INVESTORS MUNICIPAL CASH FUND, 485APOS, 2000-06-01

INVESTORS MUNICIPAL CASH FUND
485APOS, 2000-06-01

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Filed electronically with the Securities and Exchange Commission
on June 1, 2000

File No. 33-34819
File No. 811-6108

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /

Pre-Effective Amendment No. / /
Post-Effective Amendment No. 16
-- / X /
And/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /

Amendment No. 17
-- / X /

Investors Municipal Cash Fund
-----------------------------
(Exact Name of Registrant as Specified in Charter)

222 South Riverside Plaza, Chicago, Illinois 60606
--------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (312) 537-7000
--------------

Philip J. Collora, Vice President and Secretary
222 South Riverside Plaza
Chicago, Illinois 60606
-----------------------
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):

/ / Immediately upon filing pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a) (1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / On __________________ pursuant to paragraph (b)
/ X / On August 1, 2000 pursuant to paragraph (a) (1)
/ / On __________________ pursuant to paragraph (a) (2) of Rule 485.

If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment

<PAGE>

PROSPECTUS ENCLOSED
--------------------------------------------------------------------------------

Investors
Municipal
Cash Trust

August 1, 2000

Investors Florida Municipal
Cash Fund

Investors Michigan Municipal
Cash Fund

Investors New Jersey Municipal
Cash Fund

Investors Pennsylvania Municipal
Cash Fund

Tax-Exempt New York Money
Market Fund

<PAGE>

Investors Municipal
Cash Trust

PROSPECTUS

August 1, 2000

Investors Florida Municipal
Cash Fund

Investors Michigan Municipal
Cash Fund

Investors New Jersey Municipal
Cash Fund

Investors Pennsylvania Municipal
Cash Fund

Tax-Exempt New York Money
Market Fund

As with all mutual funds, the Securities and
Exchange Commission (SEC) does not approve
or disapprove these shares or determine
whether the information in this prospectus
is truthful or complete. It is a criminal
offense for anyone to inform you otherwise.

<PAGE>

Table of Contents

INVESTORS MUNICIPAL CASH TRUST

<TABLE>
<CAPTION>
The Fund And Its Portfolios Your Investment In The Funds

<S> <C>
1 Investors Florida Municipal Cash Fund 25 Policies You Should Know About

5 Investors Michigan Municipal Cash Fund 28 Understanding Distributions And Taxes

9 Investors New Jersey Municipal Cash Fund

13 Investors Pennsylvania Municipal Cash Fund

17 Tax-Exempt New York Money Market Fund

22 Other Policies And Risks

23 Who Manages The Fund
</TABLE>

<PAGE>
--------------------------------------------------------------------------------
TICKER SYMBOL XXXXX

Investors Florida Municipal Cash Fund

The Fund's Goal And Main Strategy

The fund seeks to provide maximum current income, that is exempt from federal
income tax, to the extent consistent with stability of capital.

The fund is managed to maintain a net asset value of $1.00 per share. The fund
pursues its objective primarily through a professionally managed,
non-diversified portfolio of short-term high quality municipal obligations
(securities generally rated in the two highest categories by a nationally
recognized rating service) issued by or on behalf of the State of Florida, its
political subdivisions, authorities and corporations, and territories and
possessions of the United States and their political subdivisions, agencies and
instrumentalities, and other securities that are, in the opinion of bond counsel
to the issuer, exempt from the Florida intangibles tax and the interest from
which is exempt from federal income taxes.

Though the fund generally seeks investments exempt from the Florida intangibles
tax, there is no assurance that an exemption from the Florida intangibles tax
will be available.

Under normal market conditions, the fund will maintain at least 80% of its net
assets in municipal securities, the income from which is exempt from federal
taxes.

Under normal market conditions, as a nonfundamental policy, the fund will
maintain at least 65% of its total assets in Florida municipal securities. The
fund will invest only in municipal securities that at the time of purchase meet
at least one of the following criteria:

o rated high quality by a nationally recognized statistical rating
organization;

o if unrated, are determined to be, in the discretion of the Board of
Trustees or its delegate, at least equal in quality to one or more of the
above ratings; or

o fully collateralized by an escrow of U.S. Government securities.

The fund may invest in floating and variable rate instruments (obligations that
do not bear interest at fixed rates). Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less than
for fixed-rate obligations.

Investors Florida Municipal Cash Fund | 1
<PAGE>

holdings are typically made to implement an investment strategy or meet
shareholder redemptions. Issues with short maturities are generally held until
maturity.

Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.

Florida specific risk. Florida is characterized by rapid growth, substantial
capital needs, a manageable debt burden, a diversifying but still somewhat
narrow economic base and good financial operations. The State continues to
experience rapid population growth which places an increasing burden on the
public services provided by the State. Technology-based manufacturing, business
and financial services have joined tourism and agriculture as leading elements
of Florida's continued economic growth. Florida's overall financial position
remains healthy. Florida relies on the sales tax as the major revenue source.
Florida has increased its funding of capital projects through more frequent debt
issuance rather than the historical pay-as-you-go method.

--------------------------------------------------------------------------------
Money Fund Rules

To be called a money market fund, a mutual fund must operate within strict
federal rules. Designed to help maintain a stable $1.00 share price, these rules
limit money funds to particular types of securities. Some of the rules:

o individual securities must have remaining maturities of no more than 397
days

o the dollar-weighted average maturity of the fund's holdings cannot exceed 90
days

o all securities must be in the top two credit grades for short-term debt
securities and be denominated in U.S. dollars

Main Risks to Investors

There are several risk factors that could reduce the yield you get from a
portfolio or make it perform less well than other investments. Although each
portfolio seeks to preserve the value of your investment at $1.00 per share, you
could lose money by investing in the fund.

As with most money market funds, the most important factor is market interest
rates. Each portfolio's yield tends to reflect current interest rates, which
means that when these rates fall, the portfolio's yield generally falls as well.

Because of each portfolio's high credit standards, its yield may be lower than
the yields of money funds that don't limit their investments to
government-guaranteed securities.

Other factors that could affect performance include:

o the managers could be incorrect in their analysis of interest rate trends,
credit quality or other matters

o securities that rely on third-party guarantors to raise their credit quality
could fall in price or go into default if the financial condition of the
guarantor deteriorates

o political or legal actions could change the way the portfolio's dividends
are taxed

Investors Florida Municipal Cash Fund | 2
<PAGE>

Performance

The bar chart shows how the fund's total returns have varied from year to year,
which may give some idea of risk. The table shows how the portfolio's returns
over different periods average out. All figures on this page assume reinvestment
of dividends and distributions. As always, past performance is no guarantee of
future results.

--------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year
--------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA (TO BE UPDATED):

1991 1992 1993 1994 1995 1996 1997 1998 1999

Best Quarter: %, Q 199
Worst Quarter: %, Q1 199

--------------------------------------------------------------------------------
Average Annual Total Returns as of 12/31/1999
--------------------------------------------------------------------------------

1 Year 5 Years 10 Years
--------------------------------------------------------
% % %
--------------------------------------------------------

7-day yield as of 12/31/1999: %

Investors Florida Municipal Cash Fund | 3
<PAGE>

How Much Investors Pay

The fee tables describe the fees and expenses that you may pay if you buy and
hold shares of the fund. This information doesn't include any fees that may be
charged by your financial services firm.

--------------------------------------------------------------------------------
Fee Table
--------------------------------------------------------------------------------

The fund has no sales charges or other
shareholder fees. The fund does have annual
operating expenses, and as a shareholder you
pay them indirectly.

Shareholder Fees (%)
(paid directly from your investment) None
---------------------------------------------------
Annual Operating Expenses (%)
(deducted from fund assets)
---------------------------------------------------
Management Fee
---------------------------------------------------
Distribution (12b-1) Fee
---------------------------------------------------
Other Expenses*
---------------------------------------------------
Total Annual Operating Expenses
---------------------------------------------------

* Includes costs of shareholder servicing, custody, accounting services
and similar expenses, which may vary with fund size and other factors.

--------------------------------------------------------------------------------
Example
--------------------------------------------------------------------------------

Based on the figures above, this example helps you compare this portfolio's
expenses to those of other funds. The example assumes the expenses above remain
the same, that you invested $10,000, earned 5% annual returns and reinvested all
dividends and distributions. This is only an example; actual expenses will be
different.

1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------

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

Investors Florida Municipal Cash Fund | 4
<PAGE>
--------------------------------------------------------------------------------
TICKER SYMBOL XXXXX

Investors Michigan Municipal Cash Fund

The Fund's Goal And Main Strategy

The fund seeks to provide maximum current income, that is exempt from federal
and Michigan income taxes, to the extent consistent with stability of capital.

The fund is managed to maintain a net asset value of $1.00 per share. The fund
pursues its objective primarily through a professionally managed,
non-diversified portfolio of short-term high quality municipal obligations
(securities generally rated in the two highest categories by a nationally
recognized rating service) issued by or on behalf of the State of Michigan, its
political subdivisions, authorities and corporations, and territories and
possessions of the United States and their political subdivisions, agencies and
instrumentalities, the interest from which is, in the opinion of bond counsel to
the issuer, exempt from federal and Michigan income taxes.

Under normal market conditions, the fund will maintain at least 80% of its net
assets in municipal securities, the income from which is exempt from federal
income taxes.

Under normal market conditions, as a nonfundamental policy, the fund will
maintain at least 65% of its total assets in Michigan municipal securities. The
fund will invest only in municipal securities that at the time of purchase meet
at least one of the following criteria:

o rated high quality by a nationally recognized statistical rating
organization;

o if unrated, are determined to be, in the discretion of the Board of Trustees
or its delegate, at least equal in quality to one or more of the above
ratings; or

o fully collateralized by an escrow of U.S. Government securities.

Securities are selected based on the investment managers' perception of monetary
conditions, the available supply of appropriate investments, and the investment
managers' projections for short-term interest rate movements. Sales of portfolio
holdings are typically made to implement an investment strategy or meet
shareholder redemptions. Issues with short maturities are generally held until
maturity.

Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.

Investors Michigan Municipal Cash Fund | 5
<PAGE>

Michigan specific risk. Michigan's economic performance relies heavily on
national economic trends. Its economy is highly industrialized with an economic
base concentrated in the manufacturing sector. This concentration has generally
caused the State's economy to be more volatile than that of states with more
diversified industries, although its long-term growth has kept pace with the
nation due to gains in other sectors. The most recent economic recession had a
milder effect on the State compared to the recession of the 1980s. The
restructuring of the State's manufacturing industry following the recession of
the 1980s improved the industry's overall competitive position. In addition, the
rebound in the automotive industry during the past several years has improved
the State's current economic and financial position, which are currently at
record levels of achievement. Michigan's future economic growth will likely come
from growth in its service sector.

--------------------------------------------------------------------------------
Money Fund Rules

o individual securities must have remaining maturities of no more than 397
days

o the dollar-weighted average maturity of the fund's holdings cannot exceed 90
days

o all securities must be in the top two credit grades for short-term debt
securities and be denominated in U.S. dollars

Main Risks to Investors

Because of each portfolio's high credit standards, its yield may be lower than
the yields of money funds that don't limit their investments to
government-guaranteed securities.

Other factors that could affect performance include:

o the managers could be incorrect in their analysis of interest rate trends,
credit quality or other matters

o securities that rely on third-party guarantors to raise their credit quality
could fall in price or go into default if the financial condition of the
guarantor deteriorates

o political or legal actions could change the way the portfolio's dividends
are taxed

Investors Michigan Municipal Cash Fund | 6
<PAGE>

Performance

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA (TO BE UPDATED):

1991 1992 1993 1994 1995 1996 1997 1998 1999

Best Quarter: %, Q 199
Worst Quarter: %, Q1 199

1 Year 5 Years 10 Years
--------------------------------------------------------
% % %
--------------------------------------------------------

7-day yield as of 12/31/1999: %

Investors Michigan Municipal Cash Fund | 7
<PAGE>

How Much Investors Pay

The fee tables describe the fees and expenses that you may pay if you buy and
hold shares of the fund. This information doesn't include any fees that may be
charged by your financial services firm.

--------------------------------------------------------------------------------
Fee Table
--------------------------------------------------------------------------------

The fund has no sales charges or other
shareholder fees. The fund does have annual
operating expenses, and as a shareholder you
pay them indirectly.

* Includes costs of shareholder servicing, custody, accounting services
and similar expenses, which may vary with fund size and other factors.

--------------------------------------------------------------------------------
Example
--------------------------------------------------------------------------------

1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------

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

Investors Michigan Municipal Cash Fund | 8
<PAGE>

--------------------------------------------------------------------------------
TICKER SYMBOL XXXXX

Investors New Jersey Municipal Cash Fund

The Fund's Goal And Main Strategy

The fund seeks to provide maximum current income, that is exempt from federal
and New Jersey income taxes, to the extent consistent with stability of capital.

The fund is managed to maintain a net asset value of $1.00 per share. The fund
pursues its objective primarily through a professionally managed,
non-diversified portfolio of short-term high quality municipal obligations
(securities generally rated in the two highest categories by a nationally
recognized rating service) issued by or on behalf of the State of New Jersey,
its political subdivisions, authorities and corporations, and territories and
possessions of the United States and their political subdivisions, agencies and
instrumentalities, the interest from which is, in the opinion of bond counsel to
the issuer, exempt from federal and New Jersey income taxes.

Under normal market conditions, the fund will maintain at least 80% of its net
assets in municipal securities, the income from which is exempt from federal
income taxes.

Under normal market conditions, as a nonfundamental policy, the fund will
maintain at least 65% of its total assets in New Jersey municipal securities.
The fund will invest only in municipal securities that at the time of purchase
meet at least one of the following criteria:

o rated high quality by a nationally recognized statistical rating
organization;

o if unrated, are determined to be, in the discretion of the Board of Trustees
or its delegate, at least equal in quality to one or more of the above
ratings; or

o fully collateralized by an escrow of U.S. Government securities.

Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.

Investors New Jersey Municipal Cash Fund | 9
<PAGE>

New Jersey specific risk. New Jersey is the ninth most populous state in the
nation. The state's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by rural areas
with selective rural agriculture. New Jersey is experiencing strong economic
growth and increasing reserve balances. The services and construction sectors
have been adding jobs. Job creation has led to strong personal income tax
receipts which have resulted in a series of operating surpluses and a Growing
Rainy Day Fund. Per capital income in 1997 was $32,654, the second highest of
the United States and about 128% of the national average. The distribution of
employment in New Jersey mirrors that of the nation. Along with the rest of the
Northeast, New Jersey climbed out of the recession more slowly than the rest of
the nation. Since 1992, the unemployment rate in New Jersey has exceeded the
national average; the unemployment rate for New Jersey for April, 1999, was
4.5%, slightly higher than that of the U.S. as a whole.

--------------------------------------------------------------------------------
Money Fund Rules

o individual securities must have remaining maturities of no more than 397
days

o the dollar-weighted average maturity of the fund's holdings cannot exceed 90
days

o all securities must be in the top two credit grades for short-term debt
securities and be denominated in U.S. dollars

Main Risks to Investors

Because of each portfolio's high credit standards, its yield may be lower than
the yields of money funds that don't limit their investments to
government-guaranteed securities.

Other factors that could affect performance include:

o the managers could be incorrect in their analysis of interest rate trends,
credit quality or other matters

o securities that rely on third-party guarantors to raise their credit quality
could fall in price or go into default if the financial condition of the
guarantor deteriorates

o political or legal actions could change the way the portfolio's dividends
are taxed

Investors New Jersey Municipal Cash Fund | 10
<PAGE>

Performance

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA (TO BE UPDATED):

1991 1992 1993 1994 1995 1996 1997 1998 1999

Best Quarter: %, Q 199
Worst Quarter: %, Q1 199

1 Year 5 Years 10 Years
--------------------------------------------------------
% % %
--------------------------------------------------------

7-day yield as of 12/31/1999: %

Investors New Jersey Municipal Cash Fund | 11
<PAGE>

How Much Investors Pay

The fee tables describe the fees and expenses that you may pay if you buy and
hold shares of the fund. This information doesn't include any fees that may be
charged by your financial services firm.

--------------------------------------------------------------------------------
Fee Table
--------------------------------------------------------------------------------

The fund has no sales charges or other
shareholder fees. The fund does have annual
operating expenses, and as a shareholder you
pay them indirectly.

* Includes costs of shareholder servicing, custody, accounting services
and similar expenses, which may vary with fund size and other factors.

--------------------------------------------------------------------------------
Example
--------------------------------------------------------------------------------

1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------

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

Investors New Jersey Municipal Cash Fund | 12
<PAGE>

--------------------------------------------------------------------------------
TICKER SYMBOL XXXXX

Investors Pennsylvania Municipal Cash Fund

The Fund's Goal And Main Strategy

The fund seeks to provide maximum current income, that is exempt from federal
and Pennsylvania income taxes, to the extent consistent with stability of
capital.

The fund is managed to maintain a net asset value of $1.00 per share. The fund
pursues its objective primarily through a professionally managed,
non-diversified portfolio of short-term high quality municipal obligations
(securities generally rated in the two highest categories by a nationally
recognized rating service) issued by or on behalf of the Commonwealth of
Pennsylvania, its political subdivisions, authorities and corporations, and
territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities, the interest from which is, in the
opinion of bond counsel to the issuer, exempt from federal and Pennsylvania
income taxes.

Under normal market conditions, the fund will maintain at least 80% of its net
assets in municipal securities, the income from which is exempt from federal
income taxes.

Under normal market conditions, the fund will maintain at least 65% of its total
assets in Pennsylvania municipal securities. The fund will invest only in
municipal securities that at the time of purchase meet at least one of the
following criteria:

o rated high quality by a nationally recognized statistical rating
organization;

o if unrated, are determined to be, in the discretion of the Board of Trustees
or its delegate, at least equal in quality to one or more of the above
ratings; or

o fully collateralized by an escrow of U.S. Government securities.

Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.

Investors Pennsylvania Municipal Cash Fund | 13
<PAGE>

Pennsylvania specific risk. While Pennsylvania is among the leading states in
manufacturing and mining, it is transforming into more of a services and
high-tech economy evidenced by its growing reputation as a health and education
center. Following the recession of the early 1990's, Pennsylvania's economy had
become more reflective of the nation's. Service industries became a larger
portion of total employment. The steel industry had undergone a successful
restructuring. The economy, while continuing to experience some growth, has not
seen the levels of growth that most states have experienced during this recent
expansion. The replacement of highly paid manufacturing jobs for those in the
services and trade sectors will impede income growth. Relative cost advantages
which are available to businesses in the Commonwealth compared to its
neighboring states, as well as the restructuring and modernization of
manufacturing plants, should aid in boosting the economy.

--------------------------------------------------------------------------------
Money Fund Rules

o individual securities must have remaining maturities of no more than 397
days

o the dollar-weighted average maturity of the fund's holdings cannot exceed 90
days

o all securities must be in the top two credit grades for short-term debt
securities and be denominated in U.S. dollars

Main Risks to Investors

Because of each portfolio's high credit standards, its yield may be lower than
the yields of money funds that don't limit their investments to
government-guaranteed securities.

