to  provide
information   and  services  for  existing  and  potential   shareholders.   The
distribution  agreement provides that KDI shall appoint various firms to provide
cash management services for their customers or clients through the Trust.

As principal  underwriter  for the Trust,  KDI acts as agent of the Trust in the
sale of its  shares  of the  Portfolio.  KDI pays  all its  expenses  under  the
distribution  agreement including,  without limitation,  services fees to firms.
The Trust pays the cost for the prospectus and shareholder  reports to be set in
type and printed for  existing  shareholders,  and KDI pays for the printing and
distribution of copies thereof used in connection with the offering of shares to
prospective  investors.  KDI also pays for  supplementary  sales  literature and
advertising  costs.  KDI has related selling group agreements with various firms
to  provide  distribution  services  for  Fund  shareholders.  KDI  receives  no
compensation from the Trust as principal underwriter for the Shares and pays all
expenses of  distribution  of the Shares not otherwise paid by dealers and other
financial services firms.

The distribution agreement continues in effect from year to year so long as such
continuance  is approved at least annually by a vote of the Board of Trustees of
the Trust,  including the Trustees who are not  interested  persons of the Trust
and who have no direct or  indirect  financial  interest in the  agreement.  The
distribution agreement  automatically  terminates in the event of its assignment
and may be terminated at any time without penalty by the Trust or by KDI upon 60
days' written notice. Termination of the distribution agreement by the Trust may
be by vote of a majority of the Board of Trustees, or a majority of the Trustees
who are not  interested  persons of the Trust and who have no direct or indirect
financial  interest in the agreement,  or a "majority of the outstanding  voting
securities" of the Trust as defined under the 1940 Act.

Administrative  services are provided to the Portfolio  under an  administration
services  agreement  ("administration  agreement")  with KDI.  KDI bears all its
expenses of providing services pursuant to the administration  agreement between
KDI and the Portfolio,  including the payment of service fees. Retail Shares and
Premier  Shares of the Portfolio  each pay KDI an  administrative  services fee,
payable monthly, at an annual rate of up to 0.25% of average daily net assets of
the Portfolio.  Institutional Shares of the Portfolio pays KDI an administrative
services fee, payable monthly, at an annual rate of up to 0.15% of average daily
net  assets of the  Portfolio.  In  addition  to the  discounts  or  commissions
described above, KDI will, from time to time, pay or allow additional discounts,
commissions   or  promotional   incentives,   in  the  form  of  cash  or  other
compensation,  to firms that sell  shares of the Funds.  During the fiscal  year
ended April 30, 1999, the shares of the Money Market Portfolio paid distribution
services fees of $12,373,000.

KDI has entered into related  arrangements with various  broker-dealer firms and
other  service or  administrative  firms  ("firms")  that  provide  services and
facilities  for their  customers  or clients who are  investors in Shares of the
Portfolio.  The  firms  provide  such  office  space  and  equipment,  telephone
facilities and personnel as is necessary or beneficial for providing information
and services to their clients. Such services and assistance may include, but are
not limited to,  establishing and maintaining  accounts and records,  processing
purchase and redemption transactions,  answering routine inquiries regarding the
Portfolio,  assistance to clients in changing  dividend and investment  options,
account designations and addresses and such other administrative services as may
be agreed upon from time to time and  permitted by applicable  statute,  rule or
regulation.  KDI pays each firm a service fee, normally payable quarterly, at an
annual rate of up to 0.25% of the net assets in the Portfolio's accounts that it
maintains and services,  commencing with the month after  investment.  After the
first year, a firm becomes  eligible for the  quarterly  service fee and the fee
continues until terminated by KDI or the Portfolio.  Firms to which service fees
may be paid may include affiliates of KDI.

KDI also may provide  some of the above  services  and may retain any portion of
the fee  under  the  administrative  agreement  not paid to firms to  compensate
itself for administrative functions performed for the Portfolio.

                                       8
<PAGE>

Custodian,  Transfer Agent and Shareholder  Service Agent. State Street Bank and
Trust Company, 225 Franklin Street,  Boston,  Massachusetts 02110, as custodian,
has  custody  of all  securities  and  cash  of the  Trust.  It  attends  to the
collection of principal and income,  and payment for and  collection of proceeds
of securities bought and sold by the Portfolio. Pursuant to a services agreement
with Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas
City,  Missouri 64105, the transfer agent for the Trust,  Kemper Service Company
("KSvC"),  an affiliate of the Adviser,  serves as "Shareholder  Service Agent."
IFTC receives  from the Retail  Shares,  Premier and  Institutional  Shares,  as
transfer  agent,  and pays to KSvC annual  account  fees of a maximum of $13 per
account plus out-of-pocket expense  reimbursement.  During the fiscal year ended
April  30,  1999,  IFTC  remitted  shareholder  service  fees for  Money  Market
Portfolio in the amount of $4,860,000 to KSvC as Shareholder Service Agent.

Independent  Auditors  and  Reports to  Shareholders.  The  Trust's  independent
auditors,  Ernst & Young LLP, 233 South Wacker Drive,  Chicago,  Illinois 60606,
audit and report on the Trust's  annual  financial  statements,  review  certain
regulatory  reports and the Trust's federal income tax return, and perform other
professional accounting,  auditing, tax and advisory services when engaged to do
so by the Trust.  Shareholders will receive annual audited financial  statements
and semi-annual unaudited financial statements.

Legal Counsel.  Vedder,  Price,  Kaufman & Kammholz,  222 North LaSalle  Street,
Chicago, Illinois 60601, serves as legal counsel for the Trust.

PORTFOLIO TRANSACTIONS

Brokerage Commissions

Allocation of brokerage is supervised by the Adviser.

The primary objective of the Adviser in placing orders for the purchase and sale
of  securities  for a Portfolio  is to obtain the most  favorable  net  results,
taking into account such factors as price, commission where applicable,  size of
order,   difficulty   of  execution   and  skill   required  of  the   executing
broker/dealer.  The Adviser  seeks to evaluate  the  overall  reasonableness  of
brokerage commissions paid (to the extent applicable) through the familiarity of
Scudder Investor Services,  Inc. ("SIS") with commissions  charged on comparable
transactions,  as well  as by  comparing  commissions  paid  by A  Portfolio  to
reported  commissions paid by others.  The Adviser routinely reviews  commission
rates,  execution  and  settlement  services  performed  and makes  internal and
external comparisons.

A  Portfolio's  purchases  and sales of  fixed-income  securities  are generally
placed by the Adviser with primary  market makers for these  securities on a net
basis,  with out any  brokerage  commission  being paid by a Portfolio.  Trading
does, however,  involve transaction costs.  Transactions with dealers serving as
primary  market  makers  reflect the spread  between  the bid and asked  prices.
Purchases of underwritten issues may be made, which will include an underwriting
fee paid to the underwriter.

When it can be done consistently with the policy of obtaining the most favorable
net  results,   it  is  the  Adviser's   practice  to  place  such  orders  with
broker/dealers  who supply  brokerage and research  services to the Adviser or a
Portfolio.  The term  "research  services"  includes  advice  as to the value of
securities;  the advisability of investing in, purchasing or selling securities;
the  availability  of securities or  purchasers  or sellers of  securities;  and
analyses  and  reports  concerning  issuers,  industries,  securities,  economic
factors and trends,  portfolio  strategy and the  performance  of accounts.  The
Adviser is authorized when placing portfolio transactions,  if applicable, for a
Portfolio to pay a brokerage  commission in excess of that which another  broker
might charge for executing the same transaction on account of execution services
and the receipt of research services.  The Adviser has negotiated  arrangements,
which  are  not  applicable  to most  fixed-income  transactions,  with  certain
broker/dealers  pursuant to which a broker/dealer will provide research services
to the Adviser or a Portfolio  in exchange  for the  direction by the Adviser of
brokerage  transactions  to  the  broker/dealer.  These  arrangements  regarding
receipt of research  services  generally apply to equity security  transactions.
The  Adviser  may  place  orders  with a  broker/dealer  on the  basis  that the
broker/dealer  has  or  has  not  sold  shares  of  a  Portfolio.  In  effecting
transactions  in  over-the-counter  securities,   orders  are  placed  with  the
principal  market makers for the security being traded unless,  after exercising
care, it appears that more favorable results are available elsewhere.

