<PAGE> 1
KEMPER EQUITY FUNDS
SUPPLEMENT TO PROSPECTUS
DATED DECEMBER 31, 1996
CLASS I SHARES
KEMPER AGGRESSIVE GROWTH FUND
KEMPER BLUE CHIP FUND
KEMPER GROWTH FUND
KEMPER QUANTITATIVE EQUITY FUND
KEMPER SMALL CAPITALIZATION EQUITY FUND
KEMPER TECHNOLOGY FUND
KEMPER TOTAL RETURN FUND
KEMPER VALUE+GROWTH FUND
Kemper Aggressive Growth Fund ("Aggressive Growth Fund"), Kemper Blue Chip Fund
(the "Blue Chip Fund"), Kemper Growth Fund (the "Growth Fund"), Kemper
Quantitative Equity Fund (the "Quantitative Fund"), Kemper Small Capitalization
Equity Fund (the "Small Cap Fund"), Kemper Technology Fund (the "Technology
Fund"), Kemper Total Return Fund (the "Total Return Fund") and Kemper
Value+Growth Fund (the "Value+Growth" Fund) (collectively, the "Funds")
currently offer four classes of shares to provide investors with different
purchasing options. These are Class A, Class B and Class C shares, which are
described in the prospectus, and Class I shares, which are described in the
prospectus as supplemented hereby.
Class I shares are available for purchase exclusively by the following
investors: (a) tax-exempt retirement plans of Zurich Kemper Investments, Inc.
("ZKI") and its affiliates; and (b) the following investment advisory clients of
ZKI and its investment advisory affiliates that invest at least $1 million in a
Fund: (1) unaffiliated benefit plans, such as qualified retirement plans (other
than individual retirement accounts and self-directed retirement plans); (2)
unaffiliated banks and insurance companies purchasing for their own accounts;
and (3) endowment funds of unaffiliated non-profit organizations. Class I shares
currently are available for purchase only from Kemper Distributors, Inc.,
principal underwriter for the Funds. Share certificates are not available for
Class I shares.
The primary distinctions among the classes of each Fund's shares lie in their
initial and contingent deferred sales charge schedules and in their ongoing
expenses, including asset-based sales charges in the form of Rule 12b-1
distribution fees. Class I shares are offered at net asset value without an
initial sales charge and are not subject to a contingent deferred sales charge
or a Rule 12b-1 distribution fee. Also, there is no administrative services fee
charged to Class I shares. As a result of the relatively lower expenses for
Class I shares, the level of income dividends per share (as a percentage of net
asset value) and, therefore, the overall investment return, will be higher for
Class I shares than for Class A, Class B and Class C shares.
The following information supplements the indicated sections of the prospectus.
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO ALL FUNDS) CLASS I
- ----------------------------------------------------------------------------------------- -------
<S> <C>
Maximum Sales Charge on Purchases
(as a percentage of offering price).................................................... None
Maximum Sales Charge on Reinvested Dividends............................................. None
Redemption Fees.......................................................................... None
Exchange Fee............................................................................. None
Deferred Sales Charge (as a percentage of redemption proceeds)........................... None
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES AGGRESSIVE BLUE SMALL TOTAL VALUE+
(AS A PERCENTAGE OF AVERAGE GROWTH CHIP GROWTH QUANTITATIVE CAP TECHNOLOGY RETURN GROWTH
NET ASSETS) FUND FUND FUND FUND FUND FUND FUND FUND
---------- ---- ------ ------------ ----- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees............... .65% .58% .54% .58% .52% .56% .54% .72%
12b-1 Fees.................... None None None None None None None None
Other Expenses................ .30% .73% .10% .15% .14% .20% .07% .15%
---- ---- ---- ---- ---- ---- ---- ----
Total Operating Expenses...... .95% 1.31% .64% .73% .66% .76% .72% .87%
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------- ------------------ ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a Aggressive Growth $ 10 $30 -- --
$1,000
investment, assuming (1) 5% annual return and Blue Chip $ 13 $42 $72 $158
(2) redemption at the end of each time period: Growth $ 7 $20 $36 $ 80
Quantitative $ 7 $23 -- --
Small Cap $ 7 $21 $37 $ 82
Technology $ 8 $24 $42 $ 94
Total Return $ 7 $23 $40 $ 89
Value+Growth $ 9 $28 -- --
</TABLE>
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in Class I shares of a Fund will
bear directly or indirectly. The base management fee for the Aggressive Growth
Fund and the Small Cap Fund is .65%. The base management fee is subject to an
upward or downward performance adjustment whereby the management fee will be
between .45% and .85% for the Aggressive Growth Fund and between .35% and .95%
for the Small Cap Fund. For the Small Cap Fund, the table reflects the base
management fee for the prior fiscal year after such adjustment. The Aggressive
Growth Fund will commence operations on or about December 31, 1996; thus,
"Management Fees" reflects the base management fee and "Other Expenses" shown
above for Class I shares is an estimate for the current fiscal year and the
expenses shown in the Example are for only the one and three year periods. Since
no Class I shares for the Value+Growth Fund had been issued as of the Fund's
fiscal year end, "Other Expenses" shown above is an estimate. See "Investment
Manager and Underwriter" in the prospectus.
