INVESTORS CASH TRUST, 497, 1996-08-02

INVESTORS CASH TRUST
497, 1996-08-02

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INVESTORS CASH TRUST
120 South LaSalle Street
Chicago, Illinois 60603

TABLE OF CONTENTS
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<TABLE>
<S> <C>
Summary 1
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Summary of Expenses 2
- ------------------------------------------------
Financial Highlights 2
- ------------------------------------------------
Investment Objective, Policies and Risk
Factors 3
- ------------------------------------------------
Investment Restrictions 5
- ------------------------------------------------
Net Asset Value 5
- ------------------------------------------------
Purchase of Shares 6
- ------------------------------------------------
Redemption of Shares 7
- ------------------------------------------------
Dividends and Taxes 9
- ------------------------------------------------
Investment Manager and Shareholder Services 10
- ------------------------------------------------
Performance 11
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Capital Structure 12
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</TABLE>

This Prospectus contains information about the Fund that a prospective investor
should know before investing and should be retained for future reference. A
Statement of Additional Information dated August 1, 1996, has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
It is available upon request without charge from the Fund at the address or
telephone number on this cover or the firm from which this prospectus was
received.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

ICT-1 8/96

INVESTORS
CASH
TRUST

PROSPECTUS August 1, 1996

INVESTORS CASH TRUST
Government Securities Portfolio
Treasury Portfolio

120 South LaSalle Street, Chicago, Illinois 60603 1-800-231-8568. The Fund
offers a choice of investment portfolios and is designed for investors who seek
maximum current income consistent with stability of capital. The Fund currently
offers the Government Securities Portfolio and the Treasury Portfolio. The
Government Securities Portfolio invests exclusively in U.S. Treasury bills,
notes, bonds and other obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, and repurchase agreements of such
obligations. The Treasury Portfolio invests exclusively in obligations issued by
the U.S. Government and repurchase agreements of such obligations.

The Fund is designed primarily for state and local governments and related
agencies, school districts, and other tax-exempt organizations that seek maximum
current income consistent with stability of capital to invest the proceeds of
tax-exempt bonds and working capital.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY, AND IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
<PAGE> 2

INVESTORS CASH TRUST
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603, TELEPHONE 1-800-231-8568

SUMMARY

INVESTMENT OBJECTIVES. Investors Cash Trust (the "Fund") is an open-end
diversified management investment company. The Fund currently offers a choice of
two investment portfolios; the Government Securities Portfolio and the Treasury
Portfolio ("Portfolios"). Each Portfolio invests in a portfolio of high quality
short-term money market instruments consistent with its specific objective. Each
Portfolio seeks maximum current income to the extent consistent with stability
of capital. The Government Securities Portfolio invests exclusively in U.S.
Treasury bills, notes and bonds and other obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase agreements
of such obligations. The Treasury Portfolio invests exclusively in obligations
issued by the U.S. Government and repurchase agreements of such obligations.
Each Portfolio seeks to maintain a net asset value of $1.00 per share. There is
no assurance that the objective of either Portfolio will be achieved or that
either Portfolio will be able to maintain a net asset value of $1.00 per share.
See "Investment Objectives, Policies and Risk Factors."

INVESTMENT MANAGER AND SHAREHOLDER SERVICES. Zurich Kemper Investments, Inc.
(the "Adviser") is the investment manager for the Fund and provides the Fund
with continuous professional investment supervision. The Adviser is paid an
annual investment management fee, payable monthly, of .15% of the combined
average daily net assets of each Portfolio. Kemper Distributors, Inc. ("KDI",
the "Underwriter" or the "Administrator"), an affiliate of the Adviser, is the
principal underwriter of the Fund and, as such, acts as agent of the Fund in the
sale of its shares. KDI also serves as Administrator and, as such, provides
information and services for existing and potential shareholders. The
Administrator receives an administration services fee, payable monthly, at an
annual rate of .10% of average daily net assets of each Portfolio. The
Administrator normally pays financial services firms that provide administrative
services for their customers at an annual rate that ranges between .05% and .10%
of average net assets of those Fund accounts that they maintain and service. See
"Investment Manager and Shareholder Services."

PURCHASES AND REDEMPTIONS. Shares of each Portfolio are available at net asset
value through selected financial services firms. The minimum initial investment
for each Portfolio is $1 million. See "Purchase of Shares." Shares may be
redeemed at the net asset value next determined after receipt by the Fund's
Shareholder Service Agent of a request to redeem in proper form. Shares may be
redeemed by written request or by using one of the Fund's expedited redemption
procedures. See "Redemption of Shares."

DIVIDENDS. Dividends are declared daily and paid monthly. Dividends are
automatically reinvested in additional shares of the same Portfolio, unless the
shareholder makes a different election. See "Dividends and Taxes."

GENERAL INFORMATION AND CAPITAL. The Fund is organized as a business trust
under the laws of Massachusetts and may issue an unlimited number of shares of
beneficial interest. Shares are fully paid and nonassessable when issued, are
transferable without restriction and have no preemptive or conversion rights.
The Fund is not required to hold annual shareholder meetings; but will hold
special meetings as required or deemed desirable for such purposes as electing
trustees, changing fundamental policies or approving an investment management
agreement. See "Capital Structure."

1
<PAGE> 3

SUMMARY OF EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES(1).................................................. None
</TABLE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES GOVERNMENT
(after fee waiver and expense absorption) (as a percentage of average net SECURITIES TREASURY
assets) PORTFOLIO PORTFOLIO
----- -----
<S> <C> <C>
Management Fees............................................................... .08% .03%
12b-1 Fees.................................................................... None None
Other Expenses................................................................ .17% .22%
---- ----
Total Operating Expenses...................................................... .25% .25%
==== =====
</TABLE>

1 3 5 10
EXAMPLE PORTFOLIO YEAR YEARS YEARS YEARS
--------------------- --- --- ---- ----
<S> <C> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000 investment, assuming
(1) 5% annual return and Government Securities $3 $8 $14 $32
(2) redemption at the end of each time period: Treasury $3 $8 $14 $32
</TABLE>

- ---------------
(1) Investment dealers and other firms may independently charge shareholders
additional fees; please see their materials for details.

The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in a Portfolio will bear directly or
indirectly. As discussed more fully under "Investment Manager and Shareholder
Services," the Adviser has agreed to temporarily waive its management fee and
reimburse or pay operating expenses of each Portfolio to the extent that such
expenses, as defined, exceed .25% of average daily net assets of the Portfolio.
Without such waiver and reimbursement during the fiscal year ended March 31,
1996, "Management Fees" would have been .15% and .15% and "Total Operating
Expenses" would have been .32% and .37% for the Government Securities Portfolio
and Treasury Portfolio, respectively. See "Investment Manager and Services" in
the Statement of Additional Information for more information regarding fees. The
Example assumes a 5% annual rate of return pursuant to requirements of the
Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of past or future performance of any Portfolio of
the Fund. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

FINANCIAL HIGHLIGHTS

The tables below show financial information expressed in terms of one share
outstanding throughout the period. The information in the tables is covered by
the report of the Fund's independent auditors. The report is contained in the
Fund's Registration Statement and is available from the Fund. The financial
statements contained in the Fund's

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1996 Annual Report to Shareholders are incorporated herein by reference and may
be obtained by writing or calling the Fund.

