SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
KEMPER STRATEGIC MUNICIPAL INCOME TRUST
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
- --PRELIMINARY PROXY STATEMENT
KEMPER CLOSED-END FUNDS
120 SOUTH LASALLE STREET CHICAGO, IL 60603
TELEPHONE 1-800-294-4366
NOTICE OF JOINT ANNUAL MEETING OF SHAREHOLDERS
MAY 29, 1996
AND PROXY STATEMENT
April 8, 1996
To the Shareholders:
You are invited to attend a joint annual meeting of the shareholders of Kemper
High Income Trust ("KHI"), Kemper Intermediate Government Trust ("KGT"),
Kemper Multi-Market Income Trust ("KMM"), Kemper Municipal Income Trust
("KTF"), Kemper Strategic Municipal Income Trust ("KSM") and Kemper Strategic
Income Fund ("KST") (individually, a "Fund" and collectively, the "Funds").
The meeting will be held in Room 17L on the Seventeenth Floor at the offices
of the Funds, 120 South LaSalle Street, Chicago, Illinois, on Wednesday, May
29, 1996 at 2:30 P.M. Chicago time, for the following purposes and to transact
such other business, if any, as may properly come before the meeting:
1. To elect Members to the Board of each Fund as outlined below:
a. For KHI, KGT, KMM, KSM and KST only, to elect eight Board Members to
constitute the Board of each Fund; and
b. For KTF only, to elect eight Board Members to constitute the Board of
the Fund with six Board Members to be elected by the holders of
Preferred and Common Shares voting together and two Board Members to
be elected by holders of the Preferred Shares only.
2. To ratify or reject the selection of Ernst & Young LLP as independent
auditors of each Fund for the current fiscal year.
3. For KGT only, to approve or disapprove converting the Fund from a closed-
end investment company to an open-end investment company and, in
connection therewith, changing the subclassification of the Fund from a
closed-end investment company to an open-end investment company, and
amending KGT's Agreement and Declaration of Trust and fundamental
investment policies as appropriate for the Fund's operation as an open-end
investment company.
The Board of each Fund has fixed the close of business on March 22, 1996 as
the record date for determining the shareholders of each Fund entitled to
notice of and to vote at the meeting. Shareholders are entitled to one vote
for each share held.
THE BOARD OF EACH FUND RECOMMENDS THAT YOU VOTE FOR ALL ITEMS, EXCEPT THE
BOARD OF KGT RECOMMENDS THAT YOU VOTE AGAINST ITEM 3.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
SIGN, DATE AND RETURN IT IN THE ENVELOPE PROVIDED.
TO SAVE YOUR FUND THE COST OF ADDITIONAL SOLICITATIONS, PLEASE MAIL YOUR PROXY
PROMPTLY.
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The accompanying proxy is solicited by the Board of each Fund for voting at
the joint annual meeting of shareholders to be held on Wednesday, May 29,
1996, and at any and all adjournments thereof (the "Meeting"). The
shareholders of each Fund will vote separately on the items presented at the
Meeting. This proxy statement was first mailed to shareholders on or about
April 8, 1996.
The following table indicates which Fund's shareholders are solicited with
respect to each Item:
ITEM KHI KGT KMM KTF KSM KST
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1. Elect Board Members X X X X X X
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2. Ratify Selection of Auditors X X X X X X
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3. Convert from a Closed-End
Investment Company to an
Open-End Investment Company X
The Board of each Fund recommends that shareholders vote FOR ITEMS 1 AND 2,
and the Board of KGT recommends that shareholders vote AGAINST ITEM 3. The
vote required to approve each item is described under "Miscellaneous."
The Board of each Fund has fixed the close of business on March 22, 1996 as
the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting. As of February 29, 1996, shares of the Funds were
issued and outstanding as follows:
FUND SHARES
---- ----------
KHI............................... 23,052,224
KGT............................... 33,996,171
KTF
Common.......................... 37,555,902
Preferred....................... 43,000
KMM............................... 19,972,077
KSM............................... 10,501,274
KST............................... 3,425,604
KTF ONLY. Pursuant to the Agreement and Declaration of Trust of KTF, the Board
may authorize separate classes of shares of beneficial interest. The Board has
authorized, and KTF has issued, common shares of beneficial interest (the
"Common Shares") and preferred shares of beneficial interest, Series A through
D (the "Preferred Shares"). The Common Shares and the Preferred Shares have
different powers, rights, preferences and privileges, qualifications,
limitations and restrictions with respect to, among other things, dividends,
liquidation, redemption and voting as more fully set forth in the Certificate
of Designation for Preferred Shares that established the Preferred Shares. The
Common Shares were first issued on October 20, 1988 and the Preferred Shares
were first issued on July 24, 1989.
2
At the Meeting, the holders of the Preferred Shares, voting as a separate
class, are entitled to elect two members of KTF's Board and the holders of the
Common Shares and the Preferred Shares, voting together as a single class, are
entitled to elect the six remaining members of the KTF Board. On all other
items, the holders of the Common Shares and the Preferred Shares will vote
together as a single class.
ITEM 1. ELECTION OF MEMBERS TO THE BOARDS
It is intended that the proxies will be voted for the election as Board
Members of the nominees described below. Each Board Member so elected will
serve as a Board Member of the respective Fund until the next meeting of
shareholders, if any, called for the purpose of electing Board Members and
until the election and qualification of a successor or until such Board Member
sooner dies, resigns or is removed as provided in the organizational documents
of each Fund. All the nominees were last elected to each Board at the 1995
annual joint meeting of shareholders except that (i) Messrs. Akins and Renwick
were first elected at a September 19, 1995 special meeting of shareholders,
and (ii) Mr. Morax was appointed to the Board on March 6, 1996 to fill a
vacancy and is standing for election by the Fund's shareholders for the first
time at the Meeting.
KTF ONLY. As indicated above, holders of the Preferred Shares are entitled to
elect two Board Members. Messrs. Timbers and Kelsey are nominees for election
by holders of the Preferred Shares. The six remaining Board Members are to be
elected by holders of the Common Shares and the Preferred Shares, voting
together as a single class. Messrs. Akins, Gottschalk, Morax, Renwick,
Tingleff and Weithers are nominees for election by all shareholders.
