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<PAGE> PAGE 3
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 15
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<PAGE> PAGE 21
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<PAGE> PAGE 22
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<PAGE> PAGE 23
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<PAGE> PAGE 24
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<PAGE> PAGE 26
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<PAGE> PAGE 28
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<PAGE> PAGE 29
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SIGNATURE JEROME L. DUFFY
TITLE TREASURER
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THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 1996 ANNUAL REPORT
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<CIK> 0000854905
<NAME> KEMPER TARGET EQUITY FUND
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<CIK> 0000854905
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<CIK> 0000854905
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<PER-SHARE-NAV-END> 10.70
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 1996 ANNUAL REPORT
TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000854905
<NAME> KEMPER TARGET EQUITY FUND
<SERIES>
<NUMBER> 05
<NAME> KEMPER RETIREMENT FUND 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 118,831
<INVESTMENTS-AT-VALUE> 129,793
<RECEIVABLES> 1,832
<ASSETS-OTHER> 63
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 131,688
<PAYABLE-FOR-SECURITIES> 1,511
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 430
<TOTAL-LIABILITIES> 1,941
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 106,569
<SHARES-COMMON-STOCK> 12,719
<SHARES-COMMON-PRIOR> 14,163
<ACCUMULATED-NII-CURRENT> 2,428
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,786
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,964
<NET-ASSETS> 129,747
<DIVIDEND-INCOME> 778
<INTEREST-INCOME> 5,393
<OTHER-INCOME> 0
<EXPENSES-NET> (1,286)
<NET-INVESTMENT-INCOME> 4,885
<REALIZED-GAINS-CURRENT> 13,996
<APPREC-INCREASE-CURRENT> (4,790)
<NET-CHANGE-FROM-OPS> 14,091
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,780)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3
<NUMBER-OF-SHARES-REDEEMED> (1,922)
<SHARES-REINVESTED> 475
<NET-CHANGE-IN-ASSETS> (5,190)
<ACCUMULATED-NII-PRIOR> 2,315
<ACCUMULATED-GAINS-PRIOR> (4,202)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 672
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,286
<AVERAGE-NET-ASSETS> 134,369
<PER-SHARE-NAV-BEGIN> 9.53
<PER-SHARE-NII> .39
<PER-SHARE-GAIN-APPREC> .64
<PER-SHARE-DIVIDEND> (.36)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.20
<EXPENSE-RATIO> .96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 1996 ANNUAL REPORT
TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000854905
<NAME> KEMPER TARGET EQUITY FUND
<SERIES>
<NUMBER> 06
<NAME> KEMPER WORLDWIDE 2004
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 34,362
<INVESTMENTS-AT-VALUE> 37,704
<RECEIVABLES> 132
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,924
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106
<TOTAL-LIABILITIES> 106
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,208
<SHARES-COMMON-STOCK> 3,567
<SHARES-COMMON-PRIOR> 3,082
<ACCUMULATED-NII-CURRENT> 827
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 385
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,398
<NET-ASSETS> 37,818
<DIVIDEND-INCOME> 270
<INTEREST-INCOME> 1,482
<OTHER-INCOME> 0
<EXPENSES-NET> (470)
<NET-INVESTMENT-INCOME> 1,282
<REALIZED-GAINS-CURRENT> 1,486
<APPREC-INCREASE-CURRENT> 507
<NET-CHANGE-FROM-OPS> 3,275
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,157)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 958
<NUMBER-OF-SHARES-REDEEMED> (581)
<SHARES-REINVESTED> 108
<NET-CHANGE-IN-ASSETS> 7,119
<ACCUMULATED-NII-PRIOR> 491
<ACCUMULATED-GAINS-PRIOR> (890)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 214
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 470
<AVERAGE-NET-ASSETS> 35,567
<PER-SHARE-NAV-BEGIN> 9.96
<PER-SHARE-NII> .36
<PER-SHARE-GAIN-APPREC> .63
<PER-SHARE-DIVIDEND> (.35)
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 10.60
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 1996 ANNUAL REPORT
TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000854905
<NAME> KEMPER TARGET EQUITY FUND
<SERIES>
<NUMBER> 07
<NAME> KEMPER RETIREMENT FUND 6
<MULTIPLIER> 1000
<S> <C>
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<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 49,273
<INVESTMENTS-AT-VALUE> 49,156
<RECEIVABLES> 909
<ASSETS-OTHER> 424
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50,489
<PAYABLE-FOR-SECURITIES> 718
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 82
<TOTAL-LIABILITIES> 800
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,477
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<SHARES-COMMON-PRIOR> 776
<ACCUMULATED-NII-CURRENT> 696
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 633
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 49,689
<DIVIDEND-INCOME> 137
<INTEREST-INCOME> 1,302
<OTHER-INCOME> 0
<EXPENSES-NET> (388)
<NET-INVESTMENT-INCOME> 1,051
<REALIZED-GAINS-CURRENT> 978
<APPREC-INCREASE-CURRENT> (160)
<NET-CHANGE-FROM-OPS> 1,869
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (382)
<DISTRIBUTIONS-OF-GAINS> (324)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,459