Other factors that could affect performance include:

o the managers could be incorrect in their analysis of interest rate trends,
credit quality or other matters

o securities that rely on third-party guarantors to raise their credit quality
could fall in price or go into default if the financial condition of the
guarantor deteriorates

o political or legal actions could change the way the portfolio's dividends
are taxed

Investors Pennsylvania Municipal Cash Fund | 14
<PAGE>

Performance

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA (TO BE UPDATED):

1991 1992 1993 1994 1995 1996 1997 1998 1999

Best Quarter: %, Q 199
Worst Quarter: %, Q1 199

1 Year 5 Years 10 Years
--------------------------------------------------------
% % %
--------------------------------------------------------

7-day yield as of 12/31/1999: %

Investors Pennsylvania Municipal Cash Fund | 15
<PAGE>

How Much Investors Pay

The fee tables describe the fees and expenses that you may pay if you buy and
hold shares of the fund. This information doesn't include any fees that may be
charged by your financial services firm.

--------------------------------------------------------------------------------
Fee Table
--------------------------------------------------------------------------------

The fund has no sales charges or other
shareholder fees. The fund does have annual
operating expenses, and as a shareholder you
pay them indirectly.

* Includes costs of shareholder servicing, custody, accounting services
and similar expenses, which may vary with fund size and other factors.

--------------------------------------------------------------------------------
Example
--------------------------------------------------------------------------------

1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------

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

Investors Pennsylvania Municipal Cash Fund | 16
<PAGE>

--------------------------------------------------------------------------------
TICKER SYMBOL XXXXX

Tax-Exempt New York Money Market Fund

The Fund's Goal And Main Strategy

The fund seeks to provide maximum current income that is exempt from federal,
New York State and New York City income taxes, to the extent consistent with
stability of capital.

The fund is managed to maintain a net asset value of $1.00 per share. The fund
pursues its objective primarily through a professionally managed,
non-diversified portfolio of short-term high quality municipal obligations
issued by or on behalf of the State of New York, its political subdivisions,
authorities and corporations, and territories and possessions of the United
States and their political subdivisions, agencies and instrumentalities, the
interest from which is, in the opinion of bond counsel to the issuer, exempt
from federal, New York State and New York City income taxes.

Under normal market conditions, the fund will maintain at least 80% of its net
assets in municipal securities, the income from which is exempt from federal
income taxes. The fund does not consider bonds whose interest may be subject to
the alternative minimum tax as municipal securities for purposes of this
limitation.

Under normal market conditions, as a nonfundamental policy, the fund will
maintain at least 65% of its total assets in New York municipal securities. The
fund will invest only in municipal securities that at the time of purchase meet
at least one of the following criteria:

o are rated within the two highest ratings of municipal securities by either
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("S&P");

o are guaranteed or insured by the U.S. government as to the payment of
principal and interest;

o are fully collateralized by an escrow of U.S. Government securities;

o have at the time of purchase a Moody's short-term municipal securities
rating of MIG-2 or higher or a municipal commercial paper rating of P-2 or
higher, or S&P's municipal commercial paper rating of A-2 or higher;

o are unrated, if longer term municipal securities of that issuer are rated
within the two highest rating categories by Moody's or S&P; or

o are determined to be, in the discretion of the Board of Trustees or its
delegate, at least equal in quality to one or more of the above categories.

Tax-Exempt New York Money Market Fund | 17
<PAGE>

preciation or depreciation is less than for fixed-rate obligations.

Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.

New York specific risk. New York is the third most populous state in the nation;
New York City accounts for about 40% of the State's population. After a boom in
the mid-1980's, New York and the rest of the Northeast fell into a recession a
year before the national recession officially began. Along with the rest of the
Northeast, New York climbed out of the recession more slowly than the rest of
the nation. New York ranks fourth in the nation in personal income. In 1997, New
York's per capita personal income was $30,752, which is about 120% of the
national average. Employment distribution throughout industry sectors is similar
to that of the nation except for a higher concentration in the finance,
insurance and real estate sectors and a lower concentration in the manufacturing
sector. Historically, unemployment is more cyclical in New York than for the
United States as a whole. Since 1991, New York's unemployment rate has exceeded
the U.S. average.

--------------------------------------------------------------------------------
Money Fund Rules

o individual securities must have remaining maturities of no more than 397
days

o the dollar-weighted average maturity of the fund's holdings cannot exceed 90
days

o all securities must be in the top two credit grades for short-term debt
securities and be denominated in U.S. dollars

Tax-Exempt New York Money Market Fund | 18
<PAGE>

Main Risks to Investors

Because of each portfolio's high credit standards, its yield may be lower than
the yields of money funds that don't limit their investments to
government-guaranteed securities.

Other factors that could affect performance include:

o the managers could be incorrect in their analysis of interest rate trends,
credit quality or other matters

o securities that rely on third-party guarantors to raise their credit quality
could fall in price or go into default if the financial condition of the
guarantor deteriorates

o political or legal actions could change the way the portfolio's dividends
are taxed

Tax-Exempt New York Money Market Fund | 19
<PAGE>

Performance

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA (TO BE UPDATED):

1991 1992 1993 1994 1995 1996 1997 1998 1999

Best Quarter: %, Q 199
Worst Quarter: %, Q1 199

1 Year 5 Years 10 Years
--------------------------------------------------------
% % %
--------------------------------------------------------

7-day yield as of 12/31/1999: %

Tax-Exempt New York Money Market Fund | 20
<PAGE>

How Much Investors Pay

The fee tables describe the fees and expenses that you may pay if you buy and
hold shares of the fund. This information doesn't include any fees that may be
charged by your financial services firm.

--------------------------------------------------------------------------------
Fee Table
--------------------------------------------------------------------------------

The fund has no sales charges or other
shareholder fees. The fund does have annual
operating expenses, and as a shareholder you
pay them indirectly.

* Includes costs of shareholder servicing, custody, accounting services
and similar expenses, which may vary with fund size and other factors.

--------------------------------------------------------------------------------
Example
--------------------------------------------------------------------------------

1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------

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

Tax-Exempt New York Money Market Fund | 21
<PAGE>

Other Policies And Risks

While the previous pages describe the main points of each fund's strategy and
risks, there are a few other issues to know about:

o The investment advisor establishes a security's credit grade when it buys
the security, using independent ratings or, for unrated securities, its own
credit analysis. If a security's credit quality falls below the minimum
required for purchase by the fund, the security will be sold unless the
advisor or the Board believes this would not be in the shareholders' best
interests.

o This prospectus doesn't tell you about every policy or risk of investing in
a portfolio. For more information on these, you may want to request a copy
of the Statement of Additional Information (the last page tells you how to
do this).

Keep in mind that there is no assurance that any mutual fund will achieve its
goal.

Tax-Exempt New York Money Market Fund | 22
<PAGE>

Who Manages The Fund

The Investment Advisor

The portfolios' investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach, bringing together professionals from many
investment disciplines. Supporting each team are Scudder Kemper's many
economists, research analysts, traders and other investment specialists, located
across the United States and around the world.

For serving as the portfolios' investment advisor, Scudder Kemper receives a
management fee. For the most recent fiscal year, the actual amounts Government
Securities Portfolio and Treasury Portfolio each paid in management fees were
--% and --%, respectively, of its average daily net assets.

The Portfolio Managers

The portfolio managers handle the day-to-day management of the portfolios. The
lead manager for each portfolio is Frank Rachwalski, Jr. Mr. Rachwalski, who
began his investment career when he joined the advisor in 1973, has managed each
portfolio since its inception. Christopher Proctor serves as manager for each
portfolio. Mr. Proctor joined the advisor in -- and began his investment career
in --.

o Each portfolio is managed by a team of investment professionals who work
together to develop the portfolio's investment strategies.

23
<PAGE>

Financial Highlights

This table is designed to help you understand the financial performance of the
fund's service shares in recent years. The figures in the first part of the
table are for a single share. The total return figures represent the percentage
that an investor in a particular portfolio would have earned, assuming all
dividends and distributions were reinvested. This information has been audited
by Ernst & Young LLP, whose report, along with the portfolio's financial
statements, is included in the annual report (see "Shareholder reports" on the
last page).

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Investors Florida Municipal Cash Fund
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Investors Florida Municipal Cash Fund

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Investors Michigan Municipal Cash Fund
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Investors Florida Municipal Cash Fund

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Investors New Jersey Municipal Cash Fund
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Investors Florida Municipal Cash Fund

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Investors Pennsylvania Municipal Cash Fund
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Investors Pennsylvania Municipal Cash Fund

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Tax-Exempt New York Money Market Fund
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Investors Florida Municipal Cash Fund

24
<PAGE>

Your Investment In The Funds

The following pages describe the main policies associated with buying and
selling shares of the funds. There is also information on dividends and taxes
and other matters that may affect you as a portfolio shareholder.

Because these funds are available only through a financial services firm, such
as a broker, financial institution or workplace retirement plan, you should
contact a representative of your financial services firm for instructions on how
to buy or sell portfolio shares.

Policies You Should Know About

The policies below may affect you as a shareholder. In any case where materials
provided by your financial services firm contradict the information given here,
you should follow the information in your firm's materials. Please note that a
financial services firm may charge its own fees.

Policies about transactions

Each fund is open for business each day the New York Stock Exchange is open.
Normally, each fund calculates its share price three times every business day:
at 1:00 p.m., 3:00 p.m. and 4:00 p.m. Central time for Government Securities
Portfolio, and 11:00 a.m., 1:00 p.m. and 3:00 p.m. Central time for Treasury
Portfolio.

As noted earlier, the fund expects to maintain a stable $1.00 share price.

You can place an order to buy or sell shares at any time. Once your order is
received by Kemper Service Company, and they have determined that it is a "good
order," it will be processed at the next share price calculated.

Because orders placed through financial services firms must be forwarded to
Kemper Service Company before they can be processed, you'll need to allow extra
time. A representative of your finan-

25
<PAGE>

cial services firm should be able to tell you when your order will be processed.

Wire transactions that arrive by 11 a.m. Central time will receive that day's
dividend. Wire transactions received between 11 a.m. Central time and 3 p.m.
Central time will start to accrue dividends the next business day. Investments
by check will be effective at 3 p.m. Central time on the business day following
receipt and will earn dividends the following calendar day.

When selling shares, you'll generally receive the dividend for the day on which
your shares were sold. If we receive a sell request before 11 a.m. Central time
and the request calls for proceeds to be sent out by wire, we will normally wire
you the proceeds on the same day. However, you won't receive that day's
dividend.

When you want to sell more than $50,000 worth of shares or send the proceeds to
a third party or to a new address, you'll usually need to place your order in
writing and include a signature guarantee. The only exception is if you want
money wired to a bank account that is already on file with us; in that case, you
don't need a signature guarantee. Also, you don't need a signature guarantee for
an exchange, although we may require one in certain other circumstances.

A signature guarantee is simply a certification of your signature -- a valuable
safeguard against fraud. You can get a signature guarantee from most brokerages,
banks, savings institutions and credit unions. Note that you can't get a
signature guarantee from a notary public.

If you purchased your shares directly from the fund's transfer agent, you can
sell them by sending a written request (with a signature guarantee) to:

Kemper Service Corp.
Attention: Transaction Processing
P.O. Box 219557
Kansas City, MO 64121

Money from shares you sell is normally sent out within one business day of when
your order is processed (not when it is received), although it could be delayed
for up to seven days. There are also two circumstances when it could be longer:
when you are selling shares you bought recently by check and that check hasn't
cleared yet (maximum delay: ten days) or when unusual circumstances prompt the
SEC to allow further delays.

Your financial services firm may set its own minimum investments, although those
set by the portfolios are as follows:

o Minimum initial investment: $1,000

o Minimum additional investment: $100

o Minimum investment with an automatic investment plan: $50

Share certificates are available on written request. However, we don't recommend
them unless you want them for a specific purpose, because they can only be sold
by mailing them in, and if they're ever lost they're difficult and expensive to
replace.

How the portfolios calculate share price

Each portfolio's share price is its net asset value per share, or NAV. To
calculate NAV, a portfolio uses the following equation:

TOTAL ASSETS - TOTAL LIABILITIES
------------------------------------ = NAV
TOTAL NUMBER OF SHARES OUTSTANDING

26
<PAGE>

In valuing securities, we typically use the amortized cost method (the method
used by most money market funds).

Other rights we reserve

You should be aware that we may do any of the following:

o withhold 31% of your distributions as federal income tax if you have been
notified by the IRS that you are subject to backup withholding, or if you
fail to provide us with a correct taxpayer ID number or certification that
you are exempt from backup withholding

o reject a new account application if you don't provide a correct Social
Security or other tax ID number; if the account has already been opened, we
may give you 30 days' notice to provide the correct number

o close your account and send you the proceeds if your balance falls below
$1,000; we will give you 60 days' notice so you can either increase your
balance or close your account (this policy doesn't apply to most retirement
accounts or if you have an automatic investment plan)

o pay you for shares you sell by "redeeming in kind," that is, by giving you
marketable securities (which typically will involve brokerage costs for you
to liquidate) rather than cash

o change, add or withdraw various services, fees and account policies

o reject or limit purchases of shares for any reason

o withdraw or suspend any part of the offering made by this prospectus

27
<PAGE>

Understanding Distributions And Taxes

Because each shareholder's tax situation is unique, it's always a good idea to
ask your tax professional about the tax consequences of your investments,
including any state and local tax consequences.

By law, a mutual fund is required to pass through to its shareholders virtually
all of its net earnings. A fund can earn money in two ways: by receiving
interest, dividends or other income from securities it holds, and by selling
securities for more than it paid for them. (A fund's earnings are separate from
any gains or losses stemming from your own purchase of shares.) A fund may not
always pay a distribution for a given period.

The funds intend to declare income dividends daily, and pay them monthly. The
funds may make short- or long-term capital gains distributions in November or
December, and may make additional distributions for tax purposes if necessary.

You can choose how to receive your dividends and distributions. You can have
them all automatically reinvested in portfolio shares (at NAV) or all sent to
you by check. Tell us your preference on your application. If you don't indicate
a preference, your dividends and distributions will all be reinvested. For
retirement plans, reinvestment is the only option.

The following tables show the usual tax status of transactions in portfolio
shares as well as that of any taxable distribution from a fund:

Generally taxed at ordinary income rates
----------------------------------------------------------------------------
o short-term capital gains from selling fund shares
----------------------------------------------------------------------------
o income dividends you receive from the funds
----------------------------------------------------------------------------
o short-term capital gains distributions received from the funds
----------------------------------------------------------------------------

Generally taxed at capital gains rates
----------------------------------------------------------------------------
o long-term capital gains from selling fund shares
----------------------------------------------------------------------------
o long-term capital gains distributions received from the funds
----------------------------------------------------------------------------

You will be sent detailed tax information every January. These statements tell
you the amount and the tax category of any dividends or distributions you
received. They also have certain details on your purchases and sales of shares.
The tax status of dividends and distributions is the same whether you reinvest
them or not. Dividends or distributions declared in the last quarter of a given
year are taxed in that year, even though you may not receive the money until the
following January.

28
<PAGE>

To Get More Information

Shareholder reports -- These include commentary from each fund's management team
about recent market conditions and the effects of a fund's strategies on its
performance. They also have detailed performance figures, a list of everything
each fund owns and the funds' financial statements. Shareholders get these
reports automatically. To reduce costs, we may mail one copy per household. For
more copies, contact your financial services firm.

Statement of Additional Information (SAI) -- This tells you more about each
fund's features and policies, including additional risk information. The SAI is
incorporated by reference into this document (meaning that it's legally part of
this prospectus).

If you'd like to ask for copies of these documents, or if you're a shareholder
and have questions, please contact your financial services firm or the SEC (see
below). Materials you get from your financial services firm are free; those from
the SEC involve a copying fee. If you like, you can look over these materials in
person at the SEC's Public Reference Room in Washington, DC. You can also obtain
these materials by calling the Shareholder Service Agent at (800) 231-8568,
during normal business hours only.

SEC
450 Fifth Street, N.W.
Washington, DC 20549-6009
www.sec.gov
Tel (800) SEC-0330

SEC File Number
Investors Cash Trust 811-6103

<PAGE>

This page
intentionally
left blank
(not part of prospectus).

<PAGE>

INVESTORS MUNICIPAL CASH FUND

Investors Florida Municipal Cash Fund ("Florida Fund")
Investors Michigan Municipal Cash Fund ("Michigan Fund")
Investors New Jersey Municipal Cash Fund ("New Jersey Fund")
Investors Pennsylvania Municipal Cash Fund ("Pennsylvania
Fund")
Tax-Exempt New York Money Market Fund ("New York Fund")
Collectively (the "Funds")
222 South Riverside Plaza, Chicago, Illinois 60606
1-800-231-8568

STATEMENT OF ADDITIONAL INFORMATION

August 1, 2000

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus of Investors Municipal Cash Fund (the
"Trust") dated August 1, 2000. The prospectus may be obtained without charge
from the Trust, and is also available along with other related materials on the
SEC's Internet web site (http://www.sec.gov).

------------
<TABLE>
<CAPTION>

TABLE OF CONTENTS
Page
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES.......................................................................2

MUNICIPAL SECURITIES.....................................................................................5

STATE SPECIFIC RISK FACTORS..............................................................................9

INVESTMENT RESTRICTIONS.................................................................................16

INVESTMENT ADVISER AND SHAREHOLDER SERVICES.............................................................20

PORTFOLIO TRANSACTIONS..................................................................................24

PURCHASE AND REDEMPTION OF SHARES.......................................................................26

DIVIDENDS, TAXES AND NET ASSET VALUE....................................................................29

PERFORMANCE.............................................................................................33

OFFICERS AND TRUSTEES...................................................................................38

SPECIAL FEATURES........................................................................................40

SHAREHOLDER RIGHTS......................................................................................42
</TABLE>

The financial statements appearing in the Trust's Annual Report to Shareholders
dated March 31, 2000 are incorporated herein by reference. The Trust's Annual
Report accompanies this Statement of Additional Information and may be obtained
without charge by calling 1-800-231-8568.

printed on recycled paper

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

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

Investors Municipal Cash Fund (the "Trust") is a registered open-end,
non-diversified management investment company that offers a choice of five
investment portfolios ("Funds"). Each Fund seeks to provide, to the extent
consistent with stability of capital, maximum current income that is exempt from
federal income taxes and, in the case of certain Funds, the income taxes of a
particular state. The Trust may offer additional Funds in the future.

Each Fund is a money market mutual fund that has been designed to provide
investors with professional management of short-term investment dollars. Each
Fund pools individual and institutional investors' money which it uses to buy
tax-exempt money market instruments. Because the Funds combine their respective
shareholders' money, they can buy and sell large blocks of securities, which
reduces transaction costs and increases yields. The Funds are managed by
investment professionals who analyze market trends to take advantage of changing
conditions. Investments are subject to price fluctuations resulting from rising
or declining interest rates and are subject to the ability of the issuers of
such investments to make payment at maturity. Because of their short maturities,
liquidity and high quality ratings, high quality money market instruments, such
as those in which the Funds invest, are generally considered among the safest
available. There can be no assurance that a Fund will achieve its objective or
that it will maintain a net asset value of $1.00 per share.