All the nominees listed below have consented to serve as Board Members of the
respective Funds, if elected. In case any nominee shall be unable or shall
fail to act as a Board Member by virtue of an unexpected occurrence, the
proxies may be voted for such other person(s) as shall be determined by the
persons acting under the proxies in their discretion.
SHARES BENEFICIALLY
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME OWNED AS OF
OCCUPATION AND AFFILIATIONS A BOARD MEMBER JANUARY 31, 1996**
- ------------------------------- ----------------- -------------------
James E. Akins (10/15/26) 1995--All None
Consultant on International, Political,
and Economic Affairs; formerly a career
United States Foreign Service Officer;
Energy Adviser for the White House;
United States Ambassador to Saudi
Arabia
Arthur R. Gottschalk (2/13/25) 1988--KGT, KTF KHI--1,000
Retired; formerly, President, Illinois 1989--KHI, KMM, KGT--1,000
Manufacturers Association; Trustee, KSM KMM--800
Illinois Masonic Medical Center; 1994--KST KTF--800
Member, Board of Governors, Heartland KSM--1,000
Institute/Illinois; formerly, Illinois KST--800
State Senator
3
SHARES BENEFICIALLY
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME OWNED AS OF
OCCUPATION AND AFFILIATIONS A BOARD MEMBER JANUARY 31, 1996**
- ------------------------------- ----------------- -------------------
Frederick T. Kelsey (4/25/27) 1988--KTF KHI--500
Retired; formerly, consultant to 1989--KHI, KGT, KGT--2,500
Goldman, Sachs & Co.; formerly, KMM, KSM, KMM--1,000
President, Treasurer and Trustee of 1994--KST KTF--500
Institutional Liquid Assets and its
affiliated mutual funds; Trustee of
the Benchmark Fund and the Pilot Fund
Dominique P. Morax* (10/2/48) 1995--All None
Member Extended Corporate Executive
Board, Zurich Insurance Company;
Director, Zurich Kemper Investments,
Inc.
Fred B. Renwick (2/1/30) 1995--All None
Professor of Finance, New York
University, Stern School of Business;
Director, the Wartberg Home
Foundation; Chairman, Investment
Committee of Morehouse College Board
of Trustees; Director, American Bible
Society Investment Committee;
previously member of the Investment
Committee of Atlanta University Board
of Trustees; previously Director of
Board of Pensions Evangelical Lutheran
Church in America
Stephen B. Timbers* (8/8/44) 1993--All Funds KMM--5,000
Chief Executive Officer, President, except KST KSM--500
Chief Investment Officer and Director, 1994--KST
Zurich Kemper Investments, Inc.;
Director, LTV Corporation
John B. Tingleff (5/4/35) 1991--All Funds KHI--1,788
Retired; formerly, President, Tingleff except KST KGT--533
& Associates (management consulting 1994--KST KMM--1,019
firm); formerly, Senior Vice KTF--500
President, Continental Illinois KSM--500
National Bank & Trust Company KST--330
John G. Weithers (8/8/33) 1993--All Funds KHI--400
Retired; formerly, Chairman of the except KST KGT--700
Board and Chief Executive Officer, 1994--KST KMM--200
Chicago Stock Exchange; Director, KTF--200
Federal Life Insurance Company; KSM--300
President of the Members of the KST--500
Corporation and Trustee, DePaul
University; Director, Systems
Imagineering
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* Interested persons of the Funds as defined in the Investment Company Act
of 1940 ("1940 Act").
** From time to time, the Board Members have been, and may in the future be,
restricted from buying and/or selling shares of certain Funds.
All the nominees, except Messrs. Morax and Timbers, serve as Board Members of
13 Kemper funds. Mr. Morax serves as a Board Member of 36 Kemper funds and Mr.
Timbers serves as a Board Member and president of 36 Kemper funds. A "Kemper
fund" is an investment company for which Zurich Kemper Investments, Inc. (the
"Adviser") or an affiliate serves as investment manager.
Each Board has an audit and nominating committee that is composed of Messrs.
Gottschalk, Kelsey, Tingleff and Weithers. The committee of each Fund met five
4
times during the fiscal year ended November 30, 1995. The committee makes
recommendations regarding the selection of independent auditors for each Fund,
confers with the independent auditors regarding each Fund's financial
statements, the results of audits and related matters, seeks and reviews
nominees for Board membership and performs such other tasks as the respective
Board assigns. The committee also proposes the nominees for election as Board
Members by the shareholders. Shareholders wishing to submit the name of a
candidate for consideration by the committee should submit their
recommendations to the secretary of the applicable Fund.
Each Fund pays Board Members who are not "interested persons" of such Fund an
annual retainer plus expenses, and an attendance fee for each Board meeting
and committee meeting attended. As reflected above, the Board Members
currently serve as board members of various investment companies for which the
Adviser or an affiliate serves as investment manager. Board Members or
officers who are "interested persons" receive no compensation from such Fund.
The Board of each Fund met ten times during the fiscal year ended November 30,
1995. Each then current Board Member attended 75% or more of the respective
meetings of the Board and the audit and nominating committee (if a member
thereof) held during the fiscal year ended November 30, 1995.
The table below shows, for each Board Member entitled to receive compensation
from the Funds, the aggregate compensation paid or accrued during each Fund's
fiscal year ended November 30, 1995 and the total compensation that the Kemper
funds paid or accrued during calendar year 1995.
TOTAL
COMPENSATION
FROM FUNDS
AND KEMPER
FUND COMPLEX
AGGREGATE COMPENSATION FROM FUND PAID TO
----------------------------------------- BOARD
NAME OF BOARD MEMBER KHI KGT KTF KMM KSM KST MEMBERS(3)
- -------------------- ------ ------ ------ ------ ------ ------ ------------
James E. Akins(1)....... $ 700 $ 700 $ 700 $ 700 $ 700 $ 700 $29,600
Arthur R. Gottschalk(2). 3,900 3,900 3,900 3,900 3,900 3,600 98,600
Frederick T. Kelsey(2).. 4,100 4,100 4,100 4,100 4,100 3,800 99,000
Fred B. Renwick(1)...... 700 700 700 700 700 700 29,600
John B. Tingleff........ 3,600 3,600 3,600 3,600 3,600 3,600 90,000
John G. Weithers........ 3,600 3,600 3,600 3,600 3,600 3,600 90,200
- ---------
(1) Elected to each Board on September 19, 1995.
