<PAGE> PAGE 1
000 A000000 05/31/96
000 C000000 0000919708
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 STRATEGIC INCOME FUND
001 B000000 811-8382
001 C000000 3127811121
002 A000000 120 SOUTH LASALLE
002 B000000 CHICAGO
002 C000000 IL
002 D010000 60603
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 60603
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
013 B020001 IL
013 B030001 60606
014 A000001 KEMPER DISTRIBUTORS, INC.
014 B000001 8-47765
014 A000002 GRUNTAL SECURITIES, INC.
014 B000002 8-31022
<PAGE> PAGE 2
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 THE CHASE MANHATTAN BANK, N.A.
015 B000002 C
015 C010002 BROOKLYN
015 C020002 NY
015 C030002 11245
015 E040002 X
015 A000003 STATE STREET BANK AND TRUST COMPANY
015 B000003 S
015 C010003 BOSTON
015 C020003 MA
015 C030003 02110
015 E010003 X
018 000000 Y
019 A000000 N
019 B000000 0
020 C000001 0
020 C000002 0
020 C000003 0
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
020 C000010 0
021 000000 0
022 A000001 GOLDMAN, SACHS & CO.
022 B000001 13-5108880
022 C000001 32990
022 D000001 1117
022 A000002 MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
022 B000002 13-5674085
022 C000002 13490
022 D000002 612
022 A000003 LEHMAN BROTHERS, INC.
022 B000003 13-2518466
022 C000003 9950
022 D000003 1392
022 A000004 THE FIRST BOSTON CORPORATION
022 B000004 13-5659485
022 C000004 2098
022 D000004 0
022 A000005 BT BROKERAGE CORPORATION
<PAGE> PAGE 3
022 B000005 22-2608045
022 C000005 425
022 D000005 1059
022 A000006 DONALDSON, LUFKIN & JENRETTE SECURITIES CORP.
022 B000006 13-2741729
022 C000006 728
022 D000006 434
022 A000007 CHEMICAL SECURITIES, INC.
022 B000007 13-3379014
022 C000007 878
022 D000007 0
022 A000008 NATIONSBANC CAPITAL MARKETS INC.
022 B000008 UNKNOWN
022 C000008 866
022 D000008 0
022 A000009 MORGAN STANLEY & CO. INCORPORATED
022 B000009 13-2655998
022 C000009 299
022 D000009 382
022 A000010 CHASE MANHATTAN BANK
022 B000010 13-2633612
022 C000010 0
022 D000010 553
023 C000000 61905
023 D000000 6541
024 000000 N
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
<PAGE> PAGE 4
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
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
<PAGE> PAGE 5
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
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
<PAGE> PAGE 6
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 0.0
062 N000000 48.5
062 O000000 0.0
062 P000000 43.0
062 Q000000 54.7
062 R000000 0.0
063 A000000 0
063 B000000 9.1
064 A000000 N
064 B000000 Y
065 000000 N
066 A000000 N
067 000000 N
068 A000000 N
068 B000000 Y
069 000000 N
070 A010000 Y
070 A020000 Y
070 B010000 N
070 B020000 N
070 C010000 Y
070 C020000 N
070 D010000 N
070 D020000 N
070 E010000 Y
070 E020000 N
070 F010000 N
070 F020000 N
070 G010000 Y
070 G020000 N
070 H010000 N
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 Y
070 J020000 Y
070 K010000 Y
070 K020000 N
070 L010000 Y
070 L020000 Y
070 M010000 Y
070 M020000 N
070 N010000 Y
070 N020000 N
<PAGE> PAGE 7
070 O010000 Y
070 O020000 Y
070 P010000 N
070 P020000 N
070 Q010000 N
070 Q020000 N
070 R010000 N
070 R020000 N
071 A000000 11765
071 B000000 8960
071 C000000 79181
071 D000000 23
072 A000000 6
072 B000000 3935
072 C000000 0
072 D000000 0
072 E000000 0
072 F000000 203
072 G000000 0
072 H000000 0
072 I000000 0
072 J000000 46
072 K000000 0
072 L000000 7
072 M000000 10
072 N000000 0
072 O000000 0
072 P000000 654
072 Q000000 0
072 R000000 14
072 S000000 12
072 T000000 0
072 U000000 0
072 V000000 0
072 W000000 19
072 X000000 965
072 Y000000 0
072 Z000000 2970
072AA000000 433
072BB000000 401
072CC010000 2950
072CC020000 0
072DD010000 3084
072DD020000 0
072EE000000 0
073 A010000 0.9000
073 A020000 0.0000
073 B000000 0.0000
073 C000000 0.0000
074 A000000 312
074 B000000 0
<PAGE> PAGE 8
074 C000000 0
074 D000000 70154
074 E000000 0
074 F000000 0
074 G000000 0
074 H000000 0
074 I000000 66
074 J000000 159
074 K000000 0
074 L000000 789
074 M000000 30
074 N000000 71510
074 O000000 422
074 P000000 34
074 Q000000 0
074 R010000 23054
074 R020000 0
074 R030000 0
074 R040000 24
074 S000000 0
074 T000000 47976
074 U010000 3435
074 U020000 0
074 V010000 13.97
074 V020000 0.00
074 W000000 0.0000
074 X000000 341
074 Y000000 0
075 A000000 0
075 B000000 47538
076 000000 16.88
077 A000000 Y
077 B000000 N
077 C000000 Y
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
<PAGE> PAGE 9
086 A010000 22
086 A020000 332
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
087 A020000 488426107
087 A030000 KST
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
SEMIANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000919708
<NAME> KEMPER STRATEGIC INCOME FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 64,689
<INVESTMENTS-AT-VALUE> 70,220
<RECEIVABLES> 948
