MARCH 1, 2008







                                   PROSPECTUS
                              ------------------
                               CLASSES A, B AND C

                        DWS GOLD & PRECIOUS METALS FUND


                              DWS TECHNOLOGY FUND


As with all mutual funds, the Securities and Exchange Commission (SEC) does not
approve or disapprove these shares or determine whether the information in this
prospectus is truthful or complete. It is a criminal offense for anyone to
inform you otherwise.


                            ONE GLOBAL FORCE. ONE FOCUS. YOU. [DWS SCUDDER Logo]
                                                             Deutsche Bank Group


<PAGE>

CONTENTS




<TABLE>
<S>      <C>
HOW EACH FUND WORKS
  4      DWS Gold & Precious Metals
         Fund
 14      DWS Technology Fund
 24      Other Policies and Secondary
         Risks
 25      Who Manages and Oversees
         the Funds
 30      Financial Highlights


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUNDS
 38      Choosing a Share Class
 44      How to Buy Class A, B and C
         Shares
 45      How to Exchange or Sell
         Class A, B and C Shares
 48      Policies You Should Know
         About
 61      Understanding Distributions
         and Taxes
 64      Appendix
</TABLE>

<PAGE>

HOW EACH FUND WORKS
On the next few pages, you'll find information about each fund's investment
objective, the main strategies each uses to pursue that objective and the main
risks that could affect performance.

Whether you are considering investing in a fund or are already a shareholder,
you'll want to LOOK THIS INFORMATION OVER CAREFULLY. You may want to keep it on
hand for reference as well.

CLASSES A, B AND C shares are generally intended for investors seeking the
advice and assistance of a financial advisor.

Remember that mutual funds are investments, not bank deposits. They're not
insured or guaranteed by the FDIC or any other government agency. Their share
prices will go up and down, and you could lose money by investing in them.

You can find DWS prospectuses on the Internet at WWW.DWS-SCUDDER.COM (the Web
site does not form a part of this prospectus).
<PAGE>


<TABLE>
<S>                                  <C>        <C>        <C>
                                      Class A    Class B    Class C
  ticker symbol                       SGDAX      SGDBX      SGDCX
    fund number                       419        619        719

    DWS GOLD & PRECIOUS METALS FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks maximum return (principal change and
            income).

            The fund invests at least 80% of net assets, plus the amount of any
            borrowings for investment purposes, in common stocks and other
            equities of US and foreign companies engaged in activities related
            to gold, silver, platinum or other precious metals, and in gold
            coin and bullion directly. These companies may be involved in
            activities such as exploration, mining, fabrication, processing and
            distribution.

            While the fund invests mainly in common stocks, it may invest up to
            20% of net assets in:

            -  high-quality debt securities of companies in precious metals and
               minerals operations; and

            -  debt securities whose return is linked to precious metals
               prices.

            The fund's equity investments are mainly common stocks, but may
            also include other types of equities such as preferred or
            convertible stocks.

            In choosing individual securities, the portfolio managers use a
            combination of two analytical disciplines:

            -  BOTTOM-UP RESEARCH. The managers look for companies with strong
               management and highly marketable securities. They also consider
               the quality of metals and minerals mined by a company, its
               fabrication techniques and costs, and its unmined reserves,
               among other factors.

            -  GROWTH ORIENTATION. The managers generally look for companies
               that they believe have above-average potential for sustainable
               growth of revenue or earnings and whose market value appears
               reasonable in light of their business prospects.

4 | DWS Gold & Precious Metals Fund
<PAGE>

            The managers may focus on the securities of particular issuers or
            industries within the gold and precious metals sector, or on
            particular countries or regions at different times.

            The managers will normally sell a stock when the managers believe
            its price is unlikely to go higher, its fundamentals have
            deteriorated, other investments offer better opportunities or in
            the course of adjusting the fund's emphasis on a given industry.

            OTHER INVESTMENTS. The fund is permitted, but not required, to use
            various types of derivatives (contracts whose value is based on,
            for example, indices, currencies or securities). Derivatives may be
            used for hedging and for risk management or for non-hedging
            purposes to seek to enhance potential gains. The fund may use
            derivatives in circumstances where portfolio management believes
            they offer an economical means of gaining exposure to a particular
            asset class or to keep cash on hand to meet shareholder redemptions
            or other needs while maintaining exposure to the market.