(2) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with certain Kemper funds. Deferred amounts accrue
interest monthly at a rate equal to the yield of Kemper Money Funds--
Kemper Money Market Fund. Total deferred fees and interest accrued for the
latest and all prior fiscal years are $8,300, $8,100, $8,100, $8,100,
$8,100 and $2,900 for Mr. Gottschalk and $11,100, $10,900, $10,900,
$10,900, $10,900 and $4,900 for Mr. Kelsey from KHI, KGT, KTF, KMM, KSM
and KST, respectively.
(3) Includes compensation for service on the boards of 11 Kemper funds with 25
fund portfolios during calendar year 1995. Also includes amounts for new
fund portfolios as if they existed at the beginning of the year. As noted
above, each Board Member currently serves as a board member of 13 Kemper
funds with 29 fund portfolios.
5
FUND OFFICERS. Information about the executive officers of the Fund, with
their respective dates of birth and terms as Fund officers indicated, is set
forth below (other than information about Mr. Timbers, president of each Fund
since 3/2/95, which is shown above).
J. Patrick Beimford, Jr. (5/25/50), vice president of KGT since 2/28/92, KTF
since 9/9/88, KSM since 2/14/89, KHI and KMM since 2/17/93 and KST since
4/14/94, is executive vice president and chief investment officer--fixed
income investments of the Adviser.
Dale R. Burrow (10/16/56), vice president of KSM since 5/5/93, is first vice
president of the Adviser.
Elizabeth A. Byrnes (2/8/57), vice president of KGT since 9/8/94, is first
vice president of the Adviser.
Robert S. Cessine (1/5/50), vice president of KMM since 5/4/95, is senior vice
president of the Adviser since January 1993; prior thereto, senior corporate
bond analyst at an investment management company.
Philip J. Collora (11/15/45), has been vice president of each Fund except KST
since 2/1/90 and KST since 3/2/90 and secretary of each Fund since 3/2/95. Mr.
Collora is senior vice president and assistant secretary of the Adviser.
Jerome L. Duffy (6/29/36), treasurer of KHI and KGT since 5/28/87, KMM since
8/3/88, KTF and KSM since 8/3/88 GSP since 12/18/89 and KST since 3/2/90, is
senior vice president of the Adviser.
Gordon K. Johns (1/25/48), vice president of KMM since 5/4/95, is executive
vice president of the Adviser.
Michelle M. Keeley (4/24/64), vice president of KGT since 9/8/94, is first
vice president of the Adviser.
Michael A. McNamara (12/28/44), vice president of KHI since 2/21/91 and KMM
and KST since 5/4/95, is senior vice president of the Adviser.
Christopher J. Mier (8/11/56), vice president of KTF and KSM since 2/21/91, is
senior vice president of the Adviser.
John E. Neal (3/9/50), vice president of each Fund since 1/17/96, is President
of Kemper Funds Group, a unit of the Adviser, and director of the Adviser;
prior thereto, senior vice president of Kemper Real Estate Management Company.
John E. Peters (11/4/47) has been vice president of KHI and KGT since 1/17/89,
KMM since 11/16/88, KTF since 9/9/88, KSM since 2/14/89, and KST since
4/14/94. Mr. Peters is senior executive vice president and a director of the
Adviser and president and a director of Kemper Distributors, Inc.
6
Harry E. Resis, Jr. (11/24/45), vice president of KHI since 2/17/93 and KMM
and KST since 5/4/95, is senior vice president of the Adviser.
Jonathon W. Trutter (11/29/57), vice president of KMM and KST since 5/4/95, is
first vice president of the Adviser.
Stephen R. Willson (7/11/53), vice president of KSM since 5/5/93, is first
vice president of the Adviser.
The officers of each Fund are elected by the Board of the Fund on an annual
basis to serve until their successors are elected and qualified.
SHAREHOLDINGS. As of January 31, 1996, the Board Members and officers of the
Funds as a group owned beneficially 3,688 shares of KHI, 4,733 shares of KGT,
18,019 shares of KMM, 6,000 shares of KTF, 2,300 shares of KSM, and 1,630
shares of KST, which, in each case, is less than 1% of the outstanding shares
of each Fund. As of January 31, 1996, no person is known to any Fund to have
owned beneficially more than five percent of the shares of such Fund.
Section 30(f) of the 1940 Act and Section 16(a) of the Securities Exchange Act
of 1934 require each Fund's officers and Board Members, the Adviser,
affiliated persons of the Adviser and persons who own more than ten percent of
a registered class of the Fund's equity securities to file forms reporting
their affiliation with that Fund and reports of ownership and changes in
ownership of that Fund's shares with the Securities and Exchange Commission
(the "SEC") and the New York Stock Exchange (the "NYSE"). These persons and
entities are required by SEC regulation to furnish the Funds with copies of
all Section 16(a) forms they file. Based upon a review of these forms as
furnished to each Fund, each Fund believes that, during the fiscal year ended
November 30, 1995, there was compliance with all Section 16(a) filing
requirements applicable to that Fund's officers and Board Members, the Adviser
and affiliated persons of the Adviser, except that James S. Golan, Kenneth F.
Karwowski, Rao V. Mangipudi, Albert R. Panozzo, Robert G. Smith and Sharyn A.
Tepper, affiliated persons of the Adviser, inadvertently failed to file
initial reports of ownership for each of the Funds, which filings have since
been made.
INVESTMENT MANAGER. The Adviser, 120 South LaSalle Street, Chicago, Illinois
60603, serves as each Fund's investment adviser and manager pursuant to an
investment management agreement. The Adviser is an indirect subsidiary of
Zurich Insurance Company, an internationally recognized company providing
services in life and non-life insurance, reinsurance and asset management.
ITEM 2. SELECTION OF INDEPENDENT AUDITORS
A majority of the Members of each Fund's Board who are "non-interested"
persons of the Fund has selected Ernst & Young LLP, independent auditors, to
audit the books and records of the Fund for the current fiscal year. This firm
has served each Fund in this capacity since the Fund was organized and has no
direct or indirect
7
financial interest in any Fund except as independent auditors. The selection of
Ernst & Young LLP as independent auditors of each Fund is being submitted to
the shareholders for ratification. A representative of Ernst & Young LLP is
expected to be present at the Meeting and will be available to respond to any
appropriate questions raised at the Meeting and may make a statement.