As a fundamental investment policy, each Fund will under normal market
conditions maintain at least 80% of its investments in obligations issued by or
on behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, the income from which is exempt from federal income taxes
("Municipal Securities"). In addition, each Fund will, under normal market
conditions, maintain at least 80% of its net assets in municipal securities, the
income from which is exempt from federal income taxes. Each of the Funds may
invest in bonds whose net interest may be subject to the alternative minimum
tax. In compliance with the position of the staff of the Securities and Exchange
Commission ("SEC"), the New York Fund does not consider such bonds as Municipal
Securities for purposes of the 80% limitation. This is a fundamental policy for
the New York Fund so long as the SEC staff maintains its position, after which
it would become non-fundamental. Each Fund's assets will consist of Municipal
Securities and temporary investments as described below and cash.

The New York Fund will invest only in Municipal Securities that at the time of
purchase: (a) are rated within the two highest ratings of municipal securities
(Aaa or Aa) assigned by Moody's Investors Service, Inc. ("Moody's"), or (AAA or
AA) assigned by Standard & Poor's Corporation ("S&P"); (b) are guaranteed or
insured by the U.S. Government as to the payment of principal and interest; (c)
are fully collateralized by an escrow of U.S. Government securities; (d) have at
the time of purchase a Moody's short-term municipal securities rating of MIG-2
or higher or a municipal commercial paper rating of P-2 or higher, or S&P's
municipal commercial paper rating of A-2 or higher; (e) are unrated, if longer
term municipal securities of that issuer are rated within the two highest rating
categories by Moody's or S&P; or (f) are determined by the Board of Trustees or
its delegate to be at least equal in quality to one or more of the above
categories.

2
<PAGE>

The Florida, Michigan, New Jersey and Pennsylvania Funds will invest only in
Municipal Securities that at the time of purchase: (a) are rated high quality by
Moody's, S&P, Duff Phelps, Inc., Fitch Investor's Services, Inc. or any other
nationally recognized statistical rating organization ("NRSRO") as determined by
the SEC; (b) are unrated, if in the discretion of the Board of Trustees or its
delegate the Municipal Securities are determined to be at least equal in quality
to one or more of the ratings in subparagraph (a) immediately above; or (c) are
fully collateralized by an escrow of U.S. Government securities.

Rather than invest in securities directly, each Fund may in the future seek to
achieve its investment objective by pooling its assets with assets of other
mutual funds managed by Scudder Kemper or its affiliates for investment in
another investment company having the same investment objective and
substantially the same investment policies and restrictions. The purpose of such
an arrangement is to achieve greater operational efficiencies and to reduce
costs. It is expected that any such investment company will be managed by
Scudder Kemper in substantially the same manner as the Fund pooling its assets.
Shareholders of a Fund will be given at least 30 days prior notice of any such
investment, although they will not be entitled to vote on the action. Such
investment would be made only if the trustees determine it to be in the best
interests of a Fund and its shareholders.

The Funds limit their portfolio investments to securities that meet the
diversification and quality requirements of Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act"). From time to time, a significant portion
of a Fund's securities is supported by credit and liquidity enhancements from
third party banks and other financial institutions, and as a result, changes in
the credit quality of these institutions could cause losses to a Fund and affect
its share price.

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

From time to time, as a defensive measure, including during periods when
acceptable short-term Municipal Securities are not available, each Fund may
invest in taxable "temporary investments" that include: obligations of the U.S.
Government, its agencies or instrumentalities; debt securities rated within the
two highest grades by Moody's or S&P for the New York Fund; debt securities
rated high quality by any NRSRO for the Florida, Michigan, New Jersey and
Pennsylvania Funds; commercial paper rated in the two highest grades by either
Moody's or S&P for the New York Fund; commercial paper rated high quality by any
NRSRO for the Florida, Michigan, New Jersey and Pennsylvania Funds; certificates
of deposit of domestic banks with assets of $1 billion or more; and any of the
foregoing temporary investments subject to repurchase agreements. Under a
repurchase agreement a Fund acquires ownership of a security from a
broker-dealer or bank that agrees to repurchase the security at a mutually
agreed upon time and price (which price is higher than the purchase price),
thereby determining the yield during the Fund's holding period. Repurchase
agreements with broker-dealer firms will be limited to obligations of the U.S.
Government, its agencies or instrumentalities. Maturity of the securities
subject to repurchase may exceed one year. Interest income from temporary
investments is taxable to shareholders as ordinary income. Although a Fund is
permitted to invest in taxable securities it is each Fund's primary intention to
generate income dividends that are not subject to federal income taxes and, in
the case of certain Funds, the income taxes of a particular state.

The Funds may not borrow money except as a temporary measure for extraordinary
or emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without immediately
selling any portfolio securities. Any such borrowings under this provision will
not be collateralized. A Fund will not borrow for leverage purposes. A Fund will
not purchase illiquid securities, including repurchase agreements maturing in
more than seven days, if, as a result thereof, more than 10% of a Fund's net
assets valued at the time of the transaction would be invested in such
securities. Up to 25% of the total assets of a Fund may be invested at any time
in debt obligations of a single issuer or of issuers in a single industry, and a
Fund may invest without limitation in Municipal Securities the income on which
may be derived from projects of a single type.

3
<PAGE>

Although the Trust has registered as a "non-diversified" investment company,
each Fund must meet the diversification requirements of Rule 2a-7 under the 1940
Act. Rule 2a-7 generally provides that a single state money fund shall not, as
to 75% of its assets, invest more than 5% of its assets in the securities of an
individual issuer, provided that the fund may not invest more than 5% of its
assets in the securities of an individual issuer unless the securities are First
Tier Securities (as defined in Rule 2a-7). This allows each Fund, as to 25% of
its assets, to invest more than 5% of its assets in the securities of an
individual issuer. Since each Fund is concentrated in securities issued by a
particular state or entities within that state and may invest a significant
percentage of its assets in the securities of a single issuer, an investment in
a Fund may be subject to more risk than an investment in other types of money
market funds.

FLORIDA FUND. The objective of the Florida Fund is to provide maximum current
income that is exempt from federal income tax to the extent consistent with
stability of capital. The Florida Fund pursues its objective, primarily through
a professionally managed, non-diversified portfolio of short-term high quality
municipal obligations issued by or on behalf of the State of Florida, its
political subdivisions, authorities and corporations, and territories and
possessions of the United States and their political subdivisions, agencies and
instrumentalities and other securities that are, in the opinion of bond counsel
to the issuer, exempt from the Florida intangibles tax and the interest from
which is exempt from federal income taxes ("Florida Municipal Securities").
Dividends representing interest income received by the Florida Fund on Florida
Municipal Securities will be exempt from federal income taxes. Dividend income
may be subject to state and local taxes. Florida currently has no income tax for
individuals. Since the investment manager believes that exemption from the
Florida intangibles tax is likely to be available, the Florida Fund generally
will seek investments enabling shares of the Florida Fund to be exempt from the
intangibles tax. However, there is no assurance that an exemption from the
Florida intangibles tax will be available. Florida Municipal Securities may at
times have lower yields than other tax-exempt securities. As a temporary
defensive position, to the extent Florida Municipal Securities are at any time
unavailable or unattractive for investment by the Florida Fund, it will invest
in other debt securities the interest from which is exempt from federal income
taxes. Under normal market conditions, as a non-fundamental policy, the Florida
Fund will maintain at least 65% of its total assets in Florida Municipal
Securities.

MICHIGAN FUND. The objective of the Michigan Fund is to provide maximum current
income that is exempt from federal and Michigan income taxes to the extent
consistent with stability of capital. The Michigan Fund pursues its objective
primarily through a professionally managed, non-diversified portfolio of
short-term high quality municipal obligations issued by or on behalf of the
state of Michigan, its political subdivisions, authorities and corporations, and
territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from federal and Michigan income
taxes ("Michigan Municipal Securities"). Dividends representing interest income
received by the Michigan Fund on Michigan Municipal Securities will be exempt
from federal and Michigan income taxes. Such dividend income may be subject to
other state and local taxes. To the extent that Michigan Municipal Securities
are at any time unavailable or unattractive for investment by the Michigan Fund,
it will invest temporarily in other debt securities the interest from which is
exempt from federal income taxes. Under normal market conditions, as a
non-fundamental policy, the Michigan Fund will maintain at least 65% of its
total assets in Michigan Municipal Securities.

NEW JERSEY FUND. The objective of the New Jersey Fund is to provide maximum
current income that is exempt from federal and New Jersey income taxes to the
extent consistent with stability of capital. The New Jersey Fund pursues its
objective primarily through a professionally managed, non-diversified portfolio
of short-term high quality municipal obligations issued by or on behalf of New
Jersey, its political subdivisions, authorities and corporations, and
territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from federal and New Jersey income
taxes ("New Jersey Municipal Securities"). Dividends representing interest
income received by the New Jersey Fund on New Jersey Municipal Securities will
be exempt from federal and New Jersey income taxes. Such dividend income may be
subject to other state and local taxes. To the extent that New Jersey Municipal
Securities are at any time unavailable or unattractive for investment by the New
Jersey Fund, it will invest temporarily in other debt securities the interest
from which is exempt from federal income taxes. Under normal market

4
<PAGE>

conditions, as a non-fundamental policy, the New Jersey Fund will maintain at
least 65% of its total assets in New Jersey Municipal Securities.

NEW YORK FUND. The objective of the New York Fund is to provide maximum current
income that is exempt from federal, New York State and New York City income
taxes to the extent consistent with stability of capital. The New York Fund
pursues its objective primarily through a professionally managed,
non-diversified portfolio of short-term high quality municipal obligations
issued by or on behalf of New York State, its political subdivisions,
authorities and corporations, and territories and possessions of the United
States and their political subdivisions, agencies and instrumentalities the
interest from which is, in the opinion of bond counsel to the issuer, exempt
from federal, New York State and New York City income taxes ("New York Municipal
Securities"). Dividends representing net interest income received by the New
York Fund on New York Municipal Securities will be exempt from federal, New York
State and New York City personal income taxes. Such dividend income may be
subject to other state and local taxes. To the extent New York Municipal
Securities are at any time unavailable or unattractive for investment by the New
York Fund, it will invest in other debt securities the interest from which is
exempt from Federal income taxes. Under normal market conditions, as a
non-fundamental policy, the New York Fund will maintain at least 65% of its
total assets in New York Municipal Securities.

PENNSYLVANIA FUND. The objective of the Pennsylvania Fund is to provide maximum
current income that is exempt from federal and Pennsylvania income taxes to the
extent consistent with stability of capital. The Pennsylvania Fund pursues its
objective primarily through a professionally managed, non-diversified portfolio
of short-term high quality municipal obligations issued by or on behalf of the
Commonwealth of Pennsylvania, its political subdivisions, authorities and
corporations, and territories and possessions of the United States and their
political subdivisions, agencies and instrumentalities the interest from which
is in the opinion of bond counsel to the issuer, exempt from federal and
Pennsylvania income taxes ("Pennsylvania Municipal Securities"). Dividends
representing interest income received by the Pennsylvania Fund on Pennsylvania
Municipal Securities will be exempt from federal and Pennsylvania income taxes
and (for residents of Philadelphia) from Philadelphia School District Income Tax
and (for residents of Pittsburgh) from the intangibles tax for the City and
School District of Pittsburgh. Such dividend income may be subject to other
state and local taxes. To the extent that Pennsylvania Municipal Securities are
at any time unavailable or unattractive for investment by the Pennsylvania Fund,
it will invest temporarily in other debt securities the interest from which is
exempt from federal income taxes. Under normal market conditions, as a
non-fundamental policy, the Pennsylvania Fund will maintain at least 65% of its
total assets in Pennsylvania Municipal Securities.

MUNICIPAL SECURITIES

Municipal Securities that a Fund may purchase include, without limitation, debt
obligations issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as airports, bridges,
highways, housing, hospitals, mass transportation, public utilities, schools,
streets, and water and sewer works. Other public purposes for which Municipal
Securities may be issued include refunding outstanding obligations, obtaining
funds for general operating expenses and obtaining funds to loan to other public
institutions and facilities.

Municipal Securities, such as industrial development bonds, are issued by or on
behalf of public authorities to obtain funds for purposes including privately
operated airports, housing, conventions, trade shows, ports, sports, parking or
pollution control facilities or for facilities for water, gas, electricity or
sewage and solid waste disposal. Such obligations, which may include lease
arrangements, are included within the term Municipal Securities if the interest
paid thereon qualifies as exempt from federal income taxes. Other types of
industrial development bonds, the proceeds of which are used for the
construction, equipment, repair or improvement of privately operated industrial
or commercial facilities, may constitute Municipal Securities, although the
current federal tax laws place substantial limitations on the size of such
issues.

Municipal Securities generally are classified as "general obligation" or
"revenue." General obligation notes are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue notes are payable only from the revenues derived from a particular
facility or class of

5
<PAGE>

facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source. Industrial development bonds which are Municipal
Securities are in most cases revenue bonds and generally do not constitute the
pledge of the credit of the issuer of such bonds.

Examples of Municipal Securities which are issued with original maturities of
one year or less are short-term tax anticipation notes, bond anticipation notes,
revenue anticipation notes, construction loan notes, pre-refunded municipal
bonds, warrants and tax-free commercial paper.

Tax anticipation notes typically are sold to finance working capital needs of
municipalities in anticipation of receiving property taxes on a future date.
Bond anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under the Federal Revenue Sharing Program. Construction loan
notes are instruments insured by the Federal Housing Administration with
permanent financing by "Fannie Mae" (the Federal National Mortgage Association)
or "Ginnie Mae" (the Government National Mortgage Association) at the end of the
project construction period. Pre-refunded municipal bonds are bonds which are
not yet refundable, but for which securities have been placed in escrow to
refund an original municipal bond issue when it becomes refundable. Tax-free
commercial paper is an unsecured promissory obligation issued or guaranteed by a
municipal issuer. Each Fund may purchase other Municipal Securities similar to
the foregoing that are or may become available, including securities issued to
pre-refund other outstanding obligations of municipal issuers.

The Federal bankruptcy statutes relating to the adjustments of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse changes in
the rights of holders of obligations issued by such subdivisions or authorities.

Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states, and legislation has been introduced to effect changes in public school
finances in some states. In other instances there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or Federal law which litigation ultimately could
affect the validity of those Municipal Securities or the tax-free nature of the
interest thereon.

The two principal classifications of Municipal Securities consist of "general
obligation" and "revenue" issues. General obligation bonds are secured by the
issuer's pledge of its full faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source such as the
user of the facility being financed. Industrial development bonds held by a Fund
are in most cases revenue bonds and are not payable from the unrestricted
revenues of the issuer. Among other types of instruments, a Fund may purchase
tax-exempt commercial paper, warrants and short-term municipal notes such as tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
construction loan notes, warrants and other forms of short-term loans. Such
notes are issued with a short-term maturity in anticipation of the receipt of
tax payments, the proceeds of bond placements or other revenues.

Each Fund may purchase securities which provide for the right to resell them to
an issuer, bank or dealer at an agreed upon price or yield within a specified
period prior to the maturity date of such securities. Such a right to resell is
referred to as a "Standby Commitment." Securities may cost more with Standby
Commitments than without them. Standby Commitments will be entered into solely
to facilitate portfolio liquidity. A Standby Commitment may be exercised before
the maturity date of the related Municipal Security if the Fund's Adviser
revises its evaluation of the creditworthiness of the underlying security or of
the entity issuing the Standby Commitment. Each Fund's policy is to enter into
Standby Commitments only with issuers, banks or dealers which are determined by
the Adviser to present minimal credit risks. If an issuer, bank or dealer should
default on its obligation to repurchase an underlying security, a Fund might be
unable to recover all or a portion of any loss sustained from having to sell the
security elsewhere.

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Each Fund may invest in certain Municipal Securities having rates of interest
that are adjusted periodically or that "float" continuously according to
formulae intended to minimize fluctuations in values of the instruments
("Variable Rate Notes"). The interest rate on Variable Rate Notes ordinarily is
determined by reference to or is a percentage of a bank's prime rate, the 90 day
U.S. Treasury bill rate, the rate of return on commercial paper or bank
certificates of deposit, or some similar objective standard. Generally, the
changes in the interest rate on Variable Rate Notes reduce the fluctuation in
the market value of such notes. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or capital depreciation is less
than for fixed rate obligations. Each Fund currently intends to invest a
substantial portion of its assets in Variable Rate Notes. Variable Rate Demand
Notes have a demand feature which entitles the purchaser to resell the
securities at amortized cost. The rate of return on Variable Rate Demand Notes
also varies according to some objective standard, such as an index of short-term
tax-exempt rates. Variable rate instruments with a demand feature enable a Fund
to purchase instruments with a stated maturity in excess of one year. Each Fund
determines the maturity of variable rate instruments in accordance with Rule
2a-7, which allows a Fund to consider certain of such instruments as having
maturities shorter than the maturity date on the face of the instrument.

Each Fund may purchase high quality Certificates of Participation in trusts that
hold Municipal Securities. A Certificate of Participation gives a Fund an
undivided interest in the Municipal Security in the proportion that the Fund's
interest bears to the total principal amount of the Municipal Security. These
Certificates of Participation may be variable rate or fixed rate with remaining
maturities of one year or less. A Certificate of Participation may be backed by
an irrevocable letter of credit or guarantee of a financial institution that
satisfies rating agencies as to the credit quality of the Municipal Security
supporting the payment of principal and interest on the Certificate of
Participation. Payments of principal and interest would be dependent upon the
underlying Municipal Security and may be guaranteed under a letter of credit to
the extent of such credit. The quality rating by a rating service of an issue of
Certificates of Participation is based primarily upon the rating of the
Municipal Security held by the trust and the credit rating of the issuer of any
letter of credit and of any other guarantor providing credit support to the
issue. The Adviser considers these factors as well as others, such as any
quality ratings issued by the rating services identified above, in reviewing the
credit risk presented by a Certificate of Participation and in determining
whether the Certificate of Participation is appropriate for investment by a
Fund. It is anticipated by the Adviser that, for most publicly offered
Certificates of Participation, there will be a liquid secondary market or there
may be demand features enabling a Fund to readily sell its Certificates of
Participation prior to maturity to the issuer or a third party. As to those
instruments with demand features, a Fund intends to exercise its right to demand
payment from the issuer of the demand feature only upon a default under the
terms of the Municipal Security, as needed to provide liquidity to meet
redemptions, or to maintain a high quality investment portfolio. While a Fund
may invest without limit in Certificates of Participation, it is currently
anticipated that such investments will not exceed 25% of a Fund's assets.

Each Fund may purchase and sell Municipal Securities on a when-issued or delayed
delivery basis. A when-issued or delayed delivery transaction arises when
securities are bought or sold for future payment and delivery to secure what is
considered to be an advantageous price and yield to a Fund at the time it enters
into the transaction. In determining the maturity of portfolio securities
purchased on a when-issued or delayed delivery basis, a Fund will consider them
purchased on the date when it commits itself to the purchase.

A security purchased on a when-issued basis, like all securities held in a
Fund's portfolio, is subject to changes in market value based upon changes in
the level of interest rates and investors' perceptions of the creditworthiness
of the issuer. Generally such securities will appreciate in value when interest
rates decline and depreciate in value when interest rates rise. Therefore if, in
order to achieve higher interest income, a Fund remains substantially fully
invested at the same time that it has purchased securities on a when-issued
basis, there will be a greater possibility that the net asset value of a Fund's
shares will vary from $1.00 per share, since the value of a when-issued security
is subject to market fluctuation and no interest accrues to the purchaser prior
to settlement of the transaction.

