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000 C000000 0001052427
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008 D04AA01 0100
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008 D03AA02 07701
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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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SIGNATURE PHILIP J. COLLORA
TITLE V.P. AND 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
FINANCIAL INFORMATION EXTRACTED FROM THE 1998 ANNUAL REPORT TO SHAREHOLDERS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001052427
<NAME> KEMPER EQUITY TRUST
<SERIES>
<NUMBER> 01
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> MAR-09-1998
<PERIOD-END> NOV-30-1998
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<INVESTMENTS-AT-VALUE> 225,010
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
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FINANCIAL INFORMATION EXTRACTED FROM THE 1998 ANNUAL REPORT TO SHAREHOLDERS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001052427
<NAME> KEMPER EQUITY TRUST
<SERIES>
<NUMBER> 02
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND - CLASS B
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
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IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001052427
<NAME> KEMPER EQUITY TRUST
<SERIES>
<NUMBER> 03
<NAME> KEMPER-DREMAN FINANCIAL SERVICES FUND - CLASS C
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<INVESTMENTS-AT-VALUE> 225,010
<RECEIVABLES> 1,661
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<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,519
<TOTAL-LIABILITIES> 2,519
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 229,717
<SHARES-COMMON-STOCK> 1,699
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 182
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (244)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,494)
<NET-ASSETS> 224,161
<DIVIDEND-INCOME> 2,151
<INTEREST-INCOME> 141
<OTHER-INCOME> 0
<EXPENSES-NET> (2,106)
<NET-INVESTMENT-INCOME> 186
<REALIZED-GAINS-CURRENT> (248)
<APPREC-INCREASE-CURRENT> (5,494)
<NET-CHANGE-FROM-OPS> (5,556)
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,951
<NUMBER-OF-SHARES-REDEEMED> (255)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 224,061
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,311
<AVERAGE-NET-ASSETS> 154,540
<PER-SHARE-NAV-BEGIN> 9.50
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .12
<PER-SHARE-DIVIDEND> 0
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<EXPENSE-RATIO> 2.11
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</TABLE>
REPORT OF INDEPENDENT AUDITORS
Board of Trustees
Kemper Funds
In planning and performing our audit of the financial statements of
each of the Kemper Funds listed in Exhibit A attached hereto (the
"Funds") for the period ended as of the date listed in Exhibit A
attached hereto ("Report Date"), we considered their internal
control, including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on internal
control.
The management of the Funds is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's objective of
preparing financial statements for external purposes that are fairly
presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets
against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud
may occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose
all matters in internal control that might be material weaknesses
under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the
design or operation of one or more of specific internal control
components does not reduce to a relatively low level the risk that
errors or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters
involving internal control and its operation, including controls for
safeguarding securities, that we consider to be material weaknesses
as defined above as of Report Date.
This report is intended solely for the information and use of the
board of trustees and management and the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Chicago, Illinois
January 19, 1999
Kemper Funds
Exhibit A
November 30, 1998
Kemper Value Series:
Kemper Contrarian Fund
Kemper Dreman High Return Fund
Kemper Small Cap Value Fund
Kemper High Income Trust
Kemper Municipal Income Trust
Kemper Multi-Market Income Trust
Kemper Strategic Municipal Income Trust
Kemper Strategic Income Fund
Kemper Value + Growth Fund
Kemper Quantitative Equity Fund
Kemper Europe Fund
Kemper Asian Growth Fund
Kemper Dreman Financial Services Fund
N:\SHAREDAT\CORP_ACT\CONTRACT\KEMPER\KET\ima_s98 6
INVESTMENT MANAGEMENT AGREEMENT
Kemper Equity Trust
Two International Place
Boston, Massachusetts 02110
September 7, 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: ___________________________
President
The foregoing Agreement is hereby accepted as of the date
hereof.
SCUDDER KEMPER INVESTMENTS,
INC.
By: ___________________________
Treasurer
N\\BOSFUNDS\VOL1\SHAREDAT\CORP_ACT\CONTRACT\KEMPER\KET\12B1Bsfsf
Fund: Kemper Equity Trust (the "Fund")
Series: Kemper-Dreman Financial Services
Fund (the "Series")
Class: Class B (the "Class")
AMENDED AND RESTATED 12b-1 PLAN
Pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act"), this Amended and
Restated 12b-1 Plan (the "Plan") has been adopted for the Fund,
on behalf of the Series, for the Class (all as noted and defined
above) by a majority of the members of the Fund's Board (the
"Board"), including a majority of the Board members who are not
"interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in
any agreements related to the Plan (the "Qualified Board
Members") at a meeting called for the purpose of voting on this
Plan.