ITEM 3. CONVERSION OF KGT FROM A CLOSED-END INVESTMENT COMPANY TO AN OPEN-END
INVESTMENT COMPANY, AND RELATED AMENDMENTS TO ITS DECLARATION OF
TRUST AND FUNDAMENTAL INVESTMENT POLICIES.
THE BOARD OF TRUSTEES OF KGT RECOMMENDS THAT YOU VOTE AGAINST ITEM 3.
BACKGROUND AND SUMMARY. KGT is registered as a closed-end investment company
under the 1940 Act and has operated as a closed-end fund since its inception in
1988.
KGT's Agreement and Declaration of Trust ("Declaration of Trust") provides
that, commencing on January 1, 1994, and in each year thereafter, if the shares
of KGT have traded on the NYSE at an average discount from net asset value of
more than 10%, determined on the basis of the discount as of the end of the
last trading day in each week during the period of 12 calendar weeks preceding
the beginning of such year, the Board of Trustees must submit a proposal to
convert KGT to an open-end investment company to the vote of its shareholders
at the next annual meeting of shareholders. This proposal is being submitted at
the Meeting in accordance with that requirement.
The Board met on January 17, 1996 and March 6, 1996 to consider this proposal.
At the March 6, 1996 meeting, the Board concluded that it is in the best
interests of KGT that KGT remain a closed-end investment company.
The Board of Trustees reviewed detailed information concerning the legal and
operational differences between closed-end and open-end investment companies,
the advantages and disadvantages of both closed-end and open-end investment
companies, the Fund's performance to date as a closed-end fund, the historical
relationship between the market price of its shares and their net asset value
and the possible effects of conversion on KGT. The Board also considered
adopting an "interval fund" structure, whereby it would make periodic
repurchase offers pursuant to Rule 23c-3 under the 1940 Act, and various other
alternatives intended to reduce KGT's discount, including adoption of a managed
distribution policy described below. The Board also considered advice from the
Adviser, which recommended that the Fund remain a closed-end investment company
at this time.
The Board and the Adviser believe that conversion to an open-end investment
company could adversely affect the functioning of KGT's investment operations
and its investment performance, as described under Effect of Conversion on
KGT--
8
Portfolio Management below. They believe that conversion could also expose KGT
to the risk of a substantial reduction in its size and a corresponding loss of
economies of scale. This could significantly increase the Fund's expenses as a
percentage of net asset value, as described under Effect of Conversion on
KGT-- Potential Increase in Expense Ratio and Decrease in Size below.
Conversion would eliminate the possibility of KGT's shares ever trading at a
discount from net asset value. The Board took note of the fact that, from
inception through January 31, 1996, KGT's shares have sometimes traded at a
premium, but that more recently KGT's shares have traded at a persistent
discount. KGT's average annual discount/premium by year computed as of the end
of each month is as follows:
YEAR DISCOUNT/PREMIUM
---- ----------------
1988 (July 31-December 31) 4.30%
1989 4.40%
1990 -3.50%
1991 4.50%
1992 2.40%
1993 -1.30%
1994 -8.00%
1995 -10.80%
1996 (January 1-January 31) -9.00%
The Board does not believe that eliminating the possibility of a discount
justifies the fundamental changes to KGT's portfolio management and
operations, the risk of reduced size and the potential adverse effect on its
investment performance that conversion would entail.
Upon the recommendation of the Adviser, at the March 6, 1996 Board meeting the
Board approved a policy of paying a monthly distribution of $0.055 per share.
If for any monthly distribution, net investment income and net realized short-
term capital gains are less than the amount of the distribution, the
difference will be distributed from shareholders' capital. KGT's final
distribution for each calendar year will include any remaining net investment
income and net realized short-term capital gains deemed, for Federal income
tax purposes, undistributed during the year, as well as all net long-term
capital gains realized during the year. If, for any fiscal year, the total
distributions exceed KGT's net investment income and net realized capital
gains for that year, the excess, distributed from shareholders' capital, will
generally be treated as a tax-free return of capital (up to the amount of the
shareholder's basis in the shares), thus reducing the shareholder's basis in
the shares and increasing the shareholder's potential gain or reducing the
shareholder's potential loss on the sale of the shares. As described under
Measures to be Adopted if KGT Became an Open-End Fund below, if shareholders
vote to convert KGT to an open-end investment company, the Board expects that
it would discontinue this managed distribution policy.
9
In addition to the managed-distribution policy recently adopted by the Board
and described above, the Adviser has implemented programs intended to reduce
the discount without impairing KGT's closed-end format and the benefits KGT
derives therefrom. These programs have included shareholder and market
communications and meetings with securities analysts and market professionals
to increase awareness about KGT. In addition, the Board has reviewed on a
quarterly basis, in consultation with the Adviser, whether KGT should make open
market purchases and/or tender offers for its own shares. To date, KGT has not
made any open market purchases or tender offers. Meanwhile, discounts permit
investors to purchase additional shares at the discounted price.
As described under Measures to be Adopted if KGT Became an Open-End Fund--
Redemption Fee below, if shareholders vote to convert KGT to an open-end fund,
the Board may cause KGT to impose a fee payable to the Fund of up to .50% of
the amount redeemed, for an initial period of up to nine months from
conversion, on all redemptions.
DIFFERENCES BETWEEN OPEN-END AND CLOSED-END INVESTMENT COMPANIES.
1. Fluctuation of Capital. Closed-end investment companies generally do not
redeem their outstanding shares or engage in the continuous sale of new
securities, and thus operate with a relatively fixed capitalization. The shares
of closed-end investment companies are normally bought and sold in the
securities markets.
In contrast, open-end investment companies, commonly referred to as "mutual
funds," issue redeemable securities. The holders of these redeemable securities
have the right to surrender them to the mutual fund and obtain in return their
proportionate share of the value of the mutual fund's net assets at the time of
the redemption (less any redemption fee charged by the fund or contingent
deferred sales charge imposed by the fund's distributor). Most mutual funds
also continuously issue new shares to investors at a price based upon their net
asset value at the time of such issuance. Accordingly, an open-end fund may
experience continuing inflows and outflows of cash, and may experience net
sales or net redemptions of its shares during any particular period.