<NUMBER-OF-SHARES-REDEEMED> (252)
<SHARES-REINVESTED> 71
<NET-CHANGE-IN-ASSETS> 42,500
<ACCUMULATED-NII-PRIOR> 20
<ACCUMULATED-GAINS-PRIOR> (14)
<OVERDISTRIB-NII-PRIOR> 0
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</TABLE>
SUPPLEMENTARY REPORT OF INDEPENDENT AUDITORS
Board of Trustees
Kemper Funds
In planning and performing our audit of the financial statements of
each of the Kemper Funds listed in Exhibit A attached hereto (the
"Funds") for the year ended as of the date listed in Exhibit A
attached hereto ("Report Date"), we considered their internal control
structure, including procedures for safeguarding securities, in order
to determine our auditing procedures for the purpose of expressing
our opinion on their financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal
control structure.
The management of the Funds is responsible for establishing and
maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an
internal control structure are to provide management with reasonable,
but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are
executed in accordance with management's authorization and recorded
properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure to future periods is
subject to the risk that it may become inadequate because of changes
in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
that might be material weaknesses under standards established by the
American Institute of Certified Public Accountants. A material
weakness is a condition in which the design or operation of the
specific internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the
internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined
above as of Report Date.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
August 16, 1996
Kemper Funds Exhibit A
June 30, 1996
Kemper Target Equity Fund
Kemper Retirement Fund I
Kemper Retirement Fund II
Kemper Retirement Fund III
Kemper Retirement Fund IV
Kemper Retirement Fund V
Kemper Retirement Fund VI
Kemper Worldwide 2004 Fund
Exhibit 77Q1(e)
Kemper Target Equity Fund
Form N-SAR for the period ended 06/30/96
File No. 811-5896
INVESTMENT MANAGEMENT AGREEMENT
[Kemper Retirement Fund Series]
AGREEMENT made this 4th day of January, 1996, by and between
KEMPER TARGET EQUITY FUND, a Massachusetts business trust (the
"Fund"), and KEMPER FINANCIAL SERVICES, INC., a Delaware
corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment
company registered under the Investment Company Act of 1940, the
shares of beneficial interest ("Shares") of which are registered
under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate
series or portfolios with each representing the interests in a
separate portfolio of securities and other assets;
WHEREAS, the Fund wants to retain the Adviser under this
Agreement to render investment advisory and management services
to the portfolios of the Fund known as Kemper Retirement Fund
Series I, Kemper Retirement Fund Series II, Kemper Retirement
Fund Series III, Kemper Retirement Fund Series IV, Kemper
Retirement Fund Series V and Kemper Retirement Fund Series VI
(the "Initial Portfolios"), together with any other Fund
portfolios which may be established later and served by the
Adviser hereunder, being herein referred to collectively as the
"Portfolios" and individually referred to as a "Portfolio"; and
WHEREAS, the Adviser is willing to render such investment
advisory and management services for the Initial Portfolios;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between the
parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment
adviser for the Initial Portfolios and other Portfolios hereunder
and to manage the investment and reinvestment of the assets of
each such Portfolio in accordance with the applicable investment
objectives and policies and limitations, and to administer the
affairs of each such Portfolio to the extent requested by and
subject to the supervision of the Board of Trustees of the Fund
for the period and upon the terms herein set forth, and to place
orders for the purchase or sale of portfolio securities for the
Fund's account with brokers or dealers selected by it; and, in
connection therewith, the Adviser is authorized as the agent of
the Fund to give instructions to the Custodian of the Fund as to
the deliveries of securities and payments of cash for the account
of the Fund. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed
to seek for the Fund best execution of orders. Subject to such
policies as the Board of Trustees of the Fund determines, the
Adviser shall not be deemed to have acted unlawfully or to have
breached any duty, created by this Agreement or otherwise, solely
by reason of its having caused the Fund to pay a broker or dealer
an amount of commission for effecting a securities transaction in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Adviser
determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of
either that particular transaction or the Adviser's overall
responsibilities with respect to the clients of the Adviser as to
which the Adviser exercises investment discretion. The Fund
recognizes that all research services and research that the
Adviser receives or generates are available for all clients, and
that the Fund and other clients may benefit thereby. The
investment of funds shall be subject to all applicable
restrictions of the Agreement and Declaration of Trust and By-
Laws of the Fund as may from time to time be in force.