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Each Fund will only make commitments to purchase Municipal Securities on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but each Fund reserves the right to sell these securities before
the settlement date if deemed advisable. The sale of securities may result in
the realization of gains that are not exempt from federal income taxes, and in
the case of certain Funds, income taxes of a state.

Yields on Municipal Securities are dependent on a variety of factors, including
the general conditions of the money market and the municipal bond market, and
the size, maturity and rating of the particular offering. The ratings of NRSROs
("Nationally Recognized Statistical Rating Organization") represent their
opinions as to the quality of the Municipal Securities which they undertake to
rate. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, Municipal Securities with the same
maturity, coupon and rating may have different yields.

In seeking to achieve its investment objective, a Fund may invest all or any
part of its assets in Municipal Securities that are industrial development
bonds. Moreover, although a Fund does not currently intend to do so on a regular
basis, it may invest more than 25% of its assets in Municipal Securities which
are repayable out of revenue streams generated from economically related
projects or facilities, if such investment is deemed necessary or appropriate by
the Adviser. To the extent that a Fund's assets are concentrated in Municipal
Securities payable from revenues on economically related projects and
facilities, a Fund will be subject to the peculiar risks presented by such
projects to a greater extent than it would be if the Fund's assets were not so
concentrated.

Interfund Borrowing and Lending Program. The Funds have received exemptive
relief from the SEC which permits each Fund to participate in an interfund
lending program among certain investment companies advised by the Adviser. The
interfund lending program allows the participating funds to borrow money from
and loan money to each other for temporary or emergency purposes. The program is
subject to a number of conditions designed to ensure fair and equitable
treatment of all participating funds, including the following: (1) no fund may
borrow money through the program unless it receives a more favorable interest
rate than a rate approximating the lowest interest rate at which bank loans
would be available to any of the participating funds under a loan agreement; and
(2) no fund may lend money through the program unless it receives a more
favorable return than that available from an investment in repurchase agreements
and, to the extent applicable, money market cash sweep arrangements. In
addition, a fund may participate in the program only if and to the extent that
such participation is consistent with the fund's investment objectives and
policies (for instance, money market funds would normally participate only as
lenders and tax exempt funds only as borrowers). Interfund loans and borrowings
may extend overnight, but could have a maximum duration of seven days. Loans may
be called on one day's notice. A fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional costs. The program is subject to the oversight and periodic review of
the Boards of the participating funds. To the extent each Fund is actually
engaged in borrowing through the interfund lending program, the Fund, as a
matter of non-fundamental policy, may not borrow for other than temporary or
emergency purposes (and not for leveraging), except that the Fund may engage in
reverse repurchase agreements and dollar rolls for any purpose.

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

A repurchase agreement provides a means for a Fund to earn taxable income on
funds for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., the Fund) acquires a security ("Obligation") and the seller
agrees, at the time of sale, to repurchase the Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a segregated
account and the value of such securities kept at least equal to the repurchase
price on a daily basis. The repurchase price may be higher

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than the purchase price, the difference being income to the Fund, or the
purchase and repurchase prices may be the same, with interest at a stated rate
due to the Fund together with the repurchase price on the date of repurchase. In
either case, the income to a Fund (which is taxable) is unrelated to the
interest rate on the Obligation itself. Obligations will be held by the
custodian or in the Federal Reserve Book Entry system.

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

Code of Ethics. The Funds, the Adviser and principal underwriter have each
adopted codes of ethics under rule 17j-1 of the Investment Company Act. Board
members, officers of the Funds and employees of the Adviser and principal
underwriter are permitted to make personal securities transactions, including
transactions in securities that may be purchased or held by the Funds, subject
to requirements and restrictions set forth in the applicable Code of Ethics. The
Adviser's Code of Ethics contains provisions and requirements designed to
identify and address certain conflicts of interest between personal investment
activities and the interests of the Funds. Among other things, the Adviser's
Code of Ethics prohibits certain types of transactions absent prior approval,
imposes time periods during which personal transactions may not be made in
certain securities, and requires the submission of duplicate broker
confirmations and quarterly reporting of securities transactions. Additional
restrictions apply to portfolio managers, traders, research analysts and others
involved in the investment advisory process. Exceptions to these and other
provisions of the Adviser's Code of Ethics may be granted in particular
circumstances after review by appropriate personnel.

STATE SPECIFIC RISK FACTORS

The following information as to certain risk factors is given to investors
because each Fund concentrates its investments in either Florida, Michigan, New
Jersey, New York or Pennsylvania Municipal Securities (as defined in the
prospectus). Such information constitutes only a summary, does not purport to be
a complete description and is based upon information from official statements
relating to securities offerings of Florida, Michigan, New Jersey, New York and
Pennsylvania issuers and other sources of economic data.

Florida Fund. The State of Florida has grown dramatically since 1980 and as of
April 1, 1997 ranked fourth nationally with an estimated population of 14.7
million. Florida is experiencing strong revenue growth. For fiscal year 1998-99,
the estimated General Revenue plus Working Capital and Budget Stabilization
funds (see below) totaled $19,481.8 million, a 5.2% increase over 1997-98. The
$17,779.5 million in estimated revenues represents a 5.0% increase over the
analogous figure in 1997-98. Receipts, as of March 31, 1999, exceeded 1998's
collections through March 1998 by $598.7 million. The Fiscal Year 1999 revenue
growth is driven by the State's sales tax collections. The six percent tax
accounts for close to

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75% of total revenues through March 31, 1999. A March 31 estimate shows an
expected year-end surplus of $573.8 million. When this is combined with the
Budget Stabilization Fund balance of $786.9 million, Florida's total reserves
are $1,360.7 million, or 7.5% of current year appropriations.

Florida voters approved a constitutional amendment in November of 1994 which
places a limit on the rate of growth in state revenues, limiting such growth to
no more than the growth rate in Florida personal income. In any year, the
revenue limit is determined by multiplying the average annual growth rate in
Florida personal income over the previous five years by the maximum amount of
revenue permitted under the limitation in the previous year. State revenues
collected for any fiscal year in excess of the limitation are to be transferred
to the Budget Stabilization Fund until such time that the fund reaches its
maximum (10% of general revenue collections in the previous fiscal year) and
then are to be refunded to taxpayers as provided by general law. The
Legislature, by a two-thirds vote of the membership of each house, may increase
the allowable state revenue for any fiscal year. State revenue for this purpose,
is defined, with certain Constitutional limitations, as taxes, licenses, fees,
and charges for services imposed by the Legislature on individuals, businesses
or agencies outside of state government. The Florida Constitution requires that
in the event there is a transfer of responsibility for the funding of
governmental functions between the state and other levels of government, an
adjustment to the revenue limitation is to be made by general law to reflect the
fiscal impact of this shift.

Florida's job market continues to reflect strong performance. The state's March
1999 unemployment rate was 4.1 percent, 0.3 percentage points lower than the
year ago rate of 4.4 percent. Out of a civilian labor force of 7,411,000, there
were 307,000 jobless Floridians. Florida's unemployment rate was one of the
lowest since October 1973 when it was 3.4 percent. The U.S. unemployment rate
was 4.2 percent in March 1999, just above Florida's rate.

Florida's total nonagricultural employment rose in March 1999 to 6,900,800, an
increase of 259,900 jobs, or 3.9 percent from a year ago. All major
nonagricultural industries posted increases in employment from the prior year.
Based on the most recent comparative State data, Florida maintained its number
one ranking in year to year percentage job growth and ranked third in the nation
in the number of jobs added to nonagricultural payrolls, as compared to the 10
most populous states. Services industry employment, Florida's largest industry,
grew by 5.6 percent over the year and added the highest number of new jobs
(+132,900). Trade gained the second highest number of new jobs since a year ago
(+46,300). The State is gradually becoming less dependent on employment related
to construction, agriculture and manufacturing, and more dependent on employment
related to trade and services. Presently, services constitute 34.9% and trade
25.6% of the State's total non-farm jobs.

Fueled by low interest rates, construction had the fastest growth rate at 5.8
percent and added 20,000 jobs over the year. This is the first time that
construction has achieved the rank of the fastest growing industry over the year
in the last several years. Similarly, finance, insurance, and real estate and
government also experienced year to year increases of 19,100 jobs and 16,400
jobs, respectively. Eighty seven percent of the gains in government came from
local government and most of these gains were related to education. The apparel
and textiles industries lost 1,500 jobs due to tariffs and foreign competition.

With a strong national economy, Florida continues to experience economic growth.
This is primarily due to favorable conditions such as increases in personal
income and expenditures, low overall price levels, low interest rates, and high
consumer confidence. Florida currently remains as one of the nation's strongest
job markets.

Tourism is one of Florida's most important industries. According to Visit
Florida (formerly the Florida Tourism Commission), about 47 million people
visited the State in 1997. Tourists effectively represent additional residents,
spending their dollars predominantly at eating and drinking establishments,
hotels and motels, and amusement and recreation parks. Their expenditures
generate additional business activity and State tax revenues. The State's
tourist industry over the years has become more sophisticated, attracting
visitors year-round, thus to a degree, reducing its seasonality.

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Florida has had substantial population increases over the past few years and
these are expected to continue. It is anticipated that corresponding increases
in State revenues will be necessary during the next decade to meet increased
burdens on the various public and social services provided by the State. Florida
has also experienced a diversifying economic base as technology related
industry, healthcare and financial services have grown into leading elements of
Florida's economy, complementing the State's previous reliance primarily on
agriculture and tourism. With the increasing costs and capital needs related to
its growing population, Florida's ability to meet its expenses will be dependent
in part upon the State's continued ability to foster business and economic
growth. Florida has also increased its funding of capital projects through more
frequent debt issuance rather than its historical pay-as-you go method.

Florida has a moderate debt burden. As of June 30, 1998 full faith and credit
bonds totaled $8.7 billion and revenue bonds totaled $5 billion for a total debt
of $13.7 billion. Full faith and credit debt per capita was $577. In Fiscal Year
1998, debt service as a percent of Governmental Fund expenditures was only 2.0%.
In recent years debt issuance for the State has been increasing. The State
brought a new indenture to the market in late Fiscal Year 1998, the Florida
Lottery Bonds. These bonds will finance capital improvements for Florida
schools.

As of mid December 1998, the State's general obligation debt was rated Aa2 by
Moody's Investors Service, Inc. ("Moody's") and AA+ by Standard & Poor's
Corporation ("S&P").

Michigan Fund. The State entered its eighth fiscal year of economic expansion
last October. Job growth has been strong. Personal income tax receipts continue
to increase year over year, and the General Revenue Fund and School Aid Fund's
operating surpluses are bolstering the State's reserves. The Budget
Stabilization Fund has increased from $988 million in FY95 to $1.0 billion at
the end of FY98, 5.7% of the combined General Revenue Fund and School Aid Fund.

The State's principal operating funds are its General Revenue Fund (GRF) and its
School Aid Fund (SAF). These funds are funded by various State taxes. The income
tax, sales tax, and corporate tax accounted for 81% of the $17.6 billion FY98
budget. Particular strength in income tax collections led the State to finish
FY98 with an operating surplus of $55 million, 0.3% of the combined GRF and SAF.
Due to strong income tax collections, Michigan anticipates finishing FY99 with a
balanced operating fund. As of October, 1998, income tax collections were $263.6
million ahead of FY97 collections, an increase of 6%.

The strong performance of the GRF and SAF over the last five years resulted in
an increasing balance in the Budget Stabilization Fund (BSF). Through a
combination of effective financial management and the strong economy, the BSF
has grown to its current level of $1.0 billion, 5.7% of the combined GRF and
SAF, after nearing depletion in FY92. The State maintains the BSF, which acts as
a Rainy Day Fund, for the General Fund and the School Aid Fund. The BSF is
funded during years of significant economic expansion. The BSF may be used to
contribute to operating cash flow during periods of budgetary shortfalls.

Michigan's direct debt burden is low. General obligation (G.O.) debt outstanding
as of September 30, 1998 was $874 million. This figure represents a debt per
capita of $89. However, Michigan has a sizable amount of special obligation
(S.O.) debt. As of September 30, 1998, the State had $2.9 billion in S.O. debt
outstanding. When the G.O. debt and the S.O. debt are added together, the
State's debt burden increases but is still less than the national averages. The
combined debt per capita is $380.3. Debt per capita as a percent of per capita
income is 1.45%, and annual debt service only accounted for 1.2% of FY98
Government Fund expenditures.

Michigan finished its seventh year of economic expansion in 1998, adding over
82,000 jobs, a 1.7% increase in employment. Nonmanufacturing employment grew by
2.2% in 1998 with construction, services and wholesale trade leading the way,
Michigan continues to have a large manufacturing presence with 21.4% of its work
force in the manufacturing sector. The percentage of workers in the service
sector continues to increase. It currently represents 27.5% of the work force.
The State's average unemployment rate was 3.9% in 1998; the national average was
4.5%. The State's expanding economy and job growth have caused per capita income
to increase to $25,824 in 1998.

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Michigan experienced strong economic growth in the past seven years, and is
continuing to achieve this growth in FY99. The State has transferred this
prosperity into positive financial results. Repeated operating surpluses have
increased the Budget Stabilization Fund to a level never before attained. The
State has a below average debt burden. Wealth levels have been at or above the
national average over the last four years, and the unemployment rate has fallen
below the national average for the first time in over seventeen years.

As of April 26, 1999, the State's general obligation bonds are rated Aa1 by
Moody's, AA+ by S&P and AA+ by Fitch IBCA.

Year 2000 Compliance. On October 1, 1997, the State created the Year 2000
Project office to provide guidance, coordinate oversight for applications
software, manage Year 2000 funds, provide monitoring support, quality assurance
and other matters. As of March 31, 1999 the State had validated and tested 97%
of the critical computer applications. The State is currently on schedule to
meet its objectives for Year 2000 compliance. The State currently believes that
it will continue to meet the objectives and time frames set forth for the Year
2000 Project. There can, however, be no assurance that such completion will be
done in a timely manner.

New Jersey Fund. New Jersey is the ninth largest state in population and the
fifth smallest in land area. With an average of 1,077 persons per square mile,
it is the most densely populated of all the states. The State's economic base is
diversified, consisting of a variety of manufacturing, construction and service
industries, supplemented by rural areas with selective commercial agriculture.

The State of New Jersey is experiencing strong economic growth and increasing
reserve balances. The services and construction sectors have been adding jobs.
Job creation has led to strong personal income tax receipts which have resulted
in a series of operating surpluses and a growing Rainy Day Fund. Led by growth
in personal income taxes and sales tax receipts, New Jersey estimates finishing
Fiscal Year 2000 with an operating surplus of $750 million, 4.0% of revenues.
The surplus will be split between the Rainy Day Fund, with a balance of $634
million, and an unreserved General Fund balance of $113 million.

The State operates on a fiscal year beginning July 1 and ending June 30. The
State closed recent fiscal years with surpluses in the general fund (the fund
into which all State revenues not otherwise restricted by statute are deposited
and from which the appropriations are made) of $442 million in 1996, $281
million in 1997 and $228 million in 1998. It is estimated that Fiscal Year 1999
ended with a surplus of $311 million.

The State's Fiscal Year 2000 revenue projections are based on moderate overall
economic growth. Total general fund and available revenues are projected to be
$19.1 billion. Of this amount 39.8% is recommended for State Aid to Local
Governments, 28.2% is recommended for Grants-in-Aid, 25.3% is recommended for
Direct State Services, 2.7% is recommended for Debt Service on State general
obligation bonds and 4% is recommended for Capital Construction. Of these
appropriations, the largest recommended State Aid appropriation in the amount of
$6,030.3 million is provided for local elementary and secondary education
programs. The second largest portion of recommended appropriation in Fiscal Year
2000 is for Grants-in-Aid, totaling $5,391.0 million, which represents payments
to individuals or public or private agencies for benefits to which a recipient
is entitled to by law, or for the provision of services on behalf of the State.
Of this amount the largest amount recommended is for programs administered by
the Department of Human Services. The third largest portion of recommended
appropriations in Fiscal Year 2000 is applied to Direct State Services which
supports the operations of State government's departments, the Executive Office,
several commissions, the State Legislature and the Judiciary. This amount totals
$4,858.5 million for Fiscal Year 2000, of which the largest amounts are
recommended for programs administered by the Department of Human Services and
the Department of Law and Public Safety.

In addition to payments from bond proceeds, capital construction can also be
funded by appropriation of current revenues on a pay-as-you-go basis. In Fiscal
Year 2000, the amount recommended for this purpose is $771.4 million, of which
$477.8 million is for transportation projects and debt service and is being
credited to the Transportation Trust Fund Account of the General Fund. In
addition, $98.0 million is for

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open space preservation, $72.2 million is for hazardous substance remediation
and underground tank remediation and $15.0 million is for shore protection. All
appropriations for capital projects and all proposals for State bond
authorization are subject to the review and recommendation of the New Jersey
Commission on Capital Budgeting and Planning.

In Fiscal Year 1992 the State initiated a program under which it issued tax and
revenue anticipation notes to aid in providing effective cash flow management to
fund balances which occur in the collection and disbursement of the General Fund
and Property Tax Relief Fund revenues. There are $700 million of tax and revenue
anticipation notes outstanding which notes matured on June 15, 1999. Such tax
and revenue anticipation notes do not constitute a general obligation of the
State or a debt or liability within the meaning of the State constitution. Such
notes constitute special obligations of the State payable solely from moneys on
deposit in the General Fund and the Property Tax Relief Fund and legally
available for such payment.

The State finances certain capital projects through the sale of the general
obligation bonds of the State. These bonds are backed by the full faith and
credit of the State. Certain state tax revenues and certain other fees are
pledged to meet the principal payments, interest payments, redemption premium
payments, if any, required to fully pay the bonds. As of June 30, 1998, the
State's outstanding general obligation bonded indebtedness totaled $3.6 billion.
The recommended appropriation for the debt service obligation on outstanding
projected indebtedness is $518.7 million for Fiscal Year 2000.

New jobs in service industries are leading the growth in New Jersey's labor
force. The services sector accounts for approximately 30% of total
non-agricultural employment in the State. New Jersey also has an above average
concentration of employment in the transportation and public utilities sector.
This sector accounts for approximately 7% of the non-agricultural work force.
The strong economy has led to growth in construction jobs, too. The State's
unemployment rate has been declining from its high of 8.4% in 1992 to a May,
1999, rate of 4.7%. The national rate for May, 1999, was 4.2%

The State has implemented a plan to address the Y2K problem. As of December 31,
1998, the testing, validation and implementation of 75 percent of all centrally
maintained State systems is complete. The total estimated cost to the State to
achieve year 2000 compliance is $120 million of which approximately $66 million
of expenditures has been incurred as of December 31, 1998.

At any given time, there are various numbers of claims and cases pending against
the State, State Agencies and employees, seeking recovery of monetary damages
that are primarily paid out of the fund created pursuant to the New Jersey
Claims Act. The State does not formally estimate its reserve representing a
potential exposure for these claims and cases. The State is unable to estimate
its exposure for these claims and cases.

