KEMPER VARIABLE SERIES
Kemper Small Cap Value Portfolio
SUPPLEMENT TO PROSPECTUS
DATED MAY 1, 1999
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The following text replaces the disclosure for the Kemper Small Cap Value
Portfolio in the section entitled "Main investment strategies":
The Portfolio seeks long-term capital appreciation through a diversified
portfolio of small company stocks that the investment manager believes are
undervalued. Securities may be undervalued as a result of overreaction by
investors to unfavorable news about a company, industry or the stock markets in
general or as a result of a market decline, poor economic conditions, or actual
or anticipated unfavorable developments affecting the company.
The investment manager follows a relative value investment strategy, seeking
undervalued small capitalization stocks from each major sector of the small
capitalization market as part of a well diversified, risk-managed portfolio. In
a relative value investment strategy, stocks are selected based on whether they
are undervalued relative to other stocks in the same sector. The relative value
strategy allows the Portfolio to invest in all sectors, including technology,
healthcare and other areas of the market that typically are underweighted in an
absolute value portfolio.
Under normal market conditions, the Portfolio invests at least 65% of its total
assets in equity securities of companies that are similar in size to those
comprising the Russell 2000 Index. Typically, most companies selected for
inclusion in the Portfolio have market capitalizations ranging from
approximately $100 million to $1.25 billion. The Portfolio sells securities of
companies that have grown in market capitalization above the maximum of the
Russell 2000 Index, as necessary to keep the Portfolio focused on smaller
companies.
August 13, 1999
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The investment manager employs quantitative techniques in evaluating potential
investments and the impact each would have on the Portfolio's holdings. The
evaluation starts systematically by analyzing a large number of small company
stocks to uncover those with attractive valuations. Typically, the stocks
selected are:
o undervalued in the market based on measures such as earnings, sales, cash
flow and book value;
o experiencing favorable trends in sales, earnings, growth and prices; and
o considered to have acceptable financial risk and earnings predictability.
This systematic screening process is intended to enable the investment manager
to quickly respond to changes in the marketplace and reassess relative
valuations for the Portfolio's holdings in order to make buy and sell decisions.
Of course, there can be no guarantee that by following these strategies, the
Portfolio will achieve its objective.
The following information replaces the relevant disclosure for the Kemper Small
Cap Value Portfolio in the "Portfolio management" section of the Prospectus:
James M. Eysenbach is the Lead Portfolio Manager for the Kemper Small Cap Value
Portfolio. Mr. Eysenbach joined Scudder Kemper in 1991, serving as portfolio
manager on various affiliated mutual funds. He began his investment career in
1984.
Calvin S. Young is a Portfolio Manager for the Kemper Small Cap Value Portfolio.
Mr. Young joined Scudder Kemper in 1990, serving as portfolio manager on various
affiliated mutual funds. He began his investment career in 1988.
August 13, 1999