                                       9
<PAGE>

To the  maximum  extent  feasible,  it is expected  that the Adviser  will place
orders for portfolio transactions through SIS, which is a corporation registered
as a  broker/dealer  and a subsidiary  of the Adviser;  SIS will place orders on
behalf of a Portfolio with issuers,  underwriters  or other brokers and dealers.
SIS will not receive any commission,  fee or other remuneration from a Portfolio
for this service.

Although  certain  research  services  from  broker/dealers  may be  useful to a
Portfolio  and to the  Adviser,  it is the  opinion  of the  Adviser  that  such
information  only  supplements  the  Adviser's  own  research  effort  since the
information  must still be  analyzed,  weighed,  and  reviewed by the  Adviser's
staff.  Such  information may be useful to the Adviser in providing  services to
clients  other than a  Portfolio,  and not all such  information  is used by the
Adviser in connection with a Portfolio. Conversely, such information provided to
the Adviser by  broker/dealers  through whom other clients of the Adviser effect
securities  transactions may be useful to the Adviser in providing services to a
Portfolio.

The Trustees review, from time to time, whether the recapture for the benefit of
a Portfolio of some portion of the brokerage commissions or similar fees paid by
a Portfolio on portfolio transactions is legally permissible and advisable.

Money  market  instruments  are normally  purchased  in  principal  transactions
directly from the issuer or from an underwriter  or market maker.  There usually
are no brokerage commissions paid by a Portfolio for such purchases.  During the
last three fiscal years each Portfolio paid no portfolio brokerage  commissions.
Purchases from  underwriters will include a commission or concession paid by the
issuer to the  underwriter,  and purchases from dealers serving as market makers
will include the spread between the bid and asked prices.

PURCHASES AND REDEMPTION OF SHARES

Purchase of Shares

Shares of the Portfolio are sold at their net asset value next determined  after
an order and payment are received in the form described in the  prospectus.  For
Retail  Shares,  the  minimum  initial  investment  is  $1,000  and the  minimum
subsequent   investment  is  $100.  For  Premier  Shares,  the  minimum  initial
investment  is  $25,000  and the  minimum  subsequent  investment  is $100.  For
Institutional  Shares, the minimum initial investment is $250,000.  Such minimum
amounts  may be changed at any time.  The  Portfolio  may waive the  minimum for
purchases  by  trustees,  directors,  officers or  employees of the Trust or the
Adviser and its  affiliates.  An investor  wishing to open an account should use
the Account  Application  available  from the  Portfolio or  financial  services
firms.  Orders for the purchase of shares that are  accompanied by a check drawn
on a foreign bank (other than a check drawn on a Canadian bank in U.S.  Dollars)
will not be considered in proper form and will not be rocessed  unless and until
the  Portfolio  determines  that it has received  payment of the proceeds of the
check.  The time  required  for such a  determination  will  vary and  cannot be
determined in advance.

Clients of Firms.  Firms  provide  varying  arrangements  for their clients with
respect to the purchase and redemption of Portfolio  shares and the confirmation
thereof  and  may  arrange   with  their   clients  for  other   investment   or
administrative  services. Such firms are responsible for the prompt transmission
of purchase and  redemption  orders.  Some firms may  establish  higher  minimum
investment  requirements  than set forth  above.  Such  firms may  independently
establish and charge  additional  amounts to their  clients for their  services,
which charges would reduce their clients'  yield or return.  Firms may also hold
Portfolio  shares in nominee or street  name as agent for and on behalf of their
clients. In such instances,  the Portfolio's Trust's transfer agent will have no
information   with   respect  to  or  control  over  the  accounts  of  specific
shareholders.  Such  shareholders  may  obtain  access  to  their  accounts  and
information  about their  accounts only from their firm.  Certain of these firms
may  receive  compensation  through the Trust's  Shareholder  Service  Agent for
record-keeping  and  other  expenses  relating  to these  nominee  accounts.  In
addition,  certain  privileges  with respect to the purchase and  redemption  of
shares (such as check writing  redemptions) or the reinvestment of dividends may
not be available  through such firms or may only be available subject to certain
conditions or limitations. Some firms may participate in a program allowing them
access to their clients' accounts for servicing  including,  without limitation,
transfers of registration and dividend payee changes;  and may perform functions
such  as  generation  of  confirmation   statements  and  disbursement  of  cash
dividends. The prospectus should be read in connection with such firm's material
regarding its fees and services.

Other Information.  The Portfolio reserves the right to withdraw all or any part
of the offering made by this  prospectus or to reject purchase  orders,  without
prior  notice.  The  Portfolio  also  reserves the right at any time to waive or
increase the

                                       10
<PAGE>

minimum investment requirements.  All orders to purchase Shares of the Portfolio
are subject to acceptance  by the Portfolio and are not binding until  confirmed
or accepted in writing. Any purchase that would result in total account balances
for a single shareholder in excess of $3 million is subject to prior approval by
the Portfolio.  Share certificates are issued only on request. A $10 service fee
will be charged when a check for the  purchase of Shares is returned  because of
insufficient or uncollected funds or a stop payment order.  Shareholders  should
direct their  inquiries to the firm from which they received this  prospectus or
to Kemper Service Company ("KSvC"), the Trust's "Shareholder Service Agent," 811
Main Street, Kansas City, Missouri 64105-2005.

Redemption of Shares

General.  Upon receipt by the Shareholder Service Agent of a request in the form
described  below,  shares of the Portfolio  will be redeemed by the Portfolio at
the next determined net asset value. If processed at 3:00 p.m.  Central standard
time, the shareholder  will receive that day's  dividend.  A shareholder may use
either the regular or expedited redemption  procedures.  Shareholders who redeem
all their  shares of the  Portfolio  will  receive  the net asset  value of such
shares and all declared but unpaid dividends on such shares.

The  Portfolio  may suspend the right of  redemption  or delay payment more than
seven days (a) during any period when the New York Stock  Exchange  ("Exchange")
is closed other than customary weekend and holiday closings or during any period
in which  trading on the Exchange is  restricted,  (b) during any period when an
emergency  exists  as  a  result  of  which  (i)  disposal  of  the  Portfolio's
investments  is  not  reasonably  practicable,  or  (ii)  it is  not  reasonably
practicable  for the Portfolio to determine the value of its net assets,  or (c)
for such other periods as the  Securities  and Exchange  Commission may by order
permit for the protection of the Portfolio's shareholders.

Although it is the Portfolio's present policy to redeem in cash, if the Board of
Trustees  determines that a material  adverse effect would be experienced by the
remaining  shareholders  if payment were made wholly in cash, the Portfolio will
pay the redemption  price in part by a distribution  of portfolio  securities in
lieu of cash, in conformity  with the  applicable  rules of the  Securities  and
Exchange Commission,  taking such securities at the same value used to determine
net asset value,  and  selecting  the  securities in such manner as the Board of
Trustees  may  deem  fair  and  equitable.   If  such  a  distribution   occurs,
shareholders  receiving  securities and selling them could receive less than the
redemption  value  of  such  securities  and in  addition  would  incur  certain
transaction  costs.  Such a  redemption  would not be as liquid as a  redemption
entirely  in cash.  The Trust has elected to be governed by Rule 18f-1 under the
1940 Act  pursuant  to which the  Trust is  obligated  to  redeem  shares of the
Portfolio solely in cash up to the lesser of $250,000 or 1% of the net assets of
the Portfolio during any 90-day period for any one shareholder of record.

If shares of the  Portfolio  to be redeemed  were  purchased by check or through
certain Automated Clearing House ("ACH")  transactions,  the Portfolio may delay
transmittal of redemption  proceeds until it has determined that collected funds
have been received for the purchase of such shares,  which will be up to 10 days
from receipt by the Portfolio of the purchase  amount.  Shareholders may not use
ACH or Redemption  Checks until the shares being redeemed have been owned for at
least 10 days and shareholders may not use such procedures to redeem shares held
in  certificated  form.  There is no  delay  when  shares  being  redeemed  were
purchased by wiring Federal Funds.