The State routinely receives notices of claims seeking substantial sums of
money. The majority of those claims have historically proven to be of
substantially less value than the amount originally claimed. Under the New
Jersey Tort Claims Act, any tort litigation against the State must be preceded
by a notice of claim, which affords the State the opportunity for a six month
investigation prior to the filing of any suit against it.

In addition, at any given time, there are various numbers of contracts and other
claims against the State, among other parties, arising from the alleged disposal
of hazardous waste. Claimants in such matters are seeking recovery of monetary
damages or other relief which, if granted, would require the expenditure of
funds. The State is unable to estimate its exposure for these claims.

The State is a party in numerous legal proceedings pertaining to matters
incidental to the performance of routine governmental operations. Such
litigation includes, but is not limited to, the following: claims regarding
violations of numerous laws allegedly resulting from the existence of chromium
contamination in the State owned Liberty State Park in Jersey City; challenges
to the constitutionality of annual A-901 hazardous and solid waste licensure
renewal fees collected by the Department of Environmental Protection; claims on
behalf of 17 rural school districts seeking sufficient funds to allow the school
districts to spend at the average of wealthy suburban school districts, to
implement additional programs such as full-day kindergarten, half-day pre-school
programs for three and four year olds, technology, alternative school,

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<PAGE>

accountability and school-to-work and college transition programs, and to
upgrade school facilities; claims alleging that the State's system of funding
for their schools is violative of the constitutional rights of equal protection
and a thorough and efficient education; claims by insurers licensed or admitted
to write property and casualty insurance in the State alleging that their
assessments are being used to retire debt of the Market Transition Fund; a
purported class action consisting of prisoners with serious mental disorders who
are confined within the facilities of the Department of Corrections alleging
cruel and unusual punishment, violation of the Americans with Disabilities Act
of 1990, discrimination against members of the class, sex discrimination and
violation of due process; cases involving spousal impoverishment provisions of
the Medicare Catastrophic Coverage Act; challenges by 19 New Jersey hospitals to
Medicaid hospital reimbursement since 1995; several cases filed in opposition to
a road and tunnel project in Atlantic City; claims on behalf of providers of
Medicare Part B services to Qualified Medicare Beneficiaries seeking
reimbursement for Medicare co-insurance and deductibles not paid by the State
Medicaid program from 1988 to February 10, 1995; relief sought to have the
Camden County solid waste procurement process halted to clarify bid
specifications; a case involving the award of a contract for the design,
construction, operation and maintenance of the State's enhanced motor vehicle
inspection system; a claim seeking damages in declaratory and injunctive relief
overturning, on State constitutional grounds, the "family cap" provisions of the
State Work First New Jersey Act; and challenges by various hospitals to the $10
per adjusted hospital admission charges imposed by State statute.

As of February 9, 1999, the State's general obligation ratings were rated Aa1 by
Moody's and AA+ by S&P. New Jersey's strong economic growth during the past
seven years and its growing reserves support its strong credit rating. The
State's combined debt burden is above average but is mitigated by New Jersey's
high wealth levels. Although these ratings indicate that the State is in
relatively good economic health, there can be no assurance that this will
continue or that particular bond issues may not be adversely affected by changes
in the State or local economic or political conditions.

New York Fund. This summary information is not intended to be a complete
description and is principally derived from the Annual Information Statement of
the State of New York as supplemented and contained in official statements
relating to issues of New York Municipal Securities that were available prior to
the date of this Statement of Additional Information. The accuracy and
completeness of the information contained in those official statements have not
been independently verified.

In the calendar years 1987 through 1997, the State's rate of economic growth was
somewhat slower than that of the nation. In particular, during the 1990-91
recession and post-recession period, the economy of the State, and that of the
rest of the Northeast, was more heavily damaged than that of the nation as a
whole and has been slower to recover.

State per capita personal income has historically been significantly higher than
the national average, although the ratio has varied substantially. Because New
York City is a regional employment center for a multi-state region, State
personal income measured on a residence basis understates the relative
importance of the State to the national economy and the size of the base to
which State taxation applies.

The 1998-99 State Financial Plan projected a closing balance in the General Fund
of $1.42 billion comprised of a reserve of $761 million available for future
needs, a balance of $400 million in the Tax Stabilization Reserve Fund ("TSRF"),
a balance of $158 million in the Community Projects Fund ("CPF") and a balance
of $100 million in the Contingency Reserve Fund ("CRF"). The TSRF can be used in
the event of an unanticipated General Fund cash operating deficit, as provided
under the State Constitution and State Finance Law. The CPF is used to finance
various legislative and executive initiatives. The CRF provides resources to
help finance any extraordinary litigation costs during the fiscal year.

The Third Quarterly Update of the 1998-99 Financial Plan, released on January
27, 1999, projected a year-end available cash surplus of $1.79 billion in the
General Fund, an increase of $749 million over the surplus estimate in the
Mid-Year Update. Strong growth in receipts as well as lower-than expected
disbursements during the first nine months of the fiscal year account for the
higher surplus estimate. As of February 9, 1999, this amount was projected to be
reduced by the transfer of $1.04 billion to the tax refund

14
<PAGE>

reserve. The projected remaining closing balance of $799 million in the General
Fund is comprised of $473 million in the TSRF, $226 million in the CPF, and $100
million in the CRF.

The Governor presented his 1999-2000 Executive Budget to the Legislature on
January 27, 1999. The 1999-2000 Financial Plan projects General Fund
disbursements and transfers to other funds of $37.10 billion, an increase of
$482 million over projected spending for the current year. Grants to local
governments constitute approximately 67 percent of all General Fund spending,
and include payments to local governments, non-profit providers and individuals.
Disbursements in this category are projected to decrease $87 million (0.4
percent) to $24.81 billion in 1999-2000, in part due to a $175 million decline
in proposed spending for legislative initiatives.

The State is projected to close the 1999-2000 fiscal year with a General Fund
balance of $2.36 billion. The balance is comprised of $1.79 billion in tax
reduction reserves, $473 million in the TSRF and $100 million in the CFR. The
entire $226 million balance in the Community Projects Fund is expected to be
used in 1999-2000, with $80 million spent to pay for existing projects and the
remaining balance of $146 million, against which there are currently no
appropriations as a result of the Governor's 1998 vetoes, used to fund other
expenditures in 1999-2000.

The State currently projects spending to grow by $1.09 billion (2.9 percent) in
2000-01 and an additional $1.8 billion (4.7 percent) in 2001-02. General Fund
spending increases at a higher rate in 2001-02 than in 2000-01, driven primarily
by higher growth rates for Medicaid, welfare, Children and Families Services,
and Mental Retardation, as well as the loss of federal money that offsets
General Fund spending.

Over the long-term, uncertainties with regard to the economy present the largest
potential risk to future budget balance in New York State. For example, a
downturn in the financial markets or the wider economy is possible, a risk that
is heightened by the lengthy expansion currently underway. The securities
industry is more important to the New York economy than the national economy,
potentially amplifying the impact of an economic downturn. A large change in
stock market performance during the forecast horizon could result in wage and
unemployment levels that are significantly different from those embodied in the
forecast. Merging and downsizing by firms, as a consequence of deregulation or
continued foreign competition, may also have more significant adverse effects on
employment than expected. Finally, a "forecast error" of one percentage point in
the estimated growth of receipts could cumulatively raise or lower results by
over $1 billion by 2002.

Many complex political, social and economic forces influence the State's economy
and finances, which may in turn affect the State's Financial Plan. These forces
may affect the State unpredictably from fiscal year to fiscal year and are
influenced by governments, institutions, and organizations that are not subject
to the State's control. The State Financial Plan is also necessarily based upon
forecasts of national and State economic activity. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes in
the national and the State economies. The Division of Budget believes that its
projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are based, are reasonable. The
projections assume no changes in federal tax law, which could substantially
alter the current receipts forecast. In addition, these projections do not
include funding for new collective bargaining agreements after the current
contracts expire on April 1, 1999. Actual results, however, could differ
materially and adversely from their projections, and those projections may be
changed materially and adversely from time to time.

The proposed 1998-99 through 2003-04 Capital Program and Financing Plan was
released with the Executive Budget on January 27, 1999. The recommended
five-year Capital Program and Financing Plan reflects debt reduction initiatives
that would reduce future State-supported debt issuances by significantly
increasing the share of the Plan financed with pay-as-you-go resources. Compared
to the last year of the July 1998 update to the Plan, outstanding
State-supported debt would be reduced by $4.7 billion (from $41.9 billion to
$37.2 billion).

As described therein, efforts to reduce debt, unanticipated delays in the
advancement of certain projects and revisions to estimated proceeds needs will
modestly reduce projected borrowings in 1998-99. The State's

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<PAGE>

1998-99 borrowing plan now projects issuances of $331 million in general
obligation bonds (including $154 million for purposes of redeeming outstanding
BANs) and $154 million in general obligation commercial paper. The State has
issued $179 million in Certificates of Participation to finance equipment
purchases (including costs of issuance, reserve funds, and other costs) during
the 1998-99 fiscal year. Of this amount, it is anticipated that approximately
$83 million will be used to finance agency equipment acquisitions, and $96
million to address Statewide technology issues related to Year 2000 compliance.
Approximately $228 million for information technology related to welfare reform,
originally anticipated to be issued during the 1998-99 fiscal year, is now
expected to be delayed until 1999-2000.

Borrowings by public authorities pursuant to lease-purchase and
contractual-obligation financings for capital programs of the State are
projected to total approximately $2.85 billion, including costs of issuance,
reserve funds, and other costs, net of anticipated refundings and other
adjustments in 1998-99.

As of March 5, 1999, general obligation bonds of the State of New York were
rated A and A2 by S&P and Moody's, respectively.

Pennsylvania Fund. The Commonwealth of Pennsylvania experienced stronger
economic growth in 1997 and 1998 after a slow down in growth in 1996.
Pennsylvania is expecting to finish FY99 with its seventh consecutive General
Fund operating surplus.

The Commonwealth is experiencing strong revenue growth. As of April 1999,
General Fund revenues are ahead of year-to-date estimates by $547 million, 3.4%
of revenues. Sales and use tax collections are contributing the majority of the
increase in revenues. As of April 1999, sales and use tax collections exceeded
estimates by 4.6% or $239.3 million. Given the revenue collections, the
Governor's office is anticipating finishing FY99 with a $630 million General
Fund operating surplus. Nearly $245 million, 37.7%, of the surplus will be
transferred to the Commonwealth's Rainy Day Fund. By the end of FY99, the Rainy
Day Fund should be valued at $983 million.

Job growth in the service and trade sectors led the Commonwealth from 44th in
the nation to 17th in terms of employment growth in 1997. Pennsylvania's average
unemployment rate in 1998 was 4.6%, the national average was 4.5% in 1998. The
seasonally adjusted unemployment rate at the end of March 1999, was 4.4% versus
the national average of 4.2% in March. Pennsylvania's per capita income in 1998
was $26,792, 101.4% of the national average.

Pennsylvania has a low debt burden. In 1997, per capita debt was $420, 63% of
the Moody's average. In 1997, total G.O. debt was 1.7% of per capita income, 61%
of the Moody's average.

Since the Commonwealth annually issues a comparable amount to its scheduled
amortization, any incremental increase will have a minor impact on the
Commonwealth's outstanding debt.

Pennsylvania is still in the midst of various lawsuits challenging school
funding. The suits are challenging the issue of equitable funding for school
districts in rural and urban schools. According to the Commonwealth, this
lawsuit has been in the courts for some time and will not be resolved in the
near future.

The Commonwealth is benefiting from a favorable economy which has lead to
improved finances.

All outstanding general obligation bonds of the Commonwealth of Pennsylvania
were rated AA by S&P and Aa3 by Moody's.

INVESTMENT RESTRICTIONS

Each Fund has adopted certain investment restrictions which cannot be changed
without approval by holders of a majority of its outstanding voting shares. As
defined in the Investment Company Act of 1940 ("1940 Act"), this means the
lesser of the vote of (a) 67% of a Fund's shares present at a meeting where more
than 50% of the outstanding shares are present in person or by proxy; or (b)
more than 50% of a

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<PAGE>

Fund's shares. In addition, each Fund limits its portfolio investments to
securities that meet the quality, maturity and diversification requirements of
Rule 2a-7 under the 1940 Act.

The New York Fund may not, as a fundamental policy:

(1) Purchase securities (other than securities of the United States Government,
its agencies or instrumentalities or of a state or its political
subdivisions) if as a result of such purchase more than 25% of the Fund's
total assets would be invested in any one industry.

(2) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States Government, its agencies or instrumentalities) if, as
a result, more than 5% of the Fund's total assets would be invested in
securities of that issuer; except that, as to 50% of the value of the
Fund's total assets, the Fund may invest up to 25% of its total assets in
the securities of any one issuer. For purposes of this limitation, the Fund
will regard as the issuer the entity that has the primary responsibility
for the payment of interest and principal.

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

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

(5) Make short sales of securities or purchase 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, although the
Fund may purchase Municipal Securities subject to Standby Commitments,
Variable Rate Demand Notes or Repurchase Agreements in accordance with
its investment objective and policies.

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

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

(9) Invest in commodities or commodity futures contracts or in real estate (or
real estate limited partnerships) except that the Fund may invest in
Municipal Securities secured by real estate or interests therein and
securities of issuers that invest or deal in real estate.

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

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

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

If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.

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<PAGE>

As a matter of fundamental policy the Pennsylvania Fund may not:

(1) borrow money, except as permitted under the 1940 Act, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time;

o (2) issue senior securities, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time;

o (3) concentrate its investments in a particular industry, as that term is
used in the 1940 Act, as amended, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time;

(4) engage in the business of underwriting securities issued by others, except
to the extent that a Fund may be deemed to be an underwriter in connection
with the disposition of portfolio securities;

o (5) purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities;

(6) purchase physical commodities or contracts relating to
physical commodities;

(7) make loans except as permitted under the 1940 Act, as amended, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time.

The following policies are non-fundamental, which may be changed by the Board of
Trustees without shareholder approval. As a matter of non-fundamental policy the
Pennsylvania Fund may not:

(i) purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total
assets would be invested in securities of that issuer; except that, as
to 50% of the value of the Fund's total assets, the Fund may invest up
to 25% of its total assets in the securities of any one issuer, and
except that all or substantially all of the assets of the Fund may be
invested in another registered investment company having the same
investment objective and substantially similar investment policies as
the Fund. For purposes of this limitation, the Fund will regard as the
issuer the entity that has the primary responsibility for the payment
of interest and principal;

(ii) make short sales of securities or purchase securities on margin, except
to obtain such short-term credits as may be necessary for the clearance
of transactions;

(iii) invest in real estate limited partnerships;

(iv) borrow money in an amount greater than one-third of its total assets,
except for temporary or emergency purposes;

(v) lend portfolio securities in an amount greater than 5% of its total
assets;

(vi) invest more than 10% of net assets in illiquid securities.

The Florida, Michigan and New Jersey Funds each may not, as a fundamental
policy:

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<PAGE>

of the assets of the Fund may be invested in another registered investment
company having the same investment objective and substantially similar
investment policies as the Fund.

(2) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States Government, its agencies or instrumentalities) if, as
a result, more than 5% of the Fund's total assets would be invested in
securities of that issuer; except that, as to 50% of the value of the
Fund's total assets, the Fund may invest up to 25% of its total assets in
the securities of any one issuer, and except that all or substantially all
of the assets of the Fund may be invested in another registered investment
company having the same investment objective and substantially similar
investment policies as the Fund. For purposes of this limitation, the Fund
will regard as the issuer the entity that has the primary responsibility
for the payment of interest and principal.

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

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

(6) Invest in commodities or commodity futures contracts or in real estate (or
real estate limited partnerships) except that the Fund may invest in
Municipal Securities secured by real estate or interests therein and
securities of issuers that invest or deal in real estate.

(7) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities, and except that
all or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment objective
and substantially similar investment policies as the Fund.

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

The Florida, Michigan and New Jersey Funds each have adopted the following
non-fundamental restrictions, which may be changed by the Board of Trustees
without shareholder approval. The Florida, Michigan and New Jersey Funds each
may not:

(i) Write, purchase or sell puts, calls or combinations thereof, although the
Fund may purchase Municipal Securities subject to Standby Commitments,
Variable Rate Demand Notes or Repurchase Agreements in accordance with
its investment objective and policies.

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

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<PAGE>

individual issuer, provided that the fund may not invest more than 5% of its
assets in the securities of an individual issuer unless the securities are First
Tier Securities (as defined in Rule 2a-7).

INVESTMENT ADVISER AND SHAREHOLDER SERVICES

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

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

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

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

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

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

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<PAGE>

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

If additional Funds become subject to the Agreement, the provisions concerning
continuation, amendment and termination shall be on a Fund by Fund basis and the
management fee and the expense limitations shall be computed based upon the
average daily net assets of all Funds subject to the agreement and shall be
allocated among such Funds based upon the relative net assets of such Funds.
Additional Funds may be subject to a different agreement.

For the services and facilities furnished, the Funds pay a monthly investment
management fee, on a graduated basis of 1/12 of the following annual rates.

Combined Average
Daily Net Assets All Funds
---------------- ---------

$0-$500 million .22 %
$500-$1 billion .20 %
$1 billion-$2 billion .175%
$2 billion-$3 billion .16 %
Over $3 billion .15 %

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<PAGE>

The table below shows the total gross advisory fees paid by each Fund for the
past three years.

Fund 2000 1999 1998
---- ---- ---- ----

Florida* $ 20,000 $ 9,000
Michigan* $ 72,000 N.A.
New Jersey* $ 19,000 $ 8,000
New York $ 296,000 $ 181,000
Pennsylvania* $ 9,000 $ 5,000

The table below shows the net advisory fees paid by each Fund for the past three
years (after the effect of expense caps).

Fund 2000 1999 1998
---- ---- ---- ----

Florida* $ 0 $ 5,000
Michigan* $ 33,000 N.A.
New Jersey* $ 0 $ 0
New York $ 57,000 $ 32,000
Pennsylvania* $ 0 $ 0

Scudder Kemper and certain affiliates have agreed to contractually limit total
operating expenses of the Funds to the extent described in the prospectus.

The table below shows the total operating expenses of the Funds absorbed for the
past three years under expense limitations then in effect.

Fund 1999 1998
---- ---- ----

Florida* $ 22,000 $ 4,000
Michigan* $ 39,000 N.A.
New Jersey* $ 19,000 $ 8,000
New York $ 239,000 $ 149,000
Pennsylvania* $ 9,000 $ 5,000

* The Florida, New Jersey and Pennsylvania Funds commenced operations on May
22, 1997, May 23, 1997 and May 21, 1997, respectively, and the Michigan Fund
commenced operations on April 6, 1998.

Certain trustees or officers of the Trust are also directors or officers of
Scudder Kemper Investments, Inc. and Kemper Distributors, Inc. as indicated
under "Officers and Trustees."

The Funds, or the Adviser (including any affiliate of the Adviser), or both, may
pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are held in an
omnibus account.

