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<PAGE> PAGE 2
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SIGNATURE PHILIP J. COLLORA
TITLE SECRETARY
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIALINFORMATION EXTRACTED FROM THE 1998 SEMIANNUAL REPORT TO
SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001052427
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND
<SERIES>
<NUMBER> 01
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND - CLASS A
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<S> <C>
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<PERIOD-END> MAY-31-1998
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<INVESTMENTS-AT-VALUE> 173,052
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<NET-INVESTMENT-INCOME> (23)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIALINFORMATION EXTRACTED FROM THE 1998 SEMIANNUAL REPORT TO
SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001052427
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND
<SERIES>
<NUMBER> 02
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
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<PERIOD-END> MAY-31-1998
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<INVESTMENTS-AT-VALUE> 173,052
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES. THIS SCHEDULE CONTAINS SUMMARY
FINANCIALINFORMATION EXTRACTED FROM THE 1998 SEMIANNUAL REPORT TO
SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001052427
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND
<SERIES>
<NUMBER> 03
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND - CLASS C
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<INVESTMENTS-AT-VALUE> 173,052
<RECEIVABLES> 4,011
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</TABLE>
INVESTMENT MANAGEMENT AGREEMENT
Kemper Equity Trust
Two International Place
Boston, Massachusetts 02110
March 2, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper-Dreman Financial Services Fund
Ladies and Gentlemen:
Kemper Equity Trust (the "Trust") has been established as a
Massachusetts business trust to engage in the business of an
investment company. Pursuant to the Trust's Declaration of
Trust, as amended from time-to-time (the "Declaration"), the
Board of Trustees is authorized to issue the Trust's shares
of beneficial interest, par value $.01 per share, (the
"Shares") in separate series, or funds. The Board of
Trustees has authorized Kemper-Dreman Financial Services
Fund (the "Fund"). Series may be abolished and dissolved,
and additional series established, from time to time by
action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as
the investment manager of the Fund and to provide certain
other services, as more fully set forth below, and you have
indicated that you are willing to act as such investment
manager and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Trust on
behalf of the Fund agrees with you as follows:
1. Delivery of Documents. The Trust engages in the
business of investing and reinvesting the assets of the Fund
in the manner and in accordance with the investment
objectives, policies and restrictions specified in the
currently effective Prospectus (the "Prospectus") and
Statement of Additional Information (the "SAI") relating to
the Fund included in the Trust's Registration Statement on
Form N-1A, as amended from time to time, (the "Registration
Statement") filed by the Trust under the Investment Company
Act of 1940, as amended, (the "1940 Act") and the Securities
Act of 1933, as amended. Copies of the documents referred to
in the preceding sentence have been furnished to you by the
Trust. The Trust has also furnished you with copies properly
certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration dated January 6, 1998, as amended
to date.
(b) By-Laws of the Trust as in effect on the date
hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as
investment manager and approving the form of this
Agreement.
(d) Establishment and Designation of Series of Shares
of Beneficial Interest dated January 6, 1998
relating to the Fund.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the
Prospectus, the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets
of the Fund, you shall provide continuing investment
management of the assets of the Fund in accordance with the
investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the
1940 Act and the Internal Revenue Code of 1986, as amended,
(the "Code") relating to regulated investment companies and
all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which
you have knowledge; subject always to policies and
instructions adopted by the Trust's Board of Trustees. In
connection therewith, you shall use reasonable efforts to
manage the Fund so that it will qualify as a regulated
investment company under Subchapter M of the Code and
regulations issued thereunder. The Fund shall have the
benefit of the investment analysis and research, the review
of current economic conditions and trends and the
consideration of long-range investment policy generally
available to your investment advisory clients. In managing
the Fund in accordance with the requirements set forth in
this section 2, you shall be entitled to receive and act
upon advice of counsel to the Trust. You shall also make
available to the Trust promptly upon request all of the
Fund's investment records and ledgers as are necessary to
assist the Trust in complying with the requirements of the
1940 Act and other applicable laws. To the extent required
by law, you shall furnish to regulatory authorities having
the requisite authority any information or reports in
connection with the services provided pursuant to this
Agreement which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a
manner consistent with applicable laws and regulations.