If shares being  redeemed  were  acquired from an exchange of shares of a mutual
fund  that  were  offered  subject  to a  contingent  deferred  sales  charge as
described in the  prospectus  for that other fund, the redemption of such shares
by the  Portfolio  may be  subject  to a  contingent  deferred  sales  charge as
explained in such prospectus.

Shareholders  can request the following  telephone  privileges:  expedited  wire
transfer redemptions,  ACH transactions and exchange transactions for individual
and institutional accounts and pre-authorized  telephone redemption transactions
for certain institutional accounts.  Shareholders may choose these privileges on
the account  application  or by  contacting  the  Shareholder  Service Agent for
appropriate  instructions.  Please note that the telephone exchange privilege is
automatic  unless the  shareholder  refuses it on the account  application.  The
Trust or its agents may be liable for any losses,  expenses or costs arising out
of fraudulent or unauthorized  telephone  requests pursuant to these privileges,
unless  the  Trust or its  agents  reasonably  believe,  based  upon  reasonable
verification  procedures,  that the  telephone  instructions  are  genuine.  The
shareholder   will  bear  the  risk  of  loss,   resulting  from  fraudulent  or
unauthorized transactions, as long as the reasonable

                                       11
<PAGE>

verification  procedures  are  followed.  The  verification  procedures  include
recording instructions,  requiring certain identifying information before acting
upon instructions and sending written confirmations.

Because of the high cost of maintaining small accounts,  the Portfolio  reserves
the right to redeem an account  that falls below the minimum  investment  level.
Thus,  a  shareholder  who makes only the minimum  initial  investment  and then
redeems any portion thereof might have the account redeemed.  A shareholder will
be notified in writing and will be allowed 60 days to make additional  purchases
to bring  the  account  value up to the  minimum  investment  level  before  the
Portfolio redeems the shareholder account.

Financial  services  firms  provide  varying  arrangements  for their clients to
redeem  Portfolio  shares.  Such firms may  independently  establish  and charge
amounts to their clients for such services.

Regular  Redemptions.  When shares are held for the account of a shareholder  by
the Trust's transfer agent, the shareholder may redeem them by sending a written
request with signatures  guaranteed to Kemper Service Company,  P.O. Box 419153,
Kansas City, Missouri 64141-6153. When certificates for shares have been issued,
they must be mailed to or deposited with the  Shareholder  Service Agent,  along
with a duly  endorsed  stock  power and  accompanied  by a written  request  for
redemption.  Redemption  requests  and a stock  power  must be  endorsed  by the
account holder with signatures  guaranteed by a commercial  bank, trust company,
savings and loan  association,  federal savings bank,  member firm of a national
securities  exchange or other  eligible  financial  institution.  The redemption
request  and stock  power must be signed  exactly as the  account is  registered
including any special capacity of the registered owner. Additional documentation
may  be  requested,  and  a  signature  guarantee  is  normally  required,  from
institutional  and fiduciary account holders,  such as corporations,  custodians
(e.g.,  under the Uniform Transfers to Minors Act),  executors,  administrators,
trustees or guardians.

Telephone Redemptions. If the proceeds of the redemption are $50,000 or less and
the proceeds are payable to the  shareholder of record at the address of record,
normally a  telephone  request or a written  request by any one  account  holder
without a signature  guarantee is sufficient  for  redemptions  by individual or
joint account  holders,  and trust,  executor,  guardian and  custodian  account
holders,  provided the trustee,  executor  guardian or custodian is named in the
account  registration.  Other  institutional  account  holders may exercise this
special  privilege of redeeming  shares by telephone  request or written request
without signature guarantee subject to the same conditions as individual account
holders  and  subject  to the  limitations  on  liability,  provided  that  this
privilege  has  been  pre-authorized  by the  institutional  account  holder  or
guardian account holder by written  instruction to the Shareholder Service Agent
with  signatures   guaranteed.   Telephone  requests  may  be  made  by  calling
1-800-231-8568.  Shares  purchased by check or through certain ACH  transactions
may not be  redeemed  under this  privilege  of  redeeming  shares by  telephone
request until such shares have been owned for at least 10 days.  This  privilege
of  redeeming  shares by  telephone  request  or by  written  request  without a
signature  guarantee may not be used to redeem shares held in  certificate  form
and may  not be used if the  shareholder's  account  has had an  address  change
within 30 days of the redemption request. During periods when it is difficult to
contact the Shareholder  Service Agent by telephone,  it may be difficult to use
the telephone redemption privilege, although investors can still redeem by mail.
The  Portfolio  reserves the right to terminate or modify this  privilege at any
time.

Expedited   Wire  Transfer   Redemptions.   If  the  account  holder  has  given
authorization for expedited wire redemption to the account holder's brokerage or
bank  account,  shares  can be  redeemed  and  proceeds  sent by a federal  wire
transfer to a single  previously  designated  account.  Requests received by the
Shareholder Service Agent prior to 11:00 p.m. Central time will result in shares
being redeemed that day and normally the proceeds will be sent to the designated
account that day. Once  authorization is on file, the Shareholder  Service Agent
will honor requests by telephone at 1-800-231-8568 or in writing, subject to the
limitations on liability. The Portfolio is not responsible for the efficiency of
the federal wire system or the account holder's financial services firm or bank.
The Portfolio  currently does not charge the account holder for wire  transfers.
The  account  holder is  responsible  for any  charges  imposed  by the  account
holder's firm or bank. There is a $1,000 wire redemption  minimum. To change the
designated account to receive wire redemption  proceeds,  send a written request
to the Shareholder Service Agent with signatures  guaranteed as described above,
or contact the firm through which shares of the Portfolio were purchased. Except
for  Institutional  Shares,  Shares  purchased  by check or through  certain ACH
transactions  may not be  redeemed by wire  transfer  until the shares have been
owned for at least 10 days. Account holders may not use this procedure to redeem
shares held in certificate  form. During periods when it is difficult to contact
the  Shareholder  Service  Agent by  telephone,  it may be  difficult to use the
expedited wire transfer redemption  privilege.  The Portfolio reserves the right
to terminate or modify this privilege at any time.

                                       12
<PAGE>

Redemptions By Draft. This section does not apply to Institutional  Shares. Upon
request,  shareholders will be provided with drafts to be drawn on the Portfolio
("Redemption Checks").  These Redemption Checks may be made payable to the order
of any  person  for not more  than $5  million.  Shareholders  should  not write
Redemption  Checks in an amount  less than $250 since a $10  service fee will be
charged as described below. When a Redemption Check is presented for payment,  a
sufficient  number of full and fractional  shares in the  shareholder's  account
will be redeemed as of the next  determined  net asset value to cover the amount
of the Redemption  Check.  This will enable the shareholder to continue  earning
dividends  until the  Portfolio  receives the  Redemption  Check.  A shareholder
wishing  to use this  method of  redemption  must  complete  and file an Account
Application  which is available from the Portfolio or firms through which shares
were purchased.  Redemption  Checks should not be used to close an account since
the account  normally  includes  accrued  but unpaid  dividends.  The  Portfolio
reserves  the right to  terminate  or modify this  privilege  at any time.  This
privilege may not be available  through some firms that distribute shares of the
Portfolio.  In addition,  firms may impose minimum balance requirements in order
to  offer  this  feature.  Firms  may also  impose  fees to  investors  for this
privilege or establish  variations  of minimum  check amounts if approved by the
Portfolio.

Unless one signer is authorized on the Account  Application,  Redemption  Checks
must be signed by all account holders. Any change in the signature authorization
must be  made  by  written  notice  to the  Shareholder  Service  Agent.  Shares
purchased by check or through  certain ACH  transactions  may not be redeemed by
Redemption  Check  until the shares  have been on the  Portfolio's  books for at
least 10 days.  Shareholders may not use this procedure to redeem shares held in
certificate  form. The Portfolio  reserves the right to terminate or modify this
privilege at any time.