1. Compensation. The Fund will pay to Kemper
Distributors, Inc. ("KDI") at the end of each calendar month a
distribution services fee computed at the annual rate of .75% of
average daily net assets attributable to the Class shares. KDI
may compensate various financial service firms appointed by KDI
("Firms") in accordance with the provisions of the Fund's
Underwriting and Distribution Agreement (the "Distribution
Agreement") for sales of shares at the fee levels provided in the
Fund's prospectus from time to time. KDI may pay other
commissions, fees or concessions to Firms, and may pay them to
others in its discretion, in such amounts as KDI shall determine
from time to time. The distribution services fee for the Class
shall be based upon average daily net assets of the Series
attributable to the Class and such fee shall be charged only to
the Class. For the month and year in which this Plan becomes
effective or terminates, there shall be an appropriate proration
of the distribution services fee set forth in Paragraph 1 hereof
on the basis of the number of days that the Plan and any
agreements related to the Plan are in effect during the month and
year, respectively. The distribution services fee shall be in
addition to and shall not be reduced or offset by the amount of
any contingent deferred sales charge received by KDI.
2. Periodic Reporting. KDI shall prepare reports for the
Board on a quarterly basis for the Class showing amounts paid to
the various Firms and such other information as from time to time
shall be reasonably requested by the Board.
3. Continuance. This Plan shall continue in effect
indefinitely, provided that such continuance is approved at least
annually by a vote of a majority of the Board, and of the
Qualified Board Members, cast in person at a meeting called for
such purpose or by vote of at least a majority of the outstanding
voting securities of the Class.
4. Termination. This Plan may be terminated at any time
without penalty with respect to the Class by vote of a majority
of the Qualified Board Members or by vote of the majority of the
outstanding voting securities of the Class.
5. Amendment. This Plan may not be amended to increase
materially the amount to be paid to KDI by the Fund for
distribution services with respect to the Class without the vote
of a majority of the outstanding voting securities of the Class.
All material amendments to this Plan must in any event be
approved by a vote of a majority of the Board, and of the
Qualified Board Members, cast in person at a meeting called for
such purpose.
6. Selection of Non-Interested Board Members. So long as
this Plan is in effect, the selection and nomination of those
Board members who are not interested persons of the Fund will be
committed to the discretion of Board members who are not
themselves interested persons.
7. Recordkeeping. The Fund will preserve copies of this
Plan, the Distribution Agreement, and all reports made pursuant
to Paragraph 2 above for a period of not less than six (6) years
from the date of this Plan, the Distribution Agreement, or any
such report, as the case may be, the first two (2) years in an
easily accessible place.
8. Limitation of Liability. Any obligation of the Fund
hereunder shall be binding only upon the assets of the Class and
shall not be binding on any Board member, officer, employee,
agent, or shareholder of the Fund. Neither the authorization of
any action by the Board members or shareholders of the Fund nor
the adoption of the Plan on behalf of the Fund shall impose any
liability upon any Board member or upon any shareholder.
9. Definitions. The terms "interested person" and "vote
of a majority of the outstanding voting securities" shall have
the meanings set forth in the Act and the rules and regulations
thereunder.
10. Severability; Separate Action. If any provision of
this Plan shall be held or made invalid by a court decision, rule
or otherwise, the remainder of this Plan shall not be affected
thereby. Action shall be taken separately for the Series or
Class as the Act or the rules thereunder so require.
(Amended and restated August 1, 1998)
N\\BOSFUNDS\VOL1\SHAREDAT\CORP_ACT\CONTRACT\KEMPER\KET\12B1Csfsf
Fund: Kemper Equity Trust (the "Fund")
Series: Kemper-Dreman Financial Services
Fund (the "Series")
Class: Class C (the "Class")
AMENDED AND RESTATED 12b-1 PLAN
Pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act"), this Amended and
Restated 12b-1 Plan (the "Plan") has been adopted for the Fund,
on behalf of the Series, for the Class (all as noted and defined
above) by a majority of the members of the Fund's Board (the
"Board"), including a majority of the Board members who are not
"interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in
any agreements related to the Plan (the "Qualified Board
Members") at a meeting called for the purpose of voting on this
Plan.