The Adviser accepts such employment and agrees during such
period to render such services, to furnish office facilities and
equipment and clerical, bookkeeping and administrative services
for the Fund, to permit any of its officers or employees to serve
without compensation as trustees or officers of the Fund if
elected to such positions and to assume the obligations herein
set forth for the compensation herein provided. The Adviser
shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the Fund.
It is understood and agreed that the Adviser, by separate
agreements with the Fund, may also serve the Fund in other
capacities.
2. In the event that the Fund establishes one or more
portfolios other than the Initial Portfolios with respect to
which it desires to retain the Adviser to render investment
advisory and management services hereunder, it shall notify the
Adviser in writing. If the Adviser is willing to render such
services, it shall notify the Fund in writing whereupon such
portfolio or portfolios shall become a Portfolio or Portfolios
hereunder.
3. For the services and facilities described in Section 1, the
Fund will pay to the Adviser at the end of each calendar month,
an investment management fee computed at an annual rate of .50 of
1% of the combined average daily net assets of the Portfolios.
The fee as computed above shall be computed separately for, and
charged as an expense of, each Portfolio based upon the average
daily net assets of such Portfolio. For the month and year in
which this Agreement becomes effective or terminates, there shall
be an appropriate proration on the basis of the number of days
that the Agreement is in effect during the month and year,
respectively.
4. The services of the Adviser to the Fund under this Agreement
are not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as
its services hereunder are not impaired thereby.
5. In addition to the fee of the Adviser, the Fund shall assume
and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for
keeping its books of account, for any other charges of the
custodian, and for calculating the net asset value of the Fund as
provided in the prospectus of the Fund. The Adviser shall not be
required to pay and the Fund shall assume and pay the charges and
expenses of its operations, including compensation of the
trustees (other than those affiliated with the Adviser), charges
and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, and of any registrar of
the Fund, costs of acquiring and disposing of portfolio
securities, interest, if any, on obligations incurred by the
Fund, costs of share certificates and of reports, membership dues
in the Investment Company Institute or any similar organization,
costs of reports and notices to shareholders, other like
miscellaneous expenses and all taxes and fees payable to federal,
state or other governmental agencies on account of the
registration of securities issued by the Fund, filing of trust
documents or otherwise. The Fund shall not pay or incur any
obligation for any expenses for which the Fund intends to seek
reimbursement from the Adviser as herein provided without first
obtaining the written approval of the Adviser. The Adviser shall
arrange, if desired by the Fund, for officers or employees of the
Adviser to serve, without compensation from the Fund, as
trustees, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual
consent and to any limitations imposed by law.
If expenses borne by the Fund for those Portfolios which the
Adviser manages in any fiscal year (including the Adviser's fee,
but excluding interest, taxes, fees incurred in acquiring and
disposing of portfolio securities, distribution services fees,
extraordinary expenses and any other expenses excludable under
state securities law limitations) exceed any applicable
limitation arising under state securities laws, the Adviser will
reduce its fee or reimburse the Fund for any excess to the extent
required by such state securities laws. If for any month the
expenses of the Fund properly chargeable to the income account
shall exceed 1/12 of the percentage of average net assets
allowable as expenses, the payment to the Adviser for that month
shall be reduced and if necessary the Adviser shall make a refund
payment to the Fund so that the total net expense will not exceed
such percentage. As of the end of the Fund's fiscal year,
however, the foregoing computations and payments shall be
readjusted so that the aggregate compensation payable to the
Adviser for the year is equal to the percentage calculated in
accordance with Section 3 hereof of the average net asset value
as determined as described herein throughout the fiscal year,
diminished to the extent necessary so that the total of the
aforementioned expense items of the Fund shall not exceed the
expense limitation. The aggregate of repayments, if any, by the
Adviser to the Fund for the year shall be the amount necessary to
limit the said net expense to said percentage in accordance with
the foregoing.