The  Portfolio  may  refuse to honor  Redemption  Checks  whenever  the right of
redemption has been suspended or postponed, or whenever the account is otherwise
impaired. A $10 service fee will be charged when a Redemption Check is presented
to redeem Portfolio  shares in excess of the value of a Portfolio  account or in
an amount  less than  $250;  when a  Redemption  Check is  presented  that would
require  redemption  of  shares  that were  purchased  by check or  certain  ACH
transactions  within 10 days;  or when "stop  payment" of a Redemption  Check is
requested.

Special Features.  Certain firms that offer Shares of the Portfolio also provide
special redemption features through charge or debit cards and checks that redeem
Portfolio  Shares.  Various  firms have  different  charges for their  services.
Shareholders  should  obtain  information  from their  firm with  respect to any
special redemption  features,  applicable charges,  minimum balance requirements
and special rules of the cash management program being offered.

DIVIDENDS, NET ASSET VALUE AND TAXES

Dividends.  Dividends  are declared  daily and paid monthly.  Shareholders  will
receive  dividends  in  additional  shares  unless  they elect to receive  cash.
Dividends will be reinvested monthly in Shares of the Portfolio at the net asset
value normally on the 21st day of each month if a business day, otherwise on the
next business day. The Portfolio will pay shareholders  that redeem their entire
accounts all unpaid  dividends at the time of the  redemption not later than the
next dividend  payment date.  Upon written  request to the  Shareholder  Service
Agent, a shareholder  may elect to have  Portfolio  dividends  invested  without
sales charge in shares of another  Kemper Mutual Fund offering this privilege at
the net  asset  value  of such  other  fund.  See  "Special  Features-  Exchange
Privilege"  for a list of such other Kemper Mutual Funds.  To use this privilege
of  investing  Portfolio  dividends  in shares of another  Kemper  Mutual  Fund,
shareholders  must maintain a minimum  account value of $1,000 in Retail Shares,
$25,000 in  Premier  Shares  and  $250,000  in  Institutional  Shares,  and must
maintain a minimum  account  value of $1,000 in the fund in which  dividends are
reinvested.

The Shares of the Portfolio  calculates  their  dividends based on its daily net
investment income. For this purpose,  the net investment income of the Shares of
the Portfolio  consists of (a) accrued  interest  income plus or minus amortized
discount or premium,  (b) plus or minus all short-term realized gains and losses
on  investments  and (c) minus accrued  expenses  allocated to the Shares of the
Portfolio.  Expenses of the Portfolio are accrued each day.  While the Shares of
the  Portfolio's  investments  are valued at  amortized  cost,  there will be no
unrealized gains or losses on such  investments.  However,  should the net asset
value of the Shares of the Portfolio  deviate  significantly  from market value,
the Board of Trustees could decide to value the  investments at market value and
then  unrealized  gains and losses  would be included in net  investment  income
above.  Dividends are reinvested  monthly and shareholders  will receive monthly
confirmations  of dividends and of purchase and

                                       13
<PAGE>

redemption  transactions except that confirmations of dividend  reinvestment for
Individual  Retirement Accounts and other fiduciary accounts for which Investors
Fiduciary Trust Company acts as trustee will be sent quarterly.

If the shareholder  elects to receive  dividends in cash,  checks will be mailed
monthly,  within five business days of the reinvestment date (described  below),
to the shareholder or any person designated by the shareholder. At the option of
the shareholder,  cash dividends may be sent by Federal Funds wire. Shareholders
may  request to have  dividends  sent by wire on the Account  Application  or by
contacting  the  Shareholder  Service  Agent (see  "Purchase  of  Shares").  The
Portfolio  reinvests  dividend  checks (and future  dividends)  in shares of the
Portfolio  if  checks  are  returned  as  undeliverable.   Dividends  and  other
distributions  in  the  aggregate  amount  of  $10  or  less  are  automatically
reinvested in shares of the Portfolio unless the shareholder  requests that such
policy not be applied to the shareholder's account.

Net Asset Value.  As  described  in the  prospectus,  the  Portfolio  values its
portfolio  instruments  at  amortized  cost,  which  does not take into  account
unrealized  capital  gains  or  losses.   This  involves  initially  valuing  an
instrument  at its cost and  thereafter  assuming  a  constant  amortization  to
maturity of any  discount or premium,  regardless  of the impact of  fluctuating
interest rates on the market value of the instrument. While this method provides
certainty  in  valuation,  it may  result in  periods  during  which  value,  as
determined  by amortized  cost,  is higher or lower than the price the Portfolio
would receive if it sold the  instrument.  Calculations  are made to compare the
value of the Shares of the Portfolio's investments valued at amortized cost with
market  values.  Market  valuations  are  obtained  by using  actual  quotations
provided by market makers,  estimates of market value,  or values  obtained from
yield  data  relating  to  classes  of money  market  instruments  published  by
reputable  sources  at the  mean  between  the  bid  and  asked  prices  for the
instruments.  If a deviation of 1/2 of 1% or more were to occur  between the net
asset  value  per  share  calculated  by  reference  to  market  values  and the
Portfolio's  $1.00  per  share  net  asset  value,  or if there  were any  other
deviation  that the Board of Trustees of the Trust  believed  would  result in a
material  dilution to  shareholders  or purchasers,  the Board of Trustees would
promptly consider what action, if any, should be initiated. If the Shares of the
Portfolio's net asset value per share  (computed using market values)  declined,
or were expected to decline,  below $1.00 (computed using amortized  cost),  the
Board of  Trustees  of the Trust might  temporarily  reduce or suspend  dividend
payments in an effort to maintain  the net asset value at $1.00 per share.  As a
result of such reduction or suspension of dividends or other action by the Board
of Trustees, an investor would receive less income during a given period than if
such a reduction or suspension had not taken place.  Such action could result in
investors  receiving  no dividend  for the period  during  which they hold their
shares and receiving,  upon redemption,  a price per share lower than that which
they paid. On the other hand, if the Shares of the  Portfolio's  net asset value
per share (computed using market values) were to increase,  or were  anticipated
to increase above $1.00 (computed using amortized  cost),  the Board of Trustees
of the Trust might  supplement  dividends in an effort to maintain the net asset
value at $1.00 per share.  Redemption  orders  received in  connection  with the
administration  of  checkwriting  programs by certain dealers or other financial
services firms prior to the  determination  of the  Portfolio's  net asset value
also may be processed on a confirmed  basis in  accordance  with the  procedures
established by KDI.

Taxes.  The Portfolio  intends to continue to qualify as a regulated  investment
company under  Subchapter M of the Internal Revenue Code (the "Code") and, if so
qualified,  will not be  subject  to  Federal  income  taxes to the  extent  its
earnings are distributed. Dividends derived from interest and short-term capital
gains are taxable as ordinary  income whether  received in cash or reinvested in
additional shares. Long-term capital gains distributions, if any, are taxable as
long-term capital gains regardless of the length of time shareholders have owned
their  shares.  Dividends  from the  portfolio do not qualify for the  dividends
received deduction available to corporate shareholders.

Dividends declared in October, November or December to shareholders of record as
of a date in one of those  months and paid  during  the  following  January  are
treated  as paid on  December  31 of the  calendar  year in which  declared  for
Federal income tax purposes.  The Portfolio may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in the Code.

The  Portfolio is required by law to withhold 31% of taxable  dividends  paid to
certain shareholders who do not furnish a correct taxpayer identification number
(in the case of  individuals  a social  security  number)  and in certain  other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts are
required by law to withhold 20% of the taxable portion of any distribution  that
is eligible to be "rolled over." The 20% withholding  requirement does not apply
to  distributions  from IRAs or any part of a  distribution  that is transferred
directly  to another  qualified  retirement  plan,  403(b)(7)  account,  or IRA.
Shareholders  should  consult their tax advisers  regarding the 20%  withholding
requirement.

                                       14
<PAGE>

The  "Superfund  Act of 1986" (the  "Superfund  Act")  imposes a separate tax on
corporations  at a rate of 0.12  percent  of the  excess  of such  corporation's
"modified  alternative  minimum  taxable  income" over $2 million.  A portion of
tax-exempt  interest,  may be includable in modified alternative minimum taxable
income.  Corporate  shareholders  are advised to consult their tax advisers with
respect to the consequences of the Superfund Act.