<TABLE>
<CAPTION>
SEPT. 27, 1990
YEAR ENDED MARCH 31, TO
GOVERNMENT SECURITIES PORTFOLIO 1996 1995 1994 1993 1992 MARCH 31, 1991
-------- -------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $1.00 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .06 .05 .03 .03 .05 .03
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 5.74% 4.74 3.00 3.12 5.11 3.62
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense absorption .25% .25 .25 .38 .40 .40
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 5.57% 4.72 2.96 3.13 4.74 6.68
- -----------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses .32% .33 .43 .56 .51 1.12
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 5.50% 4.64 2.78 2.95 4.63 5.96
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $230,944 176,024 129,611 129,025 104,959 50,031
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
DEC. 17, 1991
YEAR ENDED MARCH 31, TO
TREASURY PORTFOLIO 1996 1995 1994 1993 MARCH 31, 1992
-------- ------- ------ ------ ---------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .03 .03 .01
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 5.66% 4.69 2.96 3.09 1.10
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense absorption .25% .25 .23 .37 .40
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 5.48% 4.76 2.92 2.97 3.76
- -----------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses .37% .39 .61 .78 .70
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 5.36% 4.62 2.54 2.56 3.46
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $101,576 65,389 28,683 20,275 4,723
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE: The Adviser has agreed to temporarily waive its management fee and
reimburse or pay certain operating expenses to the extent necessary to limit
expenses to specific levels. Other Ratios to Average Net Assets are computed
without the effect of this expense absorption. Ratios have been determined on an
annualized basis. Total return is not annualized for periods less than a full
year.

INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS

The Fund is a money market mutual fund designed primarily for state and local
governments and related agencies, school districts, and other tax-exempt
organizations to invest the proceeds of tax-exempt bonds and working capital.
The Fund seeks to provide liquidity and maximum current income available from
short-term U.S. Government securities. The Fund provides investors with
professional management of short-term investment dollars. The Fund is a series
investment company that provides investors with a choice of separate investment
portfolios ("Portfolios"). It currently offers two Portfolios: the Government
Securities Portfolio and the Treasury Portfolio. Because each Portfolio combines
its shareholders' money, it can buy and sell large blocks of securities, which
reduces transaction costs and increases yields. A Portfolio's investments are
subject to price fluctuations resulting from rising or declining interest rates.
Because of their short maturities, liquidity and high quality, short-term U.S.
Government securities, such as those in which the Portfolios invest, are
generally considered to be the safest available. The Government guarantee of the
securities owned by the Portfolios, however, does not guarantee

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the net asset value of the Portfolios' shares. There can be no assurance that a
Portfolio will achieve its objective or that it will maintain a net asset value
of $1.00 per share.

GOVERNMENT SECURITIES PORTFOLIO. The Government Securities Portfolio seeks
maximum current income consistent with stability of capital. The Portfolio
pursues its objective by investing exclusively in U.S. Treasury bills, notes,
bonds and other obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and repurchase agreements of such obligations. All
securities purchased mature in 12 months or less. Some securities issued by U.S.
Government agencies or instrumentalities are supported only by the credit of the
agency or instrumentality, such as those issued by the Federal Home Loan Bank;
and others have an additional line of credit with the U.S. Treasury, such as
those issued by the Federal National Mortgage Association and Farm Credit
System. Also, as to securities supported only by the credit of the issuing
agency or instrumentality or by an additional line of credit with the U.S.
Treasury, there is no guarantee that the U.S. Government will provide support to
such agencies or instrumentalities and such securities may involve risk of loss
of principal and interest. The Portfolio's investments in obligations issued or
guaranteed by U.S. Government agencies or instrumentalities currently are
limited to those issued or guaranteed by the following entities: Federal Land
Bank, Farm Credit System, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal National Mortgage Association, Government National Mortgage
Association and Export-Import Credit Bank. The foregoing list of acceptable
entities is subject to change by action of the Fund's Board of Trustees;
however, the Fund will provide written notice to shareholders at least sixty
(60) days before any purchase by the Portfolio of obligations issued or
guaranteed by an entity not named above.

TREASURY PORTFOLIO. The Treasury Portfolio seeks maximum current income
consistent with stability of capital. The Portfolio pursues its objective by
investing exclusively in U.S. Treasury bills, notes, bonds and other obligations
issued by the U.S. Government and related repurchase agreements. All securities
purchased mature in 12 months or less. The payment of principal and interest on
the securities in the Fund's portfolio is backed by the full faith and credit of
the U.S. Government. See "The Fund" for information regarding repurchase
agreements.

THE FUND. Repurchase agreements are instruments under which a Portfolio acquires
ownership of a U.S. Government security from a broker-dealer or bank that agrees
to repurchase the U.S. Government 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, a Portfolio might incur expenses in
enforcing its rights, and could experience losses, including a decline in the
value of the underlying securities and loss of income. Currently, a Portfolio
will only enter into repurchase agreements with primary U.S. Government
securities dealers recognized by the Federal Reserve Bank of New York that have
been approved pursuant to procedures adopted by the Board of Trustees of the
Fund. A Portfolio will not purchase illiquid securities including repurchase
agreements maturing in more than seven days if, as a result thereof, more than
10% of a Portfolio's net assets valued at the time of the transaction would be
invested in such securities.

A Portfolio may invest in U.S. Government securities having rates of interest
that are adjusted periodically or which "float" continuously according to
formulae intended to minimize fluctuation in values of the instruments
("Variable Rate Securities"). 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. Each 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.

4
<PAGE> 6

INVESTMENT RESTRICTIONS

The Fund has adopted for the Government Securities Portfolio and Treasury
Portfolio certain investment restrictions which, together with the investment
objective and policies of each Portfolio, cannot be changed for a Portfolio
without approval by holders of a majority of its outstanding voting shares. As
defined in the Investment Company Act of 1940, 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.

Each Portfolio may not:

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

(2) 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 and will not purchase securities
or make investments while borrowings are outstanding. (The Fund has no present
intention of borrowing during the coming year.)

(3) 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.

(4) Issue senior securities as defined in the Investment Company Act of 1940.

(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) Concentrate more than 25% of the value of the Portfolio's assets in any one
industry; provided, however, that the Portfolio reserves freedom of action to
invest up to 100% of its assets in U.S. Government securities in accordance with
its investment objective and policies.

(8) Invest in commodities or commodity futures contracts.

The Government Securities Portfolio may not:

(1) Purchase any securities other than obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, and repurchase agreements of
such obligations.

The Treasury Portfolio may not:

(1) Purchase any securities other than obligations issued by the U.S. Government
and repurchase agreements of such obligations.