The net asset value for each Portfolio shall be calculated
in accordance with the provisions of the Fund's prospectus or as
the trustees may determine in accordance with the provisions of
the Investment Company Act of 1940. On each day when net asset
value is not calculated, the net asset value of a Portfolio shall
be deemed to be the net asset value of such Portfolio as of the
close of business on the last day on which such calculation was
made for the purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are or
may be interested in the Adviser as officers, directors, agents,
shareholders or otherwise, and that the officers, directors,
shareholders and agents of the Adviser may be interested in the
Fund otherwise than as a trustee, officer or agent.
7. The Adviser shall not be liable for any error of judgment or
of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence
on the part of the Adviser in the performance of its obligations
and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
8. This Agreement shall become effective with respect to the
Initial Portfolios on the date hereof and shall remain in full
force until April 1, 1996, unless sooner terminated as
hereinafter provided. This Agreement shall continue in force
from year to year thereafter with respect to each Portfolio, but
only as long as such continuance is specifically approved for
each Portfolio at least annually in the manner required by the
Investment Company Act of 1940 and the rules and regulations
thereunder; provided, however, that if the continuation of this
Agreement is not approved for a Portfolio, the Adviser may
continue to serve in such capacity for such Portfolio in the
manner and to the extent permitted by the Investment Company Act
of 1940 and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of
its assignment and may be terminated at any time without the
payment of any penalty by the Fund or by the Adviser on sixty
(60) days written notice to the other party. The Fund may effect
termination with respect to any Portfolio by action of the Board
of Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may be terminated with respect to any
Portfolio 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 such Portfolio in the event that it shall
have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken
any action which results in a breach of the covenants of the
Adviser set forth herein.
The terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth
in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of
the Adviser to receive payments on any unpaid balance of the
compensation described in Section 3 earned prior to such
termination.
9. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
11. All parties hereto are expressly put on notice of the Fund's
Agreement and Declaration of Trust and all amendments thereto,
all of which are on file with the Secretary of The Commonwealth
of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by
and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the
Fund hereunder are not binding upon any of the trustees,
officers, or shareholders of the Fund individually but are
binding upon only the assets and property of the Fund. With
respect to any claim by the Adviser for recovery of that portion
of the investment management fee (or any other liability of the
Fund arising hereunder) allocated to a particular Portfolio,
whether in accordance with the express terms hereof or otherwise,
the Adviser shall have recourse solely against the assets of that
Portfolio to satisfy such claim and shall have no recourse
against the assets of any other Portfolio for such purpose.
12. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 11 hereof which
shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of Illinois.
13. This Agreement is the entire contract between the parties
relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter
hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused
this Agreement to be executed as of the day and year first above
written.
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
-----------------------------
Title: Vice President
--------------------------
ATTEST:
/s/ Philip J. Collora
---------------------------------
Title: Secretary
---------------------------
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-----------------------------
Title: Senior Vice President
--------------------------
ATTEST:
/s/ David F. Dierenfeldt
----------------------------------
Title: Assistant Secretary
----------------------------
LKW|W:\FUNDS\NSAR.EXH\KTEF\KTEF-696.77Q|081396
Exhibit 77Q1(e)
Kemper Target Equity Fund
Form N-SAR for the period ended 06/30/96
File No. 811-5896
INVESTMENT MANAGEMENT AGREEMENT
(Worldwide)
AGREEMENT made this 4th day of January, 1996, by and
between KEMPER TARGET EQUITY FUND, a Massachusetts business
trust (the "Fund"), and KEMPER FINANCIAL SERVICES, INC., a
Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment
company registered under the Investment Company Act of 1940,
the shares of beneficial interest ("Shares") of which are
registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in
separate series or portfolios with each representing the
interests in a separate portfolio of securities and other
assets;
WHEREAS, the Fund wants to retain the Adviser under this
Agreement to render investment advisory and management
services to the portfolio of the Fund known as Kemper
Worldwide 2004 Fund (the "Initial Portfolio"), together with
any other Fund portfolios that hereafter become subject to
