<PAGE> PAGE 1
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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 17
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<PAGE> PAGE 19
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<PAGE> PAGE 20
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028 E010500 820
028 E020500 96
028 E030500 0
028 E040500 241
028 F010500 495
028 F020500 83
028 F030500 0
028 F040500 364
028 G010500 2529
028 G020500 733
028 G030500 0
028 G040500 2297
028 H000500 919
042 A000500 0
042 B000500 0
042 C000500 0
042 D000500 0
042 E000500 0
042 F000500 0
042 G000500 0
042 H000500 100
043 000500 37
044 000500 99
<PAGE> PAGE 21
049 000500 N
050 000500 N
051 000500 N
052 000500 N
053 A000500 N
055 A000500 N
055 B000500 N
056 000500 Y
057 000500 N
062 A000500 Y
062 B000500 0.0
062 C000500 0.0
062 D000500 0.0
062 E000500 6.5
062 F000500 0.0
062 G000500 0.0
062 H000500 0.0
062 I000500 0.0
062 J000500 0.0
062 K000500 0.0
062 L000500 0.0
062 M000500 0.0
062 N000500 0.0
062 O000500 92.5
062 P000500 0.0
062 Q000500 0.0
062 R000500 0.0
063 A000500 0
063 B000500 14.9
064 A000500 N
064 B000500 N
070 A010500 Y
070 A020500 N
070 B010500 N
070 B020500 N
070 C010500 Y
070 C020500 N
070 D010500 N
070 D020500 N
070 E010500 Y
070 E020500 Y
070 F010500 N
070 F020500 N
070 G010500 Y
070 G020500 N
070 H010500 N
070 H020500 N
070 I010500 N
070 I020500 N
070 J010500 Y
070 J020500 N
<PAGE> PAGE 22
070 K010500 N
070 K020500 N
070 L010500 N
070 L020500 N
070 M010500 N
070 M020500 N
070 N010500 N
070 N020500 N
070 O010500 N
070 O020500 N
070 P010500 N
070 P020500 N
070 Q010500 N
070 Q020500 N
070 R010500 N
070 R020500 N
071 A000500 6026
071 B000500 5055
071 C000500 37703
071 D000500 27
072 A000500 6
072 B000500 1064
072 C000500 0
072 D000500 0
072 E000500 0
072 F000500 110
072 G000500 43
072 H000500 0
072 I000500 0
072 J000500 18
072 K000500 0
072 L000500 3
072 M000500 0
072 N000500 0
072 O000500 0
072 P000500 0
072 Q000500 0
072 R000500 1
072 S000500 0
072 T000500 37
072 U000500 0
072 V000500 0
072 W000500 15
072 X000500 227
072 Y000500 0
072 Z000500 837
072AA000500 197
072BB000500 1
072CC010500 892
072CC020500 0
072DD010500 661
<PAGE> PAGE 23
072DD020500 176
072EE000500 250
073 A010500 0.0000
073 A020500 0.0000
073 B000500 0.0700
073 C000500 0.0000
074 A000500 70
074 B000500 0
074 C000500 2700
074 D000500 38154
074 E000500 0
074 F000500 0
074 G000500 0
074 H000500 0
074 I000500 0
074 J000500 0
074 K000500 0
074 L000500 537
074 M000500 0
074 N000500 41461
074 O000500 0
074 P000500 33
074 Q000500 0
074 R010500 0
074 R020500 0
074 R030500 0
074 R040500 157
074 S000500 0
074 T000500 41271
074 U010500 2932
074 U020500 1021
074 V010500 0.00
074 V020500 0.00
074 W000500 0.0000
074 X000500 1039
074 Y000500 0
075 A000500 0
075 B000500 40146
076 000500 0.00
028 A010600 6
028 A020600 5
028 A030600 0
028 A040600 58
028 B010600 74
028 B020600 7
028 B030600 0
028 B040600 14
028 C010600 2
028 C020600 6
028 C030600 0
028 C040600 3
<PAGE> PAGE 24
028 D010600 67
028 D020600 47
028 D030600 0
028 D040600 33
028 E010600 80
028 E020600 7
028 E030600 0
028 E040600 82
028 F010600 275
028 F020600 8
028 F030600 0
028 F040600 65
028 G010600 504
028 G020600 80
028 G030600 0
028 G040600 255
028 H000600 85
042 A000600 0
042 B000600 0
042 C000600 0
042 D000600 0
042 E000600 0
042 F000600 0
042 G000600 0
042 H000600 100
043 000600 5
044 000600 30
049 000600 N
050 000600 N
051 000600 N
052 000600 N
053 A000600 Y
053 B000600 Y
053 C000600 N
055 A000600 N
055 B000600 N
056 000600 Y
057 000600 N
062 A000600 Y
062 B000600 0.0
062 C000600 0.0
062 D000600 0.0
062 E000600 5.8
062 F000600 0.0
062 G000600 0.0
062 H000600 0.0
062 I000600 0.0
062 J000600 0.0
062 K000600 0.0
062 L000600 0.0
062 M000600 0.0
<PAGE> PAGE 25
062 N000600 0.0
062 O000600 94.6
062 P000600 0.0
062 Q000600 0.0
062 R000600 0.0
063 A000600 0
063 B000600 13.5
064 A000600 N
064 B000600 N
070 A010600 Y
070 A020600 N
070 B010600 N
070 B020600 N
070 C010600 Y
070 C020600 N
070 D010600 N
070 D020600 N
070 E010600 Y
070 E020600 Y
070 F010600 N
070 F020600 N
070 G010600 Y
070 G020600 N
070 H010600 N
070 H020600 N
070 I010600 N
070 I020600 N
070 J010600 Y
070 J020600 N
070 K010600 N
070 K020600 N
070 L010600 N
070 L020600 N
070 M010600 N
070 M020600 N
070 N010600 N
070 N020600 N
070 O010600 N
070 O020600 N
070 P010600 N
070 P020600 N
070 Q010600 N
070 Q020600 N
070 R010600 N
070 R020600 N
071 A000600 1191
071 B000600 929
071 C000600 3024
071 D000600 61
072 A000600 6
072 B000600 81
<PAGE> PAGE 26
072 C000600 0
072 D000600 0
072 E000600 0
072 F000600 9
072 G000600 2
072 H000600 0
072 I000600 0
072 J000600 2
072 K000600 0
072 L000600 0
072 M000600 1
072 N000600 0
072 O000600 0
072 P000600 0
072 Q000600 0
072 R000600 0
072 S000600 0
072 T000600 4
072 U000600 0
072 V000600 0
072 W000600 1
072 X000600 19
072 Y000600 0
072 Z000600 62
072AA000600 20
072BB000600 1
072CC010600 78
072CC020600 0
072DD010600 41
072DD020600 21
072EE000600 54
073 A010600 0.0000
073 A020600 0.0000
073 B000600 0.1800
073 C000600 0.0000
074 A000600 55
074 B000600 0
074 C000600 200
074 D000600 3276
074 E000600 0
074 F000600 0
074 G000600 0
074 H000600 0
074 I000600 0
074 J000600 20
074 K000600 0
074 L000600 51
074 M000600 0
074 N000600 3602
074 O000600 132
074 P000600 4
<PAGE> PAGE 27
074 Q000600 0
074 R010600 0
074 R020600 0
074 R030600 0
074 R040600 3
074 S000600 0
074 T000600 3463
074 U010600 196
074 U020600 139
074 V010600 0.00
074 V020600 0.00
074 W000600 0.0000
074 X000600 155
074 Y000600 0
075 A000600 0
075 B000600 3201
076 000600 0.00
028 A010700 26
028 A020700 12
028 A030700 0
028 A040700 56
028 B010700 42
028 B020700 12
028 B030700 0
028 B040700 60
028 C010700 2
028 C020700 10
028 C030700 0
028 C040700 8
028 D010700 137
028 D020700 50
028 D030700 0
028 D040700 72
028 E010700 580
028 E020700 13
028 E030700 0
028 E040700 160
028 F010700 44
028 F020700 15
028 F030700 0
028 F040700 111
028 G010700 831
028 G020700 112
028 G030700 0
028 G040700 467
028 H000700 42
042 A000700 0
042 B000700 0
042 C000700 0
042 D000700 0
042 E000700 0
<PAGE> PAGE 28
042 F000700 0
042 G000700 0
042 H000700 100
043 000700 13
044 000700 56
049 000700 N
050 000700 N
051 000700 N
052 000700 N
053 A000700 N
055 A000700 Y
055 B000700 N
056 000700 Y
057 000700 N
062 A000700 Y
062 B000700 0.0
062 C000700 0.0
062 D000700 0.0
062 E000700 5.1
062 F000700 0.0
062 G000700 0.0
062 H000700 0.0
062 I000700 0.0
062 J000700 0.0
062 K000700 0.0
062 L000700 0.0
062 M000700 0.0
062 N000700 0.0
062 O000700 94.2
062 P000700 0.0
062 Q000700 0.0
062 R000700 0.0
063 A000700 0
063 B000700 15.5
064 A000700 N
064 B000700 N
070 A010700 Y
070 A020700 N
070 B010700 N
070 B020700 N
070 C010700 Y
070 C020700 N
070 D010700 N
070 D020700 N
070 E010700 Y
070 E020700 Y
070 F010700 N
070 F020700 N
070 G010700 Y
070 G020700 N
070 H010700 N
<PAGE> PAGE 29
070 H020700 N
070 I010700 N
070 I020700 N
070 J010700 Y
070 J020700 N
070 K010700 N
070 K020700 N
070 L010700 N
070 L020700 N
070 M010700 N
070 M020700 N
070 N010700 N
070 N020700 N
070 O010700 N
070 O020700 N
070 P010700 N
070 P020700 N
070 Q010700 N
070 Q020700 N
070 R010700 N
070 R020700 N
071 A000700 1410
071 B000700 697
071 C000700 5083
071 D000700 27
072 A000700 6