You shall determine the securities, instruments,
investments, currencies, repurchase agreements, futures,
options and other contracts relating to investments to be
purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures
commission merchants or others pursuant to your
determinations and all in accordance with Fund policies as
expressed in the Registration Statement. You shall determine
what portion of the Fund's portfolio shall be invested in
securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of the Fund and on the
performance of your obligations pursuant to this Agreement,
and you shall supply such additional reports and information
as the Trust's officers or Board of Trustees shall
reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Fund such office
space and facilities in the United States as the Fund may
require for its reasonable needs, and you (or one or more of
your affiliates designated by you) shall render to the Trust
administrative services on behalf of the Fund necessary for
operating as an open end investment company and not provided
by persons not parties to this Agreement including, but not
limited to, preparing reports to and meeting materials for
the Trust's Board of Trustees and reports and notices to
Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring
the performance of, accounting agents, custodians,
depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed
to be necessary or desirable to Fund operations; preparing
and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and
self-regulatory organizations, including, but not limited
to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement,
semi-annual reports on Form N-SAR and notices pursuant to
Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and
local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code;
providing assistance with investor and public relations
matters; monitoring the valuation of portfolio securities
and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal
and state securities laws; maintaining or causing to be
maintained for the Fund all books, records and reports and
any other information required under the 1940 Act, to the
extent that such books, records and reports and other
information are not maintained by the Fund's custodian or
other agents of the Fund; assisting in establishing the
accounting policies of the Fund; assisting in the resolution
of accounting issues that may arise with respect to the
Fund's operations and consulting with the Fund's independent
accountants, legal counsel and the Fund's other agents as
necessary in connection therewith; establishing and
monitoring the Fund's operating expense budgets; reviewing
the Fund's bills; processing the payment of bills that have
been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions
available to be paid by the Fund to its shareholders,
preparing and arranging for the printing of dividend notices
to shareholders, and providing the transfer and dividend
paying agent, the custodian, and the accounting agent with
such information as is required for such parties to effect
the payment of dividends and distributions; and otherwise
assisting the Trust as it may reasonably request in the
conduct of the Fund's business, subject to the direction and
control of the Trust's Board of Trustees. Nothing in this
Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Fund or any other person not
a party to this Agreement which is obligated to provide
services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and
executive employees of the Trust (including the Fund's share
of payroll taxes) who are affiliated persons of you, and you
shall make available, without expense to the Fund, the
services of such of your directors, officers and employees
as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations
imposed by law. You shall provide at your expense the
portfolio management services described in section 2 hereof
and the administrative services described in section 3
hereof.
You shall not be required to pay any expenses of the Fund
other than those specifically allocated to you in this
section 4. In particular, but without limiting the
generality of the foregoing, you shall not be responsible,
except to the extent of the reasonable compensation of such
of the Fund's Trustees and officers as are directors,
officers or employees of you whose services may be involved,
for the following expenses of the Fund: organization
expenses of the Fund (including out of-pocket expenses, but
not including your overhead or employee costs); fees payable
to you and to any other Fund advisors or consultants; legal
expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the
Fund's custodian or other agents of the Trust; telephone,
telex, facsimile, postage and other communications expenses;
taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in
investment company trade organizations; fees and expenses of
the Fund's accounting agent for which the Trust is
responsible pursuant to the terms of the Fund Accounting
Services Agreement, custodians, subcustodians, transfer
agents, dividend disbursing agents and registrars; payment
for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in
connection with the issuance, offering, distribution, sale,
redemption or repurchase of securities issued by the Fund;
expenses relating to investor and public relations; expenses
and fees of registering or qualifying Shares of the Fund for
sale; interest charges, bond premiums and other insurance
expense; freight, insurance and other charges in connection
with the shipment of the Fund's portfolio securities; the
compensation and all expenses (specifically including travel
expenses relating to Trust business) of Trustees, officers
and employees of the Trust who are not affiliated persons of
you; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses
of printing and distributing reports, notices and dividends
to shareholders; expenses of printing and mailing
Prospectuses and SAIs of the Fund and supplements thereto;
costs of stationery; any litigation expenses;
indemnification of Trustees and officers of the Trust; and
costs of shareholders' and other meetings.
