<PAGE> 1
Kemper Multi-Market
Income Trust
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED NOVEMBER 30, 1995
"Our conviction to 'stay long' was rewarded as the slow growth and
declining rate economic cycle continued, boosting the fund's performance."
<PAGE> 2
Table of
Contents
3
General
Economic Overview
6
Performance Update
8
Portfolio Statistics
9
Terms to Know
10
Portfolio of
Investments
17
Report of
Independent Auditors
18
Financial Statements
20
Notes to
Financial Statements
23
Financial Highlights
24
Description of
Dividend
Reinvestment Plan
At A Glance
- ------------------------------------------------------------------------------
TOTAL RETURNS
- ------------------------------------------------------------------------------
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
BASED ON BASED ON
NET ASSET MARKET
VALUE PRICE
- ------------------------------------------------------------------------------
<S> <C> <C>
KEMPER MULTI-
MARKET INCOME TRUST 15.90% 27.11%
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
NET ASSET VALUE AND MARKET PRICE
- ------------------------------------------------------------------------------
AS OF AS OF
11/30/95 11/30/94
- ------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE $10.90 $10.35
MARKET PRICE $10.75 $9.375
- ------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------------------------------
DIVIDEND REVIEW
- ------------------------------------------------------------------------------
THE FOLLOWING TABLE SHOWS PER SHARE DIVIDEND AND YIELD INFORMATION FOR THE FUND
AS OF NOVEMBER 30, 1995.
<TABLE>
- ------------------------------------------------------------------------------
<S> <C>
1 YEAR INCOME: $1.01
NOVEMBER DIVIDEND: $0.0825
ANNUALIZED DISTRIBUTION RATE:
(BASED ON NET ASSET VALUE) 9.08%
ANNUALIZED DISTRIBUTION RATE:
(BASED ON MARKET PRICE) 9.21%
- ------------------------------------------------------------------------------
</TABLE>
Statistical Note: Current annualized distribution rate is the latest monthly
dividend shown as an annualized percentage of net asset value/market price on
the date shown. Distribution rate simply measures the level of dividends and is
not a complete measure of performance. Total return measures aggregate change
in net asset value/market value assuming reinvestment of dividends. Returns are
historical and do not represent future performance. Market price, net asset
value and returns fluctuate. Additional information concerning performance is
contained in the Financial Highlights appearing at the end of this report.
About Your Report
Your fund's annual report is one of your best sources for tracking the progress
of your investment. This report includes several changes that have been made in
an effort to provide additional information to you as well as to explain
significant changes to the fund over the last fiscal year. In addition, the
performance update includes commentary from your fund's portfolio manager or
management team on what might be expected in the coming months.
Specifically, your report now includes:
- Terms you need to know related to your fund
- A look at your fund's portfolio composition and how it has changed
- The maturity and quality of your fund's underlying investments
If you have any comments about the revised format, please write
to:
Kemper Funds
Shareholder Communications
120 South LaSalle Street
Chicago, IL 60603
<PAGE> 3
General Economic Overview
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS CHIEF EXECUTIVE AND CHIEF INVESTMENT
OFFICER OF KEMPER FINANCIAL SERVICES, INC. (KFS). KFS AND
ITS AFFILIATES MANAGE APPROXIMATELY $63 BILLION IN ASSETS,
INCLUDING $44 BILLION IN RETAIL MUTUAL FUNDS. TIMBERS IS A
GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR SHAREHOLDER,
Investors enjoyed very positive performance in both the fixed income and stock
markets in 1995. The returns of most leading securities markets worldwide were
significantly higher than they were in 1994.
We have an excellent environment for financial assets. After several
quarters of robust growth, the United States economy seems to be growing at a
pace that investors find comfortable. Contrary to isolated reports that caused
some observers to become concerned, we believe the economy is in no jeopardy of
recession. Its health was confirmed with the news that the economy grew (as
measured by real gross domestic product [GDP]) at an annual rate of 4.2 percent
in the third quarter. This follows much lower growth in the first two quarters,
as the economy was adjusting to the Federal Reserve Board's series of interest
rate increases. The slowdown, in fact, was acknowledged by the Fed when it
eased short-term rates by a small but symbolic 25 basis points in July. Now we
know that the economy was rebounding from July through September.
Growth without a corresponding increase in inflation is very encouraging.
Although we are well along in the economic cycle and at a point when prices
often start hiking up, inflationary pressures have actually been reduced
somewhat.
The Fed reduced rates again in December, this time acknowledging
discussions underway to reduce the federal budget deficit. Assuming these
discussions are productive, a third rate cut is possible. Even with such
reducing by the Fed, our forecast calls for lower growth ranging between 2
percent to 3 percent for the next few quarters, with the momentum likely to
come from exports and nonresidential construction.
MARKET OUTLOOK
Slow growth and low inflation is the optimal combination for investors in the
fixed income markets, and we expect them to continue to perform well.
We believe that the opportunities for common stock investors will be
increasingly concentrated in higher quality investments. After hitting new
highs and showing considerable strength for most of the year, the stock market
has shown some vulnerability and then gone on to set records. However, it's
inevitable -- the current bull market will come to an end some day. In fact,
some sectors may be overextended today.
As we view the new year, companies cannot necessarily count on the economy
to provide above-average earnings support. Rather, stocks that have proven
themselves with a pattern of consistent earnings are likely to attract investor
support. Specifically, sectors that produce more consistent earnings, such as
health care, consumer nondurables, selected technology and selected capital
goods can be expected to do well. Picking the right sectors to invest in will
be the key challenge for equity investors during the next few quarters.
International investing continues to be quite complex. After sinking to
its post-World War II low last year, the value of the U.S. dollar has gained
strength against most foreign currencies. While a stronger dollar favors the
U.S. economy because it reduces the cost of American imports and attracts
foreign capital, a strong dollar in relation to a local currency has the effect
of devaluing a foreign investment. The value of the dollar and the
attractiveness of U.S. investments to foreign investors will be key factors in
the next few months.
3
<PAGE> 4
General Economic Overview
ECONOMIC GUIDEPOSTS
Economic activity is a key influence on investment performance and
shareholder decision-making. Periods of recession or boom, inflation or
deflation, credit expansion or credit crunch have a significant impact on
mutual fund performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The
10-year Treasury rate and the prime rate are prevailing interest rates. The
other data report year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
Now (12/31/95) 6 months ago 1 year ago 2 years ago
<S> <C> <C> <C> <C>
10-year Treasury rate(1) 5.71 6.28 7.78 5.75
Prime Rate (2) 8.65 8.80 8.50 6.00
Inflation (3)* 2.60 2.97 2.60 2.74
The U.S. Dollar (4)* -1.57 -9.31 -4.52 1.71
Capital Goods orders (5)* 7.60 17.84 13.53 23.75
Industrial production (6)* 1.88 2.80 6.43 3.76
Employment growth (7)* 1.50 2.29 3.15 2.58
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best
borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on corporate profits and equity performance.
(7) An influence on family income and retail sales.
* Data as of November 30, 1995
** Data as of October 31, 1995
SOURCE: ECONOMICS DEPARTMENT, KEMPER FINANCIAL SERVICES, INC.
We are in the midst of a global recovery, and the same fundamentals that
have driven markets higher in the U.S. can be found in many foreign countries
currently. However, leading international economies continue to lag the U.S.
Japan and Germany, whose economies typically follow U.S. growth, are not as
robust as in past cycles. Moreover, conditions in emerging market countries
underline the importance of careful research and experience in understanding
how these markets work.
Political leadership also has some bearing on the progress of the economy
and the state of the financial markets. In the months preceding a presidential
election year, it has been common for incumbents to attempt to stimulate
growth. Given our Republican Congress and Democratic President, however, we do
not consider this as likely this time.