            In particular, the fund may use futures and options.

            SECURITIES LENDING. The fund may lend its investment securities in
            an amount up to 33 1/3% of its total assets to approved
            institutional borrowers who need to borrow securities in order to
            complete certain transactions.


            THE MAIN RISKS OF INVESTING IN THE FUND

            There are several risk factors that could hurt the fund's
            performance, cause you to lose money or cause the fund's
            performance to trail that of other investments.

            SECTOR RISK. An important factor with this fund is fluctuations
            in market prices for gold and other precious metals. When gold or
            other precious metals prices fall, you should expect the value of
            your investment to fall as well. Gold and other precious metals
            prices can be influenced by a variety of economic, financial and
            political factors, especially inflation: when inflation is low or
            expected to fall, prices tend to be weak.

            STOCK MARKET RISK. The fund is affected by how the stock market
            performs. To the extent the fund invests in a particular
            capitalization, the fund's performance may be proportionately
            affected by that segment's general performance. When stock prices
            fall, you should expect the value of your investment to



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS


This fund is designed for investors interested in broad exposure to the gold and
precious metals market and who understand the risks connected with it.





                                            DWS Gold & Precious Metals Fund  | 5
<PAGE>

            fall as well. Because a stock represents ownership in its issuer,
            stock prices can be hurt by poor management, shrinking product
            demand and other business risks. These factors may affect single
            companies as well as groups of companies. In addition, movements in
            financial markets may adversely affect a stock's price, regardless
            of how well the company performs. The market as a whole may not
            favor the types of investments the fund makes, which could affect
            the fund's ability to sell them at an attractive price.

            Prices of gold or other precious metals and minerals-related stocks
            may move up and down rapidly, and have historically offered lower
            long-term performance than the stock market as a whole.

            CONCENTRATION RISK. The fund concentrates its investments in
            securities related to gold and other precious metals and minerals.
            As a result, market price movements, regulatory changes, or
            economic conditions affecting companies in these industries will
            have a significant impact on the fund's performance.

            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as amended. This means
            that the fund may invest in securities of relatively few issuers.
            Thus, the performance of one or a small number of portfolio
            holdings can affect overall performance more than if the fund
            invested in a larger number of issuers.

            FOREIGN INVESTMENT RISK. Foreign investments involve certain
            special risks, including:

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed higher taxes.

            -  INFORMATION RISK. Companies based in foreign markets are usually
               not subject to accounting, auditing and financial reporting
               standards and practices as stringent as those in the US.
               Therefore, their financial reports may present an incomplete,
               untimely or misleading picture of a company, as compared to the
               financial reports required in the US.

6 | DWS Gold & Precious Metals Fund
<PAGE>

            -  LIQUIDITY RISK. Investments that trade less can be more
            difficult or more costly to buy, or to sell, than more liquid or
            active investments. This liquidity risk is a factor of the trading
            volume of a particular investment, as well as the size and
            liquidity of the entire local market. On the whole, foreign
            exchanges are smaller and less liquid than US exchanges. This can
            make buying and selling certain investments more difficult and
            costly. Relatively small transactions in some instances can have a
            disproportionately large effect on the price and supply of
            securities. In certain situations, it may become virtually
            impossible to sell an investment in an orderly fashion at a price
            that approaches portfolio management's estimate of its value. For
            the same reason, it may at times be difficult to value the fund's
            foreign investments.

            -  REGULATORY RISK. There is generally less government regulation
               of foreign markets, companies and securities dealers than in the
               US.

            -  CURRENCY RISK. The fund invests in securities denominated in
               foreign currencies. Changes in exchange rates between foreign
               currencies and the US dollar may affect the US dollar value of
               foreign securities or the income or gain received on these
               securities.

            -  LIMITED LEGAL RECOURSE RISK. Legal remedies for investors may be
               more limited than the legal remedies available in the US.

            -  TRADING PRACTICE RISK. Brokerage commissions and other fees are
               generally higher for foreign investments than for US
               investments. The procedures and rules governing foreign
               transactions and custody may also involve delays in payment,
               delivery or recovery of money or investments.

            -  TAXES. Foreign withholding and certain other taxes may reduce
               the amount of income available to distribute to shareholders of
               the fund. In addition, special US tax considerations may apply
               to the fund's foreign investments.