1. Compensation. The Fund will pay to Kemper
Distributors, Inc. ("KDI") at the end of each calendar month a
distribution services fee computed at the annual rate of .75% of
average daily net assets attributable to the Class shares. KDI
may compensate various financial service firms appointed by KDI
("Firms") in accordance with the provisions of the Fund's
Underwriting and Distribution Agreement (the "Distribution
Agreement") for sales of shares at the fee levels provided in the
Fund's prospectus from time to time. KDI may pay other
commissions, fees or concessions to Firms, and may pay them to
others in its discretion, in such amounts as KDI shall determine
from time to time. The distribution services fee for the Class
shall be based upon average daily net assets of the Series
attributable to the Class and such fee shall be charged only to
the Class. For the month and year in which this Plan becomes
effective or terminates, there shall be an appropriate proration
of the distribution services fee set forth in Paragraph 1 hereof
on the basis of the number of days that the Plan and any
agreements related to the Plan are in effect during the month and
year, respectively. The distribution services fee shall be in
addition to and shall not be reduced or offset by the amount of
any contingent deferred sales charge received by KDI.
2. Periodic Reporting. KDI shall prepare reports for the
Board on a quarterly basis for the Class showing amounts paid to
the various Firms and such other information as from time to time
shall be reasonably requested by the Board.
3. Continuance. This Plan shall continue in effect
indefinitely, provided that such continuance is approved at least
annually by a vote of a majority of the Board, and of the
Qualified Board Members, cast in person at a meeting called for
such purpose or by vote of at least a majority of the outstanding
voting securities of the Class.
4. Termination. This Plan may be terminated at any time
without penalty with respect to the Class by vote of a majority
of the Qualified Board Members or by vote of the majority of the
outstanding voting securities of the Class.
5. Amendment. This Plan may not be amended to increase
materially the amount to be paid to KDI by the Fund for
distribution services with respect to the Class without the vote
of a majority of the outstanding voting securities of the Class.
All material amendments to this Plan must in any event be
approved by a vote of a majority of the Board, and of the
Qualified Board Members, cast in person at a meeting called for
such purpose.
6. Selection of Non-Interested Board Members. So long as
this Plan is in effect, the selection and nomination of those
Board members who are not interested persons of the Fund will be
committed to the discretion of Board members who are not
themselves interested persons.
7. Recordkeeping. The Fund will preserve copies of this
Plan, the Distribution Agreement, and all reports made pursuant
to Paragraph 2 above for a period of not less than six (6) years
from the date of this Plan, the Distribution Agreement, or any
such report, as the case may be, the first two (2) years in an
easily accessible place.
8. Limitation of Liability. Any obligation of the Fund
hereunder shall be binding only upon the assets of the Class and
shall not be binding on any Board member, officer, employee,
agent, or shareholder of the Fund. Neither the authorization of
any action by the Board members or shareholders of the Fund nor
the adoption of the Plan on behalf of the Fund shall impose any
liability upon any Board member or upon any shareholder.
9. Definitions. The terms "interested person" and "vote
of a majority of the outstanding voting securities" shall have
the meanings set forth in the Act and the rules and regulations
thereunder.
10. Severability; Separate Action. If any provision of
this Plan shall be held or made invalid by a court decision, rule
or otherwise, the remainder of this Plan shall not be affected
thereby. Action shall be taken separately for the Series or
Class as the Act or the rules thereunder so require.
(Amended and restated August 1, 1998)
N:\SHAREDAT\CORP_ACT\CONTRACT\KEMPER\KET\SUBA-DRE 8
SUB-ADVISORY AGREEMENT
AGREEMENT made this 7th day of September, 1998, by and
between SCUDDER KEMPER INVESTMENTS, INC., a Delaware
corporation (the "Adviser") and DREMAN VALUE MANAGEMENT,
L.L.C., a Delaware limited liability company (the "Sub-
Adviser").
WHEREAS, KEMPER EQUITY TRUST, a Massachusetts business
trust (the "Fund") is a management investment company
registered under the Investment Company Act of 1940 ("the
Investment Company Act");
WHEREAS, the Fund has retained the Adviser to render to
it investment advisory and management services with regard
to the Fund, including the series known as the
Kemper-Dreman Financial Services Fund (the "Financial
Services Series"), pursuant to an Investment Management
Agreement (the "Management Agreement"); and
WHEREAS, the Adviser desires at this time to retain the
Sub-Adviser to render investment advisory and management
services for the Financial Services Series and the Sub-
Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between
the parties hereto as follows:
1. Appointment of Sub-Adviser.
(a) The Adviser hereby employs the Sub-Adviser to
manage the investment and reinvestment of the assets of the
Financial Services Series in accordance with the applicable
investment objectives, policies and limitations and subject
to the supervision of the Adviser and the Board of Trustees
of the Fund for the period and upon the terms herein set
forth, and to place orders for the purchase or sale of
portfolio securities for the Financial Services Series
account with brokers or dealers selected by the Sub-Adviser;
and, in connection therewith, the Sub-Adviser is authorized
as the agent of the Financial Services Series to give
instructions to the Custodian and Accounting Agent of the
Fund as to the deliveries of securities and payments of cash
for the account of the Financial Services Series. In
connection with the selection of such brokers or dealers and
the placing of such orders, the Sub-Adviser is directed to
seek for the Financial Services Series best execution of
orders. Subject to such policies as the Board of Trustees
of the Fund determines and subject to satisfying the
requirements of Section 28(e) of the Securities Exchange Act
of 1934, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having
caused the Financial Services Series to pay a broker or
dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction, if the Sub-Adviser determined in good faith
that such amount of commission was reasonable in relation to
the value of the brokerage and research services provided by
such broker or dealer viewed in terms of either that
particular transaction or the Sub-Adviser's overall
responsibilities with respect to the clients of the Sub-
Adviser as to which the Sub-Adviser exercises investment
discretion. The Adviser recognizes that all research
services and research that the Sub-Adviser receives are
available for all clients of the Sub-Adviser, and that the
Financial Services Series and other clients of the
Sub-Adviser may benefit thereby. The investment of funds
shall be subject to all applicable restrictions of the
Agreement and Declaration of Trust and By-Laws of the Fund
as may from time to time be in force to the extent the same
are provided the Sub-Adviser.
(b) The Sub-Adviser accepts such employment and
agrees during the period of this Agreement to render such
investment management services in accordance with the
applicable investment objectives, policies and limitations
set out in the Fund's prospectus and Statement of Additional
Information, as amended from time to time, to the extent the
same are provided the Sub-Adviser, to furnish related office
facilities and equipment and clerical, bookkeeping and
administrative services for the Financial Services Series,
and to assume the other obligations herein set forth for the
compensation herein provided. The Sub-Adviser shall assume
and pay all of the costs and expenses of performing its
obligations under this Agreement. The Sub-Adviser shall for
all purposes herein provided be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent
the Fund, the Financial Services Series or the Adviser in
any way or otherwise be deemed an agent of the Fund, the
Financial Services Series or the Adviser.
(c) The Sub-Adviser will keep the Adviser, for
itself and on behalf of the Fund, informed of developments
materially affecting the Fund or the Financial Services
Series and shall, on the Sub-Adviser's own initiative and as
reasonably requested by the Adviser, for itself and on
behalf of the Fund, furnish to the Adviser from time to time
whatever information the Adviser reasonably believes
appropriate for this purpose.
(d) The Sub-Adviser shall provide the Adviser
with such investment portfolio accounting and shall maintain
and provide such detailed records and reports as the Adviser
may from time to time reasonably request, including without
limitation, daily processing of investment transactions and
periodic valuations of investment portfolio positions as
required by the Adviser, monthly reports of the investment
portfolio and all investment transactions and the
preparation of such reports and compilation of such data as
may be required by the Adviser to comply with the
obligations imposed upon it under the Management Agreement.
Sub-Adviser agrees to install in its offices computer
equipment or software, as provided by the Adviser at its
expense, for use by the Sub-Adviser in performing its duties
under this Sub-Advisory Agreement, including inputting on a
daily basis that day's portfolio transactions in the
Financial Services Series.
(e) The Sub-Adviser shall maintain and enforce
adequate security procedures with respect to all materials,
records, documents and data relating to any of its
responsibilities pursuant to this Agreement including all
means for the effecting of securities transactions.
(f) The Sub-Adviser agrees that it will provide
to the Adviser or the Fund promptly upon request reports and
copies of such of its investment records and ledgers with
respect to the Financial Services Series as appropriate to
assist the Adviser and the Fund in monitoring compliance
with the Investment Company Act and the Investment Advisers
Act of 1940 (the "Advisers Act"), as well as other
applicable laws. The Sub-Adviser will furnish the Fund's
Board of Trustees such periodic and special reports with
respect to the Financial Services Series as the Adviser or
the Board of Trustees may reasonably request, including
statistical information with respect to the Financial
Services Series' securities.