<ASSETS-OTHER> 342
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,510
<PAYABLE-FOR-SECURITIES> 422
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,112
<TOTAL-LIABILITIES> 23,534
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,002
<SHARES-COMMON-STOCK> 3,435
<SHARES-COMMON-PRIOR> 3,413
<ACCUMULATED-NII-CURRENT> 610
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (6,167)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,531
<NET-ASSETS> 47,976
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,935
<OTHER-INCOME> 0
<EXPENSES-NET> (965)
<NET-INVESTMENT-INCOME> 2,970
<REALIZED-GAINS-CURRENT> 32
<APPREC-INCREASE-CURRENT> 2,950
<NET-CHANGE-FROM-OPS> 5,952
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,084)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 22
<NET-CHANGE-IN-ASSETS> 3,200
<ACCUMULATED-NII-PRIOR> 724
<ACCUMULATED-GAINS-PRIOR> (6,199)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 203
<INTEREST-EXPENSE> 654
<GROSS-EXPENSE> 965
<AVERAGE-NET-ASSETS> 47,538
<PER-SHARE-NAV-BEGIN> 13.12
<PER-SHARE-NII> .87
<PER-SHARE-GAIN-APPREC> .88
<PER-SHARE-DIVIDEND> (.90)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.97
<EXPENSE-RATIO> 4.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Exhibit 77C
Kemper Strategic Income Fund
Form N-SAR for the period ended 05/31/96
File No. 811-8382
A special meeting of Registrant's shareholders was held on May
29, 1996. Votes regarding the items submitted to shareholder
vote are set forth below.
Item 1: Election of Members to the Board
James E. Akins
Vote Number
---- -----------
FOR 3,145,540
WITHHELD 28,567
Arthur R. Gottschalk
Vote Number
---- -----------
FOR 3,147,762
WITHHELD 26,345
Frederick T. Kelsey
Vote Number
---- -----------
FOR 3,148,397
WITHHELD 25,710
Dominique P. Morax
Vote Number
---- -----------
FOR 3,146,175
WITHHELD 27,932
Fred B. Renwick
Vote Number
---- -----------
FOR 3,146,492
WITHHELD 27,615
Stephen B. Timbers
Vote Number
---- -----------
FOR 3,149,666
WITHHELD 24,441
John B. Tingleff
Vote Number
---- -----------
FOR 3,150,301
WITHHELD 23,806
John G. Weithers
Vote Number
---- -----------
FOR 3,150,301
WITHHELD 23,806
Item 2: Selection of Independent Auditors
Vote Number
---- -----------
FOR 3,118,855
AGAINST 16,269
ABSTAIN 38,983
LKW|W:\FUNDS\NSAR.EXH\KST\KST-596.77C|061396
Exhibit 77Q1(e)
Kemper Strategic Income Fund
Form N-SAR for the period ended 05/31/96
File No. 811-8382
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 4th day of January, 1996, by and between
KEMPER STRATEGIC INCOME FUND, a Massachusetts business trust (the
"Fund"), and KEMPER FINANCIAL SERVICES, INC., a Delaware
corporation (the "Adviser").
WHEREAS, the Fund is a closed-end management investment company
registered under the Investment Company Act of 1940, the shares
of beneficial interest ("Shares") of which are registered under
the Securities Act of 1933; and
WHEREAS, the Fund desires to retain the Adviser to render
investment advisory and management services, and the 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 Fund hereby employs the Adviser to act as the investment
adviser and to manage the investment and reinvestment of the
assets in accordance with the Fund's investment objectives and
policies and limitations, and to administer its affairs to the
extent requested by and subject to the supervision of the Board
of Trustees of the Fund for the period and upon the terms herein
set forth and to place orders for the purchase or sale of
portfolio securities for the Fund's account with brokers or
dealers selected by it; and in connection therewith, the Adviser
is authorized as the agent of the Fund to give instructions to
the custodian of the Fund as to the deliveries of securities and
payments of cash for the account of the Fund. In connection with
the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board of
Trustees of the Fund determines, the Adviser shall not be deemed
to have acted unlawfully or to have breached any duty, created by
this Agreement or otherwise, solely by reason of its having
caused the Fund to pay a broker or dealer an amount of commission
for effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determined in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of either that particular
transaction or the Adviser's overall responsibilities with
respect to the clients of the Adviser as to which the Adviser
exercises investment discretion. The Fund recognizes that all
research services and research that the Adviser receives or
generates are available for all clients, and that the Fund and
other clients may benefit thereby. The investment of funds shall
be subject to all applicable restrictions of the Agreement and
Declaration of Trust and By-Laws of the Fund as may from time to
time be in force.