With the rest of the country, we are closely following political
initiatives to produce a balanced federal budget. This is a political wild
card, but we would expect both the stock and fixed-income markets to react with
enthusiasm if progress can be made.
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including a question-and-answer interview with
your fund's portfolio manager. Thank you for your continued support. We
appreciate the opportunity to serve your investment needs.
Sincerely,
/S/ Stephen B. Timbers
STEPHEN B. TIMBERS
CHIEF INVESTMENT AND EXECUTIVE OFFICER
January 9,1996
4
<PAGE> 5
Management Team
Kemper Multi-Market Income Trust
Portfolio Management Team
[BEIMFORD PHOTO]
J. PATRICK BEIMFORD JOINED KEMPER FINANCIAL SERVICES, INC. (KFS) IN 1976 AND IS
NOW EXECUTIVE VICE PRESIDENT AND CHIEF INVESTMENT OFFICER -- FIXED INCOME. HE
HAS BEEN PORTFOLIO CO-MANAGER OF THE KEMPER MULTI-MARKET INCOME TRUST SINCE
1995. BEIMFORD RECEIVED HIS BACHELOR OF SCIENCE AND INDUSTRIAL MANAGEMENT
DEGREE FROM PURDUE UNIVERSITY AND WENT ON TO RECEIVE HIS M.B.A. FROM THE
UNIVERSITY OF CHICAGO AND IS A CHARTERED FINANCIAL ANALYST.
[JOHNS PHOTO]
GORDON JOHNS JOINED KFS IN 1988 AND IS NOW THE MANAGING DIRECTOR OF KEMPER
INVESTMENT MANAGEMENT COMPANY LIMITED, LONDON. HE HAS BEEN PORTFOLIO CO-MANAGER
OF KEMPER MULTI-MARKET INCOME TRUST SINCE 1995. JOHNS GRADUATED FROM BALLIOL
COLLEGE, OXFORD, WITH A B.A. IN LAW.
[RESIS PHOTO]
HARRY RESIS IS A SENIOR VICE PRESIDENT WITH KFS. HE JOINED THE COMPANY IN 1988
AND BECAME PORTFOLIO CO-MANAGER OF KEMPER MULTI-MARKET INCOME TRUST IN 1995.
RESIS RECEIVED A B.A. IN FINANCE FROM MICHIGAN STATE UNIVERSITY.
[CESSINE PHOTO]
ROBERT CESSINE JOINED KFSIN 1993 AND IS NOW A SENIOR VICE PRESIDENT. HE HAS
BEEN PORTFOLIO CO-MANAGER OF THE FUND SINCE 1995. MR. CESSINE RECEIVED BOTH HIS
B.S. AND M.B.A. FROM THE UNIVERSITY OF WISCONSIN. HE IS ALSO A CHARTERED
FINANCIAL ANALYST.
[MCNAMARA PHOTO]
MIKE MCNAMARA HAS BEEN WITH KFSSINCE 1972 AND IS NOW SENIOR VICE PRESIDENT. HE
BECAME PORTFOLIO CO-MANAGER OF KEMPER MULTI-MARKET INCOME TRUST IN 1995.
MCNAMARA GRADUATED WITH A B.S. IN BUSINESS ADMINISTRATION FROM THE UNIVERSITY
OF MISSOURI AND WENT ON TO RECEIVE HIS M.B.A. FROM LOYOLA UNIVERSITY.
[TRUTTER PHOTO]
JONATHAN TRUTTER HAS BEEN WITH KFS SINCE 1989. HE IS A FIRST VICE PRESIDENT
AND HAS BEEN PORTFOLIO CO-MANAGER OF KEMPER MULTI-MARKET INCOME TRUST SINCE
1995. TRUTTER RECEIVED HIS BACHELOR'S DEGREE WITH DUAL MAJORS IN EAST ASIAN
LANGUAGES AND INTERNATIONAL RELATIONS FROM THE UNIVERSITY OF SOUTHERN
CALIFORNIA. HE WENT ON TO RECEIVE A MASTER'S OF MANAGEMENT DEGREE FROM KELLOGG
GRADUATE SCHOOL OF NORTHWESTERN UNIVERSITY. HE IS ALSO A CERTIFIED PUBLIC
ACCOUNTANT.
The views expressed in this report reflect those of the portfolio management
team only through the end of the period of the report, as stated on the cover.
The managers' views are subject to change at any time, based on market and
other conditions.
5
<PAGE> 6
Performance Update
KEMPER MULTI-MARKET INCOME TRUST ENJOYED A YEAR OF STRONG RETURNS. BELOW THE
PORTFOLIO MANAGEMENT TEAM DISCUSSES HOW THEIR BULLISH ECONOMIC OUTLOOK AT THE
START OF THE YEAR INCITED A MOVE INTO LONGER-MATURITY INVESTMENTS, WHICH
BOLSTERED THE FUND'S PERFORMANCE.
Q KEMPER MULTI-MARKET INCOME TRUST'S TOTAL RETURN ADVANCED 15.90 PERCENT,
ON A NET ASSET VALUE BASIS, FOR THE FISCAL YEAR ENDING NOVEMBER 30, 1995. THIS
IS A SIGNIFICANT IMPROVEMENT FROM THE NEGATIVE RETURN POSTED FOR THE PREVIOUS
YEAR. WHAT PROMPTED THE TURNAROUND?
A It was a very positive year for the bond market and the fund as well.
Interest rates moved lower, economic growth continued but at a slower rate, and
inflation remained low -- creating an excellent environment for the fund's
investments.
The fund's strong performance led to an increase in net asset value
as well as a dividend increase to $0.0825 per share in August from $0.0775 per
share. Moreover, the discount of the fund's market price to net asset value
decreased to 1.4 percent on November 30, 1995, from 9.4 percent on December 1,
1994.
The previous year, however, was characterized by robust economic
growth. The Federal Reserve Board raised short-term interest rates six times in
1994 and once in early 1995 in an effort to keep inflation and economic growth
under control. This tightening of rates hurt the bond market and inhibited the
fund's returns and market value.
Q HOW DID YOU POSITION THE FUND AS INTEREST RATES FELL?
A We adopted an investment strategy that favored long-term bonds, which
helped the fund's performance.
The fiscal year began just after long-term interest rates had begun to
fall. There was a great deal of uncertainty in the market about whether this
was the beginning of a trend or just a temporary adjustment. Yet we felt that
the drop in long-term rates was a sign that the interest rate hikes of 1994 had
been successful in slowing economic growth. And we were optimistic that rates
would fall further.
At the start of the year, we moved out of shorter-maturity investments
and into longer-maturity investments. This was in contrast to the market which,
for the most part, was still favoring more defensive shorter-term bonds. Our
early optimism enabled us to purchase long-term investments at favorable
prices. And our assumption was correct -- rates continued to fall -- so we
kept the fund fully invested in long-term assets.
At several points, though, conflicting economic data spurred a sell-off
of longer-maturity bonds, which tested our resolve. We stuck to our strategy
because we were undaunted in our belief that economic growth would continue to
slow and that inflation would remain low. These sell-offs hurt the fund's
performance as prices fell, but only temporarily. Our conviction to "stay long"
was rewarded as the slow growth and declining rate economic cycle continued,
boosting the fund's performance.
Q WERE THERE ANY INVESTMENTS THAT PERFORMED ESPECIALLY WELL IN THIS
DECLINING RATE ENVIRONMENT?
A Foreign currency bonds, U.S. government securities and high yield bonds
were all superior performers.
The foreign currency bond sector was particularly strong during the
first quarter of 1995 as the U.S. dollar weakened against other major
currencies. Even since the dollar's recent strengthening, these holdings have
continued to provide positive returns.
The performance of Treasuries was outstanding as a result of a rally in
the government bond market. We began investing in Treasuries in May -- just as
the rally heightened and continued to add Treasuries to our portfolio as the
rally continued. By the year's end, Treasuries represented 21 percent of the
fund's portfolio and had provided significant price appreciation, which is
vital to a strong total return.