(g) In compliance with the requirements of Rule
31a-3 under the Investment Company Act, the Sub-Adviser
hereby agrees that any records that it maintains for the
Fund are the property of the Fund and further agrees to
surrender promptly any such records upon the Fund's or the
Adviser's request, although the Sub-Adviser may, at the
Sub-Adviser's own expense, make and retain copies of such
records. The Sub-Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the Investment
Company Act any records with respect to the Sub-Adviser's
duties hereunder required to be maintained by Rule 31a-1
under the Investment Company Act to the extent that the Sub-
Adviser prepares and maintains such records pursuant to this
Agreement and to preserve the records required by Rule 204-2
under the Advisers Act for the period specified in that
Rule.
(h) The Sub-Adviser agrees that it will
immediately notify the Adviser and the Fund in the event
that the Sub-Adviser: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from serving
as an investment adviser pursuant to this Agreement; or (ii)
is or expects to become the subject of an administrative
proceeding or enforcement action by the United States
Securities and Exchange Commission ("SEC") or other
regulatory authority.
(i) The Sub-Adviser agrees that it will
immediately forward, upon receipt, to the Adviser, for
itself and as agent for the Fund, any correspondence from
the SEC or other regulatory authority that relates to the
Financial Services Series.
(j) The Sub-Adviser acknowledges that it is an
"investment adviser" to the Fund within the meaning of the
Investment Company Act and the Advisers Act.
(k) The Sub-Adviser shall be responsible for
maintaining an appropriate compliance program to ensure that
the services provided by it under this Agreement are
performed in a manner consistent with applicable laws and
the terms of this Agreement. Sub-Adviser agrees to provide
such reports and certifications regarding its compliance
program as the Adviser or the Fund shall reasonably request
from time to time. Furthermore, the Sub-Adviser shall
maintain and enforce a Code of Ethics which in form and
substance is consistent with industry norms as changed from
time to time. Sub-Adviser agrees to allow the Board of
Trustees of the Fund to review its Code of Ethics upon
request. Sub-Adviser agrees to report to the Adviser on a
quarterly basis any violations of the Code of Ethics of
which its senior management becomes aware.
2. Compensation.
For the services and facilities described herein,
the Adviser will pay to the Sub-Adviser, 15 days after the
end of each calendar month, the unpaid balance of a fee
equal to 1/12 of .240 of 1 percent of the average daily net
assets as defined below of the Financial Services Series for
such month; provided that, for any calendar month during
which the average of such values exceeds $250,000,000, the
fee payable for that month based on the portion of the
average of such values in excess of $250,000,000 shall be
1/12 of .230 of 1 percent of such portion; provided that,
for any calendar month during which the average of such
values exceeds $1,000,000,000, the fee payable for that
month based on the portion of the average of such values in
excess of $1,000,000,000 shall be 1/12 of .224 of 1 percent
of such portion; provided that, for any calendar month
during which the average of such values exceeds
$2,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of
$2,500,000,000 shall be 1/12 of .218 of 1 percent of such
portion; provided that, for any calendar month during which
the average of such values exceeds $5,000,000,000, the fee
payable for that month based on the portion of the average
of such values in excess of $5,000,000,000 shall be 1/12
of .208 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values
exceeds $7,500,000,000, the fee payable for that month based
on the portion of the average of such values in excess of
$7,500,000,000 shall be 1/12 of .205 of 1 percent of such
portion; provided that, for any calendar month during which
the average of such values exceeds $10,000,000,000, the fee
payable for that month based on the portion of the average
of such values in excess of $10,000,000,000 shall be 1/12
of .202 of 1 percent of such portion; and provided that, for
any calendar month during which the average of such values
exceeds $12,500,000,000, the fee payable for that month
based on the portion of the average of such values in excess
of $12,500,000,000 shall be 1/12 of .198 of 1 percent of
such portion.
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. Net Asset Value. The net asset value for the
Financial Services Series shall be calculated as the Board
of Trustees of the Fund may determine from time to time in
accordance with the provisions of the Investment Company
Act. On each day when net asset value is not calculated,
the net asset value of the Financial Services Series 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.
4. Duration and Termination.
(a) This Agreement shall become effective with
respect to the Financial Services Series on the date hereof
and shall remain in full force until February 1, 2003,
unless sooner terminated or not annually approved as
hereinafter provided. Notwithstanding the foregoing, this
Agreement shall continue in force through February 1, 2003,
and from year to year thereafter, only as long as such
continuance is specifically approved at least annually and
in the manner required by the Investment Company Act and the
rules and regulations thereunder, with the first annual
renewal to be coincident with the next renewal of the
Management Agreement.