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

Distributor. Pursuant to an administration, shareholder services and
distribution agreement ("distribution agreement"), dated September 7, 1998,
Kemper Distributors, Inc. ("KDI"or the "Distributor"), 222 South Riverside
Plaza, Chicago, Illinois 60606, and affiliate of the Adviser, serves as
distributor, administrator

22
<PAGE>

and principal underwriter to the Funds to provide information and services for
existing and potential shareholders. The distribution agreement provides that
KDI shall act as agent for each Fund in the sale of Fund shares and shall
appoint various firms to provide a cash management service for their customers
or clients through a Fund. The firms are to provide such office space and
equipment, telephone facilities, personnel and sales literature distribution as
is necessary or appropriate for providing information and services to the firms'
clients and prospective clients. The Trust has adopted a plan for each of the
Funds in accordance with Rule 12b-1 of the Investment Company Act of 1940 (the
"12b-1 Plans"). The Rule regulates the manner in which an investment company
may, directly or indirectly, bear the expenses of distributing its shares. The
Trust pays for the prospectus and shareholder reports to be set in type and
printed for existing shareholders and KDI pays for the printing and distribution
of copies thereof used in connection with the continuous offering of shares to
prospective investors. KDI pays for supplementary sales literature and
advertising. For its services as distributor, and pursuant to the 12b-1 Plans,
the Trust pays KDI an annual distribution services fee, payable monthly, of
0.50% of average daily net assets of each Fund (except Michigan Fund which pays
0.35%). The fee is accrued daily as an expense of each Fund.

The distribution agreement and the 12b-1 Plans continue in effect from year to
year so long as its continuation is approved at least annually by a majority of
the trustees who are not parties to such agreements or interested persons of the
Trust and who have no direct or indirect financial interest in the agreements or
in any agreements related thereto. The distribution agreement automatically
terminate in the event of its assignment and may be terminated at any time
without penalty by the Trust or by KDI upon 60 days' written notice. Termination
by the Trust may be by vote of a majority of the Board of Trustees, or a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the agreements, or a majority
vote of the outstanding shares of the Fund subject thereto. The fee payable
pursuant to the 12b-1 Plans for each Fund may not be increased without approval
of the shareholders of that Fund and all material amendments must in any event
be approved by the Board of Trustees in the manner described above with respect
to the continuation of the agreement. The provisions concerning the
continuation, amendment and termination of the 12b-1 Plan are on a Fund by Fund
basis.

KDI has related administration services and selling group agreements with
various broker-dealer firms to provide cash management and other 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 Fund
shares of client account balances, answering routine inquiries regarding a 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. KDI 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 a Fund. KDI also may provide some of the
above services for a Fund. KDI normally pays the firms at a maximum annual rate
of 0.50% of average net assets (except the Michigan Fund which pays 0.35%) of
those accounts that they maintain and service. KDI may elect to keep a portion
of the total administration fee to compensate itself for functions performed for
a Fund or to pay for sales materials or other promotional activities.

During the fiscal year ended March 31, 2000, the Florida, Michigan, New Jersey,
New York and Pennsylvania Funds incurred a distribution services fee of
$_______, $_______, $________, $_______ and $_______, respectively. During the
fiscal year ended March 31, 1999, the Florida, Michigan, New Jersey, New York
and Pennsylvania Funds incurred a distribution services fee of $45,000,
$114,000, $44,000, $674,000 and $20,000, respectively. During the fiscal year
ended March 31, 1998, the Florida, New Jersey, New York and Pennsylvania Funds
incurred a distribution services fee of $21,000, $18,000, $411,000 and $12,000,
respectively.

During the fiscal year ended March 31, 2000, pursuant to the related services
agreements for the Florida, Michigan, New Jersey, New York and Pennsylvania
Funds, KDI remitted distribution services fees of $_______, $_________, $_______
and $________, $______, respectively, to various firms. During the fiscal year
ended March 31, 1999, pursuant to the related services agreements for the
Florida, Michigan, New Jersey, New York and Pennsylvania Funds, KDI remitted
distribution services fees of $44,000, $112,000, $44,000 and $666,000, $12,000,
respectively, to various firms. During the fiscal year ended

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<PAGE>

March 31, 1998, pursuant to the related services agreements for the Florida, New
Jersey, New York and Pennsylvania Funds, KDI remitted distribution services fees
of $15,000, $15,000, $411,000 and $4,000, respectively, to various firms.

During the fiscal year ended March 31, 2000, KDI incurred underwriting,
distribution and administrative expenses for the Florida, Michigan, New Jersey,
New York and Pennsylvania Funds as follows: service fees to firms $_________,
$________, $_________, $_________ and $_______, respectively, and marketing and
sales expenses $________, $_________, $_________, $__________ and $______,
respectively, for totals of $______, $________, $___________, $________ and
$________, respectively. A portion of the aforesaid marketing and sales expenses
could be considered overhead expense. During the fiscal year ended March 31,
1999, KDI incurred underwriting, distribution and administrative expenses for
the Florida, Michigan, New Jersey, New York and Pennsylvania Funds as follows:
service fees to firms $44,000, $112,000, $44,000, $666,000 and $12,000,
respectively, and marketing and sales expenses $5,000, $4,000, $4,000, $47,000
and $2,000, respectively, for totals of $49,000, $116,000, $48,000, $713,000 and
$14,000, respectively. A portion of the aforesaid marketing and sales expenses
could be considered overhead expense. During the fiscal year ended March 31,
1998, KDI incurred underwriting, distribution and administrative expenses for
the Florida, New Jersey, New York and Pennsylvania Funds as follows: service
fees to firms $15,000, $15,000, $411,000 and $4,000, respectively, and marketing
and sales expenses $2,000, $1,000, $30,000 and $1,000, respectively, for totals
of $17,000, $16,000, $441,000 and $5,000, respectively. A portion of the
aforesaid marketing and sales expenses could be considered overhead expense.

Custodian, Transfer Agent And Shareholder Service Agent. State Street Bank and
Trust Company ("State Street"), 225 Franklin Street, Boston, Massachusetts
02110, as custodian, has custody of all securities and cash of the Trust. State
Street attends to the collection of principal and income, and payment for and
collection of proceeds of securities bought and sold by the Trust. Investors
Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri
64105, is the transfer agent of the Trust. Pursuant to a services agreement with
IFTC, Kemper Service Company ("KSvC"), 811 Main Street, Kansas City, Missouri
64105, an affiliate of Scudder Kemper, serves as "Shareholder Service Agent" of
the Trust and, as such, performs all of IFTC's duties as transfer agent and
dividend paying agent. IFTC receives, as transfer agent, and pays to KSvC 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, 2000, 1999 and 1998, IFTC
remitted shareholder service fees in the amount of $________, $226,000 and
$94,000, respectively, to KSvC as Shareholder Service Agent.

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

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

PORTFOLIO TRANSACTIONS

Brokerage Commissions

Allocation of brokerage is supervised by the Adviser.

The primary objective of the Adviser in placing orders for the purchase and sale
of securities for a Fund' is to obtain the most favorable net results, taking
into account such factors as price, commission where applicable, size of order,
difficulty of execution and skill required of the executing broker/dealer. The
Adviser seeks to evaluate the overall reasonableness of brokerage commissions
paid (to the extent applicable) through the familiarity of Scudder Investor
Services, Inc. ("SIS") with commissions charged on

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<PAGE>

comparable transactions, as well as by comparing commissions paid by a Fund to
reported commissions paid by others. The Adviser routinely reviews commission
rates, execution and settlement services performed and makes internal and
external comparisons.

The Funds' purchases and sales of fixed-income securities are generally placed
by the Adviser with primary market makers for these securities on a net basis,
without any brokerage commission being paid by a Fund. Trading does, however,
involve transaction costs. Transactions with dealers serving as primary market
makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made, which will include an underwriting fee paid to
the underwriter.

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

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

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

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

Each Fund's average portfolio turnover rate is the ratio of the lesser of sales
or purchases to the monthly average value of the portfolio securities owned
during the year, excluding all securities with maturities or expiration dates at
the time of acquisition of one year or less. A higher rate involves greater
brokerage transaction expenses to a Fund and may result in the realization of
net capital gains, which would be taxable to shareholders when distributed.
Purchases and sales are made for a Fund's portfolio whenever necessary, in
management's opinion, to meet a Fund's objective.

Money market instruments are normally purchased in principal transactions
directly from the issuer or from an underwriter or market maker. There usually
are no brokerage commissions paid by the Trust for such purchases. During the
last three fiscal years the Trust paid no portfolio brokerage commissions.
Purchases

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<PAGE>

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.

PURCHASE AND REDEMPTION OF SHARES

Purchase of Shares

Fund shares are sold at their net asset value next determined after an order and
payment are received in the form described in the prospectus. Shares are sold
with no sales charge through selected financial services firms, such as
broker-dealers and banks ("firms"). The minimum initial investment is $1,000 and
the minimum subsequent investment is $100 but such minimum amounts may be
changed at any time in management's discretion. The Trust may waive the minimum
for purchases by trustees, directors, officers or employees of a Fund or Scudder
Kemper and its affiliates. An investor wishing to open an account should use the
Account Information Form available from the Trust 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
Trust 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.

Under an automatic investment plan, the minimum initial and subsequent
investment is $50. Firms offering a Fund's shares may set higher minimums for
accounts they service and may change such minimums at their discretion.

Each Fund seeks to be as fully invested as possible at all times in order to
achieve maximum income. Since the Funds 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), each Fund has adopted
procedures for the convenience of its shareholders and to ensure that it
receives investable funds. Orders for purchase of shares 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 11:00 a.m. Central time net asset value
determination, otherwise such shares will receive the dividend for the next
calendar day if effected at 3:00 p.m. Central time. Orders for purchase
accompanied by a check or other negotiable bank draft will be accepted and
effected as of 3:00 p.m. Central time on the next business day following receipt
and such shares will receive the dividend for the next calendar day following
the day when the purchase is effected.

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 Trust's transfer agent will have no information with respect to
or control over the accounts of specific shareholders. Such shareholders may
obtain access to their accounts and information about their accounts only from
their firm. Certain of these firms may receive compensation from the Trust's
Shareholder Service Agent for recordkeeping and other expenses relating to these
nominee accounts. In addition, certain privileges with respect to the purchase
and redemption of shares (such as check writing redemptions) or the reinvestment
of dividends may not be available through such firms or may only be available
subject to 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.

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<PAGE>

Other Information. The Trust 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 Trust 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 Trust. Share certificates are issued
only on request to the Trust and may not be available for certain types of
accounts. A $10 service fee will be charged when a check for purchase of Fund
shares is returned because of insufficient or uncollected funds or a stop
payment order.

Shareholders should direct their inquiries to Kemper Service Company ("KSvC"),
the Trust's "Shareholder Service Agent," 811 Main Street, Kansas City, Missouri
64105-2005.

Redemption of Shares

General. Upon receipt by the Shareholder Service Agent of a request in the form
described below, shares of a Fund will be redeemed by the Trust at the next
determined net asset value. If processed at 3:00 p.m. Central 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 Fund will receive the net asset value of such shares and all
declared but unpaid dividends on such shares.

If shares of a Fund to be redeemed were purchased by check or through certain
Automated Clearing House ("ACH") transactions, 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 ACH or
Redemption Checks (defined below) 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, the
redemption of such shares by the Trust may be subject to a contingent deferred
sales charge as described in the prospectus for that other fund.

Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individual
and institutional accounts and pre-authorized telephone redemption transactions
for certain institutional accounts. Shareholders may choose these privileges on
the account application or by contacting the Shareholder Service Agent for
appropriate instructions. Please note that the telephone exchange privilege is
automatic unless the shareholder refuses it on the account application. The
Trust or its agents may be liable for any losses, expenses or costs arising out
of fraudulent or unauthorized telephone requests pursuant to these privileges,
unless the Trust or its agents reasonably believe, based upon reasonable
verification procedures, that the telephone instructions are genuine. The
shareholder will bear the risk of loss, resulting from fraudulent or
unauthorized transactions, as long as the reasonable 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 Trust reserves the
right to redeem an account that falls below the minimum investment level. Thus,
a shareholder who makes only the minimum initial investment and then redeems any
portion thereof might have the account redeemed. A shareholder will be notified
in writing and will be allowed 60 days to make additional purchases to bring the
account value up to the minimum investment level before the Trust redeems the
shareholder account.

Financial services 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.

The Trust 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 Fund's investments is
not reasonably practicable, or (ii)

27
<PAGE>

it is not reasonably practicable for a 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 each Fund's shareholders.

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

Telephone Redemptions. If the proceeds of the redemption are $50,000 or less and
the proceeds are payable to the shareholder of record at the address of record,
normally a telephone request or a written request by any one account holder
without a signature guarantee is sufficient for redemptions by individual or
joint account holders, and trust, executor, guardian and custodian account
holders, provided the trustee, executor guardian or custodian is named in the
account registration. Other institutional account holders may exercise this
special privilege of redeeming shares by telephone request or written request
without signature guarantee subject to the same conditions as individual account
holders and subject to the limitations on liability 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 certain ACH
transactions may not be redeemed under this privilege of redeeming shares by
telephone request until such shares have been owned for at least 10 days. This
privilege of redeeming shares by telephone request or by written request without
a signature guarantee may not be used to redeem shares held in 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 Trust 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. Central time will result in shares
being redeemed that day and normally the proceeds will be sent to the designated
account that day. Once authorization is on file, the Shareholder Service Agent
will honor requests by telephone at 1-800-231-8568 or in writing, subject to the
limitations on liability described under "General" above. The Trust is not
responsible for the efficiency of the federal wire system or the account
holder's financial services firm or bank. The Trust currently does not charge
the account holder for wire transfers. The account holder is responsible for any
charges imposed by the account holder's firm or bank. There is a $1,000 wire
redemption minimum. To change the designated account to receive wire redemption
proceeds, send a written request to the Shareholder Service Agent with
signatures guaranteed as described above, or contact the firm through which
shares of the Trust were purchased. Shares purchased by check or through certain
ACH transactions may not be redeemed by wire transfer until the shares have been
owned for at least 10 days. Account holders may not use this procedure to redeem
shares held in certificated form. During periods when it is difficult to contact
the Shareholder Service Agent by telephone, it may be difficult to use the
expedited wire transfer redemption privilege. The Trust reserves the right to
terminate or modify this privilege at any time.

Redemptions By Draft. Upon request, shareholders will be provided with drafts to
be drawn on the Trust ("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

28
<PAGE>

$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 Trust 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 Trust 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 Trust
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
Trust. 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 Trust.

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

The Trust 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 certain ACH transactions within 10 days;
or when "stop payment" of a Redemption Check is requested.

Redemption-in-Kind

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

DIVIDENDS, TAXES AND NET ASSET VALUE

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

Each Fund 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 original issue discount or premium, (b) plus or minus all
short-term realized gains and losses on investments and (c) minus accrued
expenses.

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<PAGE>

Expenses of a Fund are accrued each day. Since a Fund's investments are valued
at amortized cost, there will be no unrealized gains or losses on such
investments. However, should the net asset value so computed 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.

Shareholders will receive monthly confirmation of dividends and of purchase and
redemption transactions. Shareholders may select one of the following ways to
receive dividends:

1. Reinvest Dividends at net asset value into additional shares of a
Fund. Dividends are normally reinvested on the next to last
business day of the month. Dividends will be reinvested unless the
shareholder elects to receive them in cash.

2. Receive Dividends in Cash if so requested. Checks will be mailed
monthly, within five business days of the reinvestment date, to
the shareholder or any person designated by the shareholder. At
the option of shareholders, dividends may be sent of federal funds
wire.

A Fund reinvests dividend checks (and future dividends) in shares of the Fund if
checks are returned as undeliverable. Dividends and other distributions of a
Fund 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. The Funds intend to qualify as regulated investment companies 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. Each Fund also intends to meet the requirements of the Code
applicable to regulated investment companies distributing tax-exempt interest
dividends and, therefore, dividends representing net interest received on
Municipal Securities will not be includable by shareholders in their gross
income for federal income tax purposes, except to the extent such interest is
subject to the alternative minimum tax as discussed hereinafter. Dividends
representing taxable net investment income (such as net interest income from
temporary investments in obligations of the U.S. Government) and net short-term
capital gains, if any, are taxable to shareholders as ordinary income.

If for any taxable year a Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions, would be taxable to shareholders to the extent of current
accumulated earnings and profits, and would be eligible for the dividends
received deduction for corporations in the case of 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. Each 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.

Net interest on certain "private activity bonds" issued on or after August 8,
1986 is treated as an item of tax preference and may, therefore, be subject to
both the individual and corporate alternative minimum tax. To the extent
provided by regulations to be issued by the Secretary of the Treasury,
exempt-interest dividends from a Fund are to be treated as interest on private
activity bonds in proportion to the interest a Fund receives from private
activity bonds, reduced by allowable deductions. For the 1998 calendar year 14%,
13%, 23%, 17% and 30% of the net interest income for the Florida, Michigan, New
Jersey, New York and Pennsylvania Funds, respectively, was derived from "private
activity bonds."

Exempt-interest dividends, except to the extent of interest from "private
activity bonds," are not treated as a tax preference item. For a corporate
shareholder, however, such dividends will be included in determining such
corporate shareholder's "adjusted current earnings." Seventy-five percent of the
excess, if any, of "adjusted current earnings" over the corporate shareholder's
other alternative minimum taxable income with certain

30
<PAGE>

adjustments will be a tax-preference item. Corporate shareholders are advised to
consult their tax advisers with respect to alternative minimum tax consequences.

Shareholders will be required to disclose on their federal income tax returns
the amount of tax-exempt interest earned during the year, including
exempt-interest dividends received from a Fund.

Individuals whose modified income exceeds a base amount will be subject to
federal income tax on up to 85% of their Social Security benefits. Modified
income includes adjusted gross income, tax-exempt interest, including
exempt-interest dividends from a Fund, and 50% of Social Security benefits.

Florida Fund. The State of Florida does not impose a personal income tax. Thus
dividends paid by the Florida Fund to individual shareholders who are Florida
residents will not be subject to state income tax. Florida does, however, impose
an annual intangibles tax on intangible assets (securities and other
intangibles) in excess of $20,000 ($40,000 if filing jointly) owned by Florida
residents on the first day of each calendar year. Florida recently lowered the
tax rate on intangible assets. Effective January 1, 2000 the intangible tax rate
is $1.00 per $1,000 of taxable value on the first day of each year on intangible
assets valued at between $20,000 and $100,000 ($40,000 and $200,000,
respectively, if filing jointly) and $2.00 per $1,000 of intangible assets over
$100,000 of value ($200,000 if filing jointly). U.S. Government securities and
Florida Municipal Securities are exempt from the intangibles tax. The value of
the shares of the Florida Fund are also exempt from the intangibles tax if on
December 31 of any year at least 90% of the net assets of Florida Fund's
portfolio consists of exempt securities. If less than 90% of the portfolio
consists of any assets which are not so exempt on the last business day of the
calendar year, only the value of that portion of the shares of the Florida Fund
which relate to securities issued by the U.S. government and its possessions and
territories will be exempt from the Florida intangibles tax. The remaining value
of such shares will be fully subject to the intangible tax, even if the value
relates, in part, to Florida tax exempt securities.

The Florida Fund will endeavor to hold at year-end at least 90% of net assets
which are exempt from Florida's intangible tax. However, there is no assurance
that an exemption from the Florida intangibles tax will be available. Whether
the Florida Fund can hold the required amount of assets exempt from the
intangibles tax at year end will depend upon a number of factors, including the
transaction costs involved in achieving such a goal and the availability of
permitted investments which will accomplish that goal.