Shareholders  normally will receive  monthly  confirmations  of dividends and of
purchase  and  redemption  transactions  except that  confirmations  of dividend
reinvestment for IRAs and other fiduciary accounts for which Investors Fiduciary
Trust  Company  serves as  trustee  will be sent  quarterly.  Firms may  provide
varying  arrangements  with their  clients  with respect to  confirmations.  Tax
information  will be provided  annually.  Shareholders  are encouraged to retain
copies of their account  confirmation  statements or year-end statements for tax
reporting  purposes.  However,  those who have  incomplete  records  may  obtain
historical account transaction information at a reasonable fee.

PERFORMANCE

From  time to time,  the  Trust  may  advertise  several  types  of  performance
information for the Portfolio,  including "yield" and "effective yield." Each of
these figures is based upon historical earnings and is not representative of the
future  performance of the Portfolio.  The yield of the Portfolio  refers to the
net investment  income  generated by a hypothetical  investment in the Portfolio
over a specific seven-day period. This net investment income is then annualized,
which means that the net investment income generated during the seven-day period
is assumed  to be  generated  each week over an annual  period and is shown as a
percentage of the investment.  The effective yield is calculated similarly,  but
the net  investment  income earned by the investment is assumed to be compounded
when annualized.  The effective yield will be slightly higher than the yield due
to this compounding effect. The tax equivalent yield is similar to the effective
yield calculated on an after-tax basis.

The Adviser, the Portfolio's Principal Underwriter,  Kemper Distributors,  Inc.,
the  Portfolio's  Shareholder  Service Agent,  Kemper Service  Company,  and the
Portfolio's Accounting Agent, Scudder Fund Accounting  Corporation,  temporarily
have agreed to maintain  certain  operating  expenses  of the  Portfolio  to the
extent specified in the prospectus. The performance results noted herein for the
Portfolio would have been lower had certain expenses not been capped.

The  Portfolio's  seven-day  yield is computed in accordance with a standardized
method prescribed by rules of the Securities and Exchange Commission. Under that
method,  the yield quotation is based on a seven-day  period and is computed for
the Portfolio as follows.  The first  calculation is net  investment  income per
share,  which  is  accrued  interest  on  portfolio  securities,  plus or  minus
amortized  discount  or  premium,  less  accrued  expenses.  This number is then
divided by the price per share  (expected  to remain  constant  at $1.00) at the
beginning of the period ("base period return").  The result is then divided by 7
and  multiplied by 365 and the resulting  yield figure is carried to the nearest
one-hundredth  of one percent.  Realized  capital gains or losses and unrealized
appreciation   or   depreciation   of  investments   are  not  included  in  the
calculations.  For the period ended April 30, 1999,  the Money Market  Portfolio
Premier Shares'  seven-day yield was 4.34%,  the Money Market  Portfolio  Retail
Shares' seven-day yield was 4.24%, and the Money Market Portfolio  Institutional
Shares' seven-day yield was 4.61%.

The  Portfolio's  effective  seven-day  yield is  determined  by taking the base
period  return  (computed  as  described  above) and  calculating  the effect of
assumed  compounding.   The  formula  for  the  seven-day  effective  yield  is:
(seven-day  base period return  +1)365/7 - 1. The Portfolio may also advertise a
thirty-day  effective yield in which case the formula is (thirty-day base period
return  +1)365/30 - 1. For the period  ended April 30,  1999,  the Money  Market
Portfolio Premier Shares' effective  seven-day yield was 4.43%, the Money Market
Portfolio  Retail Shares'  effective  seven-day  yield was 4.32%,  and the Money
Market Portfolio Institutional Shares' effective seven-day yield was 4.71%.

The Portfolio's  yield  fluctuates,  and the publication of an annualized  yield
quotation is not a representation as to what an investment in the Portfolio will
actually yield for any given future  period.  Actual yields will depend not only
on changes in interest  rates on money market  instruments  during the period in
which the  investment  in the  Portfolio  is held,  but also on such  matters as
Portfolio expenses.

Investors  have an  extensive  choice of money  market  funds  and money  market
deposit  accounts and the information  below may be useful to investors who wish
to compare the past  performance of the Portfolio with that of its  competitors.
Past performance cannot be a guarantee of future results.

                                       15
<PAGE>

The Trust may depict the  historical  performance of the securities in which the
Portfolio  may invest over  periods  reflecting  a variety of market or economic
conditions   either  alone  or  in  comparison  with   alternative   investments
performance indexes of those investments or economic  indicators.  The Trust may
also  describe the  Portfolio's  holdings  and depict its size or relative  size
compared to other mutual funds,  the number and make-up of its shareholder  base
and other descriptive factors concerning the Portfolio.

Investors also may want to compare the  Portfolio's  performance to that of U.S.
Treasury bills or notes because such instruments  represent  alternative  income
producing products.  Treasury obligations are issued in selected  denominations.
Rates of U.S. Treasury obligations are fixed at the time of issuance and payment
of  principal  and  interest  is backed by the full faith and credit of the U.S.
Treasury.  The  market  value  of  such  instruments  generally  will  fluctuate
inversely  with  interest  rates prior to  maturity  and will equal par value at
maturity.  Generally,  the values of obligations  with shorter  maturities  will
fluctuate less than those with longer  maturities.  The  Portfolio's  yield will
fluctuate.  Also,  while the  Portfolio  seeks to maintain a net asset value per
share  of  $1.00,  there  is no  assurance  that it  will  be able to do so.  In
addition,  investors  may want to compare  the  Portfolio's  performance  to the
Consumer  Price  Index  either  directly  or by  calculating  its "real  rate of
return," which is adjusted for the effects of inflation.

OFFICERS AND TRUSTEES

The  officers  and  trustees of the Trust,  their  birthdates,  their  principal
occupations and their affiliations, if any, with the Adviser and KDI, are listed
below.  All  persons  named as  officers  and  trustees  also  serve in  similar
capacities for other funds advised by the Adviser:

JOHN W. BALLANTINE  (2/16/46),  Trustee,  1500 North Lake Shore Drive,  Chicago,
Illinois;  First  Chicago NBD  Corporation/The  First  National Bank of Chicago:
1996-1998 Executive Vice President and Chief Risk Management Officer;  1995-1996
Executive Vice President and Head of International Banking;  1992-1995 Executive
Vice President, Chief Credit and Market Risk Officer.

LEWIS A. BURNHAM  (1/8/33),  Trustee,  16410 Avila  Boulevard,  Tampa,  Florida;
Retired; formerly,  Partner, Business Resources Group; formerly,  Executive Vice
President, Anchor Glass Container Corporation.

DONALD L. DUNAWAY (3/8/37),  Trustee,  7011 Green Tree Drive,  Naples,  Florida;
Retired;   formerly,   Executive  Vice  President,   A.  O.  Smith   Corporation
(diversified manufacturer).

ROBERT B.  HOFFMAN  (12/11/36),  Trustee,  1530 North  State  Parkway,  Chicago,
Illinois; Chairman, Harnischfeger Industries, Inc. (machinery for the mining and
paper industries); formerly, Vice Chairman and Chief Financial Officer, Monsanto
Company (agricultural,  pharmaceutical and nutritional/food products); formerly,
Vice President, Head of International Operations,  FMC Corporation (manufacturer
of machinery and chemicals).

DONALD R. JONES  (1/17/30),  Trustee,  182 Old Wick Lane,  Inverness,  Illinois;
Retired;  Director,  Motorola,  Inc.  (manufacturer of electronic  equipment and
components);  formerly,  Executive Vice President and Chief  Financial  Officer,
Motorola, Inc.

THOMAS W. LITTAUER  (4/26/55),  Vice President and Trustee*,  Two  International
Place, Boston, Massachusetts;  Managing Director, Scudder Kemper; formerly, Head
of Broker Dealer Division of an unaffiliated  investment  management firm during
1997; prior thereto,  President of Client Management Services of an unaffiliated
investment management firm from 1991 to 1996.

