<PAGE> PAGE 1
000 B000000 11/30/96
000 C000000 0000842905
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 KEMPER MULTI-MARKET INCOME TRUST
001 B000000 811-5689
001 C000000 3125377000
002 A000000 222 S. RIVERSIDE PLAZA
002 B000000 CHICAGO
002 C000000 IL
002 D010000 60606
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 ZURICH KEMPER INVESTMENTS, INC.
008 B000001 A
008 C000001 801-6634
008 D010001 CHICAGO
008 D020001 IL
008 D030001 60606
008 A000002 ZURICH INVESTMENT MANAGEMENT LIMITED
008 B000002 S
008 C000002 801-45306
008 D010002 LONDON
008 D050002 UK
008 D060002 EC4M 7RQ
012 A000001 KEMPER SERVICE COMPANY
012 B000001 84-1713
012 C010001 KANSAS CITY
012 C020001 MO
012 C030001 64105
013 A000001 ERNST & YOUNG LLP
013 B010001 CHICAGO
<PAGE> PAGE 2
013 B020001 IL
013 B030001 60606
014 A000001 KEMPER DISTRIBUTORS, INC.
014 B000001 8-47765
014 A000002 GRUNTAL SECURITIES, INC.
014 B000002 8-31022
014 A000003 THE GMS GROUP, INC,
014 B000003 8-23936
015 A000001 INVESTORS FIDUCIARY TRUST COMPANY
015 B000001 C
015 C010001 KANSAS CITY
015 C020001 MO
015 C030001 64105
015 E010001 X
015 A000002 STATE STREET BANK AND TRUST COMPANY
015 B000002 S
015 C010002 BOSTON
015 C020002 MA
015 C030002 02110
015 E010002 X
015 A000003 CHASE MANHATTAN BANK, N.A.
015 B000003 C
015 C010003 BROOKLYN
015 C020003 NY
015 C030003 11245
015 E040003 X
018 000000 Y
019 A000000 N
019 B000000 0
020 A000001 STANDARD & POORS SECURITIES, INC.
020 B000001 13-2671951
020 C000001 42
020 A000002 LINSCO/PRIVATE LEDGER CORP.
020 B000002 85-2834236
020 C000002 31
020 A000003 H.D. VEST INVESTMENT SECURITIES, INC.
020 B000003 75-1869963
020 C000003 25
020 A000004 PAINEWEBBER INCORPORATED
020 B000004 13-2638166
020 C000004 16
020 A000005 LIT DIV OF 1ST OPTIONS OF CHICAGO, INC.
020 B000005 36-3890396
020 C000005 14
020 A000006 A.G. EDWARDS & SONS, INC.
020 B000006 43-0895447
020 C000006 8
020 A000007 DEAN WITTER REYNOLDS, INC.
020 B000007 94-1671384
020 C000007 5
020 A000008 SALOMON BROTHERS INC.
<PAGE> PAGE 3
020 B000008 13-3082694
020 C000008 4
020 A000009 D.A. DAVIDSON & CO., INC.
020 B000009 81-0139474
020 C000009 3
020 A000010 DEUTSCHE BANK SECURITIES CORPORATION
020 B000010 13-2730828
020 C000010 3
021 000000 154
022 A000001 GOLDMAN, SACHS & CO.
022 B000001 13-5108880
022 C000001 533900
022 D000001 174313
022 A000002 GREENWICH CAPITAL MARKETS
022 B000002 UNKNOWN
022 C000002 166918
022 D000002 161408
022 A000003 BEAR, STEARNS & CO.,INC.
022 B000003 13-3299429
022 C000003 73896
022 D000003 89767
022 A000004 UBS SECURITIES INC.
022 B000004 13-2932996
022 C000004 63632
022 D000004 46871
022 A000005 CS FIRST BOSTON CORPORATION
022 B000005 13-5659485
022 C000005 61939
022 D000005 47531
022 A000006 LEHMAN BROTHERS INC.
022 B000006 13-2518466
022 C000006 84119
022 D000006 23091
022 A000007 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.
022 B000007 13-5674085
022 C000007 59963
022 D000007 37676
022 A000008 DONALDSON, LUFKIN & JENRETTE SECURITIES CORP.
022 B000008 13-2741729
022 C000008 36522
022 D000008 43882
022 A000009 SALOMON BROTHERS INC.
022 B000009 13-3082694
022 C000009 23187
022 D000009 18958
022 A000010 J.P. MORGAN SECURITIES, INC.
022 B000010 13-3224016
022 C000010 18842