this Agreement pursuant to Section 2 hereof, being herein
referred to collectively as the "Portfolios" and individually
referred to as a "Portfolio"; and
WHEREAS, the Adviser is willing to render such
investment advisory and management services for the Initial
Portfolio;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between the
parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the
investment adviser for the Initial Portfolio and other
Portfolios hereunder and to manage the investment and
reinvestment of the assets of each such Portfolio in
accordance with the applicable investment objectives and
policies and limitations, and to administer the affairs of
each such Portfolio to the extent requested by and subject to
the supervision of the Board of Trustees of the Fund for the
period and upon the terms herein set forth, and to place
orders for the purchase or sale of portfolio securities for
the Fund's account with brokers or dealers selected by it;
and, in connection therewith, the Adviser is authorized as
the agent of the Fund to give instructions to the Custodian
of the Fund as to the deliveries of securities and payments
of cash for the account of the Fund. In connection with the
selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board
of Trustees of the Fund determines, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty,
created by this Agreement or otherwise, solely by reason of
its having caused the Fund to pay a broker or dealer an
amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if
the Adviser determined in good faith that such amount of
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer viewed in terms of either that particular transaction
or the Adviser's overall responsibilities with respect to the
clients of the Adviser as to which the Adviser exercises
investment discretion. The Fund recognizes that all research
services and research that the Adviser receives or generates
are available for all clients, and that the Fund and other
clients may benefit thereby. The investment of funds shall
be subject to all applicable restrictions of the Agreement
and Declaration of Trust and By-Laws of the Fund as may from
time to time be in force.
The Adviser accepts such employment and agrees during
such period to render such services, to furnish office
facilities and equipment and clerical, bookkeeping and
administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as
trustees or officers of the Fund if elected to such positions
and to assume the obligations herein set forth for the
compensation herein provided. The Adviser shall for all
purposes herein provided be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the
Fund. It is understood and agreed that the Adviser, by
separate agreements with the Fund, may also serve the Fund in
other capacities.
2. In the event that the Fund establishes one or more
portfolios other than the Initial Portfolio with respect to
which it desires to retain the Adviser to render investment
advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render
such services, it shall notify the Fund in writing whereupon
such portfolio or portfolios shall become a Portfolio or
Portfolios hereunder.
3. For the services and facilities described in Section 1,
the Fund will pay to the Adviser at the end of each calendar
month, an investment management fee computed at an annual
rate of .60 of 1% of the combined average daily net assets of
the Portfolios. The fee as computed above shall be allocated
as an expense of each Portfolio based upon the relative daily
net assets of such Portfolios. For the month and year in
which this Agreement becomes effective or terminates, there
shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and
year, respectively.
4. The services of the Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services or other services to
others so long as its services hereunder are not impaired
thereby.
5. In addition to the fee of the Adviser, the Fund shall
assume and pay any expenses for services rendered by a
custodian for the safekeeping of the Fund's securities or
other property, for keeping its books of account, for any
other charges of the custodian, and for calculating the net
asset value of the Fund as provided in the prospectus of the
Fund. The Adviser shall not be required to pay and the Fund
shall assume and pay the charges and expenses of its
operations, including compensation of the trustees (other
than those affiliated with the Adviser), charges and expenses
of independent auditors, of legal counsel, of any transfer or
dividend disbursing agent, and of any registrar of the Fund,
costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, costs
of share certificates and of reports, membership dues in the
Investment Company Institute or any similar organization,
costs of reports and notices to shareholders, other like
miscellaneous expenses and all taxes and fees payable to
federal, state or other governmental agencies on account of
the registration of securities issued by the Fund, filing of
trust documents or otherwise. The Fund shall not pay or
incur any obligation for any expenses for which the Fund
intends to seek reimbursement from the Adviser as herein
provided without first obtaining the written approval of the
Adviser. The Adviser shall arrange, if desired by the Fund,
for officers or employees of the Adviser to serve, without
compensation from the Fund, as trustees, officers or agents
of the Fund if duly elected or appointed to such positions
and subject to their individual consent and to any
limitations imposed by law.