SHIRLEY D. PETERSON (9/3/41), Trustee, 401 Rosemont Avenue, Frederick, Maryland;
President, Hood College; formerly, partner, Steptoe & Johnson (attorneys); prior
thereto,  Commissioner,  Internal  Revenue  Service;  prior  thereto,  Assistant
Attorney General (Tax), U.S.
Department of Justice; Director Bethlehem Steel Corp.

CORNELIA M. SMALL (7/28/44),  Trustee*,  345 Park Avenue, New York, NY; Managing
Director, Scudder Kemper.

                                       16
<PAGE>

WILLIAM P. SOMMERS  (7/22/33),  Trustee,  24717 Harbour View Drive,  Ponte Vedra
Beach, Florida; Consultant and Director, SRI Consulting; prior thereto President
and Chief Executive Officer, SRI International (research and development); prior
thereto, Executive Vice President,  Iameter (medical information and educational
service  provider);  prior thereto,  Senior Vice  President and Director,  Booz,
Allen  &  Hamilton  Inc.  (management  consulting  firm);  Director,  PSI  Inc.,
Evergreen Solar, Inc. and Litton Industries.

MARK S. CASADY  (9/21/60),  President*,  345 Park  Avenue,  New York,  New York;
Managing Director, Scudder Kemper.

PHILIP J. COLLORA (11/15/45), Vice President and Secretary*, 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President, Scudder Kemper.

ANN M. McCREARY (11/6/56), Vice President*, 345 Park Avenue, New York, New York;
Managing Director, Scudder Kemper.

ROBERT C. PECK, JR.  (10/1/46),  Vice  President*,  222 South  Riverside  Plaza,
Chicago, Illinois;  Managing Director, Scudder Kemper; formerly,  Executive Vice
President  and  Chief  Investment   Officer  with  an  unaffiliated   investment
management firm from 1988 to June 1997.

KATHRYN L. QUIRK  (12/3/52),  Vice  President*,  345 Park Avenue,  New York, New
York; Managing Director, Scudder Kemper.

FRANK J. RACHWALSKI,  JR. (3/26/45), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper.

LINDA J. WONDRACK (9/12/64),  Vice President*,  Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.

JOHN  R.  HEBBLE  (6/27/58),   Treasurer*,   Two  International  Place,  Boston,
Massachusetts; Senior Vice President, Scudder Kemper.

BRENDA LYONS (2/21/63),  Assistant Treasurer*,  Two International Place, Boston,
Massachusetts Senior Vice President, Scudder Kemper.

CAROLINE  PEARSON  (4/1/62),  Assistant  Secretary*,  Two  International  Place,
Boston,   Massachusetts;   Senior  Vice  President,  Scudder  Kemper;  formerly,
Associate, Dechert Price & Rhoads (law firm), from 1989 to 1997.

MAUREEN  E. KANE  (2/14/62),  Assistant  Secretary*,  Two  International  Place,
Boston, Massachusetts;  Vice President, Scudder Kemper; formerly, Assistant Vice
President  of  an  unaffiliated   investment  management  firm;  prior  thereto,
Associate  Staff  Attorney  of  an  unaffiliated   investment  management  firm;
Associate, Peabody & Arnold (law firm).


*        Interested persons as defined in the Investment Company Act of 1940.

The  trustees  and officers who are  "interested  persons" as  designated  above
receive no  compensation  from the Trust.  The table below shows amounts paid or
accrued to those trustees who are not designated "interested persons" during the
Trust's fiscal year ended April 30, 1999 and the total  compensation that Kemper
Managed Funds paid to each trustee during the calendar year 1998.

<TABLE>
<CAPTION>
                                           Aggregate                                  Total Compensation Kemper
Name of Trustee                            Compensation From Trust                    Managed Funds Paid to Trustees (2)
- ---------------                            -----------------------                    ----------------------------------
<S>                                         <C>                                       <C>
John W. Ballantine(3)                       $    0                                    $     0
Lewis A. Burnham                            $5,890                                    $117,800
Donald L. Dunaway (1)                       $5,780                                    $125,900
Robert B. Hoffman                           $6,000                                    $109,000


                                       17
<PAGE>

Donald R. Jones                             $5,480                                    $114,200
Shirley D. Peterson                         $5,480                                    $114,000
William P. Sommers                          $6,330                                    $109,000
</TABLE>

(1)  Includes  deferred fees pursuant to deferred  compensation  agreements with
     the Trust.  Deferred  amounts accrue interest monthly at a rate approximate
     to the yield of Zurich  Money  Funds -- Zurich  Money  Market  Fund.  Total
     deferred  fees and interest  accrued from Cash Account Trust for the latest
     and all prior fiscal years are $16,500 for Mr. Dunaway.

(2)  Includes  compensation for service on the Boards of 25 Kemper funds with 41
     fund  portfolios.  Each  trustee  currently  serves as trustee of 27 Kemper
     Funds with 46 fund portfolios.

(3)  John W. Ballantine became a Trustee on May 18, 1999.

The Board of Trustees is  responsible  for the general  oversight of each Fund's
business.  A majority of the Board's  members are not  affiliated  with  Scudder
Kemper Investments, Inc.

On July 31, 1999, the officers and trustees of the Trust, as a group, owned less
than 1% of the then  outstanding  shares of the  Portfolio.  No person  owned of
record  5% or more of the  outstanding  shares  of any  class of the  Portfolio,
except the persons indicated below:

Name and Address                            % Owned         Portfolio
- ----------------                            -------         ---------
Scudder Kemper Investments, Inc.            13.02           Retail Shares
345 Park Avenue, Floor 16
New York, NY 10154

Dorothy P. Fisher                           5.86            Retail Shares
10 Summit Drive
Windsor, CT
06095

Barbara F. Brehaut                          7.66            Retail Shares
81 Bear Mountain Road
Ringwood, NJ 07456

Borough Company                             6.18            Retail Shares
4470 Indianola Avenue
Columbus, OH 43214

Sharon H. Lasker                            11.38           Retail Shares
331 Tunbridge Road
Baltimore, MD 21212

Asset Preservation, Inc.                    63.3            Institutional Shares
8700 Auburn Folsom Road, Suite 600
Granite Bay, CA 95746

SPECIAL FEATURES

Exchange Privilege.  Subject to the limitations  described below, Class A Shares
(or the  equivalent)  of the following  Kemper Mutual Funds may be exchanged for
each other at their relative net asset values:  Kemper  Technology Fund,  Kemper
Total Return Fund, Kemper Growth Fund, Kemper Small Capitalization  Equity Fund,
Kemper Income and Capital  Preservation Fund, Kemper Municipal Bond Fund, Kemper
Diversified  Income  Fund,  Kemper High Yield  Series,  Kemper  U.S.  Government
Securities Fund, Kemper International Fund, Kemper State Tax-Free Income Series,
Kemper  Adjustable  Rate U.S.  Government  Fund,  Kemper Blue Chip Fund,  Kemper
Global  Income Fund,  Kemper Target Equity Fund (series are