022 D000010 20413
023 C000000 1212316
023 D000000 755820
<PAGE> PAGE 4
024 000000 N
025 A000001 DELETE
025 D000001 0
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
026 A000000 N
026 B000000 Y
026 C000000 Y
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027 000000 N
028 A010000 0
028 A020000 0
028 A030000 0
028 A040000 0
028 B010000 0
028 B020000 0
028 B030000 0
028 B040000 0
028 C010000 0
028 C020000 0
028 C030000 0
028 C040000 0
028 D010000 0
028 D020000 0
028 D030000 0
028 D040000 0
028 E010000 0
028 E020000 0
028 E030000 0
028 E040000 0
028 F010000 0
028 F020000 0
028 F030000 0
028 F040000 0
028 G010000 0
028 G020000 0
028 G030000 0
028 G040000 0
028 H000000 0
030 A000000 0
030 B000000 0.00
<PAGE> PAGE 5
030 C000000 0.00
031 A000000 0
031 B000000 0
032 000000 0
033 000000 0
035 000000 0
036 B000000 0
038 000000 0
042 A000000 0
042 B000000 0
042 C000000 0
042 D000000 0
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 0
044 000000 0
045 000000 Y
046 000000 N
047 000000 Y
048 000000 0.850
048 A010000 0
048 A020000 0.000
048 B010000 0
048 B020000 0.000
048 C010000 0
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 0
048 K020000 0.000
049 000000 N
050 000000 N
051 000000 N
052 000000 N
053 A000000 N
054 A000000 Y
054 B000000 Y
<PAGE> PAGE 6
054 C000000 N
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 N
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 Y
054 N000000 N
054 O000000 N
055 A000000 Y
055 B000000 N
056 000000 Y
057 000000 N
058 A000000 N
059 000000 Y
060 A000000 Y
060 B000000 Y
061 000000 0
062 A000000 Y
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 27.7
062 N000000 11.8
062 O000000 0.0
062 P000000 36.1
062 Q000000 32.1
062 R000000 0.1
063 A000000 0
063 B000000 7.8
064 A000000 N
064 B000000 N
066 A000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
<PAGE> PAGE 7
070 B010000 N
070 B020000 N
070 C010000 Y
070 C020000 N
070 D010000 Y
070 D020000 N
070 E010000 Y
070 E020000 Y
070 F010000 Y
070 F020000 N
070 G010000 Y
070 G020000 N
070 H010000 Y
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 Y
070 J020000 Y
070 K010000 Y
070 K020000 Y
070 L010000 Y
070 L020000 Y
070 M010000 Y
070 M020000 Y
070 N010000 Y
070 N020000 N
070 O010000 Y
070 O020000 N
070 P010000 N
070 P020000 N
070 Q010000 N
070 Q020000 N
070 R010000 N
070 R020000 N
071 A000000 715026
071 B000000 689024
071 C000000 222077
071 D000000 310
072 A000000 12
072 B000000 18091
072 C000000 1383
072 D000000 0
072 E000000 0
072 F000000 1828
072 G000000 0
072 H000000 0
072 I000000 0
072 J000000 151
072 K000000 0
072 L000000 44
072 M000000 24
<PAGE> PAGE 8
072 N000000 0
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 27
072 S000000 14
072 T000000 0
072 U000000 0
072 V000000 0
072 W000000 45
072 X000000 2133
072 Y000000 0
072 Z000000 17341
072AA000000 13729
072BB000000 11165
072CC010000 2929
072CC020000 0
072DD010000 21361
072DD020000 0
072EE000000 0
073 A010000 1.0700
073 A020000 0.0000
073 B000000 0.0000
073 C000000 0.0000
074 A000000 921
074 B000000 0
074 C000000 0
074 D000000 236784
074 E000000 0
074 F000000 280
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 729
074 K000000 0
074 L000000 5125
074 M000000 0
074 N000000 243839