(b) This Agreement shall automatically
terminate in the event of its assignment or in the event of
the termination of the Management Agreement. In addition,
Adviser has the right to terminate this Agreement upon
immediate notice if the Sub-Adviser becomes statutorily
disqualified from performing its duties under this Agreement
or otherwise is legally prohibited from operating as an
investment adviser.
(c) This Agreement may be terminated at any
time, without the payment by the Fund of any penalty, by the
Board of Trustees of the Fund, or by vote of a majority of
the outstanding voting securities of the Financial Services
Series, or by the Adviser. The Fund may effect termination
of this Agreement by action of the Board of Trustees of the
Fund or by vote of a majority of the outstanding voting
securities of the Financial Services Series on sixty (60)
days written notice to the Adviser and the Sub-Adviser. The
Adviser may effect termination of this Agreement on sixty
(60) days written notice to the Sub-Adviser.
(d) Sub-Adviser may not terminate this Agreement
prior to the third anniversary of the original Sub-Advisory
Agreement dated March 2, 1998. Sub-Adviser may terminate
this Agreement effective on or after the third anniversary
of the Agreement dated March 2, 1998 upon ninety (90) days
written notice to the Adviser.
(e) The terms "assignment" and "vote of a
majority of the outstanding voting securities" shall have
the meanings set forth in the Investment Company Act and the
rules and regulations thereunder.
5. Representations and Warranties. The Sub-Adviser
hereby represents and warrants as follows:
(a) The Sub-Adviser is registered with the SEC as
an investment adviser under the Advisers Act, and such
registration is current, complete and in full compliance
with all material applicable provisions of the Advisers Act
and the rules and regulations thereunder;
(b) The Sub-Adviser has all requisite authority
to enter into, execute, deliver and perform the
Sub-Adviser's obligations under this Agreement;
(c) The Sub-Adviser's performance of its
obligations under this Agreement does not conflict with any
law, regulation or order to which the Sub-Adviser is
subject; and
(d) The Sub-Adviser has reviewed the portion of
(i) the registration statement filed with the SEC, as
amended from time to time for the Fund ("Registration
Statement"), and (ii) the Fund's prospectus and supplements
thereto, in each case in the form received from the Adviser
with respect to the disclosure about the Sub-Adviser and the
Financial Services Series of which the Sub-Adviser has
knowledge (the "Sub-Adviser and Financial Services
Information") and except as advised in writing to the
Adviser such Registration Statement, prospectus and any
supplement contain, as of its date, no untrue statement of
any material fact of which Sub-Adviser has knowledge and do
not omit any statement of a material fact of which
Sub-Adviser has knowledge which was required to be stated
therein or necessary to make the statements contained
therein not misleading.
6. Covenants. The Sub-Adviser hereby covenants and
agrees that, so long as this Agreement shall remain in
effect:
(a) The Sub-Adviser shall maintain the
Sub-Adviser's registration as an investment adviser under
the Advisers Act, and such registration shall at all times
remain current, complete and in full compliance with all
material applicable provisions of the Advisers Act and the
rules and regulations thereunder;
(b) The Sub-Adviser's performance of its
obligations under this Agreement shall not conflict with any
law, regulation or order to which the Sub-Adviser is then
subject;
(c) The Sub-Adviser shall at all times comply in
all material respects with the Advisers Act and the
Investment Company Act, and all rules and regulations
thereunder, and all other applicable laws and regulations,
and the Registration Statement, prospectus and any
supplement and with any applicable procedures adopted by the
Fund's Board of Trustees, provided that such procedures are
substantially similar to those applicable to similar funds
for which the Board of Trustees of the Fund is responsible
and that such procedures are identified in writing to the
Sub-Adviser;
(d) The Sub-Adviser shall promptly notify Adviser
and the Fund upon the occurrence of any event that might
disqualify or prevent the Sub-Adviser from performing its
duties under this Agreement. The Sub-Adviser further agrees
to notify Adviser of any changes that would cause the
Registration Statement or prospectus for the Fund to contain
any untrue statement of a material fact or to omit to state
a material fact which is required to be stated therein or is
necessary to make the statements contained therein not
misleading, in each case relating to Sub-Adviser and
Financial Services Information; and
(e) For the entire time this Agreement is in
effect and for a period of two years thereafter, the Sub-
Adviser shall maintain a claims made bond issued by a
reputable fidelity insurance company against larceny and
embezzlement, covering each officer and employee of Sub-
Adviser, at a minimum level of $2 million which provide
coverage for acts or alleged acts which occurred during the
period of this Agreement.