072 B000700 141
072 C000700 0
072 D000700 0
072 E000700 0
072 F000700 15
072 G000700 5
072 H000700 0
072 I000700 0
072 J000700 2
072 K000700 0
072 L000700 1
072 M000700 0
072 N000700 0
072 O000700 0
072 P000700 0
072 Q000700 0
072 R000700 0
072 S000700 1
072 T000700 13
072 U000700 0
072 V000700 0
072 W000700 3
072 X000700 40
072 Y000700 0
072 Z000700 101
<PAGE> PAGE 30
072AA000700 25
072BB000700 3
072CC010700 120
072CC020700 0
072DD010700 41
072DD020700 60
072EE000700 47
073 A010700 0.0000
073 A020700 0.0000
073 B000700 0.0900
073 C000700 0.0000
074 A000700 86
074 B000700 0
074 C000700 300
074 D000700 5533
074 E000700 0
074 F000700 0
074 G000700 0
074 H000700 0
074 I000700 0
074 J000700 0
074 K000700 0
074 L000700 76
074 M000700 0
074 N000700 5995
074 O000700 104
074 P000700 7
074 Q000700 0
074 R010700 0
074 R020700 0
074 R030700 0
074 R040700 9
074 S000700 0
074 T000700 5875
074 U010700 178
074 U020700 391
074 V010700 0.00
074 V020700 0.00
074 W000700 0.0000
074 X000700 166
074 Y000700 0
075 A000700 0
075 B000700 5519
076 000700 0.00
028 A010800 197
028 A020800 13
028 A030800 0
028 A040800 1
028 B010800 38
028 B020800 13
028 B030800 0
<PAGE> PAGE 31
028 B040800 17
028 C010800 80
028 C020800 11
028 C030800 0
028 C040800 87
028 D010800 118
028 D020800 58
028 D030800 0
028 D040800 67
028 E010800 40
028 E020800 14
028 E030800 0
028 E040800 11
028 F010800 171
028 F020800 12
028 F030800 0
028 F040800 169
028 G010800 644
028 G020800 121
028 G030800 0
028 G040800 352
028 H000800 109
042 A000800 0
042 B000800 0
042 C000800 0
042 D000800 0
042 E000800 0
042 F000800 0
042 G000800 0
042 H000800 100
043 000800 15
044 000800 57
049 000800 N
050 000800 N
051 000800 N
052 000800 N
053 A000800 Y
053 B000800 Y
053 C000800 N
055 A000800 Y
055 B000800 N
056 000800 Y
057 000800 N
062 A000800 Y
062 B000800 0.0
062 C000800 0.0
062 D000800 0.0
062 E000800 7.3
062 F000800 0.0
062 G000800 0.0
062 H000800 0.0
<PAGE> PAGE 32
062 I000800 0.0
062 J000800 0.0
062 K000800 0.0
062 L000800 0.0
062 M000800 0.0
062 N000800 0.0
062 O000800 92.4
062 P000800 0.0
062 Q000800 0.0
062 R000800 0.0
063 A000800 0
063 B000800 13.7
064 A000800 N
064 B000800 N
070 A010800 Y
070 A020800 N
070 B010800 N
070 B020800 N
070 C010800 Y
070 C020800 N
070 D010800 N
070 D020800 N
070 E010800 Y
070 E020800 Y
070 F010800 N
070 F020800 N
070 G010800 Y
070 G020800 N
070 H010800 N
070 H020800 N
070 I010800 N
070 I020800 N
070 J010800 Y
070 J020800 N
070 K010800 N
070 K020800 N
070 L010800 N
070 L020800 N
070 M010800 N
070 M020800 N
070 N010800 N
070 N020800 N
070 O010800 N
070 O020800 N
070 P010800 N
070 P020800 N
070 Q010800 N
070 Q020800 N
070 R010800 N
070 R020800 N
071 A000800 1961
<PAGE> PAGE 33
071 B000800 1325
071 C000800 6046
071 D000800 44
072 A000800 6
072 B000800 168
072 C000800 0
072 D000800 0
072 E000800 0
072 F000800 18
072 G000800 6
072 H000800 0
072 I000800 0
072 J000800 3
072 K000800 0
072 L000800 1
072 M000800 1
072 N000800 0
072 O000800 0
072 P000800 0
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072 R000800 1
072 S000800 0
072 T000800 13
072 U000800 0
072 V000800 0
072 W000800 4
072 X000800 47
072 Y000800 0
072 Z000800 121
072AA000800 32
072BB000800 3
072CC010800 164
072CC020800 0
072DD010800 54
072DD020800 67
072EE000800 57
073 A010800 0.0000
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073 B000800 0.0900
073 C000800 0.0000
074 A000800 83
074 B000800 0
074 C000800 500
074 D000800 6331
074 E000800 0
074 F000800 0
074 G000800 0
074 H000800 0
074 I000800 0
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074 K000800 0
<PAGE> PAGE 34
074 L000800 91
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074 N000800 7005
074 O000800 132
074 P000800 9
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074 R040800 11
074 S000800 0
074 T000800 6853
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074 U020800 390
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074 W000800 0.0000
074 X000800 178
074 Y000800 0
075 A000800 0
075 B000800 6657
076 000800 0.00
SIGNATURE PHILIP J. COLLORA
TITLE VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 011
<NAME> KEMPER NEW YORK TAX-FREE INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 269,516
<INVESTMENTS-AT-VALUE> 287,153
<RECEIVABLES> 3,357
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 290,598
<PAYABLE-FOR-SECURITIES> 5,640
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 682
<TOTAL-LIABILITIES> 6,322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 266,109
<SHARES-COMMON-STOCK> 24,530
<SHARES-COMMON-PRIOR> 24,954
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 530
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,637
<NET-ASSETS> 284,276
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,026
<OTHER-INCOME> 0
<EXPENSES-NET> (1,235)
<NET-INVESTMENT-INCOME> 6,791
<REALIZED-GAINS-CURRENT> 3,238
<APPREC-INCREASE-CURRENT> 3,313
<NET-CHANGE-FROM-OPS> 13,342
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,520)
<DISTRIBUTIONS-OF-GAINS> (4,387)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 564
<NUMBER-OF-SHARES-REDEEMED> (1,595)
<SHARES-REINVESTED> 607
<NET-CHANGE-IN-ASSETS> (1,658)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,904
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,235
<AVERAGE-NET-ASSETS> 285,819
<PER-SHARE-NAV-BEGIN> 10.93
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> (.26)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.01
<EXPENSE-RATIO> .82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 012
<NAME> KEMPER NEW YORK TAX-FREE INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 269,516
<INVESTMENTS-AT-VALUE> 287,153
<RECEIVABLES> 3,357
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 290,598
<PAYABLE-FOR-SECURITIES> 5,640
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 682
<TOTAL-LIABILITIES> 6,322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 266,109
<SHARES-COMMON-STOCK> 1,019
<SHARES-COMMON-PRIOR> 931
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 530
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,637
<NET-ASSETS> 284,276
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,026
<OTHER-INCOME> 0
<EXPENSES-NET> (1,235)
<NET-INVESTMENT-INCOME> 6,791
<REALIZED-GAINS-CURRENT> 3,238
<APPREC-INCREASE-CURRENT> 3,313
<NET-CHANGE-FROM-OPS> 13,342
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (211)
<DISTRIBUTIONS-OF-GAINS> (175)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 116
<NUMBER-OF-SHARES-REDEEMED> (51)
<SHARES-REINVESTED> 23
<NET-CHANGE-IN-ASSETS> (1,658)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,904
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,235
<AVERAGE-NET-ASSETS> 285,819
<PER-SHARE-NAV-BEGIN> 10.94
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.01
<EXPENSE-RATIO> 1.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 013
<NAME> KEMPER NEW YORK TAX-FREE INCOME FUND - CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 269,516
<INVESTMENTS-AT-VALUE> 287,153
<RECEIVABLES> 3,357
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 290,598
<PAYABLE-FOR-SECURITIES> 5,640
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 682
<TOTAL-LIABILITIES> 6,322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 266,109
