<PAGE> 1
SUPPLEMENT DATED SEPTEMBER 14, 1999
TO PROSPECTUS DATED MAY 1, 1999 FOR
- --------------------------------------------------------------------------------
INDIVIDUAL AND GROUP VARIABLE,
FIXED AND MARKET
VALUE ADJUSTED DEFERRED ANNUITY
CONTRACTS
- --------------------------------------------------------------------------------
ISSUED BY
KILICO VARIABLE ANNUITY SEPARATE ACCOUNT
AND
KEMPER INVESTORS LIFE INSURANCE COMPANY
Effective September 14, 1999, one new Subaccount is being added as an investment
option under the Contracts.
The new Portfolio in which the Subaccount invests is the Kemper Index 500
Portfolio of Kemper Variable Series. A prospectus for the new Portfolio is
attached to this Supplement.
In addition, effective July 6, 1999, Credit Suisse Asset Management, LLC became
the investment adviser for the two available Portfolios of the Warburg Pincus
Trust as a result of the closing of the previously announced acquisition of
Warburg Pincus Asset Management, Inc. by Credit Suisse Group, and the
combination of Warburg Pincus Asset Management, Inc. with Credit Suisse Group's
existing U.S. asset management business.
The changes to the Prospectus follow with references to those parts of the
Prospectus that are modified by this Supplement.
INTRODUCTION
The second paragraph on the cover page of the Prospectus is revised to read as
follows:
"You may allocate purchase payments to one or more of the variable options,
the fixed option or the fixed option subject to a market value adjustment.
The Contract currently offers thirty-two investment options, each of which
is a Subaccount of KILICO Variable Annuity Separate Account. Currently, you
may choose among the following Portfolios:
KEMPER VARIABLE SERIES (formerly Investors Fund Series): Kemper Money
Market; Kemper Government Securities; Kemper Investment Grade Bond; Kemper
Global Income; Kemper Horizon 5; Kemper High Yield; Kemper Horizon 10+;
Kemper Total Return; Kemper Horizon 20+; Kemper Index 500; Kemper
Value+Growth; Kemper Blue Chip; Kemper International; Kemper Contrarian
Value (formerly Kemper Value); Kemper Small Cap
S-1
<PAGE> 2
Value; Kemper Small Cap Growth; Kemper Growth; Kemper Aggressive Growth;
Kemper Technology Growth; Kemper Global Blue Chip; Kemper International
Growth and Income; Kemper-Dreman High Return Equity; Kemper-Dreman
Financial Services.
SCUDDER VARIABLE LIFE INVESTMENT FUND (CLASS A SHARES): Scudder VLIF Global
Discovery; Scudder VLIF Growth and Income; Scudder VLIF International;
Scudder VLIF Capital Growth.
JANUS ASPEN SERIES: Janus Aspen Growth; Janus Aspen Growth and Income.
WARBURG PINCUS TRUST: Warburg Emerging Markets; Warburg Post-Venture
Capital.
Subaccounts and Portfolios may be added or deleted in the future. Contract
values allocated to any of the Subaccounts vary, reflecting the investment
experience of the selected Subaccounts. Contract values allocated to the
Fixed account or one or more Guarantee Periods of the Market Value
Adjustment Option accumulate on a fixed basis."
DEFINITIONS
The definition of "Subaccounts" on page 3 of the Prospectus is revised to read
as follows:
"Subaccounts - The thirty-two subdivisions of the Separate Account, the
assets of which consist solely of shares of the corresponding Portfolios."