6
<PAGE> 7
Performance Update
High yield investments also performed exceptionally well during the
first six months of 1995 -- especially cyclical issues. Cyclical industries are
those that flourish when the economy expands because they produce or support
the production of discretionary goods, such as new homes or automobiles. By
contrast, defensive industries tend to be less sensitive to economic slowdowns
because they support nondiscretionary spending on items such as food or health
and beauty products. Cyclical issues were out of favor in the high yield market
during the year as many investors were uncertain about the economy's strength.
This enabled us to purchase cyclical bonds at very attractive prices. As
interest rates fell and fears of a recession diminished, cyclicals were strong
performers.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. At the start of the fiscal year, we were very excited about the fund's
emerging markets investments because of their high return potential.
Unfortunately, the devaluation of the Mexican peso, political turmoil in
Argentina and the overall volatility in these markets hurt returns sporadically
throughout the year. However, losses from this sector were often followed by
strong returns. Volatility will always be a concern, but we remain bullish on
the potential for returns from holdings in emerging markets.
Q. THE FUND INVESTS IN HIGH YIELD AND HIGH GRADE CORPORATE BONDS, FOREIGN
BONDS AND U.S. GOVERNMENT BONDS AND IS MANAGED BY SIX PORTFOLIO CO-MANAGERS
- -- EACH WITH SECTOR-SPECIFIC EXPERIENCE. HOW DOES THE TEAM DETERMINE THE FUND'S
DIVERSIFICATION?
A. The asset allocation of the fund -- the level of investments in each
sector -- is determined by a team of sector-specific portfolio managers and
analytical specialists with the aid of a proprietary computer model. The
computer model's analysis considers economic factors such as interest rates,
the strength of the economy and the relative valuations -- and attractiveness
- -- of the fund's potential investments. This model helps us determine the
appropriate asset allocation, but it's the management team that enhances the
investment selection by using its specialized sector knowledge and
understanding of market expectations. The collaborative efforts of these
resources played a critical role in working to fine-tune the fund's investment
strategy.
As a result of this interaction, we've defined specific investment
ranges for each sector -- and made subsequent adjustments as needed. For
example, after significant volatility in the emerging markets sector early in
the year, we limited these investments to a maximum of 10 percent of the
portfolio. That's 4 percent less than what we held at the start of the fiscal
year when emerging markets accounted for 14 percent of the fund's assets. We
believe this level enables the fund to benefit from the sector's high return
potential but with reduced exposure to volatility within emerging markets.
Q. WHAT'S YOUR OUTLOOK IN 1996?
A. The economic outlook is very good. We anticipate continued slow to
moderate economic growth, a benign level of inflation and interest rates that
should continue to fall. Further contributing to this scenario is the
likelihood that a meaningful balanced federal budget agreement will be reached.
If that happens, it is possible that interest rates may move even lower during
1996. This would be a very positive environment for fixed-income investments.
Q. WHAT ARE SOME OF THE RISKS TO THAT ASSUMPTION?
A. The principal risk would be that economic growth significantly
accelerates causing higher interest rates and inflation. But, at this point,
that's not what the economic data suggest. If the economy would take off, we'd
shorten the average maturity of the fund and probably increase our level of
mortgage investments, which generally perform better than Treasuries when
interest rates rise.
7
<PAGE> 8
Portfolio Statistics
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ON 11/30/95 ON 11/30/94
- --------------------------------------------------------------------------------
<S> <C> <C>
HIGH YIELD CORPORATE BONDS 28% 25%
EMERGING MARKETS
(U.S. DOLLAR-DENOMINATED) 5 14
FOREIGN CURRENCY BONDS 15 24
HIGH GRADE CORPORATE BONDS 7 3
MORTGAGES 9 7
COMMON AND PREFERRED STOCK 10 10
TREASURY NOTES AND BONDS 21 --
CASH AND EQUIVALENTS 5 17
100% 100%
- --------------------------------------------------------------------------------
</TABLE>
[PIE CHART] [PIE CHART]
ON 11/30/95 ON 11/30/94
- - HIGH YIELD CORPORATE BONDS
- - EMERGING MARKETS
- - FOREIGN CURRENCY BONDS
- - HIGH GRADE CORPORATE BONDS
- - MORTGAGES
- - COMMON STOCK
- - TREASURY NOTES AND BONDS
- - CASH AND EQUIVALENTS
8
<PAGE> 9
Portfolio Statistic
LONG-TERM FIXED INCOME SECURITIES RATINGS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
ON 11/30/95 ON 11/30/94
- ----------------------------------------------------------------------------
<S> <C> <C>
AAA 49% 51%
AA 2 1
A 2 1
BBB 7 4
BB 13 21
B 24 19
OTHER 3 3
100% 100%
- ----------------------------------------------------------------------------
</TABLE>
[PIE CHART] [PIE CHART]
ON 11/30/95 ON 11/30/95
- - AAA
- - AA
- - A
- - BBB
- - BB
- - B
- - OTHER
THE RATINGS OF STANDARD & POOR'S CORPORATION (S&P) AND MOODY'S INVESTORS
SERVICES, INC. (MOODY'S) REPRESENT THEIR OPINIONS AS TO THE QUALITY OF
SECURITIES THAT THEY UNDERTAKE TO RATE. THE PERCENTAGE SHOWN REFLECTS THE
HIGHER OF MOODY'S OR S&P RATINGS. PORTFOLIO COMPOSITION WILL CHANGE OVER TIME.
RATINGS ARE RELATIVE AND SUBJECTIVE AND NOT ABSOLUTE STANDARDS OF QUALITY.
AVERAGE MATURITY
<TABLE>
<CAPTION>
ON 11/30/95 ON 11/30/94
- ---------------------------------------------------------------------
<S> <C> <C>
AVERAGE MATURITY 11.9 YEARS 8.4 YEARS
- ---------------------------------------------------------------------
</TABLE>
Terms to Know
BOND RALLY A sharp, short-lived rise in bond values after a period of either
little movement or falling values.
EMERGING MARKETS A developing or emerging country can be considered to be a
country that is in the initial stages of its industrial cycle. Developing or
"emerging" markets involve exposure to economic structures that are generally
less diverse and mature than in the United States and to political systems that
may be less stable.
TOTAL RETURN A fund's total return figure measures both the net investment
income and any realized and unrealized appreciation or depreciation of the
underlying investments in its portfolio for the period, assuming the
reinvestment of all dividends. It represents the aggregate percentage or
dollar value change over the period.
VOLATILITY The characteristic of an investment that causes it to rise or fall
sharply in price in a relatively short time period.