<SHARES-COMMON-STOCK> 282
<SHARES-COMMON-PRIOR> 272
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 530
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,637
<NET-ASSETS> 284,276
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,026
<OTHER-INCOME> 0
<EXPENSES-NET> (1,235)
<NET-INVESTMENT-INCOME> 6,791
<REALIZED-GAINS-CURRENT> 3,238
<APPREC-INCREASE-CURRENT> 3,313
<NET-CHANGE-FROM-OPS> 13,342
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (60)
<DISTRIBUTIONS-OF-GAINS> (50)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89
<NUMBER-OF-SHARES-REDEEMED> (87)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> (1,658)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,904
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,235
<AVERAGE-NET-ASSETS> 285,819
<PER-SHARE-NAV-BEGIN> 10.92
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.00
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 021
<NAME> KEMPER CALIFORNIA TAX-FREE INCOME FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 927,977
<INVESTMENTS-AT-VALUE> 993,495
<RECEIVABLES> 33,365
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,026,896
<PAYABLE-FOR-SECURITIES> 16,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,159
<TOTAL-LIABILITIES> 18,409
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 944,106
<SHARES-COMMON-STOCK> 128,961
<SHARES-COMMON-PRIOR> 130,315
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,137)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 65,518
<NET-ASSETS> 1,008,487
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,498
<OTHER-INCOME> 0
<EXPENSES-NET> (3,915)
<NET-INVESTMENT-INCOME> 24,583
<REALIZED-GAINS-CURRENT> 12,121
<APPREC-INCREASE-CURRENT> 12,032
<NET-CHANGE-FROM-OPS> 48,736
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (23,954)
<DISTRIBUTIONS-OF-GAINS> (16,305)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,895
<NUMBER-OF-SHARES-REDEEMED> (14,668)
<SHARES-REINVESTED> 3,419
<NET-CHANGE-IN-ASSETS> 580
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,554
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,915
<AVERAGE-NET-ASSETS> 1,021,016
<PER-SHARE-NAV-BEGIN> 7.52
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .18
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.57
<EXPENSE-RATIO> .73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 022
<NAME> KEMPER CALIFORNIA TAX-FREE INCOME FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 927,977
<INVESTMENTS-AT-VALUE> 993,495
<RECEIVABLES> 33,365
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,026,896
<PAYABLE-FOR-SECURITIES> 16,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,159
<TOTAL-LIABILITIES> 18,409
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 944,106
<SHARES-COMMON-STOCK> 4,033
<SHARES-COMMON-PRIOR> 3,579
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,137)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 65,518
<NET-ASSETS> 1,008,487
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,498
<OTHER-INCOME> 0
<EXPENSES-NET> (3,915)
<NET-INVESTMENT-INCOME> 24,583
<REALIZED-GAINS-CURRENT> 12,121
<APPREC-INCREASE-CURRENT> 12,032
<NET-CHANGE-FROM-OPS> 48,736
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (572)
<DISTRIBUTIONS-OF-GAINS> (479)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 674
<NUMBER-OF-SHARES-REDEEMED> (305)
<SHARES-REINVESTED> 85
<NET-CHANGE-IN-ASSETS> 580
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,554
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,915
<AVERAGE-NET-ASSETS> 1,021,016
<PER-SHARE-NAV-BEGIN> 7.52
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> .19
<PER-SHARE-DIVIDEND> (.15)
<PER-SHARE-DISTRIBUTIONS> (.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.58
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 023
<NAME> KEMPER CALIFORNIA TAX-FREE INCOME FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 927,977
<INVESTMENTS-AT-VALUE> 993,495
<RECEIVABLES> 33,365
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,026,896
<PAYABLE-FOR-SECURITIES> 16,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,159
<TOTAL-LIABILITIES> 18,409
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 944,106
<SHARES-COMMON-STOCK> 236
<SHARES-COMMON-PRIOR> 201
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,137)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 65,518
<NET-ASSETS> 1,008,487
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 28,498
<OTHER-INCOME> 0
<EXPENSES-NET> (3,915)
<NET-INVESTMENT-INCOME> 24,583
<REALIZED-GAINS-CURRENT> 12,121
<APPREC-INCREASE-CURRENT> 12,032
<NET-CHANGE-FROM-OPS> 48,736
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (57)
<DISTRIBUTIONS-OF-GAINS> (28)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,603
<NUMBER-OF-SHARES-REDEEMED> (5,578)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 580
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,554
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,915
<AVERAGE-NET-ASSETS> 1,021,016
<PER-SHARE-NAV-BEGIN> 7.50
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> .16
<PER-SHARE-DIVIDEND> (.15)
<PER-SHARE-DISTRIBUTIONS> (.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.53
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 031
<NAME> KEMPER FLORIDA TAX-FREE INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 96,073
<INVESTMENTS-AT-VALUE> 102,987
<RECEIVABLES> 1,631
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 104,618
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171
<TOTAL-LIABILITIES> 171
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 97,321
<SHARES-COMMON-STOCK> 9,347
<SHARES-COMMON-PRIOR> 9,504
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 212
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,914
<NET-ASSETS> 104,447
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,844
<OTHER-INCOME> 0
<EXPENSES-NET> (432)
<NET-INVESTMENT-INCOME> 2,412
<REALIZED-GAINS-CURRENT> 1,117
<APPREC-INCREASE-CURRENT> 1,252
<NET-CHANGE-FROM-OPS> 4,781
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,307)
<DISTRIBUTIONS-OF-GAINS> (1,341)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 510
<NUMBER-OF-SHARES-REDEEMED> (850)
<SHARES-REINVESTED> 183
<NET-CHANGE-IN-ASSETS> 602
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 515
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 287
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 432
<AVERAGE-NET-ASSETS> 104,517
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> (.25)
<PER-SHARE-DISTRIBUTIONS> (.15)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.51
<EXPENSE-RATIO> .78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 032
<NAME> KEMPER FLORIDA TAX-FREE INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 96,073
<INVESTMENTS-AT-VALUE> 102,987
<RECEIVABLES> 1,631
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 104,618
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171
<TOTAL-LIABILITIES> 171
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 97,321
<SHARES-COMMON-STOCK> 529
<SHARES-COMMON-PRIOR> 406
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 212