SUMMARY
The fourth paragraph on page 4 of the Prospectus is revised to read as follows:
"Variable accumulations and benefits are provided by crediting Purchase
Payments to one or more Subaccounts selected by the Owner. Each Subaccount
invests in one of the following corresponding Portfolios:
- Kemper Money Market
- Kemper Government Securities
- Kemper Investment
Grade Bond
- Kemper Global Income
- Kemper Horizon 5
- Kemper High Yield
- Kemper Horizon 10+
- Kemper Total Return
- Kemper Growth
- Kemper Aggressive Growth
- Kemper Technology Growth
- Kemper Global Blue Chip
- Kemper International Growth
and Income
- Kemper-Dreman High
Return Equity
- Kemper-Dreman
Financial Services
- Kemper Horizon 20+
- Kemper Index 500
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<PAGE> 3
- Kemper Value+Growth
- Kemper Blue Chip
- Kemper International
- Kemper Contrarian Value
- Kemper Small Cap Value
- Kemper Small Cap Growth
- Scudder VLIF
Global Discovery
- Scudder VLIF Growth
and Income
- Scudder VLIF International
- Scudder VLIF Capital Growth
- Janus Aspen Growth
- Janus Aspen Growth
and Income
- Warburg Emerging Markets
- Warburg Post-Venture Capital
S-3
<PAGE> 4
The Summary of Expenses and Example Tables appearing on pages 7 through 11 of
the Prospectus are revised to read as follows:
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SUMMARY OF EXPENSES
- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of purchase payments).............................. None
Contingent Deferred Sales Load (as a percentage of amount surrendered)(1)
Year of Withdrawal After Purchase
First year........................... 7%
Second year.......................... 6%
Third year........................... 5%
Fourth year.......................... 5%
Fifth year........................... 4%
Sixth year........................... 3%
Seventh year......................... 2%
Eighth year and following............ 0%
Surrender Fees...................................................................................... None
Exchange Fee(2)..................................................................................... $25
ANNUAL CONTRACT FEE (Records Maintenance Charge)(3)................................................. $30
</TABLE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average daily account value)
<S> <C>
Mortality and Expense
Risk.................................. 1.25%
Administration.......................... .15%
Account Fees and
Expenses.............................. 0%
---------
Total Separate Account
Annual Expenses....................... 1.40%
=========
GUARANTEED RETIREMENT INCOME BENEFIT
CHARGE
Annual Expense (as a percentage of
Contract Value)....................... .25%
</TABLE>
FUND ANNUAL EXPENSES (After Fee Waivers and Expense
Reductions)
(as percentage of each Portfolio's average net assets for
the period ended December 31, 1998)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
MONEY GOVERNMENT INVESTMENT GLOBAL KEMPER
MARKET SECURITIES GRADE BOND(9) INCOME(10) HORIZON 5(9)
------ ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Management Fees... .50% .55% .60% .72% .60%
Other Expenses... .04 .11 .07 .33 .06
Total Portfolio Annual Expenses... .54 .66 .67 1.05 .66
<CAPTION>
KEMPER KEMPER KEMPER KEMPER KEMPER KEMPER
HIGH HORIZON TOTAL HORIZON INDEX VALUE+
YIELD 10+(9) RETURN 20+(9) 500(8) GROWTH(9)
------ ------- ------ ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Management Fees... .60% .60% .55% .60% .26% .75%
Other Expenses... .05 .04 .05 .07 .29 .03
Total Portfolio Annual Expenses... .65 .64 .60 .67 .55 .78
</TABLE>
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
BLUE KEMPER CONTRARIAN SMALL CAP SMALL CAP
CHIP(9) INTERNATIONAL VALUE(9) VALUE(9) GROWTH
------- ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Management Fees... .65% .75% .75% .75% .65%
Other Expenses... .11 .18 .03 .05 .05
Total Portfolio Annual Expenses... .76 .93 .78 .80 .70
<CAPTION>
KEMPER KEMPER-
KEMPER KEMPER KEMPER INTERNATIONAL DREMAN
KEMPER AGGRESSIVE TECHNOLOGY GLOBAL BLUE GROWTH AND HIGH RETURN
GROWTH GROWTH(6) GROWTH(10) CHIP(7)(10) INCOME(7)(10) EQUITY(7)(10)
------ ---------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees... .60% .67% .66% 0.00% 0.00% .42%
Other Expenses... .05 .28 .29 1.56 1.12 .45
Total Portfolio Annual Expenses... .65 .95 .95 1.56 1.12 .87
</TABLE>
<TABLE>
<CAPTION>
KEMPER- SCUDDER SCUDDER
DREMAN SCUDDER VLIF VLIF SCUDDER VLIF
FINANCIAL GLOBAL GROWTH AND VLIF CAPITAL
SERVICES(7)(10) DISCOVERY(11) INCOME INTERNATIONAL GROWTH
--------------- ------------- ---------- ------------- -------
<S> <C> <C> <C> <C> <C>
Management Fees... .02% .91% .47% .87% .47%
Other Expenses... .97 .81 .09 .18 .04
Total Portfolio Annual Expenses... .99 1.72 .56 1.05 .51
- ----------------------------------
<CAPTION>
JANUS WARBURG
JANUS ASPEN WARBURG POST-
ASPEN GROWTH AND EMERGING VENTURE
GROWTH(4) INCOME(4) MARKETS(5) CAPITAL(5)
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Management Fees... .65% 0.00% .20% 1.08%
Other Expenses... .03 1.25 1.20 .32
Total Portfolio Annual Expenses... .68 1.25 1.40 1.40
- ----------------------------------
</TABLE>
S-4
<PAGE> 5
(1) A Contract Owner may withdraw up to the greater of (i) the excess of
Contract Value over total Purchase Payments subject to Withdrawal Charges
less prior withdrawals that were previously assessed a Withdrawal Charge,
and (ii) 10% of the Contract Value in any Contract Year without assessment
of any charge. In certain circumstances We may reduce or waive the
contingent deferred sales charge.