Michigan Fund. Dividends paid by the Michigan Fund derived from interest income
from obligations of Michigan, its political or governmental subdivisions or
obligations of the U.S., its agencies, instrumentalities or possessions will be
exempt from the Michigan personal income tax and Michigan Single Business Tax
provided that at least 50% of the total assets of the Michigan Fund are invested
in such issues at the end of each quarter.

New Jersey Fund. Dividends paid by the New Jersey Fund will be exempt from New
Jersey Gross Income Tax to the extent that the dividends are derived from
interest on obligations of the state or its political subdivisions or
authorities or on obligations issued by certain other government authorities or
from capital gains from the disposition of such obligations, as long as the New
Jersey Fund meets certain investment and filing requirements necessary to
establish and maintain its status as a "Qualified Investment Fund" in New
Jersey, such as the requirement that, in general, 80% of the Fund's assets must
be comprised of New Jersey municipal obligations at the end of each calendar
quarter. It is the New Jersey Fund's intention to satisfy these requirements and
maintain Qualified Investment Fund status. Capital gains, if any, on redemption
of shares will also be exempt from New Jersey Gross Income Tax. Dividends paid
by the New Jersey Fund derived from interest on non-exempt assets will be
subject to New Jersey Gross Income Tax. Dividends paid by the New Jersey Fund
will be taxable to corporate shareholders subject to the New Jersey corporation
business (franchise) tax.

New York Fund. Dividends paid by the New York Fund representing net interest
received on New York Municipal Securities will be exempt from New York State and
New York City income taxes. Dividends paid by the New York Fund will be taxable
to corporate shareholders that are subject to New York State and New York City
corporate franchise tax.

31
<PAGE>

Pennsylvania Fund. Dividends paid by the Pennsylvania Fund will be exempt from
Pennsylvania income tax to the extent that the dividends are derived from
interest on obligations of Pennsylvania, any public authority, commissions,
board or other state agency, any political subdivision of the state or its
public authority, and certain obligations of the U.S. or its territories
(including Puerto Rico, Guam and the Virgin Islands). Dividends paid by the
Pennsylvania Fund representing interest income on Pennsylvania Municipal
Securities are also generally exempt from the Philadelphia School District
Income Tax for residents of Philadelphia and from the intangibles tax for the
City and School District of Pittsburgh for residents of Pittsburgh. Shareholders
of the Pennsylvania Fund who are subject to the Pennsylvania property tax in
their county of residence will be exempt from county personal property tax to
the extent that the portfolio of the Pennsylvania Fund consists of such exempt
obligations on the annual assessment date of January 1.

General. The tax exemption for federal income tax purposes of dividends from a
Fund does not necessarily result in exemption under the income or other tax laws
of any state or local taxing authority. The laws of the several states and local
taxing authorities vary with respect to the taxation of such income, and
shareholders of a Fund are advised to consult their own tax advisers in that
regard and as to the status of their accounts under state and local tax laws.

Each Fund 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.

Shareholders normally will receive monthly confirmations of dividends and of
purchase and redemption transactions. 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.

Interest on indebtedness which is incurred to purchase or carry shares of a
mutual fund which distributes exempt-interest dividends during the year is not
deductible for Federal income tax purposes. Further, a Fund may not be an
appropriate investment for persons who are "substantial users" of facilities
financed by industrial development bonds held by a Fund or are "related persons"
to such users; such persons should consult their tax advisers before investing
in a Fund.

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

Net Asset Value. As described in the prospectus, each Fund values its portfolio
instruments at amortized cost, which does not take into account unrealized
capital gains or losses. This involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the effect of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price a Fund would receive if it sold the instrument.
Calculations are made to compare the value of a Fund'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 Fund's
$1.00 per share net asset value, or if there were any other deviation that the
Board of Trustees of the Trust believed would result in a material dilution to
shareholders or purchasers, the Board of Trustees would promptly consider what
action, if any, should be initiated. If a Fund's net asset value per share
(computed using market values) declined, or were expected to decline, below
$1.00 (computed using amortized cost), the Board of Trustees of the Trust might
temporarily reduce or suspend dividend payments in an effort to maintain the net
asset value at $1.00 per share. As a result of such reduction or suspension of
dividends or other action by the Board of Trustees, an investor

32
<PAGE>

would receive less income during a given period than if such a reduction or
suspension had not taken place. Such action could result in investors receiving
no dividend for the period during which they hold their shares and receiving,
upon redemption, a price per share lower than that which they paid. On the other
hand, if a Fund's net asset value per share (computed using market values) were
to increase, or were anticipated to increase above $1.00 (computed using
amortized cost), the Board of Trustees of the Trust might supplement dividends
in an effort to maintain the net asset value at $1.00 per share.

PERFORMANCE

Scudder Kemper has agreed to absorb certain operating expenses of each Fund to
the extent described in the prospectus. Without this expense absorption, the
performance results noted herein would have been lower.

From time to time, a Fund may advertise several types of performance information
including "yield," "effective yield," and "tax equivalent yield." Each of these
figures is based upon historical earnings and is not representative of the
future performance of a Fund. The yield of a Fund refers to the net investment
income generated by a hypothetical investment in the Fund 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 weekly
when annualized. The effective yield will be slightly higher than the yield due
to this compounding effect. Tax equivalent yield is the yield that a taxable
investment must generate in order to equal the Fund's yield for an investor in a
stated federal and, if applicable, state and local income tax bracket (normally
assumed to be the maximum tax rate). Tax equivalent yield is based upon, and
will be higher than, the portion of a Fund's yield that is tax-exempt.

The performance of a Fund 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, Inc. A Fund's performance and its relative size may be
compared to other money market mutual funds as reported by IBC Financial Data,
Inc., a reporting service on money market funds. Investors may want to compare a
Fund's performance on an after-tax basis to that of various bank products as
reported by BANK RATE MONITOR(TM), 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 Fund 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 a 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. A Fund may
depict the historical performance of the securities in which it 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. A 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.

A Fund's yield will fluctuate. Shares of a Fund are not insured.

Each Fund's 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 as
follows. The first calculation is net investment income per share, which is
accrued interest on fund securities, plus or minus amortized original issue
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

33
<PAGE>

or losses and unrealized appreciation or depreciation of investments are not
included in the calculation. For the seven day period ended March 31, 2000, the
Florida Fund's yield was ____%, the Michigan Fund's yield was ____%, the New
Jersey Fund's yield was ____%, the New York Fund's yield was ____% and the
Pennsylvania Fund's yield was ____%.

Each Fund's 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 effective yield is: (base period return +1)365/7 - 1. For
the seven day period ended March 31, 2000, the Florida Fund's effective yield
was ____%, the Michigan Fund's effective yield was ____%, the New Jersey Fund's
effective yield was ____%, the New York Fund's effective yield was ____% and the
Pennsylvania Fund's effective yield was ____%.

The tax equivalent yield of a Fund is computed by dividing that portion of a
Fund's yield (computed as described above) which is tax-exempt by (one minus the
stated federal and, if applicable, state and local income tax rate) and adding
the result to that portion, if any, of the yield of a Fund that is not
tax-exempt. Based upon a marginal federal income tax rate of 37.1% for the
Florida Fund, a combined federal and Michigan State marginal income tax rate of
39.9% for the Michigan Fund, a combined federal and New Jersey State marginal
income tax rate of 41.1% for the New Jersey Fund, a combined federal, New York
State and New York City marginal income tax rate of 43.5% for the New York Fund,
and a combined federal and Pennsylvania State marginal income tax rate of 38.9%
for the Pennsylvania Fund, and a yield computed as described above for the seven
day period ended March 31, 2000, the Florida Fund's tax equivalent yield was
____%, the Michigan Fund's tax equivalent yield was ____%, the New Jersey Fund's
tax equivalent yield was ____%, the New York Fund's tax equivalent yield was
____% and the Pennsylvania Fund's tax equivalent yield was ____%.

Based upon a marginal federal income tax rate of 39.6% for the seven day period
ended March 31, 2000, the Florida Fund's taxable equivalent yield was ____%, the
Michigan Fund's tax equivalent yield was ____%, the New Jersey Fund's tax
equivalent yield was ____%, the New York Fund's tax equivalent yield was ____%
and the Pennsylvania Fund's tax-equivalent yield was ____%. For additional
information concerning tax-exempt yields, see "Tax-Exempt versus Taxable Yield"
below.

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

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

A Fund's performance also may be compared on an after-tax basis to various bank
products, including the average rate of bank and thrift institution money market
deposit accounts or interest bearing checking accounts as reported in the BANK
RATE MONITOR National Index(TM) of 100 leading bank and thrift institutions as
published by BANK RATE MONITOR(TM), N. Palm Beach, Florida 33408. 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 Standard Metropolitan Statistical Areas. Account minimums range
upward from $2,000 in each institution and compounding methods vary. Interest
bearing checking accounts generally offer unlimited check writing 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.
Bank products represent a taxable alternative income producing product. Bank and
thrift institution deposit accounts may be insured. Shareholder accounts in a
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 check writing. Bank
passbook savings accounts normally offer a fixed rate of interest while the
yield of a Fund fluctuates. Bank checking accounts normally do not pay interest

34
<PAGE>

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. (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 a Fund are redeemable at the net
asset value (normally $1.00 per share) next determined after a request is
received, without charge.

Investors also may want to compare a Fund's performance on an after-tax basis 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 value of obligations with shorter
maturities will fluctuate less than those with longer maturities. A Fund's yield
will fluctuate. Also, while each Fund seeks to maintain a net asset value per
share of $1.00, there is no assurance that it will be able to do so. Any such
comparisons may be useful to investors who wish to compare a Fund's past
performance with that of its competitors. Of course, past performance cannot be
a guarantee of future results.

A Fund's performance also may be compared to the Consumer Price Index, as
published by the U.S. Bureau of Labor Statistics, which is an established
measure of change over time in the prices of goods and services in major
expenditure groups.

Tax-Exempt Versus Taxable Yield. You may want to determine which investment --
tax-exempt or taxable -- will provide you with a higher after-tax return. To
determine the taxable equivalent yield, simply divide the yield from the
tax-exempt investment by the sum of [1 minus your marginal tax rate]. The tables
below are provided for your convenience in making this calculation for selected
tax-exempt yields and taxable income levels. These yields are presented for
purposes of illustration only and are not representative of any yield that a
Fund may generate. Both tables are based upon current law as to the 1999 federal
and 1998 state tax rates and brackets. The federal tax rate should be used for
the Florida Fund since Florida has no applicable state personal income tax.

Taxable Equivalent Yield Table For Persons Whose Adjusted Gross Income Is Under
$126,600

35
<PAGE>

[TO BE UPDATED]

<TABLE>

Single Joint Your A Tax-Exempt Yield of:
Marginal 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$25,750-$62,450 $43,050-$104,050 28.0% 2.78 4.17 5.56 6.94 8.33 9.72
Over $62,450 Over $104,050 31.0 2.90 4.35 5.80 7.25 8.70 10.14

Single Joint Combined A Tax-Exempt Yield of:
Michigan 2% 3% 4% 5% 6% 7%
Taxable Income and Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- -------------------- ------------------------------------

$25,750-$62,450 $43,050-$104,050 31.2% 2.91 4.36 5.81 7.27 8.72 10.17
Over $62,450 Over $104,050 34.0 3.03 4.55 6.06 7.58 9.09 10.61

Single Joint Combined A Tax-Exempt Yield of:
New Jersey and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------

$25,750-$35,000 $43,050-$50,000 29.3% 2.83 4.24 5.66 7.07 8.49 9.90
$50,000-$70,000 29.8 2.85 4.27 5.70 7.12 8.55 9.97
$35,000-$40,000 $70,000-$80,000 30.5 2.88 4.32 5.76 7.19 8.63 10.07
$40,000-$62,450 $80,000-$104,050 32.0 2.94 4.41 5.88 7.35 8.82 10.29
$62,450-$75,000 $104,050-$150,000 34.8 3.07 4.60 6.13 7.67 9.20 10.74
Over $75,000 Over $150,000 35.4 3.10 4.64 6.19 7.74 9.29 10.84

Single Joint Combined N.Y. City, A Tax-Exempt Yield of:
N.Y. State and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate** Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------

$25,750-$62,450 $43,050-$104,050 36.1% 3.13 4.69 6.26 7.82 9.39 10.95
Over $62,450 Over $104,050 38.8 3.27 4.9 6.54 8.17 9.80 11.44

Single Joint Combined A Tax-Exempt Yield of:
Pennsylvania and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------

$25,750-$62,450 $43,050-$104,050 30.0% 2.86 4.29 5.71 7.14 8.57 10.00
Over $62,450 Over $104,050 32.9 2.98 4.47 5.96 7.45 8.94 10.43
</TABLE>

Taxable Equivalent Yield Table For Persons Whose Adjusted Gross Income Is Over
$126,600

Single Joint Your A Tax-Exempt Yield of:
Marginal 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$62,450-$130,250 $104,050-$158,550 31.9% 2.94 4.41 5.87 7.34 8.81 10.28
$130,250-$283,150 $158,550-$283,150 37.1 3.18 4.77 6.36 7.95 9.54 11.13
Over $283,150 Over $283,150 40.8 3.38 5.07 6.76 8.45 10.14 11.82

36
<PAGE>

Single Joint Combined A Tax-Exempt Yield of:
Michigan and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------

$62,450-$130,250 $104,050-$158,550 34.9% 3.07 4.61 6.14 7.68 9.22 10.75
$130,250-$283,150 $158,550-$283,150 39.9 3.33 4.99 6.66 8.32 9.98 11.65
Over $283,150 Over $283,150 43.4 3.53 5.30 7.07 8.83 10.60 12.37

$62,450-$75,000 $104,050-$150,000 35.7% 3.11 4.67 6.22 7.78 9.33 10.89
$75,000-$130,250 $150,000-$158,550 36.2 3.13 4.70 6.27 7.84 9.40 10.97
$130,250-$283,150 $158,550-$283,150 41.1 3.40 5.09 6.79 8.49 10.19 11.88
Over $283,150 Over $283,150 44.6 3.61 5.42 7.22 9.03 10.83 12.64

Single Joint Combined N.Y. City, A Tax-Exempt Yield of:
N.Y. State and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------

$62,450-$130,250 $104,050-$158,550 39.6% 3.31 4.97 6.62 8.28 9.93 11.59
$130,250-$283,150 $158,550-$283,150 44.2 3.58 5.38 7.17 8.96 10.75 12.54
Over $283,150 Over $283,150 47.5 3.81 5.71 7.62 9.52 11.43 13.33

Single Joint Combined A Tax-Exempt Yield of:
Pennsylvania 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
-------------- ---------------- ------------------------------------

$62,450-$130,250 $104,050-$158,550 33.8% 3.02 4.53 6.04 7.55 9.06 10.57
$130,250-$283,150 $158,550-$283,150 38.9 3.27 4.91 6.55 8.18 9.82 11.46
Over $283,150 Over $283,150 42.5 3.48 5.22 6.96 8.7 10.43 12.17
</TABLE>

* This table assumes a decrease of $3.00 of itemized deductions for each
$100 of adjusted gross income over $126,600. For a married couple with
adjusted gross income between $189,950 and $312,450 (single between
$126,600 and $249,100), add 0.7% to the above Marginal Federal Tax Rate
for each personal and dependency exemption. The taxable equivalent
yield is the tax-exempt yield divided by: 100% minus the adjusted tax
rate. For example, if the table tax rate is 37.1% and you are married
with no dependents, the adjusted tax rate is 38.5% (37.1% + 0.7% +
0.7%). For a tax-exempt yield of 6%, the taxable equivalent yield is
about 9.8% (6% / (100%-38.5%)).

** The tables do not reflect the impact of the New York State Tax Table
Benefit Recapture that is intended to eliminate the benefit of the
graduated rate structure and applies to taxable income between $100,000
and $150,000.

37
<PAGE>

OFFICERS AND TRUSTEES

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

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

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

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

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

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

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

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

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

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

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

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

38
<PAGE>

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

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

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

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

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

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

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

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

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

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

The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds. The table below shows amounts paid or
accrued to those trustees who are not designated "interested persons" during the
Trust's fiscal year ended March 31, 2000. The information in the last column
indicates the total amounts paid or accrued for the calendar year 1999 for all
Scudder Kemper Funds.

Total Compensation
Scudder Kemper
Compensation Funds Paid
Name Of Trustee From the Trust To Trustees(1)
--------------- -------------- --------------

John W. Ballantine(2) $ $

Lewis A. Burnham $ $

Donald L. Dunaway(3) $ $

Robert B. Hoffman $ $

Donald R. Jones $ $

Shirley D. Peterson $ $

William P. Sommers $ $

(1) Includes compensation for service on the Boards of 25 Scudder Kemper funds
with 43 fund portfolios. Each trustee currently serves as a trustee of 26
Scudder Kemper Funds and 48 fund portfolios.

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

39
<PAGE>

o (3) Pursuant to deferred compensation agreements with the Scudder Kemper
Funds deferred amounts accrue interest monthly at a rate approximate to the
yield of Zurich Money Funds-Zurich Money Market Fund. Total deferred
amounts (including interest thereon) payable from the Funds for all prior
fiscal years for the New York Fund are $4,300 for Mr. Dunaway.

On July 1, 2000, the trustees and officers as a group owned less than 1% of the
then outstanding shares of each Fund. As of July 1, 2000, no shareholder owned
of record more than 5% of the outstanding shares of the Funds except as shown
below:

<TABLE>

------------------------------------- ----------------------------------- -----------------------------------
Fund Name and Address Percentage
---- ---------------- ----------

------------------------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
Florida Prudential Securities Inc.
1 New York Plaza
New York, NY 10004
------------------------------------- ----------------------------------- -----------------------------------
Florida Hank Asher
------------------------------------- ----------------------------------- -----------------------------------
Michigan Scudder Kemper Investments, Inc.
(Accounting Control)
345 Park Avenue
New York, NY 10154
------------------------------------- ----------------------------------- -----------------------------------
Michigan Roney & Co.
IMMCF Money Market
Omnibus Account
1 Griswold
Detroit, MI 48226
------------------------------------- ----------------------------------- -----------------------------------
New Jersey Prudential Securities Inc.
1 New York Plaza
New York, NY 10004
------------------------------------- ----------------------------------- -----------------------------------
New Jersey Bank of New York Clearing Corp.
Omnibus Account
111 E. Kilboune Avenue
Milwaukee, WI 53202
------------------------------------- ----------------------------------- -----------------------------------
New York National Investor Services Corp.
55 Water Street
New York, NY 10041
------------------------------------- ----------------------------------- -----------------------------------
New York Prudential Securities Inc.
1 New York Plaza
New York, NY 10004
------------------------------------- ----------------------------------- -----------------------------------
New York Southwest Securities, Inc.
Omnibus Account
1201 Elm Street
Dallas, TX 75270
------------------------------------- ----------------------------------- -----------------------------------
Pennsylvania Prudential Securities Inc.
1 New York Plaza
New York, NY 10004
------------------------------------- ----------------------------------- -----------------------------------

</TABLE>

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
Strategic Income Fund, Kemper High Yield Series, Kemper High Yield Fund II,
Kemper U.S. Government Securities Fund, Kemper International Fund, Kemper State
Tax-Free Income Series,

40
<PAGE>

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

<TABLE>

Florida Fund Michigan Fund New Jersey Fund New York Fund Pennsylvania Fund
------------ ------------- --------------- ------------- -----------------

<S> <C> <C> <C> <C>
Alabama California California California California
California District of Columbia Connecticut Connecticut Connecticut
District of Columbia Florida Delaware District of Columbia Delaware
Florida Georgia District of Columbia Florida District of Columbia
Georgia Illinois Florida Georgia Florida
Illinois Indiana Georgia Indiana Georgia
Indiana Michigan Illinois Illinois Illinois
Missouri Missouri Indiana Missouri Indiana
New Jersey New Jersey Maryland New Jersey Maryland
Ohio Ohio Massachusetts New York Michigan
Pennsylvania Pennsylvania Missouri Ohio Missouri
Virginia Virginia New Jersey Pennsylvania New Jersey
New York Texas Ohio
Ohio Virginia Pennsylvania
Pennsylvania Vermont
Virginia Virginia
West Virginia West Virginia
</TABLE>

The total value of shares being exchanged must at least equal the minimum
investment requirement of the Kemper Fund into which they are being exchanged.
Exchanges are made based on relative dollar values of the shares involved in the
exchange. There is no service fee for an exchange; however, financial services
firms may charge for their services in expediting exchange transactions.
Exchanges will be effected by redemption of shares of the fund held and purchase
of shares of the other fund. For federal income tax purposes, any such exchange
constitutes a sale upon which a gain or loss may be realized, depending upon
whether the value of the shares being exchanged is more or less than the
shareholder's adjusted cost basis.