9
<PAGE> 10
Portfolio of Investments
KEMPER MULTI-MARKET INCOME TRUST
Portfolio of Investments at November 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS PRINCIPAL AMOUNT VALUE
U.S. GOVERNMENT
OBLIGATIONS--29.3%
<S> <C> <C> <C>
U.S. Treasury Notes
8.875%, 1999 $ 3,000 $ 3,296
6.125-6.75%, 2000 7,500 7,777
7.75%, 2001 4,000 4,391
6.50%, 2005 5,000 5,259
U.S. Treasury Bonds
7.25-9.25%, 2016 13,160 15,717
8.75%, 2017 500 647
8.50%, 2020 3,500 4,459
6.25%, 2023 3,560 3,560
Government National Mortgage Association
6.50%, 2026 13,000 12,748
7.00%, 2022-2024 2,920 2,923
7.50%, 2022-2024 2,894 2,954
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost: $62,462) 63,731
---------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT
OBLIGATIONS--20.4%
(Principal amount in local
currency,
unless otherwise indicated)
Republic of Argentina
5.00%, 2023 $ 3,700 1,945
Federal Republic of Brazil
8.00%, 2014 $ 5,890 3,125
4.25%, 2024 $ 9,800 4,918
Dutch State Loan
7.75%, 2000 3,150 2,142
8.25%, 2007 2,900 2,068
Republic of Finland
11.00%, 1997 2,000 507
11.00%, 1999 5,000 1,338
9.50%, 2004 5,000 1,323
French Treasury
8.50%, 2000 22,000 4,814
6.75%, 2003 2,000 401
8.50%, 2008 6,000 1,346
Government of Ireland
6.25%, 1999 880 1,375
6.25%, 2004 1,420 2,070
Italian Treasury
12.00%, 1997 2,000,000 1,271
8.50%, 1999 1,700,000 988
8.50%, 2004 1,500,000 805
United Mexican States
6.25%, 2019 $ 2,300 1,415
New Zealand Government
8.00%, 1998 1,000 663
6.50%, 2000 500 319
10.00%, 2002 1,400 1,050
Kingdom of Norway
9.00%, 1999 6,000 1,035
7.00%, 2001 6,000 985
5.75%, 2004 7,000 1,043
Republic of Portugal
12.50%, 1998 112,000 784
11.875%, 2000 45,000 320
10.625%, 2003 80,000 548
</TABLE>
10
<PAGE> 11
Portfolio of Investments
<TABLE>
<CAPTION>
(Dollars in thousands)
- -----------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS PRINCIPAL AMOUNT VALUE
<S> <C> <C> <C>
Kingdom of Spain
8.40%, 1998 200,000 1,647
7.40%, 1999 215,000 1,620
10.30%, 2002 295,000 2,420
--------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost: $41,656) 44,285
--------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS
AEROSPACE--1.3%
BE Aerospace, 9.75%, 2003 $ 190 $ 190
Fairchild Corporation, 12.00%, 2001 725 696
Fairchild Industries, 12.25%, 1999 375 393
K & F Industries, Inc.
13.75%, 2001 900 936
11.875%, 2003 500 538
RHI Holdings, 11.875%, 1999 70 69
--------------------------------------------------------------------------
2,822
- -----------------------------------------------------------------------------------------------------------
BROADCASTING,
CABLESYSTEMS
AND PUBLISHING--6.8%
ACT III Broadcasting, Inc., 9.625%, 2003 90 94
Adelphia Communication Corporation, 12.50%,
2002 220 218
Affinity Group, Inc., 11.50%, 2003 315 318
(b)Australis Media Corporation, 14.00%, 2003 600 432
(b)Bell Cablemedia PLC
11.95%, 2004 600 411
11.875%, 2005 100 61
Big Flower Press, Inc., 10.75%, 2003 520 554
Cablevision Systems Company
9.875%, 2013 270 282
9.875%, 2023 30 31
CAI Wireless Systems, 12.25%, 2002 300 318
Century Communications Corporation
9.50%, 2000 90 92
11.875%, 2003 170 182
9.50%, 2005 530 538
CF Cable TV Inc., 11.625%, 2005 360 392
Comcast Corporation
9.125%, 2006 1,020 1,042
9.50%, 2008 205 211
Continental Cablevision, Inc., 9.50%, 2013 980 1,031
Granite Broadcasting, 10.375%, 2005 340 348
(b)International Cabletel Incorporated,
12.75%, 2005 850 522
Katz Corporation, 12.75%, 2002 275 304
Lenfest Communications, 8.375%, 2005 500 500
(b)Neodata Services, 12.00%, 2003 430 388
News America Holdings, Inc., 9.25%, 2013 1,000 1,152
(b)People's Choice TV Unit, 13.125%, 2004 50 28
Rogers Cablesystems Limited
9.625%, 2002 210 215
10.00%, 2005 230 241
Sinclair Broadcast Group, Inc., 10.00%, 2003 430 440
Tele-Communications, 9.80%, 2012 550 645
(b)Telewest PLC, 11.00%, 2007 1,130 658
Time Warner Inc., 8.375%, 2033 1,000 1,046
Univision TV, 11.75%, 2001 210 225
Viacom International Inc., 8.00%, 2006 1,000 1,009
Videotron Groupe, 10.625%, 2005 140 148
(b)Videotron Holdings PLC
11.125%, 2004 580 392
11.00%, 2005 270 161
</TABLE>
11
<PAGE> 12
Portfolio of Investments
<TABLE>
<CAPTION>
(Dollars in thousands)
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
<S> <C> <C> <C>
Webcraft Technologies, Inc., 9.375%, 2002 $ 170 $ 163
Young Broadcasting Inc., 11.75%, 2004 50 56
--------------------------------------------------------------------------
14,848
- -----------------------------------------------------------------------------------------------------------
BUSINESS SERVICES--1.5%
Comdata Network, Inc.
12.50%, 1999 650 738
13.25%, 2002 20 24
Corporate Express Inc., 9.125%, 2004 220 220
Digital Equipment Corp., 7.125%, 2002 1,250 1,253
IXC Communications Services, 12.50%, 2005 470 494
Monarch Marking, 12.50%, 2003 250 263
Outdoor Systems, 10.75%, 2003 350 338
--------------------------------------------------------------------------
3,330
- -----------------------------------------------------------------------------------------------------------
CHEMICALS &
ENVIRONMENTAL
PRODUCTS--1.5%
Agriculture, Mining and Chemicals Inc.,
10.75%, 2003 200 217
Allied Waste Industries, 12.00%, 2004 190 203
Arcadian Partners, L.P., 10.75%, 2005 405 442
G-I Holdings Inc., zero coupon, 1998 700 532
Huntsman Corporation, 10.625%, 2001 100 109
Pioneer Americas Acquisition Corp., 13.375%,
2005 290 303
Rexene Corporation, 11.75%, 2004 500 533
Terra Industries Inc., 10.50%, 2005 190 207
UCC Investors Holdings, Inc., 10.50%, 2002 700 717
--------------------------------------------------------------------------
3,263
- -----------------------------------------------------------------------------------------------------------
COMMUNICATIONS--3.0%
(b)Call-Net Enterprises, 13.25%, 2004 290 206
(a)(b)Celcaribe, S.A., 13.50%, 2004 250 231
(b)Cellular, Inc., 11.75%, 2003 150 117
Commnet Cellular, 11.25%, 2005 100 105
Cox Communications, 6.50%, 2002 1,500 1,506
(b)Echostar Communications, 12.875%, with
warrants, 2004 1,375 949
(b)Intelcom Group, Inc., 13.50%, 2005 320 184
Intermedia Communications of Florida, Inc.,
13.50%, with warrants, 2005 300 329
Paging Network, Inc.
11.75%, 2002 710 786
10.125%, 2007 200 215
(b)PanAmSat, L.P., 11.375%, 2003 700 564
Rogers Cantel, 11.125%, 2002 885 943
USA Mobile Communications, Inc. II, 14.00%,
2004 270 313
--------------------------------------------------------------------------
6,448
- -----------------------------------------------------------------------------------------------------------
CONSTRUCTION
MATERIALS--1.7%
American Standard, Inc.
10.875%, 1999 300 328
11.375%, 2004 60 66
10.50%, 2005 540 454
9.25%, 2016 730 759
(b)Building Materials Corporation of America,
11.75%, 2004 770 520
Nortek, 9.875%, 2004 500 466
Triangle Pacific Corp., 10.50%, 2003 495 520
Waxman Industries, Inc.