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,914
<NET-ASSETS> 104,447
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,844
<OTHER-INCOME> 0
<EXPENSES-NET> (432)
<NET-INVESTMENT-INCOME> 2,412
<REALIZED-GAINS-CURRENT> 1,117
<APPREC-INCREASE-CURRENT> 1,252
<NET-CHANGE-FROM-OPS> 4,781
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (94)
<DISTRIBUTIONS-OF-GAINS> (71)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 192
<NUMBER-OF-SHARES-REDEEMED> (77)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 602
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 515
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 287
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 432
<AVERAGE-NET-ASSETS> 104,517
<PER-SHARE-NAV-BEGIN> 10.40
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> (.20)
<PER-SHARE-DISTRIBUTIONS> (.15)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.50
<EXPENSE-RATIO> 1.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 033
<NAME> KEMPER FLORIDA TAX-FREE INCOME FUND - CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 96,073
<INVESTMENTS-AT-VALUE> 102,987
<RECEIVABLES> 1,631
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 104,618
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171
<TOTAL-LIABILITIES> 171
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 97,321
<SHARES-COMMON-STOCK> 59
<SHARES-COMMON-PRIOR> 55
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 212
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,914
<NET-ASSETS> 104,447
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,844
<OTHER-INCOME> 0
<EXPENSES-NET> (432)
<NET-INVESTMENT-INCOME> 2,412
<REALIZED-GAINS-CURRENT> 1,117
<APPREC-INCREASE-CURRENT> 1,252
<NET-CHANGE-FROM-OPS> 4,781
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11)
<DISTRIBUTIONS-OF-GAINS> (8)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 602
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 515
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 287
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 432
<AVERAGE-NET-ASSETS> 104,517
<PER-SHARE-NAV-BEGIN> 10.41
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> (.20)
<PER-SHARE-DISTRIBUTIONS> (.15)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.50
<EXPENSE-RATIO> 1.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 041
<NAME> KEMPER TEXAS TAX-FREE INCOME FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 11,781
<INVESTMENTS-AT-VALUE> 12,665
<RECEIVABLES> 235
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,900
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62
<TOTAL-LIABILITIES> 62
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,928
<SHARES-COMMON-STOCK> 1,034
<SHARES-COMMON-PRIOR> 1,075
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 884
<NET-ASSETS> 12,838
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 357
<OTHER-INCOME> 0
<EXPENSES-NET> (66)
<NET-INVESTMENT-INCOME> 291
<REALIZED-GAINS-CURRENT> 110
<APPREC-INCREASE-CURRENT> 238
<NET-CHANGE-FROM-OPS> 639
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (261)
<DISTRIBUTIONS-OF-GAINS> (127)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 52
<NUMBER-OF-SHARES-REDEEMED> (118)
<SHARES-REINVESTED> 25
<NET-CHANGE-IN-ASSETS> 369
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 63
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 66
<AVERAGE-NET-ASSETS> 12,896
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> (.24)
<PER-SHARE-DISTRIBUTIONS> (.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 042
<NAME> KEMPER TEXAS TAX-FREE INCOME FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 11,781
<INVESTMENTS-AT-VALUE> 12,665
<RECEIVABLES> 235
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,900
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62
<TOTAL-LIABILITIES> 62
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,928
<SHARES-COMMON-STOCK> 149
<SHARES-COMMON-PRIOR> 92
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 884
<NET-ASSETS> 12,838
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 357
<OTHER-INCOME> 0
<EXPENSES-NET> (66)
<NET-INVESTMENT-INCOME> 291
<REALIZED-GAINS-CURRENT> 110
<APPREC-INCREASE-CURRENT> 238
<NET-CHANGE-FROM-OPS> 639
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (24)
<DISTRIBUTIONS-OF-GAINS> (16)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 67
<NUMBER-OF-SHARES-REDEEMED> (11)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 369
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 63
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 66
<AVERAGE-NET-ASSETS> 12,896
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> (.20)
<PER-SHARE-DISTRIBUTIONS> (.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 043
<NAME> KEMPER TEXAS TAX-FREE INCOME FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 11,781
<INVESTMENTS-AT-VALUE> 12,665
<RECEIVABLES> 235
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,900
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62
<TOTAL-LIABILITIES> 62
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,928
<SHARES-COMMON-STOCK> 30
<SHARES-COMMON-PRIOR> 30
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 884
<NET-ASSETS> 12,838
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 357
<OTHER-INCOME> 0
<EXPENSES-NET> (66)
<NET-INVESTMENT-INCOME> 291
<REALIZED-GAINS-CURRENT> 110
<APPREC-INCREASE-CURRENT> 238
<NET-CHANGE-FROM-OPS> 639
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6)
<DISTRIBUTIONS-OF-GAINS> (4)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> (2)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 369
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 63
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 66
<AVERAGE-NET-ASSETS> 12,896
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> (.20)
<PER-SHARE-DISTRIBUTIONS> (.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.58
<EXPENSE-RATIO> 1.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 051
<NAME> KEMPER OHIO TAX-FREE INCOME FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 37,856
<INVESTMENTS-AT-VALUE> 40,854
<RECEIVABLES> 537
<ASSETS-OTHER> 70
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41,461
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 190
<TOTAL-LIABILITIES> 190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,444
<SHARES-COMMON-STOCK> 2,932
<SHARES-COMMON-PRIOR> 2,929
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,998
<NET-ASSETS> 41,271
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,064
<OTHER-INCOME> 0
<EXPENSES-NET> (227)
<NET-INVESTMENT-INCOME> 837
<REALIZED-GAINS-CURRENT> 196
<APPREC-INCREASE-CURRENT> 892
<NET-CHANGE-FROM-OPS> 1,925
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (661)
<DISTRIBUTIONS-OF-GAINS> (187)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 100
<NUMBER-OF-SHARES-REDEEMED> (152)
<SHARES-REINVESTED> 55
<NET-CHANGE-IN-ASSETS> 1,803
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (117)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 227
<AVERAGE-NET-ASSETS> 40,146
<PER-SHARE-NAV-BEGIN> 10.22
<PER-SHARE-NII> .23
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> (.23)