NET ASSET VALUE

Portfolio shares are sold at their net asset value next determined after an
order and payment are received in the form described under "Purchase of Shares."
The net asset value of each Portfolio's shares is calculated by dividing the
total assets of the Portfolio less its liabilities by the total number of shares
outstanding. The net asset value per share of each Portfolio is determined on
each day the New York Stock Exchange ("Exchange") is open for trading, at 11:00
a.m., 1:00 p.m. and 3:00 p.m. Chicago time, and on each other day on which there
is a sufficient degree of

5
<PAGE> 7

trading in each Portfolio's investments that its net asset value might be
affected, except that the net asset value will not be computed on a day on which
no orders to purchase shares were received and no shares were tendered for
redemption. Each Portfolio seeks to maintain a net asset value of $1.00 per
share.

Each Portfolio values its portfolio instruments at amortized cost in accordance
with Rule 2a-7 under the Investment Company Act of 1940, which means that they
are valued at their acquisition cost, as adjusted for amortization of premium or
accretion of discount, rather than at current market value. Calculations are
made to compare the value of each Portfolio's investments valued at amortized
cost with market-based values. Market-based 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-based values and
each Portfolio's $1.00 per share net asset value, or if there were any other
deviation which the Board of Trustees of the Fund 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. In order to value
its investments at amortized cost, each Portfolio purchases only securities with
a maturity of one year or less and maintains a dollar-weighted average portfolio
maturity of 90 days or less.

PURCHASE OF SHARES

Shares of each Portfolio are sold at net asset value with no sales charge
through selected financial services firms, such as broker-dealers and banks
("firms"). Investors must indicate the Portfolio in which they wish to invest.
The minimum initial investment for each Portfolio is $1 million but such minimum
amount may be changed at any time in management's discretion. Subsequent
investments may be made in any amount. Firms offering Fund shares may set higher
minimums for accounts they service and may change such minimums at their
discretion.

The Fund seeks to have its Portfolios as fully invested as possible at all times
in order to achieve maximum income. Since each Portfolio will be investing in
instruments that normally require immediate payment in Federal Funds (monies
credited to a bank's account with its regional Federal Reserve Bank), the Fund
has adopted procedures for the convenience of its shareholders and to ensure
that each Portfolio receives investable funds. Orders for purchase of shares of
a Portfolio received by wire transfer in the form of Federal Funds will be
effected at the next determined net asset value. Shares purchased by wire will
receive that day's dividend if effected at or prior to the 1:00 p.m. Chicago
time net asset value determination, otherwise such shares will receive the
dividend for the next business day. Orders for purchase accompanied by a check
or other negotiable bank draft will be accepted and effected as of 3:00 p.m.
Chicago time on the next business day following receipt and such shares will
receive the dividend for the next business day following the day when the
purchase is effected. If an order is accompanied by a check drawn on a foreign
bank, funds must normally be collected on such check before shares will be
purchased. See "Purchase and Redemption of Shares" in the Statement of
Additional Information.

If payment is wired in Federal Funds, the payment should be directed to State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
the sub-custodian for the Fund. If payment is to be wired, call the firm from
which you received this prospectus for proper instructions.

CLIENTS OF FIRMS. Firms provide varying arrangements for their clients with
respect to the purchase and redemption of Fund shares and the confirmation
thereof. 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. A firm may arrange with its clients for other
investment or administrative services. Such firms may independently establish
and charge additional amounts to their clients for such services, which charges
would reduce the clients' yield or return. Firms may also hold Fund shares in
nominee or street name as agent for and on behalf of their clients. In such
instances, the Fund'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 from the Fund's
Shareholder Service Agent for recordkeeping and other expenses relating to these
nominee accounts. In addition, certain

6
<PAGE> 8

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 conditions and
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 Fund reserves the right to withdraw all or any part of
the offering made by this prospectus or to reject purchase orders without prior
notice. All orders to purchase shares are subject to acceptance by the Fund 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 Fund. Share certificates are issued
only on request to the Fund. A $10 service fee will be charged when a check for
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, the Fund'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 a Portfolio will be redeemed by the Fund at the next
determined net asset value. If processed at 3:00 p.m. Chicago 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 a Portfolio will receive the net asset value of such shares and all
declared but unpaid dividends on such shares.

If shares of a Portfolio to be redeemed were purchased by check or through an
Automated Clearing House ("ACH") transaction, the Fund 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 Fund of the purchase amount. Shareholders may not use expedited
redemption procedures (wire transfer or Redemption Check) 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 Fund 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 Fund
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 Fund or its agents reasonably believe, based upon reasonable
verification procedures, that the telephone instructions are genuine. THE
SHAREHOLDER WILL BEAR THE RISK OF LOSS, including loss resulting from fraudulent
or unauthorized transactions, as long as the reasonable 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 Fund 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

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<PAGE> 9

will be allowed 60 days to make additional purchases to bring the account value
up to the minimum investment level before the Fund redeems the shareholder
account.

Firms provide varying arrangements for their clients to redeem Fund 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 Fund'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 and guardian account holders
(excluding custodial accounts for gifts and transfers to minors) provided the
trustee, executor or guardian is named in the account registration. Other
institutional account holders and guardian account holders of custodial accounts
for gifts and transfers to minors 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 described under "General" above,
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 an ACH
transaction 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 certificated 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 Fund 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 a.m. Chicago 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 described under "General" above. The Fund is not
responsible for the efficiency of the federal wire system or the account
holder's financial services firm or bank. The Fund 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 to contact the firm through which
shares of the Fund were purchased. Shares purchased by check or through an ACH
transaction 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 certificated form. During periods when it is difficult to contact
the

8
<PAGE> 10

Shareholder Service Agent by telephone, it may be difficult to use the expedited
wire transfer redemption privilege. The Fund reserves the right to terminate or
modify this privilege at any time.

EXPEDITED REDEMPTIONS BY DRAFT. Upon request, shareholders will be provided
with drafts to be drawn on the Fund ("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 Fund
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 Fund 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 Fund 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 Fund. 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 Fund.

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 an ACH transaction may not be redeemed by
Redemption Check until the shares have been on the Fund's books for at least 10
days. Shareholders may not use this procedure to redeem shares held in
certificated form. The Fund reserves the right to terminate or modify this
privilege at any time.

The Fund 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
Fund shares in excess of the value of a Fund 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 ACH transaction within 10 days; or when
"stop payment" of a Redemption Check is requested.

EXCHANGE PRIVILEGE. Information about an exchange privilege with other mutual
funds managed by the Fund's Adviser is contained in the Statement of Additional
Information; and further information may be obtained without charge from the
Adviser.

DIVIDENDS AND TAXES

DIVIDENDS. Dividends are declared daily and paid monthly. Shareholders may
select one of the following ways to receive dividends:

1. 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"). Dividends will be received
in cash unless the shareholder elects to have them reinvested.

2. REINVEST DIVIDENDS at net asset value into additional shares of the same
Portfolio if so requested. Dividends are reinvested on the 1st day of each month
if a business day, otherwise on the next business day.

The Fund reinvests dividend checks (and future dividends) in shares of the Fund
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 Fund unless the shareholder requests that such policy not be applied to the
shareholder's account.