12.25%, 1998 190 184
13.75%, 1999 214 171
(b) 12.75%, 2004 412 165
(a) 12,154 warrants expiring 2004 2
--------------------------------------------------------------------------
3,635
- -----------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
Portfolio of Investments
<TABLE>
<CAPTION>
(Dollars in thousands)
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
<S> <C> <C> <C>
CONSUMER PRODUCTS
AND SERVICES--3.2%
Atlantis Group, Inc., 11.00%, 2003 $ 310 $ 253
Black & Decker, 7.50%, 2003 1,000 1,050
Cinemark USA, Inc., 12.00%, 2002 84 92
(b)Dr. Pepper Bottling Holdings, Inc., 11.625%, 2003 370 296
Herff Jones, Inc., 11.00%, 2005 140 147
Nabisco, 6.70%, 2002 1,000 1,008
Pathmark Stores, Inc., 11.625%, 2002 770 755
P&C Food Markets, Inc., 11.50%, 2001 240 234
Premier Parks Inc., 12.00%, 2003 150 154
Ralph's Grocery Company, 10.45%, 2004 550 544
RJR Nabisco, 8.75%, 2005 1,000 1,009
(b)Six Flags Theme Park, 12.25%, 2005 630 490
Van De Kamps, Inc., 12.00%, 2005 170 176
West Point Stevens Inc., 9.375%, 2005 780 783
------------------------------------------------------------------------------
6,991
- -----------------------------------------------------------------------------------------------------------
DRUGS AND
HEALTH CARE--1.3%
Amerisource Distribution Corp., 11.25%, 2005 195 212
Charter Medical Corporation, 11.25%, 2004 290 315
Dade International Inc., 13.00%, 2005 230 254
Graphic Controls, 12.00%, 2005 160 164
Ornda Healthcorporation
12.25%, 2002 285 312
11.375%, 2004 250 278
Tenet Healthcare
9.625%, 2002 140 152
8.625%, 2003 750 776
10.125%, 2005 380 412
------------------------------------------------------------------------------
2,875
- -----------------------------------------------------------------------------------------------------------
ENERGY AND
RELATED SERVICES--3.3%
Chesapeake Energy Corporation, 10.50%, 2002 120 124
Columbia Gas System, 7.05%, 2007 1,000 1,004
Coastal Corporation, 11.75%, 2006 1,500 1,613
Empire Gas Corporation, 7.00%, with warrants, 2004 200 165
Gerrity Oil & Gas, 11.75%, 2004 190 177
Gulf Canada Resources Limited, 9.25%, 2004 250 254
HS Resources, 9.875%, 2003 170 167
Oryx Energy, 8.00%, 2003 1,000 1,009
Parker & Parsley Petroleum, 8.25%, 2007 1,000 1,062
Santa Fe Energy Resources, Inc., 11.00%, 2004 100 109
TransTexas Gas Corporation, 11.50%, 2002 720 744
USX Corp., 9.375%, 2012 750 859
------------------------------------------------------------------------------
7,287
- -----------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES, HOME
BUILDERS AND
REAL ESTATE--1.0%
Banco Central Hispano, 7.50%, 2005 1,000 1,041
Continental Homes Holding, 12.00%, 1999 175 188
The Forecast Group L.P., 11.375%, 2000 70 40
Hovnanian Kent
11.25%, 2005 226 213
9.75%, 2005 290 251
J.M. Peters, 12.75%, with warrants, 2002 150 136
The Presley Companies, 12.50%, 2001 435 348
------------------------------------------------------------------------------
2,217
- -----------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
Portfolio of Investments
<TABLE>
<CAPTION>
(Dollars in thousands)
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
HOTEL AND GAMING--1.6%
<S> <C> <C> <C>
Bally's Park Place Funding, Inc., 9.25%, 2004 $ 685 $ 685
Empress River Casino, 10.75%, 2002 300 309
ITT Destinations, 6.75%, 2005 1,000 1,008
Players International Inc., 10.875%, 2005 110 103
Santa Fe Hotel, Inc., 11.00%, 2000 119 83
Trump Taj Mahal, PIK, 11.35%, 1999 1,530 1,338
---------------------------------------------------------------------------
3,526
- ------------------------------------------------------------------------------------------------------------
MANUFACTURING
AND METALS--3.0%
Aftermarket Technology, 12.00%, 2004 320 335
Bluebird Body Company, 11.75%, 2002 380 390
Crain Industries, Inc., 13.50%, 2005 220 224
Day International Group, Inc., 11.125%, 2005 330 331
Essex Group Incorporated, 10.00%, 2003 245 240
Fairfield Manufacturing Company, 11.375%, 2001 160 155
Foamex L.P.
9.50%, 2000 1,160 1,148
11.25%, 2002 200 200
(b)Foamex - JPS Automotive L.P., 14.00%, with warrants,
2004 330 190
Great Dane Holding Company, 12.75%, 2001 380 351
GS Technologies
12.00%, 2004 520 515
12.25%, 2005 190 189
Jordan Industries, 10.375%, 2003 400 336
JPS Automotive Products Corporation, 11.125%, 2001 10 10
Newflo Corporation, 13.25%, 2002 300 311
NS Group, Inc., 13.50%, 2003 310 267
Pace Industries, Inc., 10.625%, 2002 165 146
Penda Industries Inc., 10.75%, 2004 185 150
Polymer Group Inc., 12.25%, 2002 310 321
Thermadyne Industries, Inc.
10.25%, 2002 155 157
10.75%, 2003 600 606
---------------------------------------------------------------------------
6,572
- ------------------------------------------------------------------------------------------------------------
PAPER, FOREST PRODUCTS
AND CONTAINERS--2.0%
Berry Plastics Corporation, 12.25%, with
warrants, 2004 150 159
Container Corporation of America, 11.25%, 2004 460 473
Crown Paper, 11.00%, 2005 300 280
Maxxam Group Inc.
(b) 12.25%, 2003 90 63
11.25%, 2003 340 332
Owens-Illinois, Inc.
11.00%, 2003 548 612
9.95%, 2004 100 105
9.75%, 2004 675 702
Repap New Brunswick, 10.625%, 2005 370 363
SD Warren Company, 12.00%, 2004 170 188
Smurfit Capital Funding, 6.75%, 2005 750 759
Sweetheart Cup Company Inc., 10.50%, 2003 235 236
---------------------------------------------------------------------------
4,272
- ------------------------------------------------------------------------------------------------------------
RETAILING--1.4%
Federated Department Stores, Inc., 10.00%, 2001 1,000 1,091
Finlay Fine Jewelry Corporation, 10.625%, 2003 225 218
(b)International Semi-Tech
Microelectronics Inc., 11.50%, 2003 390 201
Pamida Holdings, 11.75%, 2003 575 473
Southland Corporation, 5.00%, 2003 362 301
</TABLE>
14
<PAGE> 15
Portfolio of Investments
<TABLE>
<CAPTION>
(Dollars in thousands)
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
<S> <C> <C> <C>
Specialty Retailers, Inc., 11.00%, 2003 $ 160 $ 146
Thrifty Payless, Inc., 11.75%, 2003 520 563
--------------------------------------------------------------------------
2,993
- -----------------------------------------------------------------------------------------------------------
TECHNOLOGY--1.0%
Communication and Power Industry, Inc.,
12.00%, 2005 140 144
Computervision Corporation
10.875%, 1997 310 323
11.375%, 1999 1,090 1,150
Merisel, Inc., 12.50%, 2004 400 300
Unisys Corporation, 8.875%, 1997 150 136
--------------------------------------------------------------------------
2,053
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.5%
Delta Airlines, 9.75%, 2021 1,500 1,785
OMI Corp., 10.25%, 2003 525 463
(b)Transtar Holdings, L.P., 13.375%, 2003 200 134
United Airlines, 9.56%, 2018 750 851
--------------------------------------------------------------------------
3,233
--------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--35.1%
(Cost: $74,852) 76,365
--------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS NUMBER OF SHARES VALUE
<S> <C> <C> <C>
BCP/Essex Holdings, PIK, preferred 5,381shs $ 142
BEA Strategic Income 100,000 875
Fort Dearborn Income Securities Inc. 17,400 261
Franklin Principle Maturity Trust 200,000 1,500
Global Government Plus Fund 298,600 2,202
Global Yield Fund Inc. 375,000 3,047
(c)Grand Union Company 17,408 131
INA Investment Securities 21,900 383
MFS Charter Income Trust 544,900 4,904
MFS Government Market Income Trust 151,000 981
MFS Intermediate Income 50,000 331
MFS Multi-Market Income Trust 104,100 677
Putnam Master Income Trust 14,900 123
Putnam Master International Income Trust 200,000 1,500
Putnam Premier Income Trust 313,500 2,430
Strategic Global Income 50,000 562
Templeton Global Income Fund 200,000 1,425
(c)Thrifty Payless Holding Corp. 5,320 30
Walter Industries, Inc. 9,052 118
--------------------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCKS--10.0%
(Cost: $22,533) 21,622
--------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
Portfolio of Investments
<TABLE>
<CAPTION>
(Dollars in thousands)
- -----------------------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS PRINCIPAL AMOUNT VALUE
<S> <C> <C> <C>
Yield--5.87-5.93%
Due--December 1995
Freedom Asset Funding $ 8,050 $ 8,032
Potomac Capital 8,000 7,983
Sundstrand Corporation 8,000 7,985
Unocal Corporation 4,000 3,993
--------------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--12.9%
(Cost: $27,993) 27,993
--------------------------------------------------------------------------
TOTAL INVESTMENTS--107.7%
(Cost: $229,496) 233,996
--------------------------------------------------------------------------
LIABILITIES, LESS CASH AND OTHER
ASSETS--(7.7)% (16,813)
--------------------------------------------------------------------------
NET ASSETS--100% $217,183
--------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The following securities may require registration under the Securities Act
of 1933 or an exemption therefrom in order to effect sale in the ordinary
course of business; they were valued at cost on the dates of acquisition.