            EMERGING MARKET RISK. All of the risks of investing in foreign
            securities are increased in connection with investments in emerging
            markets securities. In addition, profound social changes and
            business practices that depart from norms in developed countries'
            economies have hindered the orderly growth of emerging economies
            and their markets in the past


                                            DWS Gold & Precious Metals Fund  | 7
<PAGE>

            and have caused instability. High levels of debt tend to make
            emerging economies heavily reliant on foreign capital and
            vulnerable to capital flight. Countries in emerging markets are
            also more likely to experience high levels of inflation, deflation
            or currency devaluation, which could also hurt their economies and
            securities markets. For these and other reasons, investments in
            emerging markets are often considered speculative.

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

            SECURITIES LENDING RISK. Any loss in the market price of securities
            loaned by the fund that occurs during the term of the loan would be
            borne by the fund and would adversely affect the fund's
            performance. Also, there may be delays in recovery of securities
            loaned or even a loss of rights in the collateral should the
            borrower of the securities fail financially while the loan is
            outstanding. However, loans will be made only to borrowers selected
            by the fund's delegate after a review of relevant facts and
            circumstances, including the creditworthiness of the borrower.


8 | DWS Gold & Precious Metals Fund
<PAGE>

            Other factors that could affect performance include:

            -  portfolio management could be wrong in the analysis of
               industries, companies, economic trends, the relative
               attractiveness of different securities or other matters.

            -  a bond could fall in credit quality, go into default, or
               decrease in value for various reasons, including a change in
               prevailing interest rates.

            -  derivatives could produce disproportionate losses due to a
               variety of factors, including the failure of the counterparty to
               meet its obligations or unexpected price or interest rate
               movements. (See "Secondary Risks" for more information.)

            -  the fund may purchase securities that are subject to legal or
               contractual restriction on resale ("restricted securities"). The
               fund may be unable to sell a restricted security and it may be
               more difficult to determine a market value for a restricted
               security. This investment practice, therefore, could increase
               the level of illiquidity of the fund.


                                            DWS Gold & Precious Metals Fund  | 9
<PAGE>

THE FUND'S PERFORMANCE HISTORY

While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.

The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads on fund
performance. The performance of both the fund and the index varies over time.
All figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).

The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

The inception date for Class A, B and C shares is June 25, 2001. In the bar
chart, the performance figures for Class A before that date are based on the
historical performance of the fund's original share class (Class S), adjusted
to reflect the higher gross total annual operating expenses of Class A.

In the table, the performance figures for each share class prior to its
inception are based on the historical performance of Class S, adjusted to
reflect both the higher gross total annual operating expenses of Class A, B or
C and the current applicable sales charges of Classes A and B. Class S shares
are offered in a different prospectus.

DWS Gold & Precious Metals Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]





<TABLE>
<S>         <C>       <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
-16.94       8.76      -9.24     15.94      66.41      94.20       -9.14     20.53      28.92      25.12
 1998       1999      2000       2001       2002       2003       2004       2005       2006       2007
</TABLE>





<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 44.30%, Q3 2003              WORST QUARTER: -18.91%, Q2 2004
</TABLE>



10 | DWS Gold & Precious Metals Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effects of maximum sales load.)


<TABLE>
<CAPTION>
                                              1 YEAR       5 YEARS      10 YEARS
<S>                                         <C>           <C>          <C>
 CLASS A
   Return before Taxes                          17.92        26.45        17.78
   Return after Taxes on Distributions          14.07        23.31        16.17
   Return after Taxes on Distributions
   and Sale of Fund Shares                      12.76        22.22        15.46
 CLASS B (Return before Taxes)                  21.16        26.90        17.54
 CLASS C (Return before Taxes)                  24.19        27.03        17.57
 S&P 500 (reflects no deductions for
 fees, expenses or taxes)                        5.49        12.83         5.91
 S&P/CITIGROUP GOLD & PRECIOUS
 METALS INDEX (reflects no deductions
 for fees, expenses or taxes)                   23.04        26.91        20.01
</TABLE>


     Total returns for would have been lower if operational expenses hadn't
been reduced.


 STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
 index of 500 stocks. The index is designed to measure performance of the broad
 domestic economy through changes in the aggregate market value of 500 stocks
 representing all major industries.