7. Use of Names.
(a) The Sub-Adviser acknowledges and agrees
that the names Kemper, Zurich and Scudder, and abbreviations
or logos associated with those names, are the valuable
property of Adviser and its affiliates; that the Fund,
Adviser and their affiliates have the right to use such
names, abbreviations and logos; and that the Sub-Adviser
shall use the names Zurich, Kemper and Scudder, and
associated abbreviations and logos, only in connection with
the Sub-Adviser's performance of its duties hereunder.
Further, in any communication with the public and in any
marketing communications of any sort, Sub-Adviser agrees to
obtain prior written approval from Adviser before using or
referring to Kemper Value Fund, Kemper, Scudder, Zurich
or Kemper-Dreman Financial Services Fund or any
abbreviations or logos associated with those names; provided
that nothing herein shall be deemed to prohibit the
Sub-Adviser from referring to the performance of the
Kemper-Dreman Financial Services Fund in the Sub-Adviser's
marketing material as long as such marketing material does
not constitute "sales literature" or "advertising" for the
Financial Services Series, as those terms are used in the
rules, regulations and guidelines of the SEC and the
National Association of Securities Dealers, Inc.
(b) Adviser acknowledges that "Dreman" is
distinctive in connection with investment advisory and
related services provided by the Sub-Adviser, the "Dreman"
name is a property right of the Sub-Adviser, and the
"Dreman" name as used in the name of the Financial Services
Series is understood to be used by the Fund upon the
conditions hereinafter set forth; provided that the Fund may
use such name only so long as the Sub-Adviser shall be
retained as the investment sub-adviser of the Financial
Services Series pursuant to the terms of this Agreement.
(c) Adviser acknowledges that the Fund and
its agents may use the "Dreman" name in the name of the
Financial Services Series for the period set forth herein in
a manner not inconsistent with the interests of the
Sub-Adviser and that the rights of the Fund and its agents
in the "Dreman" name are limited to their use as a component
of the Financial Services Series name and in connection with
accurately describing the activities of the Financial
Services Series, including use with marketing and other
promotional and informational material relating to the
Financial Services Series. In the event that the
Sub-Adviser shall cease to be the investment sub-adviser of
the Financial Services Series, then the Fund at its own or
the Adviser's expense, upon the Sub-Adviser's written
request: (i) shall cease to use the Sub-Adviser's name as
part of the name of the Financial Services Series or for any
other commercial purpose (other than the right to refer to
the Financial Services Series' former name in the Fund's
Registration Statement, proxy materials and other Fund
documents to the extent required by law and, for a
reasonable period the use of the name in informing others of
the name change); and (ii) shall use its best efforts to
cause the Fund's officers and directors to take any and all
actions which may be necessary or desirable to effect the
foregoing and to reconvey to the Sub-Adviser all rights
which the Fund may have to such name. Adviser agrees to
take any and all reasonable actions as may be necessary or
desirable to effect the foregoing and Sub-Adviser agrees to
allow the Fund and its agents a reasonable time to
effectuate the foregoing.
(d) The Sub-Adviser hereby agrees and consents to
the use of the Sub-Adviser's name upon the foregoing terms
and conditions.
8. Standard of Care. Except as may otherwise be
required by law, and except as may be set forth in paragraph
9, the Sub-Adviser shall not be liable for any error of
judgment or of law or for any loss suffered by the Fund, the
Financial Services Series or the Adviser in connection with
the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross
negligence on the part of the Sub-Adviser in the performance
of its obligations and duties or by reason of its reckless
disregard of its obligations and duties under this
Agreement.
9. Indemnifications.
(a) The Sub-Adviser agrees to indemnify and hold
harmless Adviser and the Fund against any losses, expenses,
claims, damages or liabilities (or actions or proceedings in
respect thereof), to which Adviser or the Fund may become
subject arising out of or based on the breach or alleged
breach by the Sub-Adviser of any provisions of this
Agreement or any wrongful action or alleged wrongful action
by the Sub-Adviser; provided, however, that the Sub-Adviser
shall not be liable under this paragraph in respect of any
loss, expense, claim, damage or liability to the extent that
a court having jurisdiction shall have determined by a final
judgment, or independent counsel agreed upon by the Sub-
Adviser and the Adviser or the Fund, as the case may be,
shall have concluded in a written opinion, that such loss,
expense, claim, damage or liability resulted primarily from
the Adviser's or the Fund's willful misfeasance, bad faith
or gross negligence or by reason of the reckless disregard
by the Adviser or the Fund of its duties. The foregoing
indemnification shall be in addition to any rights that the
Adviser or the Fund may have at common law or otherwise.