TAXES. Each 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

9
<PAGE> 11

income whether received in cash or reinvested in additional shares. Dividends
from a 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 Fund may adjust its schedule for dividend
reinvestment for the month of December to assist it in complying with reporting
and minimum distribution requirements contained in the Code.

The Code restricts the ability to invest tax-exempt bond proceeds at yields
materially higher than the yield on the issue. Tax advisers should be consulted
before investing tax-exempt bond proceeds in a Portfolio.

Portfolio dividends that are derived from interest on direct obligations of the
U.S. Government and certain of its agencies and instrumentalities may be exempt
from state and local taxes in certain states. In other states, arguments can be
made that such distributions should be exempt from state and local taxes based
on federal law, 31 U.S.C. Section 3124, and the U.S. Supreme Court's
interpretation of that provision in American Bank and Trust Co. v. Dallas
County, 463 U.S. 855 (1983). The Fund currently intends to advise shareholders
of the proportion of its dividends that consists of such interest. Shareholders
should consult their tax advisers regarding the possible exclusion of such
portion of their dividends for state and local income tax purposes.

Each 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
requirements.

Shareholders normally will receive monthly confirmations of dividends and of
purchase and redemption transactions except that confirmations of dividend
reinvestment for 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.

INVESTMENT MANAGER AND SHAREHOLDER SERVICES

INVESTMENT MANAGER. Zurich Kemper Investments, Inc. (the "Adviser"), 120 South
LaSalle Street, Chicago, Illinois 60603, is the investment manager of the Fund
and provides the Fund with continuous professional investment supervision. The
Adviser is one of the largest investment managers in the country and has been
engaged in the management of investment funds for more than forty-six years. The
Adviser and its affiliates provide investment advice and manage investment
portfolios for the Kemper Funds, affiliated insurance companies and other
corporate, pension, profit-sharing and individual accounts representing
approximately $78 billion under management including $13 billion in money market
fund assets. The Adviser acts as investment adviser for 29 open-end and seven
closed-end investment companies, with 76 separate investment portfolios
representing more than 3 million shareholder accounts. The Adviser is an
indirect subsidiary of Zurich Insurance Company, an internationally recognized
company providing services in life and non-life insurance, reinsurance and asset
management.

Responsibility for overall management of the Fund rests with its Board of
Trustees and officers. Professional investment supervision is provided by the
Adviser. The investment management agreement provides that the Adviser shall act
as the Fund's investment adviser, manage its investments and provide it with
various services and facilities. For the services and facilities furnished to
the Government Securities and Treasury Portfolios, the Fund pays an annual
investment management fee, payable monthly, of .15% of the combined average
daily net assets of the Portfolios. Prior to December 1, 1993, the Fund paid the
management fee under a different fee schedule. The Adviser has agreed to
temporarily waive its management fee and absorb or pay each Portfolio's
operating expenses

10
<PAGE> 12

to the extent that they exceed .25% of average daily net assets of the Portfolio
on an annual basis. For this purpose, "Portfolio operating expenses" do not
include taxes, interest, extraordinary expenses, brokerage commissions or
transaction costs. Upon notice to the Fund, the Adviser may terminate this
waiver or expense absorption with respect to a Portfolio at any time.

UNDERWRITER. Pursuant to an underwriting agreement, Kemper Distributors, Inc.
(the "Underwriter" or the "Administrator"), 120 South LaSalle Street, Chicago,
Illinois 60603, an affiliate of the Adviser, serves as the principal underwriter
of the Fund's shares. The Underwriter receives no compensation from the Fund as
principal underwriter and pays all expenses of distribution of the Fund's shares
under the underwriting agreement not otherwise paid by dealers or other
financial services firms.

ADMINISTRATOR. Pursuant to an administrative services agreement ("administrative
agreement"), the Administrator provides information and administrative services
for shareholders. The administrative agreement provides that the Administrator
shall appoint various financial services firms ("firms"), such as broker-dealers
and banks, to provide administrative services for their customers or clients who
are shareholders of the Fund. The firms are to provide such office space and
equipment, telephone facilities and personnel as is necessary or appropriate for
providing information and services to Fund shareholders. If the Glass-Steagall
Act should prevent banking firms from acting in any capacity or providing any of
the described services, management will consider what action, if any, is
appropriate. Management does not believe that termination of a relationship with
a bank would result in any material adverse consequences to the Fund. Banks or
other financial services firms may be subject to various state laws regarding
the services described above and may be required to register as dealers pursuant
to state law. The Fund has agreed to pay the Administrator an annual
administrative services fee under the administrative agreement, payable monthly,
of .10% of average daily net assets of each Portfolio. The Administrator may
elect to keep a portion of the total administrative fee to compensate itself for
administrative functions performed for the Fund. However, as reflected above,
the Adviser has agreed to temporarily waive its management fee and reimburse or
pay certain operating expenses of each Portfolio. The Administrator normally
pays firms a monthly service fee at an annual rate that ranges between .05% and
.10% of average net assets of those Fund accounts that they maintain and
service.

CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary
Trust Company ("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, as
custodian, and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodian, have custody of all securities and cash
of the Fund. They attend to the collection of principal and income, and payment
for and collection of proceeds of securities bought and sold by the Fund. IFTC
also is the Fund's transfer and dividend-paying agent. Pursuant to a services
agreement with IFTC, Kemper Service Company, 811 Main Street, Kansas City,
Missouri 64105, an affiliate of the Adviser, serves as Shareholder Service Agent
of the Fund.

PERFORMANCE

From time to time, the Fund may advertise several types of performance
information for a Portfolio, including "yield" and "effective yield." Each of
these figures is based upon historical earnings and is not representative of the
future performance of a Portfolio. The yield of a 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 performance of a Portfolio may be compared to that of other money market
mutual funds or mutual fund indexes as reported by independent mutual fund
reporting services such as Lipper Analytical Services, Inc. A Portfolio's
performance and its relative size may be compared to other money market mutual
funds as reported by IBC/Donoghue's Money Fund Report(R) or Money Market
Insight(R), reporting services on money market funds.

11
<PAGE> 13

Investors may want to compare a Portfolio's performance to that of various bank
products as reported by BANK RATE MONITORTM, a financial reporting service that
weekly publishes average rates of bank and thrift institution money market
deposit accounts and interest bearing checking accounts or various certificate
of deposit indexes. The performance of a Portfolio also may be compared to that
of U.S. Treasury bills and notes. Certain of these alternative investments may
offer fixed rates of return and guaranteed principal and may be insured. In
addition, investors may want to compare the Fund'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.

Information may be quoted from publications such as Morningstar, Inc., The Wall
Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago Tribune,
USA Today, Institutional Investor and Registered Representative. The Fund may
depict the historical performance of the securities in which the Fund 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 Fund may also describe its portfolio
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 Fund.

Each Portfolio's yield will fluctuate. Shares of the Fund are not insured.
Additional information concerning a Portfolio's performance appears in the
Statement of Additional Information.