(2) We reserve the right to charge a fee of $25 for each transfer of Contract
Value in excess of 12 transfers per calendar year.
(3) Applies to Contracts with a Contract Value less than $50,000 on the date of
assessment. In certain circumstances We may reduce or waive the annual
Records Maintenance Charge.
(4) The expense figures shown are net of certain fee waivers or reductions from
Janus Capital Corporation. Without such waivers, Management Fees, Other
Expenses and Total Portfolio Annual Expenses for the Portfolios for the
fiscal year ended December 31, 1998 would have been: .72%, .03% and .75%,
respectively, for the Growth Portfolio; and .75%, 2.31% and 3.06%,
respectively, for the Growth and Income Portfolio. See the prospectus and
Statement of Additional Information of Janus Aspen Series for a description
of these waivers.
(5) The expense figures shown are net of certain fee waivers or reductions from
the Portfolios' investment adviser and its affiliates based on actual
expenses for fiscal year ended December 31, 1998. Without such waivers,
Management Fees, Other Expenses and Total Portfolio Annual Expenses for the
Portfolios would have been 1.25%, 6.96% and 8.21%, respectively, for the
Emerging Markets Portfolio; and 1.25%, .45% and 1.70%, respectively, for
the Post-Venture Capital Portfolio. Fee waivers and expense reimbursements
may be discontinued at any time.
(6) Portfolios commenced operations after 5/1/99. "Other Expenses" have been
estimated.
(7) Portfolios commenced operations on or after 5/1/98. "Other Expenses" have
been estimated.
(8) Portfolio commenced operations after 9/1/99. "Other Expenses" have been
estimated. Pursuant to their respective agreements with Kemper Variable
Series, the investment manager and the accounting agent have agreed, for
the period from commencement of operations to April 30, 2000, to limit
their respective fees and to reimburse other operating expenses of the
Kemper Index 500 Portfolio to the extent necessary to limit total operating
expenses to the level set forth in the table. Without taking into effect
this cap, management fees are estimated to be .45%, Other Expenses are
estimated to be .29%, and total operating expenses are estimated to be
.74%.
(9) Pursuant to their respective agreements with Kemper Variable Series, the
investment manager and the accounting agent have agreed, for the one year
period commencing on approximately May 1, 1999, to limit their respective
fees and to reimburse other operating expenses, to the extent necessary to
limit total operating expenses of the following described Portfolios to the
amounts set forth after the Portfolio names: Kemper Value + Growth
Portfolio (.84%), Kemper Contrarian Value Portfolio (.80%), Kemper Small
Cap Value Portfolio (.84%), Kemper Horizon 5 Portfolio (.97%), Kemper
Horizon 10+ Portfolio (.83%), Kemper Horizon 20+ Portfolio (.93%), Kemper
Investment Grade Bond Portfolio (.80%), and Kemper Blue Chip Portfolio
(.95%). The amounts set forth in the table above reflect actual expenses
for the past fiscal year, which were lower than these expense limits.