The Sub-Adviser's agreements in this paragraph shall, upon
the same terms and conditions, extend to and inure to the
benefit of each person who may be deemed to control the
Adviser or the Fund, be controlled by the Adviser or the
Fund, or be under common control with the Adviser or the
Fund and their affiliates, trustees, officers, employees and
agents. The Sub-Adviser's agreement in this paragraph shall
also extend to any of the Fund's, Financial Services
Series', and Adviser's successors or the successors of the
aforementioned affiliates, trustees, officers, employees or
agents.
(b) The Adviser agrees to indemnify and hold
harmless the Sub-Adviser against any losses, expenses,
claims, damages or liabilities (or actions or proceedings in
respect thereof), to which the Sub-Adviser may become
subject arising out of or based on the breach or alleged
breach by the Adviser of any provisions of this Agreement or
the Management Agreement, or any wrongful action or alleged
wrongful action by the Adviser or its affiliates in the
distribution of the Fund's shares, or any wrongful action or
alleged wrongful action by the Fund other than wrongful
action or alleged wrongful action that was caused by the
breach by Sub-Adviser of the provisions of this Agreement;
provided, however, that the Adviser shall not be liable
under this paragraph in respect of any loss, expense, claim,
damage or liability to the extent that a court having
jurisdiction shall have determined by a final judgment, or
independent counsel agreed upon by the Adviser and the
Sub-Adviser shall have concluded in a written opinion, that
such loss, expense, claim, damage or liability resulted
primarily from the Sub-Adviser's willful misfeasance, bad
faith or gross negligence or by reason of the reckless
disregard by the Sub-Adviser of its duties. The foregoing
indemnification shall be in addition to any rights that the
Sub-Adviser may have at common law or otherwise. The
Adviser's agreements in this paragraph shall, upon the same
terms and conditions, extend to and inure to the benefit of
each person who may be deemed to control the Sub-Adviser, be
controlled by the Sub-Adviser or be under common control
with the Sub-Adviser and to each of the Sub-Adviser's and
each such person's respective affiliates, trustees,
officers, employees and agents. The Adviser's agreements in
this paragraph shall also extend to any of the Sub-Adviser's
successors or the successors of the aforementioned
affiliates, trustees, officers, employees or agents.
(c) Promptly after receipt by a party indemnified
under paragraphs 9(a) and 9(b) above of notice of the
commencement of any action, proceeding, or investigation for
which indemnification will be sought, such indemnified party
shall promptly notify the indemnifying party in writing; but
the omission so to notify the indemnifying party shall not
relieve it from any liability which it may otherwise have to
any indemnified party unless such omission results in actual
material prejudice to the indemnifying party. In case any
action or proceeding shall be brought against any
indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, individually or
jointly with any other indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the
defense of any action or proceeding, the indemnifying party
shall not be liable to the indemnified party for any legal
or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than
reasonable costs of investigation. If the indemnifying
party does not elect to assume the defense of any action or
proceeding, the indemnifying party on a monthly basis shall
reimburse the indemnified party for the reasonable legal
fees and other costs of defense thereof. Regardless of
whether or not the indemnifying party shall have assumed the
defense of any action or proceeding, the indemnified party
shall not settle or compromise the action or proceeding
without the prior written consent of the indemnifying party,
which shall not be unreasonably withheld.
10. Survival. If any provision of this Agreement
shall be held or made invalid by a court decision, statute,
rule or otherwise, the remainder shall not be thereby
affected.
11. Notices. Any notice under this Agreement shall be
in writing, addressed and delivered or mailed, postage
prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
12. Governing Law. This Agreement shall be construed
in accordance with applicable federal law and the laws of
the State of New York.
13. Miscellaneous.
(a) The captions in this Agreement are included
for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect
their construction or effect.
(b) Terms not defined herein shall have the
meaning set forth in the Fund's prospectus.
(c) 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 WITNESS WHEREOF, the Adviser and the Sub-Adviser have
caused this Agreement to be executed as of the day and year
first above written.
SCUDDER KEMPER INVESTMENTS, INC.
By:________________________________
Title:_____________________________
DREMAN VALUE MANAGEMENT, L.L.C.
By:_________________________________
Title:______________________________
FOR THE PURPOSE OF ACCEPTING ITS
OBLIGATIONS UNDER SECTION 7 HEREIN
ONLY
KEMPER EQUITY TRUST
By:_________________________________
Title:______________________________