<PER-SHARE-DISTRIBUTIONS> (.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> .92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 052
<NAME> KEMPER OHIO TAX-FREE INCOME FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 37,856
<INVESTMENTS-AT-VALUE> 40,854
<RECEIVABLES> 537
<ASSETS-OTHER> 70
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41,461
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 190
<TOTAL-LIABILITIES> 190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,444
<SHARES-COMMON-STOCK> 951
<SHARES-COMMON-PRIOR> 895
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,998
<NET-ASSETS> 41,271
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,064
<OTHER-INCOME> 0
<EXPENSES-NET> (227)
<NET-INVESTMENT-INCOME> 837
<REALIZED-GAINS-CURRENT> 196
<APPREC-INCREASE-CURRENT> 892
<NET-CHANGE-FROM-OPS> 1,925
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (167)
<DISTRIBUTIONS-OF-GAINS> (59)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 111
<NUMBER-OF-SHARES-REDEEMED> (69)
<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> 1,803
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (117)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 227
<AVERAGE-NET-ASSETS> 40,146
<PER-SHARE-NAV-BEGIN> 10.22
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 053
<NAME> KEMPER OHIO TAX-FREE INCOME FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 37,856
<INVESTMENTS-AT-VALUE> 40,854
<RECEIVABLES> 537
<ASSETS-OTHER> 70
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41,461
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 190
<TOTAL-LIABILITIES> 190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,444
<SHARES-COMMON-STOCK> 70
<SHARES-COMMON-PRIOR> 38
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (171)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,998
<NET-ASSETS> 41,271
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,064
<OTHER-INCOME> 0
<EXPENSES-NET> (227)
<NET-INVESTMENT-INCOME> 837
<REALIZED-GAINS-CURRENT> 196
<APPREC-INCREASE-CURRENT> 892
<NET-CHANGE-FROM-OPS> 1,925
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9)
<DISTRIBUTIONS-OF-GAINS> (4)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 1,803
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (117)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 227
<AVERAGE-NET-ASSETS> 40,146
<PER-SHARE-NAV-BEGIN> 10.22
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 061
<NAME> KEMPER MICHIGAN TAX-FREE INCOME FUND - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 3,274
<INVESTMENTS-AT-VALUE> 3,476
<RECEIVABLES> 71
<ASSETS-OTHER> 55
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,602
<PAYABLE-FOR-SECURITIES> 132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 139
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,276
<SHARES-COMMON-STOCK> 196
<SHARES-COMMON-PRIOR> 187
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 202
<NET-ASSETS> 3,463
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 81
<OTHER-INCOME> 0
<EXPENSES-NET> (19)
<NET-INVESTMENT-INCOME> 62
<REALIZED-GAINS-CURRENT> 19
<APPREC-INCREASE-CURRENT> 78
<NET-CHANGE-FROM-OPS> 159
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (41)
<DISTRIBUTIONS-OF-GAINS> (34)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15
<NUMBER-OF-SHARES-REDEEMED> (11)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 372
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 20
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20
<AVERAGE-NET-ASSETS> 3,201
<PER-SHARE-NAV-BEGIN> 10.19
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> .32
<PER-SHARE-DIVIDEND> (.21)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.33
<EXPENSE-RATIO> .93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 062
<NAME> KEMPER MICHIGAN TAX-FREE INCOME FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 3,274
<INVESTMENTS-AT-VALUE> 3,476
<RECEIVABLES> 71
<ASSETS-OTHER> 55
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,602
<PAYABLE-FOR-SECURITIES> 132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 139
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,276
<SHARES-COMMON-STOCK> 132
<SHARES-COMMON-PRIOR> 105
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 202
<NET-ASSETS> 3,463
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 81
<OTHER-INCOME> 0
<EXPENSES-NET> (19)
<NET-INVESTMENT-INCOME> 62
<REALIZED-GAINS-CURRENT> 19
<APPREC-INCREASE-CURRENT> 78
<NET-CHANGE-FROM-OPS> 159
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (19)
<DISTRIBUTIONS-OF-GAINS> (18)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 31
<NUMBER-OF-SHARES-REDEEMED> (7)
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 372
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 20
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20
<AVERAGE-NET-ASSETS> 3,201
<PER-SHARE-NAV-BEGIN> 10.18
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .33
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.33
<EXPENSE-RATIO> 1.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX-FREE INCOME SERIES
<SERIES>
<NUMBER> 063
<NAME> KEMPER MICHIGAN TAX-FREE INCOME FUND - CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 3,274
<INVESTMENTS-AT-VALUE> 3,476
<RECEIVABLES> 71
<ASSETS-OTHER> 55
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,602
<PAYABLE-FOR-SECURITIES> 132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 139
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,276
<SHARES-COMMON-STOCK> 7
<SHARES-COMMON-PRIOR> 12
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 202
<NET-ASSETS> 3,463
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 81
<OTHER-INCOME> 0
<EXPENSES-NET> (19)
<NET-INVESTMENT-INCOME> 62
<REALIZED-GAINS-CURRENT> 19
<APPREC-INCREASE-CURRENT> 78
<NET-CHANGE-FROM-OPS> 159
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2)
<DISTRIBUTIONS-OF-GAINS> (2)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2
<NUMBER-OF-SHARES-REDEEMED> (8)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 372
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 20
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20
<AVERAGE-NET-ASSETS> 3,201
<PER-SHARE-NAV-BEGIN> 10.18
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .33
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.33
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX FREE INCOME SERIES
<SERIES>
<NUMBER> 071
<NAME> KEMPER NEW JERSEY TAX-FREE INCOME FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 5,514
<INVESTMENTS-AT-VALUE> 5,833
<RECEIVABLES> 76
<ASSETS-OTHER> 86
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,995
<PAYABLE-FOR-SECURITIES> 104
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16
<TOTAL-LIABILITIES> 120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,593
<SHARES-COMMON-STOCK> 178
<SHARES-COMMON-PRIOR> 192
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (37)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 319
<NET-ASSETS> 5,875
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141
<OTHER-INCOME> 0
<EXPENSES-NET> (40)
<NET-INVESTMENT-INCOME> 101
<REALIZED-GAINS-CURRENT> 22
<APPREC-INCREASE-CURRENT> 120
<NET-CHANGE-FROM-OPS> 243
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (41)