You shall not be required to pay expenses of any activity
which is primarily intended to result in sales of Shares of
the Fund if and to the extent that (i) such expenses are
required to be borne by a principal underwriter which acts
as the distributor of the Fund's Shares pursuant to an
underwriting agreement which provides that the underwriter
shall assume some or all of such expenses, or (ii) the Trust
on behalf of the Fund shall have adopted a plan in
conformity with Rule 12b-1 under the 1940 Act providing that
the Fund (or some other party) shall assume some or all of
such expenses. You shall be required to pay such of the
foregoing sales expenses as are not required to be paid by
the principal underwriter pursuant to the underwriting
agreement or are not permitted to be paid by the Fund (or
some other party) pursuant to such a plan.
5. Management Fee. For all services to be rendered,
payments to be made and costs to be assumed by you as
provided in sections 2, 3, and 4 hereof, the Trust on behalf
of the Fund shall pay you in United States Dollars on the
last day of each month the unpaid balance of a fee equal to
the excess of 1/12 of 0.75 of 1 percent of the average daily
net assets as defined below of the Fund for such month;
provided that, for any calendar month during which the
average of such values exceeds $250 million, the fee payable
for that month based on the portion of the average of such
values in excess of $250 million up to and including $1.0
billion shall be 1/12 of 0.72 of 1 percent of such portion;
provided further that, for any calendar month during which
the average of such values exceeds $1.0 billion, the fee
payable for that month based on the portion of the average
of such values in excess of $1.0 billion up to and including
$2.5 billion shall be 1/12 of 0.70 of 1 percent of such
portion; provided further that, for any calendar month
during which the average of such values exceeds $2.5
billion, the fee payable for that month based on the portion
of the average of such values in excess of $2.5 billion up
to and including $5.0 billion shall be 1/12 of 0.68 of 1
percent of such portion; provided further that, for any
calendar month during which the average of such values
exceeds $5.0 billion, the fee payable for that month based
on the portion of the average of such values in excess of
$5.0 billion up to and including $7.5 billion shall be 1/12
of 0.65 of 1 percent of such portion; provided further that,
for any calendar month during which the average of such
values exceeds $7.5 billion, the fee payable for that month
based on the portion of the average of such values in excess
of $7.5 billion up to and including $10.0 billion shall be
1/12 of 0.64 of 1 percent of such portion; provided further
that, for any calendar month during which the average of
such values exceeds $10.0 billion, the fee payable for that
month based on the portion of the average of such values in
excess of $10.0 billion up to and including $12.5 billion
shall be 1/12 of 0.63 of 1 percent of such portion; and
provided that, for any calendar month during which the
average of such values exceeds $12.5 billion, the fee
payable for that month based on the portion of the average
of such values in excess of $12.5 billion shall be 1/12 of
0.62 of 1 percent of such portion over the lowest applicable
expense fully described below or over any compensation
waived by you from time to time (as more fully described
below). You shall be entitled to receive during any month
such interim payments of your fee hereunder as you shall
request, provided that no such payment shall exceed 75
percent of the amount of your fee then accrued on the books
of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the
average of the values placed on the Fund's net assets as of
4:00 p.m. (New York time) on each day on which the net asset
value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund
lawfully determines the value of its net assets as of some
other time on each business day, as of such time. The value
of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration and
the Registration Statement. If the determination of net
asset value does not take place for any particular day, then
for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be
the value of its net assets as of 4:00 p.m. (New York time),
or as of such other time as the value of the net assets of
the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its
portfolio more than once on any day, then the last such
determination thereof on that day shall be deemed to be the
sole determination thereof on that day for the purposes of
this section 5.