2. Redeemability of Shares; Elimination of Discount and Premium. Open-end funds
are required to redeem their shares at a price based upon their then-current
net asset value (except during periods when the NYSE is closed or trading
thereon is restricted, or when redemptions may otherwise be suspended in an
emergency as permitted by the 1940 Act). The open-end fund structure thus
precludes the possibility of the mutual fund's shares trading at a discount
from, or a premium to, net asset value.
The shares of closed-end funds, on the other hand, are bought and sold in the
securities markets at prevailing market prices, which may be equal to, less
than, or more than net asset value. From July 21, 1988 to December 31, 1995
KGT's shares have traded on the NYSE at prices ranging from 13.38% below net
asset value to 11.17% above net asset value. On February 29, 1996 the closing
price of a KGT share on the NYSE was 8.43% below its net asset value.
10
If approved by shareholders, upon conversion of KGT to an open-end investment
company, shareholders who wished to do so could redeem their shares at net
asset value (less the possible temporary redemption fee discussed below under
Measures to be Adopted if KGT Became an Open-End Fund--Redemption Fee). As a
result, the discount from net asset value at which KGT's shares currently trade
on the NYSE would be eliminated. Conversion would also eliminate, however, any
possibility that KGT's shares could trade at a premium over net asset value. In
addition, the current discount may be reduced prior to the date of conversion
because, in anticipation of the ability to redeem shares at net asset value,
the market price for KGT's shares might increase to a price closer to net asset
value.
3. Raising Capital; Cash Reserves. Closed-end investment companies may not
issue new shares at a price below net asset value except in rights offerings to
existing shareholders, in payment of distributions, and in certain other
limited circumstances. Accordingly, the ability of closed-end funds to raise
new capital is restricted, particularly at times when their shares are trading
at a discount to net asset value. The shares of open-end investment companies,
on the other hand, are usually offered on a continuous basis at net asset
value, or at net asset value plus a sales charge.
Because closed-end investment companies are not required to meet redemptions,
their cash reserves can be substantial or minimal, depending upon the
investment manager's investment strategy. Most open-end investment companies
maintain cash reserves adequate to meet anticipated redemptions without
prematurely liquidating their portfolio securities. The maintenance of larger
cash reserves required to operate prudently as an open-end investment company
when net redemptions are anticipated may reduce an open-end investment
company's ability to achieve its investment objective.
4. New York Stock Exchange Delisting; State Securities Law Registrations. KGT's
shares are currently listed and traded on the NYSE and the Chicago Stock
Exchange (Symbol: KGT). If KGT converted to an open-end fund, its shares would
immediately be delisted from the Exchanges. Delisting would save KGT the annual
Exchange fees of approximately $34,000; but, as noted below, it would cause the
Fund to have to pay federal and state registration fees on sales of new shares,
except to the extent that the underwriter of such shares may pay some of these
fees. Any net savings or increased cost to the Fund because of the different
expenses would not be expected to materially affect KGT's expense ratio.
As an open-end fund not listed on a stock exchange, KGT would be required to
register its shares under the securities or "Blue Sky" laws of most of the
states of the United States and would be subject to certain investment
restrictions imposed by the securities laws and regulations of the states where
it is required to register its shares. However, it is not anticipated that
these restrictions would have a material effect upon KGT.
5. Underwriting; Brokerage Commissions or Sales Charges on Purchases and Sales.
Open-end investment companies typically seek to sell new shares on a continuous
11
basis in order to offset redemptions and avoid shrinkage in size. Shares of
"load" open-end investment companies are normally offered and sold through a
principal underwriter, which deducts a sales charge from the purchase price at
the time of purchase or from the redemption proceeds at the time of redemption,
or receives a distribution fee from the fund, or both, to compensate it and
securities dealers for sales and marketing services (see Measures to be Adopted
if KGT Became an Open-End Fund--Underwriting and Distribution below). Shares of
"no-load" open-end investment companies are sold at net asset value, without a
sales charge, with the fund's investment adviser or an affiliate normally
bearing the cost of sales and marketing from its own resources. Shares of
closed-end investment companies, on the other hand, are bought and sold in
secondary market transactions at prevailing market prices subject to the
brokerage commissions charged by the broker-dealer firms executing such
transactions.
6. Shareholder Services. Open-end investment companies typically provide more
services to shareholders and incur correspondingly higher shareholder servicing
expenses. One service that is generally offered by a family of open-end funds
is enabling shareholders to exchange their investment from one fund into
another fund that is part of the same family of open-end funds at little or no
cost to the shareholders. The Kemper Mutual Funds currently consist of 26 open-
end investment companies, with 47 portfolios. Shares of the various Kemper
Mutual Funds are generally eligible to be exchanged, in a taxable transaction,
for shares of other Kemper Mutual Funds. As an open-end fund, the ability of
shares of KGT to be exchanged for shares of a Kemper Mutual Fund would depend
upon, among other things, the agreement to such arrangement by the boards of
such Kemper Mutual Funds.
7. Leverage. Open-end investment companies are prohibited by the 1940 Act from
issuing "senior securities" representing indebtedness (i.e. bonds, debentures,
notes and other similar securities), other than indebtedness to banks when
there is asset coverage of at least 300% for all borrowings, and may not issue
preferred stock. Closed-end investment companies, on the other hand, are
permitted to issue senior securities representing indebtedness when the 300%
asset coverage test is met, may issue preferred stock subject to various
limitations (including a 200% asset coverage test), and are not limited to
borrowings from banks. KGT currently has no indebtedness to banks or other
lenders, and has no authorized class of senior securities or any plan for
issuing any.
8. Annual Shareholders Meetings. KGT is organized as a Massachusetts business
trust under the terms of its Declaration of Trust which does not require
meetings of shareholders, except when required for certain 1940 Act matters.
However, as a closed-end investment company listed on the NYSE, KGT is required
by the rules of the NYSE to hold annual meetings of its shareholders. If KGT
were converted to an open-end investment company, it would no longer be subject
to these NYSE rules and annual shareholder meetings would be eliminated, except
when required for certain 1940 Act matters. KGT would save the cost of these
meetings, which management estimates to be approximately $43,000 per year;
however, these savings would not be expected to materially affect KGT's expense
ratio.