CAPITAL STRUCTURE

The Fund is an open-end, diversified management investment company, organized as
a business trust under the laws of Massachusetts on March 2, 1990. The Fund 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. The Fund's shares are not currently divided into classes. While only
shares of the "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 Fund offers multiple Portfolios,
it is known as a "series company." 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. As of June 28, 1996, Clark County Nevada,
Treasurer owned more than 25% of the outstanding shares of each Portfolio and
may be deemed a control person of the Portfolios of the Fund. The Fund is not
required to hold annual shareholders' meetings and does not intend to do so.
However, it will hold special meetings as required or deemed desirable for such
purposes as electing trustees, changing fundamental policies or approving an
investment management agreement. Subject to the Agreement and Declaration of
Trust of the Fund, shareholders may remove trustees. 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.

12
<PAGE> 14

Investors Cash
Trust
Prospectus
August 1, 1996

ICT Pro 8/96 [RECYCLED LOGO] printed on recycled paper
<PAGE> 15

STATEMENT OF ADDITIONAL INFORMATION
AUGUST 1, 1996

INVESTORS CASH TRUST
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
1-800-231-8568

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus of Investors Cash Trust (the "Fund") dated
August 1, 1996. The prospectus may be obtained without charge from the Fund.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Manager and Shareholder Services....................... B-1
Portfolio Transactions............................................ B-3
Purchase and Redemption of Shares................................. B-4
Dividends and Net Asset Value..................................... B-4
Performance....................................................... B-5
Officers and Trustees............................................. B-7
Special Features.................................................. B-9
Shareholder Rights................................................ B-10
</TABLE>

The financial statements appearing in the Fund's 1996 Annual Report to
Shareholders are incorporated herein by reference. The Fund's Annual Report
accompanies this Statement of Additional Information.

ICT 33 8/96
<PAGE> 16

INVESTMENT MANAGER AND SHAREHOLDER SERVICES

INVESTMENT MANAGER. Zurich Kemper Investments, Inc. (the "Adviser") is the
Fund's investment manager. The Adviser is wholly owned by KFS Holding Corp. KFS
Holding Corp. is a more than 90% owned subsidiary of Zurich Holding Company of
America, Inc., which is a wholly owned subsidiary of Zurich Insurance Company,
an internationally recognized company providing services in life and non-life
insurance, reinsurance and asset management. Pursuant to an investment
management agreement, the Adviser acts as the Fund's investment adviser, manages
its investments, administers its business affairs, furnishes office facilities
and equipment, provides clerical, bookkeeping and administrative services and
permits any of its officers or employees to serve without compensation as
trustees or officers of the Fund if elected to such positions. The Fund 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, brokerage commissions or transaction costs, taxes, registration
fees, the fees and expenses of qualifying the Fund and its shares for
distribution under federal and state securities laws and membership dues in the
Investment Company Institute or any similar organization. The Fund's expenses
generally are allocated between the Portfolios on the basis of relative net
assets at the time of allocation, except that expenses directly attributable to
a particular Portfolio are charged to that Portfolio.

The agreement provides that the Adviser shall not be liable for any error of
judgment or of law, or for any loss suffered by the Fund 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 the Adviser in the
performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under the agreement.

The investment management agreement continues in effect from year to year so
long as its continuation is approved at least annually by (a) a majority vote of
the trustees who are not parties to such agreement or interested persons of any
such party except in their capacity as trustees of the Fund, cast in person at a
meeting called for such purpose, and (b) by the shareholders of each Portfolio
or the Board of Trustees. If continuation is not approved for a Portfolio, the
investment management agreement nevertheless may continue in effect for any
Portfolio for which it is approved and the Adviser may continue to serve as
investment manager for the Portfolio for which it is not approved to the extent
permitted by the Investment Company Act of 1940. It may be terminated at any
time upon 60 days' notice by either party, or by a majority vote of the
outstanding shares, and will terminate automatically upon assignment. Additional
Portfolios may be subject to a different agreement.

Effective December 1, 1993, for services and facilities furnished, the Fund pays
an annual investment management fee, payable monthly of .15% of average daily
net assets of the Government Securities and Treasury Portfolios. Between October
1, 1991 and November 30, 1993, the Fund paid an annual investment management
fee, payable monthly, on a graduated basis of .25% of the first $200 million of
combined average daily net assets of the Portfolios, .19% of the next $300
million and .15% of the combined average daily net assets of the Portfolios over
$500 million. The Adviser has agreed to reimburse the Fund to the extent
required by applicable state expense limitations should all operating expenses
of the Fund, including the investment management fee of the Adviser but
excluding taxes, interest, extraordinary expenses and brokerage commissions or
transaction costs, exceed the applicable state expense limitations. The Fund
believes that the most restrictive state expense limitation currently applicable
to the Fund would require that such operating expenses not exceed 2.5% of the
first $30 million of average daily net assets, 2% of the next $70 million and
1.5% of average daily net assets over $100 million. The investment management
fee and the expense limitations are computed based on average daily net assets
of all Portfolios and are allocated between the Portfolios based upon the
relative net asset levels. Pursuant to the investment management agreement, the
Fund incurred investment management fees for the Government Securities Portfolio
of $317,000, $207,000 and $296,000 for the fiscal years ended March 31, 1996,
1995 and 1994, respectively. The Fund incurred investment management fees of
$120,000, $57,000 and $57,000 for the Treasury Portfolio for the fiscal years
ended March 31, 1996, 1995 and 1994, respectively. In addition to the expense
limitation, the Adviser has agreed to temporarily waive its management fee and
absorb or pay Portfolio operating expenses to the extent that they exceed .25%
of average daily net assets of a Portfolio on an annual basis. For this

B-1
<PAGE> 17

purpose, "Portfolio operating expenses" do not include taxes, interest,
extraordinary expenses, brokerage commissions or transaction costs. Upon notice
to the Fund, the Adviser may terminate these arrangements with respect to a
Portfolio at any time. During the fiscal years ended March 31, 1996, 1995 and
1994, the Adviser waived or absorbed $154,000, $117,000 and $244,000,
respectively, of the Government Securities Portfolio's operating expenses.
During the fiscal years ended March 31, 1996, 1995 and 1994 the Adviser waived
or absorbed $100,000, $53,000 and $103,000, respectively, of the Treasury
Portfolio's operating expenses.

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

UNDERWRITER. Pursuant to an underwriting agreement, Kemper Distributors, Inc.
(the "Underwriter" or the "Administrator"), an affiliate of the Adviser, serves
as the principal underwriter of the continuous offering of the Fund's shares.
Before February 1, 1995, the Adviser was the principal underwriter for the Fund.
The Underwriter receives no compensation from the Fund as principal underwriter
and pays all expenses of distribution of the Fund's shares under the
underwriting agreement not otherwise paid by dealers or other financial services
firms.

ADMINISTRATOR. Pursuant to an administrative services agreement ("administrative
agreement"), the Administrator also serves as administrator to the Fund to
provide information and services for shareholders. Before February 1, 1995, the
Adviser was the administrator for the Fund. The administrative agreement
provides that the Administrator shall appoint various firms to provide
administrative services for their customers or clients who are shareholders of
the Fund. The firms are to provide such office space and equipment, telephone
facilities and personnel as are necessary or appropriate for providing
information and services to Fund shareholders. For its services, the Fund pays
the Administrator an annual administrative services fee, payable monthly, of
.10% of average daily net assets of each Portfolio. Prior to December 1, 1993,
the administrative services fee was .15% of average daily net assets of each
Portfolio.