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subject to a limited offering period),  Kemper Intermediate Municipal Bond Fund,
Kemper Cash Retails Fund, Kemper U.S.  Mortgage Fund, Kemper  Short-Intermediate
Government  Fund,  Kemper  Value  Series,  Inc.,  Kemper Value Plus Growth Fund,
Kemper Quantitative Equity Fund, Kemper Horizon Fund, Kemper Europe Fund, Kemper
Asian Growth Fund, Kemper  Aggressive  Growth Fund, Kemper  Global/International
Series,  Inc.,  Kemper  Securities Trust and Kemper Equity Trust ("Kemper Mutual
Funds") and certain "Money Market Funds" (Zurich Money Funds,  Zurich  Yieldwise
Money Fund, Cash Equivalent Fund,  Tax-Exempt California Money Market Fund, Cash
Account Trust,  Investors Municipal Cash Fund and Investors Cash Trust).  Shares
of Money  Market  Funds and  Kemper  Cash  Retails  Fund that were  acquired  by
purchase (not including shares acquired by dividend reinvestment) are subject to
the applicable sales charge on exchange. In addition,  shares of a Kemper Mutual
Fund in excess of $1,000,000 (except Zurich Yieldwise Money Fund and Kemper Cash
Retails  Fund)  acquired  by exchange  from  another  Fund may not be  exchanged
thereafter until they have been owned for 15 days (the "15-Day Hold Policy"). In
addition  to the  current  limits  on  exchanges  of  shares  with a value  over
$1,000,000,  shares of a Kemper fund with a value of  $1,000,000 or less (except
Kemper Cash Reserves  Fund)  acquired by exchange  from another  Kemper fund, or
from a money market fund, may not be exchanged  thereafter  until they have been
owned for 15 days,  if,  in the  investment  manager's  judgment,  the  exchange
activity may have an adverse  effect on the fund.  In  particular,  a pattern of
exchanges that coincides  with a "market  timing"  strategy may be disruptive to
the Kemper  fund and  therefore  may be subject to the 15-day hold  policy.  For
purposes of  determining  whether the 15-Day Hold Policy applies to a particular
exchange,  the  value  of the  shares  to be  exchanged  shall  be  computed  by
aggregating  the value of shares being  exchanged for all accounts  under common
control,   discretion  or  advice,   including   without   limitation   accounts
administered  by  a  financial  services  firm  offering  market  timing,  asset
allocation  or similar  services.  Series of Kemper  Target  Equity Fund will be
available  on  exchange  only  during the  Offering  Period  for such  series as
described in the prospectus for such series.  Cash Equivalent  Fund,  Tax-Exempt
California Money Market Fund, Cash Account Trust,  Investors Municipal Cash Fund
and Investors  Cash Trust are available on exchange but only through a financial
services firm having a services  agreement  with KDI with respect to such funds.
Exchanges  may  only be made  for  funds  that  are  available  for  sale in the
shareholder's state of residence.  Currently, Tax-Exempt California Money Market
Fund is available  for sale only in California  and the  portfolios of Investors
Municipal Cash Fund are available for sale in certain states.

The total  value of  shares  being  exchanged  must at least  equal the  minimum
investment  requirement  of the  fund  into  which  they  are  being  exchanged.
Exchanges are made based on relative dollar values of the shares involved in the
exchange. There is no service fee for an exchange;  however,  financial services
firms may  charge  for  their  services  in  expediting  exchange  transactions.
Exchanges will be effected by redemption of shares of the fund held and purchase
of shares of the other fund. For federal income tax purposes,  any such exchange
constitutes  a sale upon which a gain or loss may be  realized,  depending  upon
whether  the  value  of the  shares  being  exchanged  is more or less  than the
shareholder's  adjusted cost basis.  Shareholders  interested in exercising  the
exchange  privilege  may obtain an exchange form and  prospectuses  of the other
funds from financial  services firms or KDI. Exchanges also may be authorized by
telephone if the shareholder has given authorization.  Once the authorization is
on file,  the  Shareholder  Service  Agent will honor  requests by  telephone at
1-800-231-8568  or in writing subject to the limitations on liability  described
in the  prospectus.  Any  share  certificates  must be  deposited  prior  to any
exchange of such  shares.  During  periods  when it is  difficult to contact the
Shareholder  Service  Agent by  telephone,  it may be difficult to implement the
telephone exchange  privilege.  The exchange privilege is not a right and may be
suspended,  terminated or modified at any time. Except as otherwise permitted by
applicable  regulation,  60 days' prior  written  notice of any  termination  or
material change will be provided.

Systematic  Withdrawal  Program.  An owner of $5,000 or more of the  Portfolio's
Shares may  provide for the payment  from the owner's  account of any  requested
dollar  amount up to $50,000 to be paid to the owner or the  owner's  designated
payee monthly, quarterly,  semi-annually or annually. The $5,000 minimum account
size is not applicable to Individual Retirement Accounts. Dividend distributions
will be reinvested automatically at net asset value. A sufficient number of full
and fractional shares will be redeemed to make the designated payment. Depending
upon the size of the payments  requested,  redemptions for the purpose of making
such payments may reduce or even exhaust the account. The program may be amended
on thirty days notice by the  Portfolio and may be terminated at any time by the
shareholder  or the  Portfolio.  Firms provide  varying  arrangements  for their
clients  to  redeem  Portfolio  shares  on a  periodic  basis.  Such  firms  may
independently establish minimums for such services.

Tax-Sheltered  Retirement  Programs.  The  Shareholder  Service  Agent  provides
retirement plan services and documents and KDI can establish your account in any
of the following types of retirement plans:

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<PAGE>

          o    Individual  Retirement  Accounts  (IRAs)  trusteed  by  Investors
               Fiduciary  Trust  Company  ("IFTC").   This  includes  Simplified
               Employee Pension Plan (SEP) IRA accounts and prototype documents.

          o    403(b)  Custodial  Accounts also  trusteed by IFTC.  This type of
               plan is available to employees of most non-profit organizations.

          o    Prototype money purchase pension and profit-sharing  plans may be
               adopted by employers. The maximum contribution per participant is
               the lesser of 25% of compensation or $30,000.

Brochures  describing the above plans as well as providing model defined benefit
plans,  target  benefit  plans,  457  plans,  401(k)  plans  and  materials  for
establishing them are available from the Shareholder Service Agent upon request.
The  brochures  for plans  trusteed by IFTC describe the current fees payable to
IFTC for its services as trustee.  Investors  should  consult with their own tax
advisers before establishing a retirement plan.

Electronic  Funds Transfer  Programs.  For your  convenience,  the Portfolio has
established  several  investment and redemption  programs using electronic funds
transfer via the Automated Clearing House (ACH). There is currently no charge by
the  Portfolio  for  these  programs.  To use  these  features,  your  financial
institution  (your  employer's  financial  institution  in the  case of  payroll
deposit) must be affiliated  with an Automated  Clearing  House (ACH).  This ACH
affiliation  permits the Shareholder  Service Agent to  electronically  transfer
money  between  your bank  account,  or  employer's  payroll bank in the case of
Direct Deposit,  and your Portfolio  account.  Your bank's crediting policies of
these transferred funds may vary. These features may be amended or terminated at
any time by the Portfolio. Shareholders should contact Kemper Service Company at
1-800-621-1048  or the  financial  services firm through which their account was
established for more  information.  These programs may not be available  through
some firms that distribute shares of the Portfolio.

SHAREHOLDER RIGHTS

The Trust is an open-end,  diversified management investment company,  organized
as a business trust under the laws of  Massachusetts on March 2, 1990. The Trust
may issue an unlimited  number of shares of  beneficial  interest in one or more
series or  "Portfolios,"  all having no par  value,  which may be divided by the
Board of  Trustees  into  classes of  shares,  subject  to  compliance  with the
Securities  and  Exchange  Commission  regulations  permitting  the  creation of
separate classes of shares.  While only shares of the "Money Market  Portfolio",
"Government  Securities  Portfolio" and "Treasury Portfolio" are presently being
offered,  the  Board of  Trustees  may  authorize  the  issuance  of  additional
Portfolios if deemed desirable, each with its own investment objective, policies
and restrictions.  Since the Trust offers multiple Portfolios,  it is known as a
"series company."  Furthermore,  the Money Market Portfolio is currently divided
into four classes; the Retail Shares, Premier Shares,  Institutional Shares, and
Service Shares.  Shares of each Portfolio have equal noncumulative voting rights
and equal  rights with  respect to  dividends,  assets and  liquidation  of such
Portfolio  subject to any  preferences,  rights or  privileges of any classes of
shares  within  the  Portfolio.  Generally  each  class of  shares  issued  by a
particular  Portfolio  would differ as to the allocation of certain  expenses of
the Portfolio such as  distribution  and  administrative  expenses,  permitting,
among other  things,  different  levels of  services or methods of  distribution
among various classes.  Shares are fully paid and nonassessable when issued, are
transferable  without  restriction and have no preemptive or conversion  rights.
The Trust is not  required to hold annual  shareholders'  meetings  and does not
intend to do so.  Under the  Agreements  and  Declaration  of Trust of the Trust
("Declaration  of  Trust"),  however,  shareholder  meetings  will  be  held  in
connection with the following  matters:  (a) the election or removal of trustees
if a meeting is called for such  purpose;  (b) the  adoption of any contract for
which  shareholder  approval is required by the 1940 Act; (c) any termination of
the Trust to the extent and as provided  in the  Declaration  of Trust;  (d) any
amendment of the Declaration of Trust (other than  amendments  changing the name
of the  Trust  or any  Portfolio,  establishing  the  Portfolio,  supplying  any
omission,  curing any  ambiguity  or curing,  correcting  or  supplementing  any
defective or inconsistent provision thereof); and (e) such additional matters as
may be required by law, the  Declaration of Trust,  the By-laws of the Trust, or
any registration of the Trust with the Securities and Exchange Commission or any
state, or as the trustees may consider necessary or desirable.  The shareholders
also would vote upon changes in fundamental investment  objectives,  policies or
restrictions.  Subject to the Agreements and  Declaration of Trust of the Trust,
shareholders may remove trustees.  Each trustee serves until the next meeting of
shareholders,  if any, called for the purpose of electing trustees and until the
election and  qualification  of a successor  or until such trustee  sooner dies,
resigns, retires or is removed by a majority vote of the shares entitled to vote
(as described below) or a majority of the trustees.  In accordance with the 1940
Act (a) the Trust will hold a  shareholder  meeting for the election of trustees
at such time as less than a  majority  of the