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 Fund. THE
EXAMPLE SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
<PAGE> 3
FINANCIAL HIGHLIGHTS
KEMPER BLUE CHIP FUND
<TABLE>
<CAPTION>
NOVEMBER 22,
1995 TO
OCTOBER 31,
1996
------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $15.30
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .36
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 2.96
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.32
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .24
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain 1.20
- ------------------------------------------------------------------------------------------------------------------------
Total dividends 1.44
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.18
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 21.89%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses 1.31%
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 1.33%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEMPER GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 3 TO
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 16.09 14.80
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .19 .03
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 2.74 1.26
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.93 1.29
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .08 --
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain 1.68 --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends 1.76 --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.26 16.09
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 20.19% 8.72
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses .64% .59
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 1.08% .92
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
KEMPER QUANTITATIVE EQUITY FUND
<TABLE>
<CAPTION>
SEPTEMBER 9
TO NOVEMBER
30,
1996
-------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.67
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss --
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.47
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.47
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.14
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.20%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses absorbed by the Fund 1.08%
- ------------------------------------------------------------------------------------------------------------------------
Net investment loss (.05)%
- ------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses 2.23%
- ------------------------------------------------------------------------------------------------------------------------
Net investment loss (1.20)%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEMPER SMALL CAPITALIZATION EQUITY FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 3 TO
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.15 6.27
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .01 --
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .94 .88
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .95 .88
- ------------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain 1.05 --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.05 7.15
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 16.76% 14.04
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses .66% .79
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .16% (.14)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
KEMPER TECHNOLOGY FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 3 TO
OCTOBER 31, OCTOBER 31,
1996 1995
----------- -----------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.64 12.72
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.07) (.02)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain .76 1.94
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .69 1.92
- ------------------------------------------------------------------------------------------------------------------------
Less distribution from net realized gain 2.13 --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.20 14.64
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 8.06% 15.09
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses .76% .65
- ------------------------------------------------------------------------------------------------------------------------
Net investment loss (.49)% (.33)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEMPER TOTAL RETURN FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 3 TO
OCTOBER 31, OCTOBER 31,
1996 1995
----------- -----------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.61 10.07
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .32 .10
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.23 .52
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.55 .62
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .39 .08
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain .50 --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends .89 .08
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.27 10.61
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.64% 6.21
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses .72% .61
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 3.09% 2.97
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
No financial information is presented for Class I shares of the Value+Growth
Fund since no Class I shares had been issued as of the Fund's fiscal year end.
The Aggressive Growth Fund will commence operations on or about December 31,
1996.
SPECIAL FEATURES
Shareholders of a Fund's Class I shares may exchange their shares for (i) shares
of Kemper Money Funds-- Kemper Money Market Fund if the shareholders of Class I
shares have purchased shares because they are participants in tax-exempt
retirement plans of ZKI and its affiliates and (ii) Class I shares of any other
"Kemper Mutual Fund" listed under "Special Features--Class A Shares--Combined
Purchases" in the prospectus. Conversely, shareholders of Kemper Money
Funds--Kemper Money Market Fund who have purchased shares because they are
participants in tax-exempt retirement plans of ZKI and its affiliates may
exchange their shares for Class I shares of "Kemper Mutual Funds" to the extent
that they are available through their plan. Exchanges will be made at the
relative net asset values of the shares. Exchanges are subject to the
limitations set forth in the prospectus under "Special Features--Exchange
Privilege--General."
December 31, 1996
KEF - 1 (12/96)
6