The Administrator has related services agreements with various firms to provide
administrative services for Fund shareholders. Such services and assistance may
include, but are not limited to, establishing and maintaining shareholder
accounts and records, processing purchase and redemption transactions, providing
automatic investment in Portfolio shares of client account balances, answering
routine inquiries regarding the Fund, assisting clients in changing account
options, designations and addresses, and such other services as may be agreed
upon from time to time and as may be permitted by applicable statute, rule or
regulation. The Administrator also has services agreements with banking firms to
provide the above listed services, except for certain distribution services that
the banks may be prohibited from providing, for their clients who wish to invest
in the Fund. The Administrator also may provide some of the above services for
the Fund. The Administrator normally pays the firms a monthly service fee at an
annual rate that ranges between .05% and .10% of average net assets of those
Fund accounts that they maintain and service. The Administrator may elect to
keep a portion of the total administration fee to compensate itself for
functions performed for the Fund. Between October 1, 1991 and November 30, 1993,
the Adviser (as predecessor to the Administrator) received an annual
administrative services fee of .15% of average daily net assets and normally
paid firms at an annual rate of .15% of average net assets for accounts
maintained and serviced. During the fiscal years ended March 31, 1996, 1995 and
1994, the Government Securities Portfolio incurred administrative services fees
of $211,000, $138,000 and $182,000, respectively, and the Administrator (or the
Adviser as predecessor to the Administrator) paid $105,000, $69,000 and
$120,000, respectively, as service fees to firms, including $38,000, $57,000 and
$94,000, respectively, paid to firms then affiliated with the Administrator and
the Treasury Portfolio incurred administrative services fees of $80,000, $38,000
and $35,000, respectively, and the Administrator (or the Adviser as predecessor
to the Administrator) paid $40,000, $19,000 and $27,000, respectively, as
service fees to firms, including $9,000, $11,000 and $14,000, respectively, paid
to firms then affiliated with the Administrator.

B-2
<PAGE> 18

securities bought and sold by the Fund. IFTC is also the transfer agent of the
Fund. Pursuant to a services agreement with IFTC, Kemper Service Company, an
affiliate of the Adviser, serves as "Shareholder Service Agent." IFTC receives,
as transfer agent, and pays to the Shareholder Service Agent annual account fees
of a maximum of $13 per year per account plus out-of-pocket expense
reimbursement. During the fiscal year ended March 31, 1996, IFTC remitted
shareholder service fees in the amount of $5,000 to the Shareholder Service
Agent.

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

PORTFOLIO TRANSACTIONS

Portfolio transactions are undertaken principally to pursue each Portfolio's
investment objective in relation to movements in the general level of interest
rates, to invest money obtained from the sale of Fund shares, to reinvest
proceeds from maturing portfolio securities and to meet redemptions of Fund
shares. These transactions may increase or decrease the yield of a Portfolio
depending upon management's ability to correctly time and execute such
transactions. Since a Portfolio's assets will be invested in securities with
short maturities, its portfolio will turn over several times a year. However,
since securities with maturities of less than one year are excluded from
required portfolio turnover rate calculations, each Portfolio's turnover rate
for reporting purposes will be zero.

The Adviser and its affiliates furnish investment management services for the
Kemper Funds and other clients including affiliated insurance companies. These
entities may share some common research and trading facilities. At times
investment decisions may be made to purchase or sell the same investment
securities for a Portfolio and for one or more of the other clients managed by
the Adviser or its affiliates. When two or more of such clients are
simultaneously engaged in the purchase or sale of the same security through the
same trading facility, the transactions are allocated as to amount and price in
a manner considered equitable to each. It is the opinion of the Board of
Trustees that the benefits available because of the Adviser's organization
outweigh any disadvantages that may arise from exposure to simultaneous
transactions.

The Adviser, in effecting purchases and sales of portfolio securities for the
account of each Portfolio, will implement the Fund's policy of seeking the best
execution of orders, which includes best net prices. Consistent with this
policy, orders for portfolio transactions are placed with broker-dealer firms
giving consideration to the quality, quantity and nature of the firm's
professional services which include execution, clearance procedures, reliability
and other factors. In selecting among the firms believed to meet the criteria
for handling a particular transaction, the Adviser may give consideration to
those firms that have sold or are selling shares of the Kemper Funds, as well as
to those firms that provide market, statistical and other research information
to the Fund and the Adviser, although the Adviser is not authorized to pay
higher prices to firms that provide such services. Any research benefits derived
are available for all clients including clients of affiliated companies. Since
it is only supplemental to the Adviser's own research efforts and must be
analyzed and reviewed by the Adviser's staff, the receipt of research
information is not expected to materially reduce expenses. The Fund expects that
purchases and sales of portfolio securities usually will be principal
transactions. Portfolio securities will normally be purchased directly from the
issuer or from an underwriter or market maker for the securities. There usually
are no brokerage commissions paid by the Portfolios for such purchases. During
the last three fiscal years, neither the Government Securities Portfolio or the
Treasury Portfolio paid 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.

B-3
<PAGE> 19

PURCHASE AND REDEMPTION OF SHARES

Shares of a Portfolio are sold at their net asset value next determined after an
order and payment are received in the form described in the prospectus. The
minimum initial investment is $1 million but such minimum amount may be changed
at any time. The Fund may waive the minimum for purchases by trustees,
directors, officers or employees of the Fund or the Adviser and its affiliates.
An investor wishing to open an account should use the Account Application
available from the Fund 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 processed unless and until the Fund 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.

The Fund 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 a Portfolio's investments
is not reasonably practicable, or (ii) it is not reasonably practicable for the
Fund 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 Fund's shareholders.

Although it is the Fund'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 Fund will pay
the redemption price in whole or 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 Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940 pursuant to which the Fund is obligated to redeem
shares of a 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.

DIVIDENDS AND NET ASSET VALUE

DIVIDENDS. Dividends are declared daily and paid monthly. Shareholders will
receive cash dividends unless they elect to receive dividends in additional
shares. For cash dividends, checks will be mailed within five business days
after the reinvestment date described below. For dividends paid in additional
shares, dividends will be reinvested monthly in shares of the same Portfolio
normally on the first day of each month, if a business day, otherwise on the
next business day. The Fund will pay shareholders who redeem their entire
accounts all unpaid dividends at the time of redemption not later than the next
dividend payment date.

Each Portfolio calculates its dividends based on its daily net investment
income. For this purpose, net investment income 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. Expenses of the Fund are accrued each day. Since each 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 a 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 paid in cash monthly and shareholders will receive monthly
confirmation of dividends and of purchase and redemption transactions.