41
<PAGE>

Shareholders interested in exercising the exchange privilege may obtain an
exchange form and prospectuses of the other funds from firms or KDI. Exchanges
also may be authorized by telephone if the shareholder has given authorization.
Once the authorization is on file, the Shareholder Service Agent will honor
requests by telephone at 1-800-231-8568 or in writing subject to the limitations
on liability described in the prospectus. Any share certificates must be
deposited prior to any exchange of such shares. During periods when it is
difficult to contact the Shareholder Service Agent by telephone, it may be
difficult to use the telephone exchange privilege. The exchange privilege is not
a right and may be suspended, terminated or modified at any time. Except as
otherwise permitted by applicable regulation, 60 days' prior written notice of
any termination or material change will be provided.

Systematic Withdrawal Program. The owner of $5,000 or more of a Fund's shares
may provide for the payment from the owner's account of any requested dollar
amount up to $50,000 to be paid to the owner or the owner's designated payee
monthly, quarterly, semi-annually or annually. The minimum periodic payment is
$100. Shares are redeemed so that the payee will receive payment approximately
the first of the month. Dividend distributions will be automatically reinvested
at net asset value. A sufficient number of full and fractional shares will be
redeemed to make the designated payment. Depending upon the size of the payments
requested, redemptions for the purpose of making such payments may reduce or
even exhaust the account. The right is reserved to amend the systematic
withdrawal program on 30 days' notice. The program may be terminated at any time
by the shareholder or the Trust. Firms provide varying arrangements for their
clients to redeem Fund shares on a periodic basis. Such firms may independently
establish minimums for such services.

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

SHAREHOLDER RIGHTS

The Trust is an open-end, non-diversified management investment company, which
was organized under the name "Tax-Exempt New York Money Market Fund" as a
business trust under the laws of Massachusetts on March 2, 1990 with a single
investment portfolio. On May 21, 1997 the Trust changed its name from
"Tax-Exempt New York Money Market Fund" to "Investors Municipal Cash Fund."

The Trust may issue an unlimited number of shares of beneficial interest in one
or more series or "Funds," 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. Currently, the Trust has five Funds. None of the
Funds' shares are divided into classes. The Board of Trustees may authorize the
issuance of additional Funds if deemed desirable, each with its own investment
objective, policies and restrictions. Since the Trust offers multiple Funds, it
is known as a "series company." Shares of a Fund have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation of
such Fund subject to any preferences, rights or privileges of any classes of
shares within the Fund. Generally each class of shares issued by a particular
Fund would differ as to the allocation of certain expenses of the Fund such as
distribution and administrative expenses, permitting, among other things,
different levels of services or methods of distribution among various classes.
Shares are fully paid and nonassessable when issued, are transferable without
restriction and have no preemptive or conversion rights. The Trust is not
required to hold annual shareholders' meetings, and does not intend to do so.
However, it will hold shareholder meetings as required or deemed desirable in
connection with the following matters: (a) the election or removal of trustees
if a meeting is called for such purpose; (b) the adoption of any contract for
which shareholder approval is required by the 1940 Act; (c) any termination of

42
<PAGE>

a 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 Trust, establishing a fund, supplying any omission, curing any ambiguity
or curing, correcting or supplementing any defective or inconsistent provision
thereof); and (e) such additional matters as may be required by law, the
Declaration of Trust, the By-laws of the Trust, or any registration of the Trust
with the Securities and Exchange Commission or any state, or as the trustees may
consider necessary or desirable. The shareholders also would vote upon changes
in fundamental investment objectives, policies or restrictions. Subject to the
Agreement and Declaration of Trust of the Trust, shareholders may remove
trustees. Shareholders will vote by Fund and not in the aggregate or by class
except when voting in the aggregate is required under the 1940 Act, such as for
the election of trustees, or when the Board of Trustees determines that voting
by class is appropriate.

The Florida, Michigan, New Jersey and Pennsylvania Funds each may in the future
seek to achieve its investment objective by pooling its assets with assets of
other mutual funds for investment in another investment company having the same
investment objective and substantially the same investment policies and
restrictions as such Fund. The purpose of such an arrangement is to achieve
greater operational efficiencies and to reduce costs. It is expected that any
such investment company would be managed by Scudder Kemper in substantially the
same manner as the corresponding Fund. Shareholders of a Fund will be given at
least 30 days' prior notice of any such investment, although they will not be
entitled to vote on the action. Such investment would be made only if the
Trustees determine it to be in the best interests of the respective Fund and its
shareholders.

Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of a
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described below) or a majority
of the trustees. In accordance with the 1940 Act (a) the Trust will hold a
shareholder meeting for the election of trustees at such time as less than a
majority of the 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 Trust stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.

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

The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or any Fund 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
Trust. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust and the
Trust will be

43
<PAGE>

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 Scudder Kemper remote and not
material, since it is limited to circumstances in which a disclaimer is
inoperative and the Trust itself is unable to meet its obligations.

<PAGE>

INVESTORS MUNICIPAL CASH FUND

PART C. OTHER INFORMATION
<TABLE>
<CAPTION>

Item 23. Exhibits.
-------- ---------

<S> <C> <C>
(a)(1) Amended and Restated Agreement and Declaration of Trust dated March 9, 1990.
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)

(b) By-laws
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)

(c)(1) Text of Share Certificate
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)

(c)(2) Written Instrument Establishing and Designating New Series
(Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registration Statement)

(c)(3) Written Instrument Establishing and Designating New Trust Name
(Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registration Statement)

(c)(4) Written Instrument Establishing and Designating New Series (Michigan Fund)
(Incorporated herein by reference to Post-Effective Amendment No. 11 to the
Registration Statement)

(d) Investment Management Agreement (IMA) between the Registrant, on behalf of
Investors Florida Municipal Cash Fund, Investors New Jersey Municipal Cash
Fund, Investors Michigan Municipal Cash Fund, Investors Pennsylvania
Municipal Cash Fund, and Tax-Exempt New York Money Market Fund, dated
September 7, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

(e)(1) Underwriting Agreement between Investors Municipal Cash Fund and Kemper
Distributors, Inc., dated September 7, 1998
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

(f) Inapplicable.

(g) Custody Agreement between the Registrant, on behalf of Investors Florida
Municipal Cash Fund, Investors New Jersey Municipal Cash Fund, Investors
Michigan Municipal Cash Fund, Investors Pennsylvania Municipal Cash Fund,
and Tax-Exempt New York Money Market Fund, and State Street Bank and Trust
Company, dated May 3, 1999.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

1
<PAGE>

(h)(1) Agency Agreement between Investors Municipal Cash Fund and Investors
Fiduciary Trust Company dated October 18, 1990.
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)

(h)(2) Supplement to Agency Agreement between Investors Municipal Cash Fund and
Fiduciary Trust Company dated April 1, 1995.
(Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement)

(h)(3) Fund Accounting Agreement between the Registrant, on behalf of Investors
Florida Municipal Cash Fund, Investors New Jersey Municipal Cash Fund,
Investors Michigan Municipal Cash Fund, Investors Pennsylvania Municipal
Cash Fund, and Tax-Exempt New York Money Market Fund, and Scudder Fund
Accounting Corporation, dated December 31, 1997.
(Incorporated herein by reference to Post-Effective Amendment No. 11 to the
Registration Statement)

(i) Legal Opinion to be filed by amendment.

(j) Consent of Independent Accountants to be filed by amendment.

(k) Inapplicable.

(l) Inapplicable.

(m)(1) Rule 12b-1 Plan between Investors Florida Municipal Cash Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

(m)(2) Rule 12b-1 Plan between Investors New Jersey Municipal Cash Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

(m)(3) Rule 12b-1 Plan between Investors Michigan Municipal Cash Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

(m)(4) Rule 12b-1 Plan between Investors Pennsylvania Municipal Cash Fund and
Kemper Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

(m)(5) Rule 12b-1 Plan between Tax-Exempt New York Money Market Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)

(n) Inapplicable.

(o) Inapplicable.
</TABLE>

2
<PAGE>

Item 24. Persons Controlled by or under Common Control with Fund.
-------- --------------------------------------------------------

None

Item 25. Indemnification.
-------- ----------------

Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permittid to trustees, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding
Corp. ("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens &
Clark, Inc. ("Scudder") and the representatives of the beneficial owners of the
capital stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich became the majority
stockholder in Scudder with an approximately 70% interest, and ZKI was combined
with Scudder ("Transaction"). In connection with the trustees' evaluation of the
Transaction, Zurich agreed to indemnify the Registrant and the trustees who were
not interested persons of ZKI or Scudder (the "Independent Trustees") for and
against any liability and expenses based upon any action or omission by the
Independent Trustees in connection with their consideration of and action with
respect to the Transaction. In addition, Scudder has agreed to indemnify the
Registrant and the Independent Trustees for and against any liability and
expenses based upon any misstatements or omissions by Scudder to the Independent
Trustees in connection with their consideration of the Transaction.

Item 26. Business and Other Connections of Investment Adviser
-------- ----------------------------------------------------

Scudder Kemper Investments, Inc. has stockholders and
employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not
considered officers for the purpose of this Item 26.

<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------

3
<PAGE>

<S> <C>
Stephen R. Beckwith Treasurer, Scudder Kemper Investments, Inc.**
Director, Kemper Service Company
Director, Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director and Treasurer, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Director and Chairman, Scudder Threadneedle International Ltd.
Director, Scudder Kemper Holdings (UK) Ltd. oo
Director and President, Scudder Realty Holdings Corporation *
Director, Scudder, Stevens & Clark Overseas Corporation o
Director and Treasurer, Zurich Investment Management, Inc. xx
Director and Treasurer, Zurich Kemper Investments, Inc.

Lynn S. Birdsong Director, Vice President and Chief Investment Officer, Scudder Kemper
Investments, Inc.**
Director and Chairman, Scudder Investments (Luxembourg) S.A. #
Director, Scudder Investments (U.K.) Ltd. oo
Director and Chairman of the Board, Scudder Investments Asia, Ltd. ooo
Director and Chairman, Scudder Investments Japan, Inc. +
Senior Vice President, Scudder Investor Services, Inc.
Director and Chairman, Scudder Trust (Cayman) Ltd. @@@
Director, Scudder, Stevens & Clark Australia x
Director and Vice President, Zurich Investment Management, Inc. xx
Director and President, Scudder, Stevens & Clark Corporation **
Director and President, Scudder , Stevens & Clark Overseas Corporation o
Director, Scudder Threadneedle International Ltd.
Director, Korea Bond Fund Management Co., Ltd. @@

4
<PAGE>

William H. Bolinder Director, Scudder Kemper Investments, Inc.**
Member Group Executive Board, Zurich Financial Services, Inc. ##
Chairman, Zurich-American Insurance Company xxx

Nick Bratt Director and Vice President, Scudder Kemper Investments, Inc.**
Vice President, Scudder MAXXUM Company***
Vice President, Scudder, Stevens & Clark Corporation**
Vice President, Scudder, Stevens & Clark Overseas Corporation o

Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
Director, ZKI Holding Corporation xx

Gunther Gose Director, Scudder Kemper Investments, Inc.**
CFO, Member Group Executive Board, Zurich Financial Services, Inc. ##
CEO/Branch Offices, Zurich Life Insurance Company ##

Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
Director, Chairman of the Board, Zurich Holding Company of America xxx
Director, ZKI Holding Corporation xx

Harold D. Kahn Chief Financial Officer, Scudder Kemper Investments, Inc.**

Kathryn L. Quirk Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Vice President, Chief Legal Officer and Secretary, Kemper Distributors, Inc.
Director and Secretary, Kemper Service Company
Director, Senior Vice President, Chief Legal Officer & Assistant Clerk, Scudder
Investor Services, Inc.
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director and Secretary, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc. ###
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. @
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation o
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President, Chief Legal Officer and Secretary, Scudder Financial
Services, Inc.*

5
<PAGE>

Director, Korea Bond Fund Management Co., Ltd. @@
Director, Scudder Threadneedle International Ltd.
Director, Chairman of the Board and Secretary, Scudder Investments Canada, Ltd.
Director, Scudder Investments Japan, Inc. +
Director and Secretary, Scudder Kemper Holdings (UK) Ltd. oo
Director and Secretary, Zurich Investment Management, Inc. xx

Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc. ###
President and Director, Scudder, Stevens & Clark Overseas Corporation o
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc. @
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
Director, Scudder Threadneedle International Ltd. oo
Director, Scudder Investments Japan, Inc. +
Director, Scudder Kemper Holdings (UK) Ltd. oo
President and Director, Zurich Investment Management, Inc. xx
Director and Deputy Chairman, Scudder Investment Holdings, Ltd.
</TABLE>

* Two International Place, Boston, MA
@ 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg,
R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
@@@ Grand Cayman, Cayman Islands, British West Indies
o 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
xxx Zurich Towers, 1400 American Ln., Schaumburg, IL
@@ P.O. Box 309, Upland House, S. Church St., Grand Cayman,
British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
oo 1 South Place 5th floor, London EC2M 2ZS England
ooo One Exchange Square 29th Floor, Hong Kong
+ Kamiyachyo Mori Building, 12F1, 4-3-20, Toranomon, Minato-ku,
Tokyo 105-0001
x Level 3, 5 Blue Street North Sydney, NSW 2060

Item 27. Principal Underwriters.
-------- -----------------------

(a)

Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and acts as principal underwriter of the Kemper
Funds.

6
<PAGE>

(b)

Information on the officers and directors of Kemper Distributors, Inc.,
principal underwriter for the Registrant is set forth below. The
principal business address is 222 South Riverside Plaza, Chicago,
Illinois 60606.

<TABLE>
<CAPTION>
(1) (2) (3)

Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------

<S> <C> <C>
James L. Greenawalt President None

Linda C. Coughlin Director and Vice Chairman Trustee and President

Kathryn L. Quirk Director, Secretary, Chief Legal Trustee, Vice President and Assistant
Officer and Vice President Secretary

James J. McGovern Chief Financial Officer and Treasurer None

Linda J. Wondrack Vice President and Chief Compliance None
Officer

Paula Gaccione Vice President None

Michael E. Harrington Managing Director None

Robert A. Rudell Vice President None

William M. Thomas Managing Director None

Todd N. Gierke Assistant Treasurer None

Philip J. Collora Assistant Secretary None

Paul J. Elmlinger Assistant Secretary None

Diane E. Ratekin Assistant Secretary None

Mark S. Casady Director and Chairman None

Herbert A. Christiansen Vice President None

Robert Froelich Managing Director None

C. Perry Moore Senior Vice President and Managing None
Director

Lorie O'Malley Managing Director None

William F. Glavin Managing Director None

Gary N. Kocher Managing Director None

Howard S. Schneider Managing Director None

Thomas V. Bruns Managing Director None

7
<PAGE>

Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------

Johnston Allan Norris Managing Director and Senior Vice None
President

John H. Robinson, Jr. Managing Director and Senior Vice None
President

George A. Antonak Senior Vice President None
</TABLE>

Item 28. Location of Accounts and Records
-------- --------------------------------

Accounts, books and other documents are maintained at the offices of
the Registrant, the offices of Registrant's investment adviser, Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at the
offices of the Registrant's principal underwriter, Kemper Distributors, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606 or, in the case of records
concerning custodial functions, at the offices of the custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110 or, in
the case of records concerning transfer agency functions, at the offices of
Investors Fiduciary Trust Company, 801 Pennsylvania Avenue, Kansas City,
Missouri 64105 and of the shareholder service agent, Kemper Service Company, 811
Main Street, Kansas City, Missouri 64105.

Item 29. Management Services.
-------- --------------------

Inapplicable.

Item 30. Undertakings.
-------- -------------

Inapplicable.

8
<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago and State of Illinois, on the
1st day of June, 2000.

INVESTORS MUNICIPAL CASH FUND

By /s/Mark S. Casady
-------------------------------
Mark S. Casady
President

Pursuant to the requirements of the Securities Act of 1933, this
amendment to its Registration Statement has been signed below on June 1, 2000,
on behalf of the following persons in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

--------------------------------------
John W. Ballantine Trustee June 1, 2000

/s/ Lewis A. Burnham
--------------------------------------
Lewis A. Burnham* Trustee June 1, 2000

--------------------------------------
Linda C. Coughlin Trustee June 1, 2000

/s/ Donald L. Dunaway
--------------------------------------
Donald L. Dunaway* Trustee June 1, 2000

/s/ Robert B. Hoffman
--------------------------------------
Robert B. Hoffman* Trustee June 1, 2000

/s/ Donald R. Jones
--------------------------------------
Donald R. Jones* Trustee June 1, 2000

--------------------------------------
Thomas W. Littauer Chairman and Trustee June 1, 2000

/s/ Shirley D. Peterson
--------------------------------------
Shirley D. Peterson* Trustee June 1, 2000

<PAGE>

/s/ William P. Sommers
--------------------------------------
William P. Sommers* Trustee June 1, 2000

/s/John R. Hebble
--------------------------------------
John R. Hebble Treasurer (Principal Financial and June 1, 2000
Accounting Officer)

</TABLE>

*By: /s/Philip J. Collora
------------------------------------
Philip J. Collora**

** Philip J. Collora signs this
document pursuant to powers of
attorney contained in
Post-Effective Amendment No. 11
to the Registration Statement,
filed on February 20, 1998.

<PAGE>

File No. 33-34819
File No. 811-6108

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

EXHIBITS

FORM N-1A

POST-EFFECTIVE AMENDMENT NO. 16
TO REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AND

AMENDMENT NO. 17

TO REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

INVESTORS MUNICIPAL CASH FUND

<PAGE>

INVESTORS MUNICIPAL CASH FUND

EXHIBIT INDEX