(10) Pursuant to their respective agreements with Kemper Variable Series, the
investment manager and the accounting agent have agreed, for the one year
period commencing on approximately May 1, 1999, to limit their respective
fees and to reimburse other operating expenses, to the extent necessary to
limit total operating expenses of the Kemper Aggressive Growth, Kemper
Technology Growth, Kemper-Dreman Financial Services, Kemper-Dreman High
Return Equity, Kemper International Growth and Income, Kemper Global Blue
Chip and Kemper Global Income Portfolios of Kemper Variable Series to the
levels set forth in the table above. Without taking into effect these
expense caps, for the Aggressive Growth, Technology Growth, Financial
Services, High Return Equity, International Growth and Income, Global Blue
Chip and Global Income Portfolios of Kemper Variable Series: management
fees are estimated to be .75%, .75%, .75%, .75%, 1.00%, 1.00% and .75%.
Other Expenses are estimated to be .28%, .29%, .97%, .45%, 18.54%, 11.32%,
and .33%, respectively, and total operating expenses are estimated to be
1.03%, 1.04%, 1.72%, 1.20%, 19.54%, 12.32%, and 1.08%, respectively. In
addition, for Kemper International Growth and Income and Kemper Global Blue
Chip, the investment manager has agreed to limit its management fee to .70%
and .85%, respectively, of such portfolios for one year from May 1, 1999.
(11) Until April 30, 1998, the Adviser waived a portion of its management fee to
limit the expenses of the Global Discovery Portfolio to 1.50% of the
average daily net assets.
S-5
<PAGE> 6
EXAMPLE
<TABLE>
<CAPTION>
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
If you surrender your Contract at the Kemper Money Market #1(1) $ 92 $116 $152 $228
end of the periods shown, you would
pay the following expenses on a $1,000 Kemper Government Securities 93 120 158 241
investment, assuming 5% annual return Kemper Investment Grade Bond 93 120 158 242
on assets: Kemper Global Income 97 131 177 281
Kemper Horizon 5 93 120 158 241
Kemper High Yield 93 119 157 240
Kemper Horizon 10+ 93 119 157 239
Kemper Total Return 93 118 155 234
Kemper Horizon 20+ 93 120 158 242
Kemper Index 500 92 116 -- --
Kemper Value+Growth 94 123 164 253
Kemper Blue Chip 94 123 163 251
Kemper International 96 128 171 269
Kemper Contrarian Value 94 123 164 253
Kemper Small Cap Value 94 124 165 255
Kemper Small Cap Growth 94 121 160 245
Kemper Growth 93 119 157 240
Kemper Aggressive Growth 96 128 -- --
Kemper Technology Growth 96 128 -- --
Kemper Global Blue Chip 102 146 202 332
Kemper International Growth and 98 133 181 288
Income
Kemper-Dreman High Return 95 126 168 263
Equity
Kemper-Dreman Financial 96 129 174 275
Services
Scudder VLIF Global Discovery 103 150 210 347
Scudder VLIF Growth and Income 92 117 153 230
Scudder VLIF International 97 131 177 281
Scudder VLIF Capital Growth 92 115 150 225
Janus Aspen Growth 93 120 159 243
Janus Aspen Growth and Income 99 137 187 301
Warburg Emerging Markets 100 141 194 316
Warburg Post-Venture Capital 99 139 190 308
</TABLE>
S-6
<PAGE> 7
EXAMPLE
<TABLE>
<CAPTION>
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
If you do not surrender your contract,
you would pay the following expenses on
a $1,000 investment, assuming 5% annual
return on assets:
Kemper Money Market #1(1) $ 20 $ 61 $106 $228
Kemper Government Securities 21 65 112 241
Kemper Investment Grade Bond 21 66 112 242
Kemper Global Income 25 77 132 281
Kemper Horizon 5 21 65 112 241
Kemper High Yield 21 65 111 240
Kemper Horizon 10+ 21 65 111 239
Kemper Total Return 21 63 109 234
Kemper Horizon 20+ 21 66 112 242
Kemper Index 500 20 62 -- --
Kemper Value+Growth 22 69 118 253
Kemper Blue Chip 22 68 117 251
Kemper International 24 74 126 269
Kemper Contrarian Value 22 69 118 253
Kemper Small Cap Value 23 70 119 255
Kemper Small Cap Growth 22 66 114 245
Kemper Growth 21 65 111 240
Kemper Aggressive Growth 24 74 -- --
Kemper Technology Growth 24 74 -- --
Kemper Global Blue Chip 30 93 158 332
Kemper International Growth and 26 79 136 288
Income
Kemper-Dreman High Return 23 72 123 263
Equity
Kemper-Dreman Financial 24 75 129 275
Services
Scudder VLIF Global Discovery 32 98 166 347
Scudder VLIF Growth and Income 20 62 107 230
Scudder VLIF International 25 77 132 281
Scudder VLIF Capital Growth 20 61 104 225