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually
bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's
expenses, as if such waiver or limitation were fully set
forth herein.
6. Avoidance of Inconsistent Position; Services Not
Exclusive. In connection with purchases or sales of
portfolio securities and other investments for the account
of the Fund, neither you nor any of your directors, officers
or employees shall act as a principal or agent or receive
any commission. You or your agent shall arrange for the
placing of all orders for the purchase and sale of portfolio
securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund
policies as expressed in the Registration Statement. If any
occasion should arise in which you give any advice to
clients of yours concerning the Shares of the Fund, you
shall act solely as investment counsel for such clients and
not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that you
may render investment advice, management and services to
others. In acting under this Agreement, you shall be an
independent contractor and not an agent of the Trust.
Whenever the Fund and one or more other accounts or
investment companies advised by you have available funds for
investment, investments suitable and appropriate for each
shall be allocated in accordance with procedures believed by
you to be equitable to each entity. Similarly, opportunities
to sell securities shall be allocated in a manner believed
by you to be equitable. The Fund recognizes that in some
cases this procedure may adversely affect the size of the
position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this
Agreement, the Trust agrees that you shall not be liable
under this Agreement for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or
purport to protect you against any liability to the Trust,
the Fund or its shareholders to which you would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason
of your reckless disregard of your obligations and duties
hereunder.
8. Duration and Termination of This Agreement. This
Agreement shall remain in force until
September 30, 1999 and continue in force from year to year
thereafter, but only so long as such continuance is
specifically approved at least annually (a) by the vote of a
majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this
Agreement, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Trustees
of the Trust, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid
requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive
order therefrom.
This Agreement may be terminated with respect to the Fund at
any time, without the payment of any penalty, by the vote of
a majority of the outstanding voting securities of the Fund
or by the Trust's Board of Trustees on 60 days' written
notice to you, or by you on 60 days' written notice to the
Trust. This Agreement shall terminate automatically in the
event of its assignment.
This Agreement may be terminated with respect to the Fund at
any time without the payment of any penalty by the Board of
Trustees or by vote of a majority of the outstanding voting
securities of the Fund in the event that it shall have been
established by a court of competent jurisdiction that you or
any of your officers or directors has taken any action which
results in a breach of your covenants set forth herein.
9. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the
party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this
Agreement shall be effective until approved in a manner
consistent with the 1940 Act and rules and regulations
thereunder and any applicable SEC exemptive order therefrom.
10. Limitation of Liability for Claims. The Declaration, a
copy of which, together with all amendments thereto, is on
file in the Office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Kemper Equity Trust"
refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or
agent of the Trust, shall be subject to claims against or
obligations of the Trust or of the Fund to any extent
whatsoever, but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that
the obligations assumed by the Trust on behalf of the Fund
pursuant to this Agreement shall be limited in all cases to
the Fund and its assets, and you shall not seek satisfaction
of any such obligation from the shareholders or any
shareholder of the Fund or any other series of the Trust, or
from any Trustee, officer, employee or agent of the Trust.
You understand that the rights and obligations of each Fund,
or series, under the Declaration are separate and distinct
from those of any and all other series.
11. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
In interpreting the provisions of this Agreement, the
definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "affiliated person,"
"assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions as may be
granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the
laws of The Commonwealth of Massachusetts, provided that
nothing herein shall be construed in a manner inconsistent
with the 1940 Act, or in a manner which would cause the Fund
to fail to comply with the requirements of Subchapter M of
the Code.
This Agreement shall supersede all prior investment advisory
or management agreements entered into between you and the
Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute
the form of acceptance on the accompanying counterpart of
this letter and return such counterpart to the Trust,
whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
Kemper Equity Trust, on behalf
of
Kemper-Dreman Financial
Services Fund
By: ___________________________
Mark S. Casady
President
The foregoing Agreement is hereby accepted as of the date
hereof.
SCUDDER KEMPER INVESTMENTS,
INC.
By: ___________________________
Stephen R. Beckwith
Treasurer