12
9. Reinvestment of Dividends and Distributions. As a closed-end fund, KGT's
current Dividend Reinvestment Plan permits shareholders to elect to reinvest
their dividends and distributions on a basis other than would be the case if
the Fund converted to an open-end investment company. Currently, if shares are
trading at a discount, the agent for the Plan will attempt to buy as many
shares of KGT as are needed on the NYSE or elsewhere. This permits a
reinvesting shareholder to benefit by purchasing additional shares at a
discount and this buying activity may tend to lessen any discount. (If, before
the agent for the Plan completes such purchases the market price exceeds the
net asset value, however, the average per share purchase price of the
reinvested shares may exceed the net asset value per share.) If shares are
trading at a premium, reinvesting shareholders are issued shares at the higher
of net asset value or 95% of the market price. As an open-end investment
company, all dividends and distributions would be reinvested at net asset
value.
10. Redemption of Small Accounts. Open-end investment companies typically
require minimum shareholder account sizes in order to reduce the administrative
burdens and costs incurred in maintaining numerous small accounts. If KGT were
converted to an open-end investment company, it anticipates that it would adopt
a $1,000 minimum initial investment and a $100 minimum subsequent investment
requirement. An open-end investment company may reserve the right to redeem all
the shares of any shareholder whose account has a net asset value below a
certain level (e.g., $500). KGT also anticipates that it would reserve the
right to redeem small accounts. KGT would typically give shareholders 60 days'
prior written notice to allow purchase of sufficient additional shares to avoid
such redemption.
EFFECT OF CONVERSION ON KGT. In addition to the inherent characteristics of
open-end investment companies described above, KGT's conversion to an open-end
investment company would potentially have the consequences described below.
1. Portfolio Management. As noted above, a closed-end investment company
operates with a relatively fixed capitalization, while the capitalization of an
open-end investment company fluctuates depending upon whether it experiences
net sales or net redemptions of its shares. The Adviser believes that open-end
investment companies tend to have larger net sales near market highs, and
larger net redemptions near market lows. To the extent that this is true, if
KGT were to convert to an open-end investment company, the investment manager
could be required to invest new monies near market highs and to sell portfolio
securities in a falling market when it might otherwise wish to invest. Because
KGT is a closed-end investment company, however, the investment manager is not
required to invest new monies or liquidate portfolio holdings at what may be
inopportune times, and can manage KGT's portfolio with emphasis upon long-term
considerations.
The Board and the Adviser believe that the closed-end format is better suited
to KGT's investment objective and policies than the open-end format. KGT's
investment objective is to provide high current income consistent with
preservation
13
of capital by investing in U.S. Government and Foreign Government securities.
KGT maintains a dollar weighted average portfolio maturity of between three and
ten years. The Board and the Adviser believe that the investment manager can
better pursue KGT's objective without pressures to invest new monies or
liquidate portfolio holdings at times when its investment style would dictate
doing otherwise. Furthermore, as a fixed income fund, the ability to be more
fully invested means that a larger portion of KGT's portfolio is generating
income to be used by the Fund to pay periodic dividends and distributions to
its shareholders.
Currently, KGT may invest up to 20% of its assets in illiquid securities. If
KGT were converted to an open-end fund, it would not be permitted to have more
than 15% of its net assets invested in illiquid securities. However, as of
January 31, 1996, KGT had none of its net assets invested in illiquid
securities.
2. Possible Sales of Portfolio Securities; Recognition of Capital Gains or
Losses. If KGT were to experience substantial redemptions of shares following
its conversion to an open-end investment company, which the Board and the
Adviser believe to be likely, KGT could lack sufficient cash reserves to pay
for such redemptions, which would require it to sell portfolio securities and
incur increased transaction costs to raise cash to meet such redemptions;
although to some extent redemptions could be met through delivery of portfolio
securities in kind as described under Measures to be Adopted if KGT Became an
Open-End Fund--Redemptions in Kind below. KGT would not recognize taxable gain
or loss if it delivers portfolio securities in order to satisfy such redemption
requests; however, any sale of portfolio securities effected to fund cash
redemption obligations would be a taxable transaction. Thus, KGT may realize
gains or losses at a time when it would otherwise consider it disadvantageous
to do so. At January 31, 1996, KGT had aggregate unrealized gains of $8,037,000
on its portfolio securities and aggregate unrealized losses of $84,000. In
order to retain its qualification as a regulated investment company under the
Internal Revenue Code and thus be relieved of taxation at the investment
company level, KGT would be required to distribute any net recognized capital
gains to its shareholders, including those who do not redeem their shares and
remain shareholders of the Fund. This would have two negative consequences.
First, non-redeeming shareholders would recognize and be required to pay taxes
on a greater amount of capital gain than would otherwise be the case. Second,
KGT may need to sell additional portfolio securities in order to make the
required distribution of recognized capital gains, which could cause the
recognition of additional net capital gains.
3. Potential Increase in Expense Ratio and Decrease in Size. Conversion to an
open-end investment company could result in substantial redemptions of KGT's
shares, particularly in the period immediately following the conversion,
although the potential temporary redemption fee of up to .50% described under
Measures to be Adopted if KGT Became an Open-End Fund below may reduce the
number of initial redemptions that would otherwise occur. Unless KGT's
principal underwriter, if any, were able to generate enough sales of new shares
to offset these redemptions, KGT's assets would be expected to shrink. Because
certain of KGT's operating
14
expenses are fixed, a decrease in KGT's asset size would tend to increase the
ratio of its operating expenses to its income and net assets and, as a result,
decrease KGT's net income per share available for dividends. Such a decrease in
size would also result in a reduction in the amount of fees paid by KGT to the
Adviser. Of course, to the extent that KGT increased in size, KGT's expense
ratio could be reduced and the fees paid by KGT to the Adviser would increase.
4. Conversion Costs. The process of converting KGT to an open-end investment
company would be expensive. It would require legal, accounting and other
expenses to the Fund, estimated to be at least $275,000; although the costs
could be substantially higher. This cost of conversion would result in a one-
time increase in KGT's current expense ratio.
MEASURES TO BE ADOPTED IF KGT BECAME AN OPEN-END FUND. If the shareholders
voted to convert KGT to an open-end fund, the Board would take the following
actions.
