KEMPER EQUITY FUNDS/VALUE STYLE
Kemper-Dreman High Return Equity Fund
Kemper Small Cap Value Fund
SUPPLEMENT TO STATEMENT OF
ADDITIONAL INFORMATION
DATED FEBRUARY 1, 1999
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The following text replaces information in the section entitled "Investment
Policies and Techniques":
Foreign Securities. Kemper-Dreman High Return Equity Fund and Kemper Small Cap
Value Fund invest primarily in securities that are publicly traded in the United
States; but, each has discretion to invest a portion of its assets in foreign
securities that are traded principally in securities markets outside the United
States. Each Fund may invest up to 20% of its assets in securities of foreign
companies through the acquisition of American Depository Receipts ("ADRs"),
which are bought and sold in the United States as well as through the purchase
of securities of foreign companies that are publicly traded in the United States
and the purchase of securities of foreign companies that are traded principally
in securities markets outside the United States. In connection with its foreign
securities investments, each Fund may, to a limited extent, engage in foreign
currency exchange, options and futures transactions as a hedge and not for
speculation.
Emerging Markets. While the Funds' investments in foreign securities will be
principally in developed countries, Kemper-Dreman High Return Equity Fund and
Kemper Small Cap Value Fund may make investments in developing or "emerging"
countries, which involve exposure to economic structures that are generally less
diverse and mature than in the United States, and to political systems that may
be less stable. A developing or emerging market country can be considered to be
a country that is in the initial stages of its industrialization cycle.
Currently, emerging markets generally include every country in the world other
than the United States, Canada, Japan, Australia, New Zealand, Hong Kong,
Singapore and most Western European countries. Currently, investing in many
emerging markets may not be desirable or feasible because of the lack of
adequate custody arrangements for a Fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or other reasons. As
opportunities to invest in securities in emerging markets develop, a Fund may
expand and further broaden the group of emerging markets in which it invests. In
the past, markets of developing or emerging market countries have been more
volatile than the markets of developed countries; however, such markets often
have provided higher rates of return to investors. The investment manager
believes that these characteristics can be expected to continue in the future.
Depository Receipts. Each Fund may invest up to 20% of its assets in securities
of foreign companies through the acquisition of American Depository Receipts
("ADRs") as well as through the purchase of securities of foreign companies that
are publicly traded in the United States and, in the case of Kemper-Dreman High
Return Equity Fund and Kemper Small Cap Value Fund, the purchase of foreign
companies that are traded principally in securities markets outside the United
States. ADRs are bought and sold in the United States and are issued by domestic
banks. ADRs represent the right to receive securities of foreign issuers
deposited in the domestic bank or a correspondent bank. ADRs do not eliminate
all the risk inherent in investing in the securities of foreign issuers, such as
changes in foreign currency exchange rates. However, by investing in ADRs rather
than directly in foreign issuers' stock, the Fund avoids currency risks during
the settlement period. In general, there is a large, liquid market in the United
States for most ADRs.
Foreign Currency Options. The Kemper-Dreman High Return Equity Fund and Kemper
Small Cap Value Fund may engage in foreign currency options transactions. A
foreign currency option provides the option buyer with the right to buy or sell
a stated amount of foreign currency at the exercise price at a specified date or
during the option period. A call option gives its owner the right, but not the
obligation, to buy the currency, while a put option gives its owner the right,
but not the obligation, to sell the currency. The option seller (writer) is
obligated to fulfill the terms of the option sold if it is exercised. However,
either seller or buyer may close its position during the option period in the
secondary market for such options any time prior to expiration.
Foreign Currency Futures Transactions. As part of its financial futures
transactions (see "Financial Futures Contracts" and "Options on Financial
Futures Contracts" above), each of the Kemper-Dreman
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High Return Equity Fund and Kemper Small Cap Value Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Fund may be able to achieve many of the same
objectives as through forward foreign currency exchange contracts more
effectively and possibly at a lower cost.
Forward Foreign Currency Exchange Contracts. The Kemper-Dreman High Return
Equity Fund and Kemper Small Cap Value Fund may engage in forward foreign
currency transactions. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days ("term") from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. These contracts are
traded directly between currency traders (usually large commercial banks) and
their customers. The investment manager believes that it is important to have
the flexibility to enter into such forward contracts when it determines that to
do so is in the best interests of a Fund. A Fund will not speculate in foreign
currency exchange.
March 2, 1999