Janus Aspen Growth 21 66 113 243
Janus Aspen Growth and Income 27 83 142 301
Warburg Emerging Markets 29 88 150 316
Warburg Post-Venture Capital 28 86 146 308
</TABLE>
S-7
<PAGE> 8
The purpose of the preceding table which includes the "SUMMARY OF EXPENSES" on
the prior page, is to assist Contract Owners in understanding the various costs
and expenses that a Contract Owner in a Subaccount will bear directly or
indirectly. The table reflects expenses of both the Separate Account and the
Fund. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR
FUTURE EXPENSES AND DOES NOT INCLUDE THE DEDUCTION OF STATE PREMIUM TAXES, WHICH
MAY BE ASSESSED BEFORE OR UPON ANNUITIZATION. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. "Management Fees" and "Other Expenses" in the "SUMMARY OF
EXPENSES" for the Portfolios have been provided by Scudder Kemper Investments,
Inc., Janus Capital Corporation and Credit Suisse Asset Management, LLC
(successor to Warburg Pincus Asset Management, Inc.), as applicable, and have
not been independently verified. The Example assumes a 5% annual rate of return
pursuant to requirements of the Securities and Exchange Commission. This
hypothetical rate of return is not intended to be representative of past or
future performance of any Subaccount. The Records Maintenance Charge is a single
charge, it is not a separate charge for each Subaccount. In addition, the effect
of the Records Maintenance Charge has been reflected in the Example by applying
the percentage derived by dividing the total amounts of annual Records
Maintenance Charge collected by the total net assets of all the Subaccounts in
the Separate Account. See "Contract Charges and Expenses" for more information
regarding the various costs and expenses.
(1)Money Market Subaccount #2 is not shown because it is available only for
dollar cost averaging that will deplete an Owner's subaccount value entirely
at least by the end of the first Contribution Year.
S-8
<PAGE> 9
THE FUNDS
The first line on page 18 of the Prospectus is revised to read as follows:
"The thirty-one Portfolios are summarized below:"
Also on page 18 of the Prospectus, the section entitled "KEMPER VARIABLE SERIES
(FORMERLY INVESTORS FUND SERIES)" is revised to add the following between
"KEMPER HORIZON 20+ PORTFOLIO" and "KEMPER VALUE+GROWTH PORTFOLIO":
"KEMPER INDEX 500 PORTFOLIO seeks to match, as closely as possible, before
expenses, the performance of the Standard & Poor's 500 Composite Stock
Price Index, which emphasizes stocks of large U.S. companies.*"
The second paragraph on page 20 of the Prospectus is revised to read as follows:
"Scudder Kemper Investments, Inc. ("SKI") is the investment manager for the
twenty-three available Portfolios of Kemper Variable Series (formerly
Investors Fund Series) and the four available Portfolios of Scudder
Variable Life Investment Fund. Bankers Trust Company ("Bankers") is the
sub-adviser for the Kemper Index 500 Portfolio. Under the terms of the
sub-advisory agreement with SKI, Bankers will handle day-to-day investment
and trading functions for the Kemper Index 500 Portfolio. Scudder
Investments (U.K.) Limited ("Scudder U.K."), an affiliate of SKI, is the
sub-adviser for Kemper International Portfolio and the Kemper Global Income
Portfolio. Under the terms of the Sub-Advisory Agreement with SKI, Scudder
U.K. renders investment advisory and management services with regard to
that portion of these Portfolios' assets as may be allocated by SKI to
Scudder U.K. from time to time for management, including services related
to foreign securities, foreign currency transactions and related
investments. Dreman Value Management L.L.C. ("DVM") serves as sub-adviser
for the Kemper-Dreman High Return Equity and Kemper-Dreman Financial
Services Portfolios. Under the terms of the sub-advisory agreement between
SKI and DVM for each such Portfolio, DVM manages the day-to-day investment
and trading functions for each such Portfolios. Janus Capital Corporation
is the investment adviser for the two available Portfolios of the Janus
Aspen Series. Credit Suisse Asset Management, LLC (successor to Warburg
Pincus Asset Management, Inc.) is the investment adviser for the two
available Portfolios of the Warburg Pincus Trust. The investment advisers
are paid fees for their services by the Funds they manage.