074 O000000 23691
074 P000000 155
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 54
074 S000000 0
074 T000000 219939
074 U010000 20052
074 U020000 0
074 V010000 10.97
074 V020000 0.00
<PAGE> PAGE 9
074 W000000 0.0000
074 X000000 3392
074 Y000000 35580
075 A000000 0
075 B000000 231731
076 000000 10.63
077 A000000 Y
077 B000000 Y
077 C000000 N
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 N
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 Y
077 Q020000 N
077 Q030000 N
078 000000 N
080 A000000 ICI MUTUAL INSURANCE COMPANY
080 C000000 60000
081 A000000 Y
081 B000000 87
082 A000000 Y
082 B000000 100
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
086 A010000 119
086 A020000 1283
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
087 A010000 SHARES OF BENEFICIAL INTEREST
<PAGE> PAGE 10
087 A020000 48842B106
087 A030000 KMM
088 A000000 N
088 B000000 N
088 C000000 N
088 D000000 N
SIGNATURE JEROME L. DUFFY
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1996
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000842905
<NAME> KEMPER MULTI MARKET TRUST
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 230,067
<INVESTMENTS-AT-VALUE> 237,064
<RECEIVABLES> 5,854
<ASSETS-OTHER> 921
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 243,839
<PAYABLE-FOR-SECURITIES> 23,691
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 209
<TOTAL-LIABILITIES> 23,900
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 220,403
<SHARES-COMMON-STOCK> 20,052
<SHARES-COMMON-PRIOR> 19,933
<ACCUMULATED-NII-CURRENT> 231
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,124)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,429
<NET-ASSETS> 219,939
<DIVIDEND-INCOME> 1,383
<INTEREST-INCOME> 18,091
<OTHER-INCOME> 0
<EXPENSES-NET> (2,133)
<NET-INVESTMENT-INCOME> 17,341
<REALIZED-GAINS-CURRENT> 2,564
<APPREC-INCREASE-CURRENT> 2,929
<NET-CHANGE-FROM-OPS> 22,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (21,361)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 119
<NET-CHANGE-IN-ASSETS> 2,756
<ACCUMULATED-NII-PRIOR> 5,499
<ACCUMULATED-GAINS-PRIOR> (10,374)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,828
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,133
<AVERAGE-NET-ASSETS> 231,731
<PER-SHARE-NAV-BEGIN> 10.90
<PER-SHARE-NII> .87
<PER-SHARE-GAIN-APPREC> .27
<PER-SHARE-DIVIDEND> (1.07)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.97
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</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
January 17, 1997
Kemper Funds Exhibit A
November 30, 1996
Kemper High Income Trust
Kemper Intermediate Government Trust
Kemper Multi-Market Income Trust
Kemper Strategic Municipal Income Trust
Kemper Municipal Income Trust
Kemper Strategic Income Fund
Kemper Asian Growth Fund
Kemper Europe Fund
The Growth Fund of Spain, Inc.
Exhibit 77Q1(e)
Kemper Multi-Market Income Trust
Form N-SAR for the period ended 11/30/96
File No. 811-5689
SUB-ADVISORY AGREEMENT
(Form 2)
AGREEMENT made this 1st day of December, 1996, by and
between ZURICH KEMPER INVESTMENTS, INC., a Delaware corporation
(the "Adviser") and ZURICH INVESTMENT MANAGEMENT LIMITED, an
English corporation (the "Sub-Adviser").