These securities are valued at fair value as determined in good faith by the
Board of Trustees of the Fund. At November 30, 1995, the value of the Fund's
restricted securities was $233,000, which represented .11% of net assets.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
DATE OF NUMBER OF UNIT
SECURITY DESCRIPTION ACQUISITION SHARES COST
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Celcaribe, S.A., 13.50%, 2004 May 1994 $250,000 $ 0.80
--------------------------------------------------------------------------------------------
Waxman Industries, warrants expiring 2004 June 1994 12,154shs. 2.00
--------------------------------------------------------------------------------------------
</TABLE>
(b) Deferred interest obligation; currently zero coupon under the terms of the
initial offering.
(c) Non-income producing security.
"PIK" denotes that interest or dividends are paid in kind.
Based on the cost of investments of $229,496,000 for federal income tax purposes
at November 30, 1995, the aggregate gross unrealized appreciation was
$7,699,000, the aggregate gross unrealized depreciation was $3,199,000 and the
net unrealized appreciation of investments was $4,500,000.
See accompanying Notes to Financial Statements
16
<PAGE> 17
Report of Independent Auditors
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER MULTI-MARKET INCOME TRUST
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Multi-Market Income Trust as
of November 30, 1995, the related statements of operations for the year then
ended, and changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the fiscal periods since 1991.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
Multi-Market Income Trust at November 30, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the fiscal
periods since 1991, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 12, 1996
17
<PAGE> 18
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995
(in thousands)
- -------------------------------------------------------------------------
ASSETS
<TABLE>
<S> <C>
Investments, at value
(Cost: $229,496) $233,996
- -------------------------------------------------------------------------------------------------
Cash 724
- -------------------------------------------------------------------------------------------------
Receivable for:
Investments sold 1,206
- -------------------------------------------------------------------------------------------------
Interest and dividends 4,023
- -------------------------------------------------------------------------------------------------
TOTAL ASSETS 239,949
- -------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
<TABLE>
<S> <C>
Payable for:
Investments purchased 22,527
- -------------------------------------------------------------------------------------------------
Management fee 153
- -------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 75
- -------------------------------------------------------------------------------------------------
Other 11
- -------------------------------------------------------------------------------------------------
Total liabilities 22,766
- -------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO 19,933 SHARES OUTSTANDING, $.01 PAR VALUE, EQUIVALENT TO $10.90
PER SHARE $217,183
- -------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
<TABLE>
<S> <C>
Paid-in capital $217,558
- -------------------------------------------------------------------------------------------------
Accumulated net realized loss on sales of investments and foreign currency
transactions (10,374)
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and assets and liabilities in foreign
currencies 4,500
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 5,499
- -------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $217,183
- -------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE ($217,183 / 19,933 shares outstanding) $10.90
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 19
Financial Statements
STATEMENT OF OPERATIONS
Year ended November 30, 1995
(in thousands)
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME
<TABLE>
<S> <C>
Interest $19,617
- -------------------------------------------------------------------------------------------------
Dividends 1,684
- -------------------------------------------------------------------------------------------------
Total investment income 21,301
- -------------------------------------------------------------------------------------------------
Expenses:
Management fee 1,784
- -------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 223
- -------------------------------------------------------------------------------------------------
Professional fees 45
- -------------------------------------------------------------------------------------------------
Reports to shareholders 33
- -------------------------------------------------------------------------------------------------
Trustees' fees and other 51
- -------------------------------------------------------------------------------------------------
Total expenses 2,136
- -------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 19,165
- -------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<TABLE>
<S> <C>
Net realized loss on sales of investments (including options purchased) and foreign
currency transactions (4,585)
- -------------------------------------------------------------------------------------------------
Net realized gain from futures transactions 1,888
- -------------------------------------------------------------------------------------------------
Net realized loss on options written (22)
- -------------------------------------------------------------------------------------------------
Net realized loss (2,719)
- -------------------------------------------------------------------------------------------------
Change in net unrealized depreciation on investments and assets and liabilities in
foreign currencies 14,650
- -------------------------------------------------------------------------------------------------
Net gain on investments 11,931
- -------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $31,096
- -------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS AND DIVIDENDS
Net investment income $19,165 18,914
- -------------------------------------------------------------------------------------------------
Net realized loss (2,719) (4,724)
- -------------------------------------------------------------------------------------------------
Change in net unrealized depreciation 14,650 (14,437)
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 31,096 (247)
- -------------------------------------------------------------------------------------------------
Distribution from net investment income (20,133) (15,199)
- -------------------------------------------------------------------------------------------------
Distribution from net realized gain -- (3,389)
- -------------------------------------------------------------------------------------------------
Total dividends to shareholders (20,133) (18,588)
- -------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,963 (18,835)
- -------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NET ASSETS
<TABLE>
<S> <C> <C>
Beginning of year 206,220 225,055
- -------------------------------------------------------------------------------------------------
END OF YEAR (including undistributed net investment income of
$5,499 and $4,867 respectively) $217,183 206,220
- -------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
Notes to Financial Statements
- --------------------------------------------------------------------------------
1 SIGNIFICANT ACCOUNTING
POLICIES DESCRIPTION OF FUND. The Fund is registered under
the Investment Company Act of 1940 as a
diversified, closed-end management investment
company.
INVESTMENT VALUATION. Investments are stated at
value. Fixed income securities are valued by using
market quotations, or independent pricing services
that use prices provided by market makers or
estimates of market values obtained from yield data
relating to instruments or securities with similar
characteristics. Portfolio securities that are
traded on a domestic securities exchange are valued
at the last sale price on the exchange where
primarily traded or, if there is no recent sale, at
the last current bid quotation. Portfolio
securities that are primarily traded on foreign
securities exchanges are generally valued at the
preceding closing values of such securities on
their respective exchanges where primarily traded.
Securities not so traded are valued at the last
current bid quotation if market quotations are
available. Exchange traded options are valued at
the last sale price unless there is no sale price,
in which event prices provided by market makers are
used. Over-the-counter traded options are valued
based upon prices provided by market makers.