<DISTRIBUTIONS-OF-GAINS> (17)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> (26)
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 571
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40
<AVERAGE-NET-ASSETS> 5,519
<PER-SHARE-NAV-BEGIN> 10.12
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> (.21)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.31
<EXPENSE-RATIO> .96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX FREE INCOME SERIES
<SERIES>
<NUMBER> 072
<NAME> KEMPER NEW JERSEY TAX-FREE INCOME FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 5,514
<INVESTMENTS-AT-VALUE> 5,833
<RECEIVABLES> 76
<ASSETS-OTHER> 86
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,995
<PAYABLE-FOR-SECURITIES> 104
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16
<TOTAL-LIABILITIES> 120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,593
<SHARES-COMMON-STOCK> 370
<SHARES-COMMON-PRIOR> 310
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (37)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 319
<NET-ASSETS> 5,875
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141
<OTHER-INCOME> 0
<EXPENSES-NET> (40)
<NET-INVESTMENT-INCOME> 101
<REALIZED-GAINS-CURRENT> 22
<APPREC-INCREASE-CURRENT> 120
<NET-CHANGE-FROM-OPS> 243
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (56)
<DISTRIBUTIONS-OF-GAINS> (28)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 71
<NUMBER-OF-SHARES-REDEEMED> (17)
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> 571
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40
<AVERAGE-NET-ASSETS> 5,519
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> .27
<PER-SHARE-DIVIDEND> (.17)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.33
<EXPENSE-RATIO> 1.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX FREE INCOME SERIES
<SERIES>
<NUMBER> 073
<NAME> KEMPER NEW JERSEY TAX-FREE INCOME FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 5,514
<INVESTMENTS-AT-VALUE> 5,833
<RECEIVABLES> 76
<ASSETS-OTHER> 86
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,995
<PAYABLE-FOR-SECURITIES> 104
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16
<TOTAL-LIABILITIES> 120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,593
<SHARES-COMMON-STOCK> 21
<SHARES-COMMON-PRIOR> 21
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (37)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 319
<NET-ASSETS> 5,875
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141
<OTHER-INCOME> 0
<EXPENSES-NET> (40)
<NET-INVESTMENT-INCOME> 101
<REALIZED-GAINS-CURRENT> 22
<APPREC-INCREASE-CURRENT> 120
<NET-CHANGE-FROM-OPS> 243
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4)
<DISTRIBUTIONS-OF-GAINS> (2)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> (2)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 571
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40
<AVERAGE-NET-ASSETS> 5,519
<PER-SHARE-NAV-BEGIN> 10.16
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> .28
<PER-SHARE-DIVIDEND> (.17)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.35
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX FREE INCOME SERIES
<SERIES>
<NUMBER> 081
<NAME> KEMPER PENNSYLVANIA TAX - FREE INCOME FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 6,462
<INVESTMENTS-AT-VALUE> 6,831
<RECEIVABLES> 91
<ASSETS-OTHER> 83
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,005
<PAYABLE-FOR-SECURITIES> 132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,486
<SHARES-COMMON-STOCK> 255
<SHARES-COMMON-PRIOR> 244
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 369
<NET-ASSETS> 6,853
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> (47)
<NET-INVESTMENT-INCOME> 121
<REALIZED-GAINS-CURRENT> 29
<APPREC-INCREASE-CURRENT> 164
<NET-CHANGE-FROM-OPS> 314
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (54)
<DISTRIBUTIONS-OF-GAINS> (23)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16
<NUMBER-OF-SHARES-REDEEMED> (10)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 26
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 18
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 49
<AVERAGE-NET-ASSETS> 6,657
<PER-SHARE-NAV-BEGIN> 10.41
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> .31
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.63
<EXPENSE-RATIO> .97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX FREE INCOME SERIES
<SERIES>
<NUMBER> 082
<NAME> KEMPER PENNSYLVANIA TAX - FREE INCOME FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 6,462
<INVESTMENTS-AT-VALUE> 6,831
<RECEIVABLES> 91
<ASSETS-OTHER> 83
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,005
<PAYABLE-FOR-SECURITIES> 132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,486
<SHARES-COMMON-STOCK> 296
<SHARES-COMMON-PRIOR> 271
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 369
<NET-ASSETS> 6,853
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> (47)
<NET-INVESTMENT-INCOME> 121
<REALIZED-GAINS-CURRENT> 29
<APPREC-INCREASE-CURRENT> 164
<NET-CHANGE-FROM-OPS> 314
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (51)
<DISTRIBUTIONS-OF-GAINS> (26)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 43
<NUMBER-OF-SHARES-REDEEMED> (23)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 26
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 18
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 49
<AVERAGE-NET-ASSETS> 6,657
<PER-SHARE-NAV-BEGIN> 10.41
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .30
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.62
<EXPENSE-RATIO> 1.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 SEMI-ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000714287
<NAME> KEMPER STATE TAX FREE INCOME FUND
<SERIES>
<NUMBER> 083
<NAME> KEMPER PENNSYLVANIA TAX - FREE INCOME FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 6,462
<INVESTMENTS-AT-VALUE> 6,831
<RECEIVABLES> 91
<ASSETS-OTHER> 83
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,005
<PAYABLE-FOR-SECURITIES> 132
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,486
<SHARES-COMMON-STOCK> 94
<SHARES-COMMON-PRIOR> 91
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 369
<NET-ASSETS> 6,853
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 168
<OTHER-INCOME> 0
<EXPENSES-NET> (47)
<NET-INVESTMENT-INCOME> 121
<REALIZED-GAINS-CURRENT> 29
<APPREC-INCREASE-CURRENT> 164
<NET-CHANGE-FROM-OPS> 314
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16)
<DISTRIBUTIONS-OF-GAINS> (8)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 549
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 26
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 18
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 49
<AVERAGE-NET-ASSETS> 6,657
<PER-SHARE-NAV-BEGIN> 10.41
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> .31
<PER-SHARE-DIVIDEND> (.18)
<PER-SHARE-DISTRIBUTIONS> (.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.63
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 1
A special meeting of Registrant's shareholders was held on
December 3, 1997 and was adjourned as necessary. Votes regarding
the items submitted to shareholder vote are set forth below.