WHEREAS, KEMPER MULTI-MARKET INCOME TRUST, a Massachusetts
business trust (the "Fund") is a management investment company
registered under the Investment Company Act of 1940;
WHEREAS, the Fund has retained the Adviser to render to it
investment advisory and management services with regard to the
Fund's sole series (the "initial series") pursuant to an
Investment Management Agreement (the "Management Agreement"); and
WHEREAS, the Adviser desires at this time to retain the
Sub-Adviser to render investment advisory and management services
with respect to that portion of the portfolio of the Fund's
initial series allocated to the Sub-Adviser by the Adviser for
management of foreign securities, including foreign currency
transactions and related investments, and the Sub-Adviser is
willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between the
parties hereto as follows:
1. The Adviser hereby employs the Sub-Adviser to manage
the investment and reinvestment of the assets of the initial
series of the Fund allocated by the Adviser in its sole
discretion to the Sub-Adviser for management of foreign
securities, including foreign currency transactions and related
investments, in accordance with the applicable investment
objectives, policies and limitations and subject to the
supervision of the Adviser and 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 the
Sub-Adviser; and, in connection therewith, the Sub-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 Sub-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 and subject to satisfying the
requirements of Section 28(e) of the Securities Exchange Act of
1934, the Sub-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 Sub-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 Sub-Adviser's overall responsibilities with
respect to the clients of the Sub-Adviser as to which the
Sub-Adviser exercises investment discretion. The Adviser
recognizes that all research services and research that the
Sub-Adviser receives are available for all clients of the
Sub-Adviser, and that the Fund and other clients of the
Sub-Adviser 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 Sub-Adviser accepts such employment and agrees during
such period to render such investment management services, to
furnish related 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 Sub-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 or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser.
It is understood and agreed that the Sub-Adviser, by separate
agreements with the Fund, may also serve the Fund in other
capacities.
The Sub-Adviser will keep the Fund and the Adviser informed
of developments materially affecting the Fund and shall, on the
Sub-Adviser's own initiative and as reasonably requested by the
Adviser or the Fund, furnish to the Fund and the Adviser from
time to time whatever information the Adviser reasonably believes
appropriate for this purpose.
The Sub-Adviser agrees that, in the performance of the
duties required of it by this Agreement, it will comply with the
Investment Advisers Act of 1940 and the Investment Company Act of
1940, and all rules and regulations thereunder, and all
applicable laws and regulations and with any applicable
-2-
procedures adopted by the Fund's Board of Trustees and identified
in writing to the Sub-Adviser.
The Sub-Adviser shall provide the Adviser with such
investment portfolio accounting and shall maintain and provide
such detailed records and reports as the Adviser may from time to
time reasonably request, including without limitation, daily
processing of investment transactions and cash positions,
periodic valuations of investment portfolio positions as required
by the Adviser, monthly reports of the investment portfolio and
all investment transactions and the preparation of such reports
and compilation of such data as may be required by the Adviser to
comply with the obligations imposed upon it under Management
Agreement.
The Sub-Adviser shall provide adequate security with respect
to all materials, records, documents and data relating to any of
its responsibilities pursuant to this Agreement including any
means for the effecting of securities transactions.
The Sub-Adviser agrees that it will make available to the
Adviser and the Fund promptly upon their request copies of all of
its investment records and ledgers with respect to the Fund to
assist the Adviser and the Fund in monitoring compliance with the
Investment Company Act of 1940 and the Investment Advisers Act of
1940, as well as other applicable laws. The Sub-Adviser will
furnish the Fund's Board of Trustees such periodic and special
reports with respect to the Fund's portfolio as the Adviser or
the Board of Trustees may reasonably request.
In compliance with the requirements of Rule 31a-3 under the
Investment Company Act of 1940, the Sub-Adviser hereby agrees
that any records that it maintains for the Fund are the property
of the Fund and further agrees to surrender promptly to the Fund
copies of any such records upon the Fund's request. The Sub-
Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the Investment Company Act of 1940 any records
with respect to the Sub-Adviser's duties hereunder required to be
maintained by Rule 31a-1 under the such Act to the extent that
the Sub-Adviser prepares and maintains such records pursuant to
this Agreement and to preserve the records required by Rule 204-2
under the Investment Advisers Act of 1940 for the period
specified in that Rule.
The Sub-Adviser agrees that it will immediately notify the
Adviser and the Fund in the event that the Sub-Adviser: (i)
becomes subject to a statutory disqualification that prevents the
Sub-Adviser from serving as an investment adviser pursuant to
this Agreement; or (ii) is or expects to become the subject of an
administrative proceeding or enforcement action by the United
States Securities and Exchange Commission, the Investment
-3-
Management Regulatory Organization ("IMRO") or other regulatory
authority.