If expenses borne by the Fund for those Portfolios which
the Adviser manages in any fiscal year (including the
Adviser's fee, but excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities,
distribution services fees, extraordinary expenses and any
other expenses excludable under state securities law
limitations) exceed any applicable limitation arising under
state securities laws, the Adviser will reduce its fee or
reimburse the Fund for any excess to the extent required by
such state securities laws. The expense limitation guarantee
shall be allocated to each such Portfolio upon a fee
reduction or reimbursement based upon the relative average
daily net assets of each such Portfolio. If for any month
the expenses of the Fund properly chargeable to the income
account shall exceed 1/12 of the percentage of average net
assets allowable as expenses, the payment to the Adviser for
that month shall be reduced and if necessary the Adviser
shall make a refund payment to the Fund so that the total net
expense will not exceed such percentage. As of the end of
the Fund's fiscal year, however, the foregoing computations
and payments shall be readjusted so that the aggregate
compensation payable to the Adviser for the year is equal to
the percentage set forth in Section 3 hereof of the average
net asset value as determined as described herein throughout
the fiscal year, diminished to the extent necessary so that
the total of the aforementioned expense items of the Fund
shall not exceed the expense limitation. The aggregate of
repayments, if any, by the Adviser to the Fund for the year
shall be the amount necessary to limit the said net expense
to said percentage in accordance with the foregoing.
The net asset value for each Portfolio shall be
calculated in accordance with the provisions of the Fund's
prospectus or as the trustees may determine in accordance
with the provisions of the Investment Company Act of 1940.
On each day when net asset value is not calculated, the net
asset value of a share of a Portfolio shall be deemed to be
the net asset value of such a share as of the close of
business on the last day on which such calculation was made
for the purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are
or may be interested in the Adviser as officers, directors,
agents, shareholders or otherwise, and that the officers,
directors, shareholders and agents of the Adviser may be
interested in the Fund otherwise than as a trustee, officer
or agent.
7. The Adviser shall not be liable for any error of
judgment or of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates,
except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the
performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
8. This Agreement shall become effective with respect to
the Initial Portfolio on the date hereof and shall remain in
full force until April 1, 1996, unless sooner terminated as
hereinafter provided. This Agreement shall continue in force
from year to year thereafter with respect to each Portfolio,
but only as long as such continuance is specifically approved
for each Portfolio at least annually in the manner required
by the Investment Company Act of 1940 and the rules and
regulations thereunder; provided, however, that if the
continuation of this Agreement is not approved for a
Portfolio, the Adviser may continue to serve in such capacity
for such Portfolio in the manner and to the extent permitted
by the Investment Company Act of 1940 and the rules and
regulations thereunder.
This Agreement shall automatically terminate in the
event of its assignment and may be terminated at any time
without the payment of any penalty by the Fund or by the
Adviser on sixty (60) days written notice to the other party.
The Fund may effect termination with respect to any Portfolio
by action of the Board of Trustees or by vote of a majority
of the outstanding voting securities of such Portfolio.
This Agreement may be terminated with respect to any
Portfolio 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 such Portfolio in the event
that it shall have been established by a court of competent
jurisdiction that the Adviser or any officer or director of
the Adviser has taken any action which results in a breach of
the covenants of the Adviser set forth herein.
The terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set
forth in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right
of the Adviser to receive payments on any unpaid balance of
the compensation described in Section 3 earned prior to such
termination.
9. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the
other party at such address as such other party may designate
for the receipt of such notice.
11. All parties hereto are expressly put on notice of the
Fund's Agreement and Declaration of Trust and all amendments
thereto, all of which are on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by
its representatives as such representatives and not
individually, and the obligations of the Fund hereunder are
not binding upon any of the trustees, officers, or
shareholders of the Fund individually but are binding upon
only the assets and property of the Fund. With respect to
any claim by the Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund
arising hereunder) allocated to a particular Portfolio,
whether in accordance with the express terms hereof or
otherwise, the Adviser shall have recourse solely against the
assets of that Portfolio to satisfy such claim and shall have
no recourse against the assets of any other Portfolio for
such purpose.
12. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 11 hereof
which shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of
Illinois.
IN WITNESS WHEREOF, the Fund and the Adviser have caused
this Agreement to be executed as of the day and year first
above written.
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
----------------------------
Title: Vice President
-------------------------
ATTEST:
/s/ Philip J. Collora
---------------------------------
Title: Secretary
---------------------------
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
----------------------------
Title: Senior Vice President
-------------------------
ATTEST:
/s/ David F. Dierenfeldt
----------------------------------
Title: Assistant Secretary
----------------------------
LKW|W:\FUNDS\NSAR.EXH\KTEF\KTEFW696.77Q|082696