NET ASSET VALUE. As described in the prospectus, each Portfolio values its
portfolio instruments at amortized cost, which does not take into account
unrealized capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of

B-4
<PAGE> 20

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 a
Portfolio would receive if it sold the instrument. Calculations are made to
compare the value of a 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 a Portfolio's
$1.00 per share net asset value, or if there were any other deviation which the
Board of Trustees of the Fund 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 a 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 Fund 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 held their shares and receiving, upon redemption, a
price per share lower than that which they paid. On the other hand, if a
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 Fund might supplement dividends in an effort
to maintain the net asset value at $1.00 per share.

PERFORMANCE

As reflected in the prospectus, the historical performance calculation for a
Portfolio may be shown in the form of "yield" and "effective yield." These
various measures of performance are described below. The Adviser temporarily has
agreed to absorb certain operating expenses of each Portfolio to the extent
specified in the prospectus. See "Investment Manager and Services" in the
prospectus. Without this expense absorption, the performance results noted
herein for the Government Securities and Treasury Portfolios would have been
lower.

Each 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
each 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 March 31, 1996, the Government Securities
Portfolio's seven-day yield was 5.23% and the Treasury Portfolio's seven-day
yield was 5.15%.

Each Portfolio's seven-day effective 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. Each 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 March 31, 1996, the Government
Securities Portfolio's seven-day effective yield was 5.37% and the Treasury
Portfolio's seven-day effective yield was 5.28%.

Each Portfolio's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in a 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 a Portfolio is held, but also on such matters as
Portfolio expenses.

B-5
<PAGE> 21

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 a Portfolio with that of its competitors.
Past performance cannot be a guarantee of future results.

As indicated in the prospectus (see "Performance"), the performance of a
Portfolio may be compared to that of other mutual funds tracked by Lipper
Analytical Services, Inc. ("Lipper"). Lipper performance calculations include
the reinvestment of all capital gain and income dividends for the periods
covered by the calculations. A Portfolio's performance also may be compared to
other money market funds reported by IBC Financial Data, Inc. Money Fund
Report(R) or Money Market Insight(R) ("IBC Financial Data, Inc."), reporting
services on money market funds. As reported by IBC Financial Data, Inc., all
investment results represent total return (annualized results for the period net
of management fees and expenses) and one year investment results would be
effective annual yields assuming reinvestment of dividends.

IBC Financial Data, Inc. and Lipper reported the following results for the
Portfolios.

IBC FINANCIAL DATA, INC. LIPPER ANALYTICAL SERVICES, INC.

These results are not annualized.
<TABLE>
<CAPTION>
IBC
Financial
Data, Inc. Lipper
Money Institutional
Fund U.S. Government
Averages(TM) Money
Government Government Government Market
Securities Treasury Institutional Securities Funds Treasury
Period Portfolio Portfolio Only Period Portfolio Average Portfolio
- ------------------ ---------- --------- ---------- ------------------ ---------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
7 days ended 1 month ended
3/26/96........... 5.17% 5.09% 4.88% 3/31/96........... 0.44% 0.42% 0.43%
1 month ended 3 months ended
3/31/96........... 5.19 5.07 4.91 3/31/96........... 1.32 1.25 1.30

Lipper
Institutional
U.S. Treasury
Money
Market
Funds
Period Average
- ------------------ -------------
<S> <<C>
7 days ended
3/26/96........... 0.41%
1 month ended
3/31/96........... 1.23
</TABLE>

BANK RATE MONITOR(TM), N. Palm Beach, Florida 33408, a financial reporting
service which each week publishes average rates of bank and thrift institution
money market deposit accounts and interest bearing checking accounts, reported
the following results for the BANK RATE MONITOR National Index(TM), which is
compared to the seven day annualized yield of the Portfolios:

<TABLE>
<CAPTION>
BANK RATE MONITOR
National Index(TM)
Money
Market
Deposit Interest Bearing
Accounts Checking Government
(stated Accounts Securities Treasury
Date rate) (stated rate) Portfolio Portfolio
----------------------------- ------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
March 27, 1996............... 2.74% 1.44% 5.17% 5.10%
</TABLE>

The rates published by the BANK RATE MONITOR National Index(TM) are averages of
the personal account rates offered on the Wednesday prior to the date of
publication by 100 of the leading bank and thrift institutions in the ten
largest Consolidated Metropolitan Statistical Areas. Account minimums range
upward from $2,000 in each institution and compounding methods vary. Interest
bearing checking accounts generally offer unlimited checking while money market
deposit accounts generally restrict the number of checks that may be written. If
more than one rate is offered, the lowest rate is used. Rates are determined by
the financial institution and are subject to change at any time specified by the
institution. Bank products represent an alternative income producing product.
Bank and thrift institution account deposits may be insured. Shareholder
accounts in the Fund are not insured. Bank passbook savings accounts share some
liquidity features with money market mutual fund accounts but they may not offer
all the features available from a money market mutual fund, such as
checkwriting. Bank passbook savings accounts normally offer a fixed rate of
interest, while the yield of each Portfolio fluctuates. Bank checking accounts
normally do not pay interest but share some liquidity features with money market
mutual fund accounts (e.g., the ability to write checks against the account).
Bank certificates of deposit may offer fixed or variable rates for a set term.

B-6
<PAGE> 22

(Normally, a variety of terms are available.) Withdrawal of these deposits prior
to maturity normally will be subject to a penalty. In contrast, shares of the
Fund are redeemable at the net asset value next determined (normally $1.00 per
share) after a request is received, without charge.

Investors also may want to compare a 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. Each Portfolio's yield will
fluctuate. Also, while each 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.

OFFICERS AND TRUSTEES

The officers and trustees of the Fund, their birthdates, their principal
occupations and their affiliations, if any, with the Adviser and Underwriter,
are as follows (the number following each person's title is the number of
investment companies managed by the Adviser ("Kemper Managed Funds") for which
he or she holds similar positions):

DAVID W. BELIN (6/20/28), Trustee (23), 2000 Financial Center, 7th and Walnut,
Des Moines, Iowa; Member, Belin Harris Lamson McCormick, P.C. (attorneys).

LEWIS A. BURNHAM (1/8/33), Trustee (23), 16410 Avila Boulevard, Tampa, Florida;
Partner, Business Resources Group; formerly, Executive Vice President, Anchor
Glass Container Corporation.

DONALD L. DUNAWAY (3/8/37), Trustee (23), 7515 Pelican Bay Blvd., Naples,
Florida; Retired; formerly, Executive Vice President, A. O. Smith Corporation
(diversified manufacturer).

ROBERT B. HOFFMAN (12/11/36), Trustee (23), 800 North Lindbergh Boulevard, St.
Louis, Missouri; Senior Vice President and Chief Financial Officer, Monsanto
Company (chemical products); formerly, Vice President, FMC Corporation
(manufacturer of machinery and chemicals); prior thereto, Director, Executive
Vice President and Chief Financial Officer, Staley Continental, Inc. (food
products).

DONALD R. JONES (1/17/30), Trustee (23), 1776 Beaver Pond Road, Inverness,
Illinois; Retired; Director, Motorola, Inc. (manufacturer of electronic
equipment and components); formerly, Executive Vice President and Chief
Financial Officer, Motorola, Inc.