The Sub-Adviser represents that it is an investment adviser
registered under the Investment Advisers Act of 1940 and other
applicable laws and it is regulated by IMRO and will treat the
Fund as a Non-Private Customer as defined by IMRO. The Sub-
Adviser agrees to maintain the completeness and accuracy of its
registration on Form ADV in accordance with all legal
requirements relating to that Form. The Sub-Adviser acknowledges
that it is an "investment adviser" to the Fund within the meaning
of the Investment Company Act of 1940 and the Investment Advisers
Act of 1940.
The Sub-Adviser shall be responsible maintaining an
appropriate compliance program to ensure that the services
provided by it under this Agreement are performed in a manner
consistent with applicable laws and the terms of this Agreement.
Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser.
Sub-Adviser agrees to provide such reports and certifications
regarding its compliance program as the Adviser or the Fund
shall reasonably request from time to time.
2. In the event that there are, from time to time, one or
more additional series of the Fund with respect to which the
Adviser desires to retain the Sub-Adviser to render investment
advisory and management services hereunder, the Adviser shall
notify the Sub-Adviser in writing. If the Sub-Adviser is willing
to render such services, it shall notify the Adviser in writing
whereupon such additional series shall become subject to this
Agreement.
3. For the services and facilities described in Section 1,
the Adviser will pay to the Sub-Adviser, at the end of each
calendar month, a sub-advisory fee computed at an annual rate of
.30% of that portion of the average daily net assets of the
initial series of the Fund that is allocated by the Adviser to
the Sub-Adviser for management.
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 Sub-Adviser under this Agreement
are not to be deemed exclusive, and the Sub-Adviser shall be free
to render similar services or other services to others so long as
its services hereunder are not impaired thereby.
5. The Sub-Adviser shall arrange, if desired by the Fund,
for officers or employees of the Sub-Adviser to serve, without
-4-
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.
6. The net asset value for each series of the Fund
subject to this Agreement shall be calculated as the Board of
Trustees of the Fund may determine from time to time 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 series shall be deemed to be the net asset
value of such series as of the close of business on the last day
on which such calculation was made for the purpose of the
foregoing computations.
7. Subject to applicable statutes and regulations, it is
understood that certain trustees, officers or agents of the Fund
are or may be interested in the Sub-Adviser as officers,
directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Sub-Adviser
may be interested in the Fund otherwise than as a trustee,
officer or agent.
8. The Sub-Adviser shall not be liable for any error of
judgment or of law or for any loss suffered by the Fund or the
Adviser 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 Sub-Adviser in the
performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
9. This Agreement shall become effective with respect to
the initial series of the Fund on the date hereof and shall
remain in full force until April 1, 1998, unless sooner
terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter with respect to
each such series, but only as long as such continuance is
specifically approved for each series 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 series, the
Sub-Adviser may continue to serve in such capacity for such
series 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 or in the event of the termination of the
Management Agreement and may be terminated at any time with
respect to any series subject to this Agreement without the
payment of any penalty by the Adviser or by the Sub-Adviser on
-5-
sixty (60) days written notice to the other party. The Fund may
effect termination with respect to any such series without
payment of any penalty by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of such
series on sixty (60) days written notice to the Adviser and the
Sub-Adviser.
This Agreement may be terminated with respect to any series
at any time without the payment of any penalty by the Board of
Trustees of the Fund, by vote of a majority of the outstanding
voting securities of such series or by the Adviser in the event
that it shall have been established by a court of competent
jurisdiction that the Sub-Adviser or any officer or director of
the Sub-Adviser has taken any action which results in a breach of
the covenants of the Sub-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 Sub-Adviser to receive payments on any unpaid balance of the
compensation described in Section 3 earned prior to such
termination.
10. 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.
11. 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.
12. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Illinois.
-6-
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 Adviser and the Sub-Adviser have
caused this Agreement to be executed as of the day and year first
above written.
ZURICH KEMPER INVESTMENTS, INC.
By:
--------------------------------
Title:
-----------------------------
ZURICH INVESTMENT MANAGEMENT LIMITED
By:
---------------------------------
Title:
------------------------------
LKW|W:\FUNDS\NSAR.EXH\KMM\SUBZIML.F-2|011597
-7-