1. Discontinuation of Managed Distribution Policy. As noted above, KGT
currently has a policy of paying monthly distributions of $0.055 per share. The
Board believes that this managed distribution policy may not be appropriate for
an open-end investment company. Accordingly, if shareholders vote to convert
KGT to an open-end investment company, KGT's managed distribution policy would
be discontinued. Like most investment companies, KGT would continue to make
distributions of its net investment income and net realized capital gains, if
any.
2. Redemption Fee. In order to reduce the number of redemptions of KGT's shares
immediately following conversion (thereby reducing any disruption of the Fund's
normal portfolio management), and to offset the brokerage and other costs of
such redemptions, for a period of up to nine months following KGT's conversion
to an open-end investment company, the Board reserves the right to impose a fee
of up to 0.50% of the redemption proceeds payable to KGT on all redemptions
(whether in cash or in kind).
3. Redemptions in Kind. The Board reserves the right to meet redemptions
following KGT's conversion to an open-end investment company by delivering KGT
portfolio securities to the redeeming shareholder ("redemption in kind"),
rather than paying cash, to the extent that a shareholder's redemptions during
any 90-day period exceed the lesser of $250,000 or 1% of the net assets of the
Fund at the beginning of such period. Redemptions in kind would shift the cost
of liquidating the portfolio securities from KGT to the redeeming shareholder
and, to the extent appreciated securities were delivered, would avoid the
recognition of capital gains by the Fund (see Effect of Conversion on KGT--
Possible Sales of Portfolio Securities; Recognition of Capital Gains or Losses;
above).
4. Underwriting and Distribution. If the shareholders were to vote to convert
KGT to an open-end investment company, the Board would consider whether to
select a principal underwriter of the shares of KGT, which underwriter could be
Kemper Distributors, Inc. ("KDI"), an affiliate of the Adviser and the
principal underwriter
15
for the Kemper Mutual Funds. In that event, the shares could be offered and
sold directly by KDI itself and by any other broker-dealers who entered into
selling agreements with KDI; although there is no assurance that KDI or any
such other broker-dealer firms would be able to generate sufficient sales of
KGT shares to offset redemptions, particularly in the initial months following
conversion.
5. Amendment and Restatement of KGT's Declaration of Trust; Amendments to
Certain Fundamental Investment Policies; Timing. If the shareholders were to
vote to change KGT's subclassification under the 1940 Act from a closed-end
investment company to an open-end investment company, KGT's Declaration of
Trust would be amended to authorize the issuance of redeemable securities at
net asset value (as defined), and to provide that its outstanding shares would
be redeemable at the option of the shareholders. In addition, certain other
changes would be made consistent with the operation of an open-end investment
company. Specifically, the Declaration of Trust would be amended to authorize
the issuance of additional series of shares and classes thereof from time to
time as the Board in its discretion may determine. Each series would have its
own investment objective, policies and restrictions and shares of each series
would represent interests in separate investment portfolios, each of which
would be accounted for separately on the books of KGT with respect to income,
earnings, profits, proceeds, assets and liabilities attributable to that
series. Shares of each series would be entitled to vote separately to approve
investment advisory agreements, changes in fundamental investment restrictions
and distribution plans; but shares of all series would vote together on the
election of Board members and the ratification of the selection of auditors.
Classes of a series would have such preferences or special or relative rights
and privileges as the Board may determine, and each class would vote separately
on issues that relate exclusively to that class. The Board has no present
intent to authorize additional series of shares of KGT if the shareholders vote
to convert KGT to an open-end fund. The amended Declaration of Trust would also
authorize the Board to cause all the shares in a shareholder account to be
redeemed if the value of the shares in the account were less than a minimum
amount established by the Board. Certain technical and non-material changes
would also be made. The Board would also make conforming changes to KGT's By-
Laws.
Amendment to Certain Fundamental Investment Policies. If the shareholders were
to vote to approve the conversion of KGT to an open-end investment company,
certain of KGT's fundamental investment policies would be amended. A
fundamental investment policy may not be changed without the approval of a
"majority of the outstanding voting securities" of the Fund. These amendments
are required for open-end investment companies under the 1940 Act. It is not
anticipated that these amendments would have a material effect on KGT. KGT's
fundamental investment policies would require the following amendments
(additions are underlined; deletions are stricken):
The Fund may not:
(1) borrow money, except for temporary and emergency purposes (but not for
the purpose of purchase of investments) and then only in an amount not to
16
exceed 33 1/3% of the Fund's total assets; the Fund may borrow to
repurchase shares of the Fund if, after each such borrowing, the ratio
which the value of the total assets of the Fund less all liabilities and
indebtedness not represented by senior securities bears to the aggregate
amount of senior securities representing indebtedness of the Fund is at
least 300%. To the extent the Fund engages in any such borrowings, it will
be in a leveraged position.
(2) invest in illiquid investments, including securities which are subject
to legal or contractual restrictions on resale or for which there is no
readily available market (e.g., trading in the securities is suspended or,
in the case of unlisted securities, market makers do not exist or will not
entertain bids or offers), if more than 15% 20% of the Fund's net assets
(taken at market value) would be invested in such securities. For purposes
of this restriction, repurchase agreements not terminable within seven
days will be deemed illiquid.
Timing. If the shareholders were to vote to convert KGT to an open-end
investment company, a number of steps would be appropriate to implement the
conversion, including the preparation, filing and effectiveness of a
registration statement under the Securities Act of 1933 covering the offering
of KGT's shares and the negotiation and execution of a new or amended agreement
with its transfer agent. It is anticipated that a period of six to nine months
would be necessary to effect the conversion. The amendments to KGT's
Declaration of Trust and fundamental investment policies would become effective
simultaneously with the effectiveness of the registration statement referred to
above under the Securities Act of 1933.
MISCELLANEOUS
GENERAL. The cost of preparing, printing and mailing the enclosed proxy,
accompanying notice and proxy statement and all other costs in connection with
solicitation of proxies will be paid by the Funds, including any additional
solicitation made by letter, telephone or telegraph. In addition to
solicitation by mail, certain officers and representatives of the Funds,
officers and employees of the Adviser and certain financial services firms and
their representatives, who will receive no extra compensation for their
services, may solicit proxies by telephone, telegram or personally. In
addition, the Adviser may retain a firm to solicit proxies on behalf of KGT's
Board, the fee for which will be borne by the Fund. Failure of a quorum to be
present at the Meeting for a Fund will necessitate adjournment for that Fund
and will subject that Fund to additional expense. A COPY OF A FUND'S ANNUAL
REPORT IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY WRITING TO SUCH FUND, 120
SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603 OR BY CALLING 1-800-294-4366.