Financial futures and options thereon are valued at
the settlement price established each day by the
board of trade or exchange on which they are
traded. Forward foreign currency contracts are
valued at the forward rates prevailing on the day
of valuation. Other securities and assets are
valued at fair value as determined in good faith by
the Board of Trustees.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency
values are converted into U.S. dollar values at the
mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by a
recognized dealer. If such quotations are not
readily available, the rate of exchange is
determined in good faith by the Board of Trustees.
Income and expenses and purchases and sales of
investments are translated into U.S. dollars at the
rate of exchange prevailing on the respective dates
of such transactions. The Fund includes that
portion of the results of operations resulting from
changes in foreign exchange rates with net realized
and unrealized gain on investments, as appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, and interest income is recorded
on the accrual basis. Interest income includes
premium and discount amortization on money market
instruments; it also includes original issue and
market discount amortization on long-term fixed
income securities. Realized gains and losses from
investment transactions are reported on an
identified cost basis.
The Fund may purchase securities with delivery or
payment to occur at a later date. At the time the
Fund enters into a commitment to purchase a
security, the transaction is recorded and the value
of the security is reflected in the net asset
value. The value of the security may vary with
market fluctuations. No interest accrues to the
Fund until payment takes
20
<PAGE> 21
Notes to Financial Statements
place. At the time the Fund enters into this type
of transaction it is required to segregate cash or
other liquid assets equal to the value of the
securities purchased. At November 30, 1995 the Fund
had $14,641,000 in purchase commitments outstanding
(7% of net assets) with a corresponding amount of
assets segregated.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS.
The Fund has complied with the special provisions
of the Internal Revenue Code available to
investment companies for the six months ended
November 30, 1995. The accumulated net realized
loss on sales of investments for federal income tax
purposes at November 30, 1995, amounting to
approximately $9,992,000, is available to offset
future taxable gains. If not applied, the loss
carryover expires during the period 2002 through
2004.
The Fund declares and pays dividends on a monthly
basis. Net realized capital gains, if any, reduced
by capital loss carryovers, will be distributed at
least annually. Dividends payable to its
shareholders are recorded by the Fund on the
ex-dividend date.
Dividends are determined in accordance with income
tax principles which may treat certain
transactions, such as foreign currency
transactions, differently from generally accepted
accounting principles.
- --------------------------------------------------------------------------------
2 TRANSACTIONS WITH
AFFILIATES The Fund has a management agreement with Kemper
Financial Services, Inc. (KFS) and the Fund pays a
management fee at an annual rate of .85% of average
weekly net assets. The Fund incurred a management
fee of $1,784,000 for the year ended November 30,
1995.
Pursuant to a services agreement with the Fund's
transfer agent, Kemper Service Company (KSvC) is
the shareholder service agent of the Fund. For the
year ended November 30, 1995, the transfer agent
remitted shareholder service fees to KSvC of
$37,000.
Certain officers or trustees of the Fund are also
officers or directors of KFS. During the year ended
November 30, 1995, the Fund made no direct payments
to its officers and incurred trustees' fees of
$18,000 to independent trustees.
- --------------------------------------------------------------------------------
3 INVESTMENT
TRANSACTIONS For the year ended November 30, 1995, investment
transactions (excluding short-term instruments) are
as follows (dollars in thousands):
<TABLE>
<S> <C>
Purchases $562,407
Proceeds from sales 572,965
</TABLE>
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
--------- --------
Options written:
<S> <C> <C>
Options outstanding at beginning of year -- --
Option contracts written 120 $ 54
Options terminated by repurchases 120 54
Options outstanding at end of year -- --
</TABLE>
21
<PAGE> 22
Notes to Financial Statements
4 FINANCIAL
FUTURES CONTRACTS The Fund has entered into exchange traded financial
futures contracts to take advantage of anticipated
market conditions and bears the risk that arises
from owning these contracts.
At the time the Fund enters into a futures
contract, it is required to segregate liquid assets
with its custodian. Subsequently, gain or loss is
recognized and payments are made on a daily basis
between the Fund and the broker as the market value
of the futures contract changes. At November 30,
1995, the market value of assets segregated by the
Fund was $14,080,000 for the following financial
futures contracts owned by the Fund.
<TABLE>
<CAPTION>
FACE EXPIRATION GAIN AT
TYPE AMOUNT POSITION MONTH 11/30/95
------------------ ---------- -------- ------------ --------
<S> <C> <C> <C> <C>
U.S. Treasury $6,475,000 Long December '95 $ 92,000
Securities 6,482,000 Long March '96 72,000
</TABLE>
22
<PAGE> 23
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $10.35 11.29 10.88 10.36 7.88
- -------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .96 .96 1.04 1.13 1.18
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .60 (.97) .45 .48 2.56
- -------------------------------------------------------------------------------------------------------------
Total from investment operations 1.56 (.01) 1.49 1.61 3.74
- -------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income 1.01 .76 1.08 1.09 1.16
- -------------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- .17 -- -- --
- -------------------------------------------------------------------------------------------------------------
Distribution from paid-in capital -- -- -- -- .10
- -------------------------------------------------------------------------------------------------------------
Total dividends 1.01 .93 1.08 1.09 1.26
- -------------------------------------------------------------------------------------------------------------
Net asset value per share, end of year $10.90 10.35 11.29 10.88 10.36
- -------------------------------------------------------------------------------------------------------------
Market value per share, end of year $10.75 9.38 11.00 10.38 9.88
- -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
TOTAL RETURN:
Based on net asset value 15.90% (.07) 14.29 16.03 50.92
- -------------------------------------------------------------------------------------------------------------
Based on market value 27.11 (6.39) 16.82 16.35 51.88
- -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.02% 1.03 .97 .99 1.00
- -------------------------------------------------------------------------------------------------------------
Net investment income 9.13 8.80 9.43 10.33 12.60
- -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $217,183 206,220 225,055 215,428 204,509
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 271% 253 240 101 24
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return based on net asset value reflects changes in the Fund's net
asset value during the year. Total return based on market value reflects changes
in market value. Each figure includes reinvestment of dividends. These figures
will differ depending upon the level of any discount from or premium to net
asset value at which the Fund's shares trade during the year.
23
<PAGE> 24
Description of Dividend Reinvestment Plan
- --------------------------------------------------------------------------------
1 PARTICIPATION We invite you to review the description of the
Dividend Reinvestment Plan (the "Plan") which is
available to you as a shareholder of Kemper Multi-
Market Income Trust (the "Fund"). If you wish to
participate and your shares are held in your own
name, simply contact Kemper Service Company, whose
address and phone number are provided in Paragraph
4 for the appropriate form. If your shares are held
in the name of a brokerage firm, bank, or other
nominee, you must instruct that nominee to re-
register your shares in your name so that you may
participate in the Plan, unless your nominee has
made the Plan available on shares held by them.
Shareholders who so elect will be deemed to have
appointed United Missouri Bank, n.a. ("UMB") as
their agent and as agent for the Fund under the
Plan.
- --------------------------------------------------------------------------------
2 DIVIDEND INVESTMENT
ACCOUNT The Fund's transfer agent and dividend disbursing
agent or its delegate ("Agent") will establish a
Dividend Investment Account (the "Account") for
each shareholder participating in the Plan. Agent
will credit to the Account of each participant
funds it receives from the following sources: (a)
cash dividends and capital gains distributions paid
on shares of beneficial interest (the "Shares") of
the Fund registered in the participant's name on
the books of the Fund; (b) cash dividends and
capital gains distributions paid on Shares
registered in the name of Agent but credited to the
participant's Account. Sources described in clauses
(a) and (b) of the preceding sentence are
hereinafter called "Distributions."