Item 1: Election of the Board of Trustees
David W. Belin
Vote Number
---- -----------
FOR 119,248,795
WITHHELD 2,108,979
Lewis A. Burnham
Vote Number
---- -----------
FOR 119,311,562
WITHHELD 2,046,211
Donald L. Dunaway
Vote Number
---- -----------
FOR 119,304,528
WITHHELD 2,053,245
Robert B. Hoffman
Vote Number
---- -----------
FOR 119,334,394
WITHHELD 2,023,379
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 2
Donald R. Jones
Vote Number
---- -----------
FOR 119,298,645
WITHHELD 2,059,128
Shirley D. Peterson
Vote Number
---- -----------
FOR 119,239,486
WITHHELD 2,118,287
Daniel Pierce
Vote Number
---- -----------
FOR 119,315,863
WITHHELD 2,041,911
William P. Sommers
Vote Number
---- -----------
FOR 119,329,837
WITHHELD 2,027,937
Edmond D. Villani
Vote Number
---- -----------
FOR 119,280,576
WITHHELD 2,077,197
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 3
Item 2: Selection of Independent Auditors
Vote Number
---- -----------
FOR 117,579,199
AGAINST 738,097
ABSTAIN 3,040,476
Item 3: New Investment Management Agreement
Kemper California Tax-Free Income Fund
Vote Number
---- -----------
FOR 80,712,708
AGAINST 1,676,927
ABSTAIN 3,851,109
Kemper Florida Tax-Free Income Fund
Vote Number
---- -----------
FOR 6,611,545
AGAINST 120,351
ABSTAIN 139,090
Kemper Michigan Tax-Free Income Fund
Vote Number
---- -----------
FOR 174,037
AGAINST 11,615
ABSTAIN 5,551
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 4
Kemper New Jersey Tax-Free Income Fund
Vote Number
---- -----------
FOR 324,164
AGAINST 0
ABSTAIN 1,885
Kemper New York Tax-Free Income Fund
Vote Number
---- -----------
FOR 17,137,463
AGAINST 254,004
ABSTAIN 1,106,984
Kemper Ohio Tax-Free Income Fund
Vote Number
---- -----------
FOR 2,776,485
AGAINST 9,043
ABSTAIN 74,864
Kemper Pennsylvania Tax-Free Income Fund
Vote Number
---- -----------
FOR 442,147
AGAINST 19,766
ABSTAIN 4,464
Kemper Texas Tax-Free Income Fund
Vote Number
---- -----------
FOR 696,921
AGAINST 20,745
ABSTAIN 27,456
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 5
Item 6: New Rule 12b-1 Distribution Plan
Kemper California Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 2,025,046
AGAINST 20,538
ABSTAIN 163,816
Kemper California Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 333,407
AGAINST 0
ABSTAIN 0
Kemper Florida Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 225,907
AGAINST 0
ABSTAIN 10,479
Kemper Florida Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 46,249
AGAINST 0
ABSTAIN 0
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 6
Kemper Michigan Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 59,473
AGAINST 1,381
ABSTAIN 4,251
Kemper Michigan Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 8,176
AGAINST 0
ABSTAIN 0
Kemper New Jersey Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 180,565
AGAINST 9,314
ABSTAIN 91
Kemper New Jersey Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 16,085
AGAINST 0
ABSTAIN 0
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 7
Kemper New York Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 442,667
AGAINST 20,751
ABSTAIN 26,818
Kemper New York Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 152,199
AGAINST 0
ABSTAIN 5,067
Kemper Ohio Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 650,945
AGAINST 2,654
ABSTAIN 43,368
Kemper Ohio Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 20,434
AGAINST 1,715
ABSTAIN 0
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 8
Kemper Pennsylvania Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 189,295
AGAINST 27,260
ABSTAIN 0
Kemper Pennsylvania Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 67,329
AGAINST 0
ABSTAIN 0
Kemper Texas Tax-Free Income Fund
(for Class B shareholders)
Vote Number
---- -----------
FOR 50,661
AGAINST 0
ABSTAIN 0
Kemper Texas Tax-Free Income Fund
(for Class C shareholders)
Vote Number
---- -----------
FOR 26,206
AGAINST 0
ABSTAIN 0
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 9
Item 7: To approve changes in investment policies
Kemper California Tax-Free Income Fund
Vote Number
---- -----------
FOR 69,563,872
AGAINST 2,469,902
ABSTAIN 5,458,605
Kemper Florida Tax-Free Income Fund
Vote Number
---- -----------
FOR 5,393,015
AGAINST 452,928
ABSTAIN 218,954
Kemper Michigan Tax-Free Income Fund
Vote Number
---- -----------
FOR 170,268
AGAINST 12,209
ABSTAIN 6,593
Kemper New Jersey Tax-Free Income Fund
Vote Number
---- -----------
FOR 278,972
AGAINST 9,965
ABSTAIN 169
Exhibit 77C
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 02/28/98
File No. 811-3657
Page 10
Kemper New York Tax-Free Income Fund
Vote Number
---- -----------
FOR 14,404,558
AGAINST 408,230
ABSTAIN 1,122,352
Kemper Ohio Tax-Free Income Fund
Vote Number
---- -----------
FOR 2,101,971
AGAINST 46,816
ABSTAIN 121,579
Kemper Pennsylvania Tax-Free Income Fund
Vote Number
---- -----------
FOR 382,751
AGAINST 27,391
ABSTAIN 4,464
Kemper Texas Tax-Free Income Fund
Vote Number
---- -----------
FOR 647,626
AGAINST 27,887
ABSTAIN 18,802
Exhibit 77Q1(e)(1)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper California Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
California Tax-Free Income Fund (the "Fund"). Series may be
abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders'
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds 10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) the greater of (i) the amount by which the
Fund's expenses exceed 1.5% of average daily net assets up to $30
million and 1% of average daily net assets over $30 million or
(ii) any compensation waived by you from time to time (as more
fully described below). You shall be entitled to receive during
any month such interim payments of your fee hereunder as you
shall request, provided that no such payment shall exceed 75
percent of the amount of your fee then accrued on the books of
the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
6
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
You agree that your gross compensation for any fiscal year shall
not be greater than an amount which, when added to other expenses
of the Fund, shall cause the aggregate expenses of the Fund to
equal 1.5% of average daily net assets up to $30 million and 1%
of average daily net assets over $30 million. Except to the
extent that such amount has been reflected in reduced payments to
you, you shall refund to the Fund the amount of any payment
received in excess of the limitation pursuant to this section 5
as promptly as practicable after the end of such fiscal year,
provided that you shall not be required to pay the Fund an amount
greater than the fee paid to you in respect of such year pursuant
to this Agreement. As used in this section 5, "expenses" shall
mean those expenses included in the applicable expense limitation
having the broadest specifications thereof, and "expense
limitation" means a limit on the maximum annual expenses which
may be incurred by an investment company determined (i) by
multiplying a fixed percentage by the average, or by multiplying
more than one such percentage by different specified amounts of
the average, of the values of an investment company's net assets
for a fiscal year or (ii) by multiplying a fixed percentage by an
investment company's net investment income for a fiscal year.
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement. If
any occasion should arise in which you give any advice to clients
of yours concerning the Shares of the Fund, you shall act solely
as investment counsel for such clients and not in any way on
behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
7
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
8
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
9
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper
California Tax-Free Income Fund
By: /s/ John E. Neal
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-------------------------------
Vice President
10
Exhibit 77Q1(e)(2)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Florida Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
Florida Tax-Free Income Fund (the "Fund"). Series may be
abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust s officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders'
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds $10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) any compensation waived by you from time to
time (as more fully described below). You shall be entitled to
receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment
shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
6
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement.