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trustees have been elected by shareholders, and (b) if, as a result of a vacancy
in the Board of Trustees, less than two-thirds of the trustees have been elected
by the  shareholders,  that  vacancy  will  be  filled  only  by a  vote  of the
shareholders.

Shareholders  will vote by Portfolio and not in the aggregate or by class except
when voting in the  aggregate is required  under the  Investment  Company Act of
1940,  such as for the  election  of  trustees,  or when the  Board of  Trustees
determines that voting by class is appropriate.

Trustees  may be removed  from  office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the  written  request  of the  holders  of not less than 10% of the
outstanding  shares.  Upon the written request of ten or more  shareholders  who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of the Trust stating that such shareholders wish to
communicate  with the  other  shareholders  for the  purpose  of  obtaining  the
signatures  necessary to demand a meeting to consider removal of a trustee,  the
Trust has undertaken to disseminate  appropriate materials at the expense of the
requesting shareholders.

The Declaration of Trust provides that the presence at a shareholder  meeting in
person or by proxy of at least 30% of the  shares  entitled  to vote on a matter
shall  constitute a quorum.  Thus, a meeting of  shareholders of the Trust could
take place even if less than a majority of the shareholders  were represented on
its  scheduled  date.  Shareholders  would in such a case be  permitted  to take
action which does not require a larger vote than a majority of a quorum, such as
the election of trustees and  ratification  of the  selection of auditors.  Some
matters  requiring  a larger  vote  under  the  Declaration  of  Trust,  such as
termination  or  reorganization  of the  Trust  and  certain  amendments  of the
Declaration of Trust, would not be affected by this provision; nor would matters
which  under the 1940 Act require  the vote of a  "majority  of the  outstanding
voting securities" as defined in the 1940 Act.

The  Declaration  of Trust  specifically  authorizes  the Board of  Trustees  to
terminate  the Trust (or  Portfolio  or  Shares)  by notice to the  shareholders
without shareholder approval.

Under Massachusetts law,  shareholders of a Massachusetts  business trust could,
under certain  circumstances,  be held personally  liable for obligations of the
Trust. The Declaration of Trust,  however,  disclaims  shareholder liability for
acts or obligations of the Trust and requires that notice of such  disclaimer be
given in each agreement,  obligation,  or instrument entered into or executed by
the Trust or the  trustees.  Moreover,  the  Declaration  of Trust  provides for
indemnification  out of  Trust  property  for all  losses  and  expenses  of any
shareholder  held  personally  liable for the  obligations  of the Trust and the
Trust will be covered by insurance which the trustees consider adequate to cover
foreseeable  tort claims.  Thus, the risk of a shareholder  incurring  financial
loss on account of shareholder liability is considered by the Adviser remote and
not  material,  since it is limited to  circumstances  in which a disclaimer  is
inoperative and the Trust itself is unable to meet its obligations.

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<PAGE>

APPENDIX -- RATINGS OF INVESTMENTS

COMMERCIAL PAPER RATINGS

A-1, A-2, Prime-1, Prime-2 and Duff 1, Duff 2 Commercial Paper Ratings

Commercial  paper  rated by  Standard  & Poor's  Corporation  has the  following
characteristics:  Liquidity  ratios  are  adequate  to meet  cash  requirements.
Long-term senior debt is rated "A" or better.  The issuer has access to at least
two  additional  channels of  borrowing.  Basic  earnings  and cash flow have an
upward  trend with  allowance  made for unusual  circumstances.  Typically,  the
issuer's  industry  is well  established  and the issuer  has a strong  position
within the industry. The reliability and quality of management are unquestioned.
Relative  strength  or  weakness  of the above  factors  determine  whether  the
issuer's commercial paper is rated A-1, A-2 or A-3.

The ratings  Prime-1 and Prime-2 are the two highest  commercial  paper  ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by them
in assigning ratings are the following:  (1) evaluation of the management of the
issuer;  (2) economic  evaluation of the issuer's  industry or industries and an
appraisal of speculative-type  risks which may be inherent in certain areas; (3)
evaluation  of the  issuer's  products in relation to  competition  and customer
acceptance;  (4) liquidity;  (5) amount and quality of long-term debt; (6) trend
of  earnings  over a period of ten years;  (7)  financial  strength  of a parent
company and the relationships  which exist with the issuer;  and (8) recognition
by the management of  obligations  which may be present or may arise as a result
of public interest questions and preparations to meet such obligations. Relative
strength or  weakness  of the above  factors  determines  whether  the  issuer's
commercial paper is rated Prime-1, 2 or 3.

The rating  Duff-1 is the highest  commercial  paper  rating  assigned by Duff &
Phelps Inc.  Paper rated  Duff-1 is  regarded as having very high  certainty  of
timely  payment with  excellent  liquidity  factors that are  supported by ample
asset  protection.  Risk  factors are minor.  Paper rated  Duff-2 is regarded as
having good  certainty  of timely  payment,  good access to capital  markets and
sound liquidity factors and company fundamentals. Risk factors are small.

MIG-1 and MIG-2 Municipal Notes

Moody's  Investors  Service,  Inc.'s  ratings for state and municipal  notes and
other short-term loans will be designated  Moody's  Investment Grade (MIG). This
distinction is in recognition of the differences  between short-term credit risk
and  long-term  risk.  Factors  affecting  the  liquidity  of the  borrower  are
uppermost in importance in short-term  borrowing,  while various  factors of the
first  importance in bond risk are of lesser  importance in the short run. Loans
designated  MIG-1  are of the best  quality,  enjoying  strong  protection  from
established  cash flows of funds for their  servicing  or from  established  and
broad-based  access to the market for  refinancing,  or both.  Loans  designated
MIG-2 are of high  quality,  with margins of  protection  ample  although not so
large as in the preceding group.

STANDARD & POOR'S CORPORATION BOND RATINGS, CORPORATE BONDS

AAA. This is the highest rating  assigned by Standard & Poor's  Corporation to a
debt obligation and indicates an extremely  strong capacity to pay principal and
interest.

AA. Bonds rated AA also qualify as high-quality  debt  obligations.  Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.

MOODY'S INVESTORS SERVICE, INC. BOND RATINGS

Aaa. Bonds which are rated Aaa are judged to be of the best quality.  They carry
the  smallest  degree  of  investment  risk  and are  generally  referred  to as
"gilt-edge."  Interest  payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change,  such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

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Aa. Bonds which are rated Aa are judged to be of high quality by all  standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds.  They are rated lower than the best bonds  because  margins of protection
may not be as large as in Aaa securities or  fluctuation of protective  elements
may be of greater  amplitude or there may be other  elements  present which make
the long term risks appear somewhat larger than in Aaa securities.

DUFF & PHELP'S INC. BOND RATINGS

AAA -- Highest  credit  quality.  The risk  factors are  negligible,  being only
slightly more than for risk-free U.S. Treasury debt.

AA -- High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.


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