- --------------------------------------------------------------------------------
3 INVESTMENT OF
DISTRIBUTION FUNDS HELD
IN EACH ACCOUNT If on the record date for a Distribution (the
"Record Date"), Shares are trading at a discount
from net asset value per Share (according to the
evaluation most recently made on Shares of the
Fund), funds credited to a participant's Account
will be used to purchase Shares (the "Purchase").
UMB will attempt, commencing five days prior to the
Payment Date and ending at the close of business on
the Payment Date ("Payment Date" as used herein
shall mean the last business day of the month in
which such Record Date occurs), to acquire Shares
in the open market. If and to the extent that UMB
is unable to acquire sufficient Shares to satisfy
the Distribution by the close of business on the
Payment Date, the Fund will issue to UMB Shares
valued at net asset value per Share (according to
the evaluation most recently made on Shares of the
Fund) in the aggregate amount of the remaining
value of the Distribution. If, on the Record Date,
Shares are trading at a premium over net asset
value per Share, the Fund will issue on the Payment
Date, Shares valued at net asset value per Share on
the Record Date to Agent in the aggregate amount of
the funds credited to the participants' accounts.
- --------------------------------------------------------------------------------
4 ADDITIONAL INFORMATION Address all notices, correspondence, questions, or
other communication regarding the Plan to:
KEMPER SERVICE COMPANY
P.O. Box 419066
Kansas City, Missouri 64141-6066
1-800-294-4366
24
<PAGE> 25
Description of Dividend Reinvestment Plan
- --------------------------------------------------------------------------------
5 ADJUSTMENT OF
PURCHASE PRICE The Fund will increase the price at which Shares
may be issued under the Plan to 95% of the fair
market value of the shares on the Record Date if
the net asset value per Share of the Shares on the
Record Date is less than 95% of the fair market
value of the Shares on the Record Date.
- --------------------------------------------------------------------------------
6 DETERMINATION OF
PURCHASE PRICE The Cost of Shares and fractional Shares acquired
for each participant's Account in connection with a
Purchase shall be determined by the average cost
per Share, including brokerage commissions as
described in Paragraph 7 hereof, of the Shares
acquired by UMB in connection with that Purchase.
Shareholders will receive a confirmation showing
the average cost and number of Shares acquired as
soon as practicable after Agent has received or UMB
has purchased Shares. Agent may mingle the cash in
a participant's account with similar funds of other
participants of the Fund for whom UMB acts as agent
under the Plan.
- --------------------------------------------------------------------------------
7 BROKERAGE CHARGES There will be no brokerage charges with respect to
Shares issued directly by the Fund as a result of
Distributions. However, each participant will pay a
pro rata share of brokerage commissions incurred
with respect to UMB's open market purchases in
connection with the reinvestment of Distributions.
Brokerage charges for purchasing small amounts of
Shares for individual Accounts through the Plan can
be expected to be less than the usual brokerage
charges for such transactions, as UMB will be
purchasing Shares for all participants in blocks
and prorating the lower commission thus attainable.
- --------------------------------------------------------------------------------
8 SERVICE CHARGES There is no service charge by Agent or UMB to
shareholders who participate in the Plan other than
service charges specified in Paragraph 12 hereof.
However, the Fund reserves the right to amend the
Plan in the future to include a service charge.
- --------------------------------------------------------------------------------
9 TRANSFER OF SHARES
HELD BY AGENT Agent will maintain the participant's Account, hold
the additional Shares acquired through the Plan in
safekeeping and furnish the participant with
written confirmation of all transactions in the
Account. Shares in the Account are transferable
upon proper written instructions to Agent. Upon
request to Agent, a certificate for any or all full
Shares in a participant's Account will be sent to
the participant.
- --------------------------------------------------------------------------------
10 SHARES NOT HELD IN
SHAREHOLDER'S NAME Beneficial owners of Shares which are held in the
name of a broker or nominee will not be
automatically included in the Plan and will receive
all distributions in cash. Such shareholders should
contact the broker or nominee in whose name their
Shares are held to determine whether and how they
may participate in the Plan.
- --------------------------------------------------------------------------------
11 AMENDMENTS Experience under the Plan may indicate that changes
are desirable. Accordingly, the Fund reserves the
right to amend or terminate the Plan, including
provisions with respect to any Distribution paid
subsequent to
25
<PAGE> 26
Description of Dividend Reinvestment Plan
notice thereof sent to participants in the Plan at
least ninety days before the record date for such
Distribution.
- --------------------------------------------------------------------------------
12 WITHDRAWAL FROM
PLAN Shareholders may withdraw from the Plan at any time
by giving Agent a written notice. If the proceeds
are $25,000 or less and the proceeds are to be
payable to the shareholder of record and mailed to
the address of record, a signature guarantee
normally will not be required for notices by
individual account owners (including joint account
owners), otherwise a signature guarantee will be
required. In addition, if the certificate is to be
sent to anyone other than the registered owner(s)
at the address of record, a signature guarantee
will be required on the notice. A notice of
withdrawal will be effective for the next
Distribution following receipt of the notice by the
Agent provided the notice is received by the Agent
at least ten days prior to the Record Date for the
Distribution. When a participant withdraws from the
Plan, or when the Plan is terminated in accordance
with Paragraph 11 hereof, the participant will
receive a certificate for full Shares in the
Account, plus a check for any fractional Shares
based on market price; or if a Participant so
desires, Agent will notify UMB to sell his Shares
in the Plan and send the proceeds to the
participant, less brokerage commissions and a $2.50
service fee.
- --------------------------------------------------------------------------------
13 TAX IMPLICATIONS Shareholders will receive tax information annually
for personal records and to assist in preparation
of Federal income tax returns. If shares are
purchased at a discount, the amount of the discount
is considered taxable income and is added to the
cost basis of the purchased shares.
26
<PAGE> 27
Shareholders' Meeting
SPECIAL SHAREHOLDERS' MEETING
On September 19, 1995, a special shareholders' meeting was held. Kemper
Multi-Market Income Trust shareholders were asked to vote on three separate
issues: election of two additional members to the Board of Trustees,
ratification of Ernst & Young LLP as independent auditors and approval of a new
investment management agreement with Kemper Financial Services, Inc. or its
successor on the same terms as the current agreement. We are pleased to report
that all nominees were elected and all other items were approved. Following are
the results for each issue:
1) Election of additional Trustees
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
James E. Akins 15,001,856 526,408
Fred B. Renwick 15,001,856 526,408
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the fund
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
15,226,981 96,065 205,218
</TABLE>
3) Approval of new investment management agreement
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
15,005,470 206,308 319,486
</TABLE>
<PAGE> 28
Trustees and Officers
TRUSTEES OFFICERS
STEPHEN B. TIMBERS JOHN E. NEAL PHILIP J. COLLORA
President and Trustee Vice President Vice President and
Secretary
JAMES E. AKINS JOHN E. PETERS CHARLES F. CUSTER
Trustee Vice President Vice President and
Assistant Secretary
ARTHUR R. GOTTSCHALK J. PATRICK BEIMFORD, JR. JEROME L. DUFFY
Trustee Vice President Treasurer
FREDERICK T. Kelsey ROBERT S. CESSINE
Trustee Vice President
FRED B. RENWICK GORDON K. JOHNS
Trustee Vice President
JOHN B. TINGLEFF MICHAEL A. McNAMARA
Trustee Vice President
JOHN G. WEITHERS HARRY E. RESIS, JR.
Trustee Vice President
JONATHAN W. TRUTTER
Vice President
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419066
Kansas City, MO 64141-6066
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Printed on recycled paper.
Chicago, IL 60606
- --------------------------------------------------------------------------------
INVESTMENT MANAGER KEMPER FINANCIAL SERVICES, INC.
120 South LaSalle Street
Chicago, IL 60603
[RECYCLED LOGO] [KEMPER MUTUAL FUNDS LOGO]
KMMIT - 2 (1/96)
1008280
Printed in the U.S.A.