If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way
on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
vote of a majority of the Trustees who are not parties to this
7
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund
8
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
9
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper Florida
Tax-Free Income Fund
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
10
Exhibit 77Q1(e)(3)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Michigan Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
Michigan Tax-Free Income Fund (the "Fund"). Series may be
abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds $10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) any compensation waived by you from time to
time (as more fully described below). You shall be entitled to
receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment
shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
6
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement.
If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way
on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
7
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
8
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
9
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper
Michigan Tax-Free Income Fund
By: /s/ John E. Neal
----------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-----------------------------
Vice President
10
Exhibit 77Q1(e)(4)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper New Jersey Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
New Jersey Tax-Free Income Fund (the "Fund"). Series may be
abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds $10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) any compensation waived by you from time to
time (as more fully described below). You shall be entitled to
receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment
shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
6
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement.
If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way
on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
7
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
8
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
9
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper New
Jersey Tax-Free Income Fund
By: /s/ John E. Neal
-----------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-----------------------------
Vice President
10
Exhibit 77Q1(e)(5)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper New York Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
New York Tax-Free Income Fund (the "Fund"). Series may be
abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust s officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders'
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
3. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds 10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) any compensation waived by you from time to
time (as more fully described below). You shall be entitled to
receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment
shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
6
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement.
If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way
on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
7
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
8
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
9
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper New
York Tax-Free Income Fund
By: /s/ John E. Neal
-----------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-----------------------------
Vice President
10
Exhibit 77Q1(e)(6)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Ohio Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
Ohio Tax-Free Income Fund (the "Fund"). Series may be abolished
and dissolved, and additional series established, from time to
time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders'
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
3. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds 10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) any compensation waived by you from time to
time (as more fully described below). You shall be entitled to
receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment
shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
6
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement.
If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way
on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
7
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
8
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
9
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper Ohio
Tax-Free Income Fund
By: /s/ John E. Neal
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
10
Exhibit 77Q1(e)(7)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Pennsylvania Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
Pennsylvania Tax-Free Income Fund (the "Fund"). Series may be
abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders'
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds 10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) any compensation waived by you from time to
time (as more fully described below). You shall be entitled to
receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment
shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
6
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement.
If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way
on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
7
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
8
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
9
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper
Pennsylvania Tax-Free Income Fund
By: /s/ John E. Neal
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
10
Exhibit 77Q1(e)(8)
Kemper State Tax-Free Income Series
Form N-SAR for the period ended 2/28/98
File No. 811-3657
INVESTMENT MANAGEMENT AGREEMENT
Kemper State Tax-Free Income Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Texas Tax-Free Income Fund
Ladies and Gentlemen:
KEMPER STATE TAX-FREE INCOME SERIES (the "Trust") has been
established as a Massachusetts business trust to engage in the
business of an investment company. Pursuant to the Trust's
Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the
Trust's shares of beneficial interest (the "Shares"), in separate
series, or funds. The Board of Trustees has authorized Kemper
Texas Tax-Free Income Fund (the "Fund"). Series may be abolished
and dissolved, and additional series established, from time to
time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the
investment manager of the Fund and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. Accordingly, the Trust on behalf of the Fund agrees
with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of the Fund in the manner
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to the Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, you shall provide continuing investment management of
the assets of the Fund in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the
investment analysis and research, the review of current economic
conditions and trends and the consideration of long-range
investment policy generally available to your investment advisory
clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
2
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of the Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office space
and facilities in the United States as the Fund may require for
its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative
services on behalf of the Fund necessary for operating as an open
end investment company and not provided by persons not parties to
this Agreement including, but not limited to, preparing reports
to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising,
negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax
returns; preparing and filing the Fund's federal excise tax
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Fund all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other
3
agents of the Fund; assisting in establishing the accounting
policies of the Fund; assisting in the resolution of accounting
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust as it may
reasonably request in the conduct of the Fund's business, subject
to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Fund or any other
person not a party to this Agreement which is obligated to
provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including the Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Fund other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of the Fund:
organization expenses of the Fund (including out of-pocket
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment
company trade organizations; fees and expenses of the Fund's
4
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
business) of Trustees, officers and employees of the Trust who
are not affiliated persons of you; brokerage commissions or other
costs of acquiring or disposing of any portfolio securities of
the Fund; expenses of printing and distributing reports, notices
and dividends to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto; costs
of stationery; any litigation expenses; indemnification of
Trustees and officers of the Trust; and costs of shareholders
and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of the Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of the Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that the Fund (or some other party) shall assume some
or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting agreement
or are not permitted to be paid by the Fund (or some other party)
pursuant to such a plan.
3. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Fund shall pay you
in United States Dollars on the last day of each month the unpaid
balance of a fee equal to the excess of (a) 1/12 of .55 of 1
percent of the average daily net assets as defined below of the
Fund for such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000 the fee
payable for that month based on the portion of the average of
such values in excess of $250,000,000 shall be 1/12 of .52 of 1
percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $1,000,000,000,
5
the fee payable for that month based on the portion of the
average of such values in excess of $1,000,000,000 shall be 1/12
of .50 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $2,500,000,000
shall be 1/12 of .48 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values
exceeds $5,000,000,000, the fee payable for that month based on
the portion of the average of such values in excess of
$5,000,000,000 shall be 1/12 of .45 of 1 percent of such portion;
provided that, for any calendar month during which the average of
such values exceeds $7,500,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $7,500,000,000 shall be 1/12 of .43 of 1 percent of
such portion; provided that, for any calendar month during which
the average of such values exceeds $10,000,000,000, the fee
payable for that month based on the portion of the average of
such values in excess of $10,000,000,000 shall be 1/12 of .41 of
1 percent of such portion; and provided that, for any calendar
month during which the average of such values exceeds
$12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$12,500,000,000 shall be 1/12 of .40 of 1 percent of such
portion; over (b) any compensation waived by you from time to
time (as more fully described below). You shall be entitled to
receive during any month such interim payments of your fee
hereunder as you shall request, provided that no such payment
shall exceed 75 percent of the amount of your fee then accrued on
the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund's net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If the Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
6
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced waiver of
your fee, or any limitation of the Fund's expenses, as if such
waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Fund, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for the Fund's
account with brokers or dealers selected by you in accordance
with Fund policies as expressed in the Registration Statement.
If any occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way
on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever the Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Fund or its shareholders to which you
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and
duties hereunder.
8. Duration and Termination of This Agreement. This Agreement
shall remain in force until March 1, 1998, and continue in force
from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
7
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust, or by the
vote of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
This Agreement may be terminated with respect to the Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of the Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to the Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
the Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Kemper State Tax-Free Income Series"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent
of the Trust, shall be subject to claims against or obligations
of the Trust or of the Fund to any extent whatsoever, but that
the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of the Fund pursuant
to this Agreement shall be limited in all cases to the Fund and
its assets, and you shall not seek satisfaction of any such
8
obligation from the shareholders or any shareholder of the Fund
or any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause the Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Fund.
9
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
KEMPER STATE TAX-FREE INCOME
SERIES, on behalf of Kemper Texas
Tax-Free Income Fund
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
10