DOMINIQUE P. MORAX (10/2/48), Trustee* (36), 120 S. LaSalle Street, Chicago,
Illinois; Member, Extended Corporate Executive Board, Zurich Insurance Company;
Director, the Adviser.

SHIRLEY D. PETERSON (9/3/41), Trustee (23), 401 Rosemont Avenue, Frederick,
Maryland; President, Hood College; formerly, partner, Steptoe & Johnson
(attorneys); prior thereto, Commissioner, Internal Revenue Service; prior
thereto, Assistant Attorney General, U.S. Department of Justice.

WILLIAM P. SOMMERS (7/22/33), Trustee (23), 333 Ravenswood Avenue, Menlo Park,
California; 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) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.

STEPHEN B. TIMBERS (8/8/44), President and Trustee* (36), 120 S. LaSalle St.,
Chicago, Illinois; President, Chief Executive Officer, Chief Investment Officer
and Director, the Adviser; Director, the Underwriter, Dreman Value Advisors,
Inc. and LTV Corporation.

B-7
<PAGE> 23

J. PATRICK BEIMFORD, JR. (5/25/50), Vice President* (23), 120 South LaSalle
Street, Chicago, Illinois; Executive Vice President and Chief Investment Officer
of Fixed Income Investments, the Adviser.

PHILIP J. COLLORA (11/15/45), Vice President and Secretary* (36), 120 South
LaSalle Street, Chicago, Illinois; Attorney, Senior Vice President and Assistant
Secretary, the Adviser.

JEROME L. DUFFY (6/29/36), Treasurer* (36), 120 South LaSalle Street, Chicago,
Illinois; Senior Vice President, the Adviser.

JOHN E. NEAL (3/9/50), Vice President* (36), 120 South LaSalle Street, Chicago,
Illinois; President, Kemper Funds Group, a unit of the Adviser; Director, the
Adviser, Dreman Value Advisors, Inc. and the Underwriter.

JOHN E. PETERS (11/4/47), Vice President* (36), 120 South LaSalle Street,
Chicago, Illinois; Director and Senior Executive Vice President, the Adviser;
Director and President, the Underwriter.

FRANK J. RACHWALSKI, JR. (3/26/45), Vice President* (9), 120 South LaSalle
Street, Chicago, Illinois; Senior Vice President, the Adviser.

ELIZABETH C. WERTH (10/1/47), Assistant Secretary* (28), 120 South LaSalle
Street, Chicago, Illinois; Vice President and Director of State Registrations,
the Adviser and the Underwriter.

* 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 Fund. The table below shows amounts paid or
accrued to those trustees who are not designated "interested persons" during the
Fund's fiscal year ended March 31, 1996 and the total compensation that Kemper
Managed Funds paid to each trustee during the calendar year 1995.

<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION KEMPER MANAGED FUNDS
NAME OF TRUSTEE FROM FUND PAID TO TRUSTEES(3)
------------------------------------------------------ ------------ -----------------------
<S> <C> <C>
David W. Belin(1)..................................... $2,700 $ 149,700
Lewis A. Burnham...................................... 2,500 111,000
Donald L. Dunaway(1).................................. 3,000 151,000
Robert B. Hoffman..................................... 2,500 105,500
Donald R. Jones....................................... 2,600 110,700
Shirley D. Peterson(2)................................ 1,800 44,500
William P. Sommers.................................... 2,400 100,700
</TABLE>

- ---------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Fund. Deferred amounts accrue interest
monthly at a rate approximate to the yield of Kemper Money Funds--Kemper
Money Market Fund. Total deferred fees and interest accrued for the latest
and all prior fiscal years are $7,900 for Mr. Belin and $8,700 for Mr.
Dunaway from Investors Cash Trust.

(2) Appointed to the Board on June 15, 1995.

(3) Includes compensation for service on the Boards of 23 Kemper funds with 40
fund portfolios.

On June 28, 1996, the trustees and officers as a group owned less than 1% of the
then outstanding shares of each Portfolio. On June 28, 1996, Clark County
Nevada, Treasurer, 225 Bridger Avenue, Las Vegas, Nevada 89101 owned of record
and beneficially 51.45% of the outstanding shares of the Government Securities
Portfolio; and Clark County Nevada, Treasurer, 225 Bridger Avenue, Las Vegas,
Nevada 89101, Wharton County, 100 S. Fulton, Box 606, Wharton, Texas 77488,
First of America--Michigan, P.O. Box 4042, Kalamazoo, Michigan 49003, Angelina
County General Fund, P.O. Box 908, Lufkin, Texas 75902 and Federated Rural
Electric Ins. Co.,

B-8
<PAGE> 24

P.O. Box 15147, Lenexa, Kansas 66285 owned of record and beneficially 37.86%,
10.32%, 9.39%, 7.64% and 7.17%, respectively, of the outstanding shares of the
Treasury Portfolio.

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 Fund, 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 subject to a limited
offering period), Kemper Intermediate Municipal Bond Fund, Kemper Cash Reserves
Fund, Kemper U.S. Mortgage Fund, Kemper Short-Intermediate Government Fund,
Kemper Dreman Fund, Inc., Kemper Value+Growth Fund, Kemper Quantitative Equity
Fund, Kemper Horizon Fund and Kemper Europe Fund ("Kemper Mutual Funds") and
certain "Money Market Funds" (Kemper Money Funds, Cash Equivalent Fund,
Tax-Exempt California Money Market Fund, Cash Account Trust, Tax-Exempt New York
Money Market Fund and Investors Cash Trust). Shares of Money Market Funds and
Kemper Cash Reserves Fund that were acquired by purchase (not including shares
acquired by dividend reinvestment) are subject to the applicable sales charge on
exchange. Shares purchased by check or through an ACH transaction may not be
exchanged until they have been owned for at least 10 days. In addition, shares
of Kemper Funds, other than a Money Market Fund and Kemper Cash Reserves Fund,
acquired by exchange from another Fund may not be exchanged thereafter until
they have been owned for 15 days. A 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, Tax-Exempt New York Money
Market Fund and Investors Cash Trust are available on exchange but only through
a financial services firm having a services agreement with the Underwriter 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
Tax-Exempt New York Money Market Fund is available for sale only in New York,
Connecticut, New Jersey and Pennsylvania.

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 effecting 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 firms or the Underwriter. 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 regulations, 60 days' prior written notice of any termination or
material change will be provided.

B-9
<PAGE> 25

SHAREHOLDER RIGHTS

The Fund generally is not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust of the Fund ("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 Investment Company Act of 1940 ("1940 Act"); (c) any termination
of the Fund 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 Fund or any Portfolio, establishing a 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 Fund, or any
registration of the Fund 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.

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 Fund will hold a
shareholder meeting for the election of trustees at such time as less than a
majority of the trustees have been elected by shareholders, and (b) if, as a
result of a vacancy on 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.

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 Fund, 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
Fund 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 Fund 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 Fund 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 Fund (or any Portfolio or class) 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
Fund. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
the Fund or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Fund property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund and the Fund
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 Fund itself is unable to meet its obligations.

B-10