The Adviser accepts such employment and agrees during such period
to render such services, to furnish office facilities and
equipment and clerical, bookkeeping and certain administrative
services for the Fund, to permit any of its officers or employees
to serve without compensation as trustees or officers of the Fund
if elected to such positions and to assume the obligations herein
set forth for the compensation herein provided. The Adviser
shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the Fund.
It is understood and agreed that the Adviser, by separate
agreements with the Fund, may also serve the Fund in other
capacities.
2. For the services and facilities described in Section 1, the
Fund will pay to the Adviser at the end of each calendar month,
an investment management fee computed at an annual rate of 0.85
of 1% of the average weekly net assets. 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.
3. The services of the Adviser to the Fund under this Agreement
are not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as
its services hereunder are not impaired thereby.
4. In addition to the fee of the Adviser, the Fund shall assume
and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property, for
keeping its books of account, for any other charges of the
custodian, and for calculating the net asset value of the Fund as
provided in the prospectus of the Fund. The Adviser shall not be
required to pay and the Fund shall assume and pay the charges and
expenses of its operations, including compensation of the
trustees (other than those affiliated with the Adviser), charges
and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, any registrar of the Fund,
costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, costs of
share certificates and of reports, membership dues in the
Investment Company Institute or any similar organization, reports
2
and notices to shareholders, other like miscellaneous expenses
and all taxes and fees payable to federal, state or other
governmental agencies on account of the registration of
securities issued by the Fund, filing of trust documents or
otherwise. The Fund shall not pay or incur any obligation for
any expenses for which the Fund intends to seek reimbursement
from the Adviser as herein provided without first obtaining the
written approval of the Adviser. The Adviser shall arrange, if
desired by the Fund, for officers or employees of the Adviser to
serve, without compensation from the Fund, as trustees, officers
or agents of the Fund if duly elected or appointed to such
positions and subject to their individual consent and to any
limitations imposed by law.
The net asset value of the Fund shall be calculated in accordance
with the provisions of the Fund's prospectus or at such other
time or times as the trustees may determine in accordance with
the provisions of the Investment Company Act of 1940. On each
day when net asset value is not calculated, the net asset value
shall be deemed to be the net asset value as of the close of
business on the last day on which such calculation was made for
the purpose of the foregoing computations.
5. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are or
may be interested in the Adviser as officers, directors, agents,
shareholders or otherwise, and that the officers, directors,
shareholders and agents of the Adviser may be interested in the
Fund otherwise than as a trustee, officer or agent.
6. The Adviser shall not be liable for any error of judgment or
of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence
on the part of the Adviser in the performance of its obligations
and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
7. This Agreement shall become effective on the date hereof and
shall remain in full force until April 1, 1996, unless sooner
terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter, but only as long
as such continuance is specifically approved 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, the Adviser may
continue to serve in such capacity in the manner and to the
extent permitted by the Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment
3
of any penalty by the Fund or by the Adviser on sixty (60) days
written notice to the other party. The Fund may effect
termination by action of the Board of Trustees or by vote of a
majority of the outstanding voting securities.
This Agreement may be terminated at any time without the payment
of any penalty by the Board of Trustees or by vote of a majority
of the outstanding voting securities in the event that it shall
have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken
any action which results in a breach of the covenants of the
Adviser set forth herein.
The terms "assignment" and "vote" of a majority of the
outstanding voting securities shall have the meanings set forth
in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the
compensation described in Section 2 earned prior to such
termination.
8. 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.
9. 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.
10. All parties hereto are expressly put on notice of the Fund's
Agreement and Declaration of Trust and all amendments thereto,
all of which are on file with the Secretary of The Commonwealth
of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by
and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the
Fund hereunder are not binding upon any of the trustees, officers
or shareholders of the Fund individually but are binding upon
only the assets and property of the Fund.
11. This Agreement shall be construed in accordance with
applicable federal law and except as to Section 10 hereof which
shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of Illinois.
4
12. This Agreement is the entire contract between the parties
relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter
hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused
this Agreement to be executed as of the day and year first above
written.
KEMPER STRATEGIC INCOME FUND
By: /s/ John E. Peters
----------------------------
Title: Vice President
-------------------------
ATTEST:
By: /s/ Philip J. Collora
---------------------------
Title: Secretary
------------------------
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick Dudasik
----------------------------
Title: Senior Vice President
-------------------------
ATTEST:
By: /s/ David F. Dierenfeldt
--------------------------
Title: Assistant Secretary
------------------------
MRB|W:\FUNDS\NSAR.EXH\KST\KST-596.77Q|060496
5