- ---------------
* "Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc., and have been
licensed for use by Scudder Kemper Investments, Inc. The Kemper Index 500
Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's,
and Standard & Poor's makes no representation regarding the advisability of
investing in the fund. Additional information may be found in the fund's
Statement of Additional Information.
S-9
<PAGE> 10
KILICO may receive compensation from the Funds or the investment advisers
of the Funds for services related to the Funds. Such compensation will be
consistent with the services rendered or the cost savings resulting from
the arrangement."
The section entitled "KEMPER VARIABLE SERIES (FORMERLY INVESTORS FUND SERIES)"
on pages 20 and 21 of the Prospectus is revised to read as follows:
"For its services, SKI is paid a management fee based upon the average
daily net assets of each Portfolio, as follows: Kemper Money Market (.50 of
1%), Kemper Government Securities (.55 of 1%), Kemper Investment Grade Bond
(.60 of 1%), Kemper Global Income (.75 of 1%), Kemper Horizon 5 (.60 of
1%), Kemper High Yield (.60 of 1%), Kemper Horizon 10+ (.60 of 1%), Kemper
Total Return (.55 of 1%), Kemper Horizon 20+ (.60 of 1%), Kemper Index 500
(.45% for the first $200 million, .42% for the next $550 million, .40% for
the next $1.25 billion, .38% for the next $3 billion and .35% for amounts
over $5 billion), Kemper Value+Growth (.75 of 1%), Kemper Blue Chip (.65 of
1%), Kemper International (.75 of 1%), Kemper Contrarian Value (.75 of 1%),
Kemper Small Cap Value (.75 of 1%), Kemper Small Cap Growth (.65 of 1%),
Kemper Growth (.60 of 1%), Kemper Global Blue Chip (1.00% for the first
$250 million, .95% for the next $750 million and .90% over $1 billion),
Kemper International Growth and Income (1%), Kemper-Dreman High Return
Equity, Kemper-Dreman Financial Services, Kemper Aggressive Growth, and
Kemper Technology Growth (.75% for the first $250 million, .72% for the
next $750 million, .70% for the next $1.5 billion, .68% for the next $2.5
billion, .65% for the next $2.5 billion, .64% for the next $2.5 billion,
.63% for the next $2.5 billion and .62% over $12.5 billion). SKI pays
Bankers for its services as sub-adviser for the Kemper Index 500 Portfolio
a sub-advisory fee, calculated monthly as a percentage of the Portfolio's
total assets, at the annual rate of .08% for the first $200 million, .05%
for the next $550 million and .025% over $750 million. The minimum annual
fee is set at $100,000; however, the minimum fee does not apply during the
first year of the Portfolio's operations. SKI pays Scudder U.K. for its
services as sub-adviser for the Kemper International Portfolio and the
Kemper Global Income Portfolio a sub-advisory fee, payable monthly, at an
annual rate of .35 of 1% and .30 of 1%, respectively, of the average daily
net assets of such Portfolios. SKI pays DVM for its services as sub-adviser
for the Kemper-Dreman High Return Equity and Kemper-Dreman Financial
Services Portfolios a sub-advisory fee, payable monthly, at the annual rate
of .24% of the first $250 million of each Portfolio's average daily net
assets, .23% of the average daily net assets between $250 million and $1
billion, .224% of average daily net assets between $1 billion and $2.5
billion, .218% of average daily net assets between $2.5 billion and $5
billion, .208% of average daily net assets between $5 billion and $7.5
billion, .205% of average daily net assets between $7.5 billion and $10
billion, .202% of average daily net assets between $10 billion and $12.5
billion and .198% of each Portfolio's average daily net assets over $12
billion."
S-10
<PAGE> 11
The section entitled "WARBURG PINCUS TRUST" on page 22 of the Prospectus is
revised to read as follows:
"Credit Suisse Asset Management, LLC (successor to Warburg Pincus Asset
Management, Inc.) receives a monthly advisory fee based upon the average
daily net assets of each Warburg Portfolio, as follows: Emerging Markets
1.25% (.20% after waivers and/or reimbursements) and Post-Venture Capital
1.25% (1.08% after waivers and/or reimbursements).
S-11