PROPOSALS OF SHAREHOLDERS. Any shareholder proposal that may properly be
included in the proxy solicitation material for a Fund's next annual
shareholder meeting, if any, must be received by such Fund no later than
December 9, 1996.
17
OTHER MATTERS TO COME BEFORE THE MEETING. The Boards are not aware of any
matters that will be presented for action at the Meeting other than those set
forth herein. Should any other matters requiring a vote of shareholders arise,
the proxy in the accompanying form will confer upon the person or persons
entitled to vote the shares represented by such proxy the discretionary
authority to vote the shares with respect to any such other matters in
accordance with their best judgment in the interest of the Fund.
VOTING, QUORUM. Each valid proxy will be voted in accordance with the
instructions on the proxy and as the persons named in the proxy determine on
such other business as may come before the Meeting. If no instructions are
given, the proxy will be voted for the election as Board members of the persons
who have been nominated for such Fund and as recommended by the Board on each
other item. Shareholders who execute proxies may revoke them at any time before
they are voted, either by writing to the Fund or in person at the time of the
Meeting. Proxies given by telephone or electronically transmitted instruments
may be counted if obtained pursuant to procedures designed to verify that such
instructions have been authorized. Item 1, election of Board Members for a
Fund, requires a plurality vote of the shares of such Fund. Item 2,
ratification of the selection of independent auditors for a Fund, requires the
affirmative vote of a majority of the shares of the Fund voting on the matter.
Item 3, approval of the conversion of KGT from a closed-end investment company
to an open-end investment company, requires the affirmative vote of more than
50% of the outstanding voting securities of KGT. In tallying shareholder votes,
abstentions and broker non-votes (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) will be counted for
determining whether a quorum is present for purposes of convening the Meeting
and will be considered present at the Meeting. On Item 1, abstentions and
broker non-votes will have no effect; the persons receiving the largest number
of votes will be elected. On Item 2, abstentions and broker non-votes will not
be counted as "votes cast" and will have no effect on the result of the vote.
On Item 3, abstentions and broker non-votes will have the effect of being voted
against the Item. As noted previously, the holders of the Preferred Shares of
KTF, voting as a separate class, are entitled to elect two Members of KTF's
Board and the holders of the Common Shares and the Preferred Shares, voting
together as a single class, are entitled to elect the six remaining Members of
KTF's Board. With regard to all other items, the holders of the Common Shares
and the Preferred Shares of KTF will vote together as a single class.
At least 50% of the shares of a Fund must be present, in person or by proxy, in
order to constitute a quorum for that Fund. Thus, the meeting for a particular
Fund could not take place on its scheduled date if less than 50% of the shares
of that Fund were represented.
18
THE BOARD OF EACH FUND RECOMMENDS AN AFFIRMATIVE VOTE ON ALL ITEMS APPLICABLE
TO THAT FUND, EXCEPT THAT THE BOARD OF KGT RECOMMENDS THAT YOU VOTE AGAINST
ITEM 3.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards,
Philip J. Collora
Secretary
19
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NOTICE OF JOINT
ANNUAL MEETING
OF SHAREHOLDERS
MAY 29, 1996
AND
PROXY STATEMENT
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
KEMPER HIGH INCOME TRUST
KEMPER INTERMEDIATE GOVERNMENT TRUST
KEMPER MULTI-MARKET INCOME TRUST
KEMPER MUNICIPAL INCOME TRUST
KEMPER STRATEGIC MUNICIPAL INCOME TRUST
KEMPER STRATEGIC INCOME FUND
LOGO
KEMPER STRATEGIC MUNICIPAL INCOME TRUST
FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 29, 1996
THE SIGNERS OF THIS PROXY HEREBY
APPOINT STEPHEN B. TIMBERS AND ARTHUR
R. GOTTSCHALK, AND EACH OF THEM,
ATTORNEYS AND PROXIES, WITH POWER OF
SUBSTITUTION IN EACH, TO VOTE ALL
SHARES FOR THE SIGNERS AT THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD MAY
29, 1996, AND AT ANY ADJOURNMENTS
THEREOF, AS SPECIFIED HEREIN, AND IN
ACCORDANCE WITH THEIR BEST JUDGEMENT,
ON ANY OTHER BUSINESS THAT MAY PROPERLY
COME BEFORE THIS MEETING. IF NO
SPECIFICATION IS MADE HEREIN, ALL
SHARES WILL BE VOTED AS RECOMMENDED BY
THE BOARD ON EACH ITEM SET FORTH ON
THIS PROXY.
PLEASE VOTE PROMPTLY!
Your vote is needed! Please vote below and sign in the space provided. You may
receive additional proxies for your other accounts with Kemper. These are not
duplicates; you should sign and return each proxy card in order for your votes
to be counted. Please return them as soon as possible to help save the cost of
additional mailings.
THE PROXY IS SOLICITED BY THE BOARD OF THE FUND WHICH RECOMMENDS A VOTE "FOR"
ITEMS 1 AND 2.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND
RETAIN THE TOP PORTION.
KEMPER STRATEGIC MUNICIPAL INCOME TRUST
For Withhold For All
1. To elect the following as trustees: All All Except
/ / / / / /
01) James E. Akins, 02) Arthur R. Gottschalk, 03) Frederick T. Kelsey,
04) Dominique P. Morax, 05) Fred B. Renwick, 06) Stephen B. Timbers,
07) John B. Tingleff, 08) John G. Weithers
- --------------------------------------------------------------------------------
TO WITHHOLD AUTHORITY TO VOTE ON ANY INDIVIDUAL NOMINEE(S), PLEASE PRINT THE
NUMBER(S) ON THE LINE ABOVE.
2. Ratify or reject the selection of For Against Abstain
/ / / / / /
Ernst & Young LLP as the Fund's
independent auditors for the current
fiscal year.
Signature(s) (All registered owners of accounts shown to the left must sign.
If signing for a corporation, estate or trust, please indicate your capacity
or title.)
X
- -------------------------------------------------------
Signature Date
X
- -------------------------------------------------------
Signature Date