 S&P/CITIGROUP GOLD & PRECIOUS METALS INDEX is an unmanaged index that
 represents the precious metals industry component of the S&P/Citigroup Global
 Equity family of indices, which include more than 7,000 companies in more than
 50 countries. On October 19, 2007, the S&P/Citigroup Gold & Precious Metals
 Index replaced the London Bullion Market Association Gold PM Fix Price/USD as
 the fund's secondary index because the Advisor believes that it more
 accurately reflects the fund's investment strategy.


--------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 621-1048 or visit our Web site at www.dws-scudder.com.


--------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.


                                           DWS Gold & Precious Metals Fund  | 11
<PAGE>

HOW MUCH INVESTORS PAY

The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.


<TABLE>
<CAPTION>
FEE TABLE                                        CLASS A         CLASS B       CLASS C
<S>                                         <C>                 <C>          <C>

 SHAREHOLDER FEES, paid directly from your investment
___________________________________________________________________________________________
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)            5.75%1         None          None
 Maximum Deferred Sales Charge (Load)
 (as % of redemption proceeds)                    None 2             4.00%         1.00%
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds)3                            2.00             2.00          2.00

 ANNUAL OPERATING EXPENSES, deducted from fund assets
___________________________________________________________________________________________
 Management Fee 4                                 0.87  %          0.87%         0.87%
 Distribution/Service (12b-1) Fee                 0.23             0.99          0.99
 Other Expenses 5                                 0.36             0.35          0.31
 Acquired Funds (Underlying Funds) Fees
 and Expenses 6                                   0.01             0.01          0.01
 TOTAL ANNUAL OPERATING EXPENSES7                 1.47             2.22          2.18
</TABLE>


1   Because of rounding in the calculation of the offering price, the actual
   maximum front-end sales charge paid by an investor may be higher than the
   percentage noted (see "Choosing a Share Class - Class A shares").

2   The redemption of shares purchased at net asset value under the Large Order
   NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
   be subject to a contingent deferred sales charge of 1.00% if redeemed
   within 12 months of purchase and 0.50% if redeemed within the following six
   months.

3   This fee is charged on all applicable redemptions or exchanges. Please see
   "Policies You Should Know About - Policies about transactions."

4   Restated on an annualized basis to reflect fee changes which took effect on
   October 1, 2007.

5   "Other Expenses" include an administrative services fee paid to the Advisor
   in the amount of 0.10%.

6   The amount indicated is based on the indirect net expenses associated with
   the fund's investment in the acquired funds (underlying funds) for the
   fiscal year ended October 31, 2007.

7   Through September 30, 2008, the Advisor has contractually agreed to waive
   all or a portion of its fees and reimburse or pay operating expenses of the
   fund so that total operating expenses will not exceed 1.48% and 2.23% for
   Class A and Class B shares, respectively, excluding certain expenses such
   as extraordinary expense, taxes, brokerage, interest and expenses of
   acquired funds (underlying funds). Although there can be no assurance that
   the current waiver/expense reimbursement arrangement will be maintained
   beyond September 30, 2008, the Advisor has committed to review the
   continuance of waiver/expense reimbursement arrangements by September 30,
   2008.

12 | DWS Gold & Precious Metals Fund
<PAGE>

Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. If the fund's expenses
show capped expenses in the fee table above, the expense example includes the
capped expenses for the period provided in the footnotes. This is only an
example; actual expenses will be different.


<TABLE>
<CAPTION>
EXAMPLE                1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                   <C>         <C>          <C>          <C>
 EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
 Class A shares         $716       $1,013       $1,332       $2,231
 Class B shares*         625          994        1,390        2,192
 Class C shares          321          682        1,170        2,513

 EXPENSES, assuming you kept your shares.
_________________________________________________________________________
 Class A shares         $716       $1,013       $1,332       $2,231
 Class B shares*         225          694        1,190        2,192
 Class C shares          221          682        1,170        2,513
</TABLE>


*   Reflects conversion of Class B to Class A shares, which pay lower fees.
   Conversion occurs six years after purchase.

                                           DWS Gold & Precious Metals Fund  | 13
<PAGE>


<TABLE>
<S>                      <C>        <C>        <C>
                          Class A    Class B    Class C
  ticker symbol           KTCAX      KTCBX      KTCCX
    fund number           001        201        301

    DWS TECHNOLOGY FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks growth of capital.

            Under normal circumstances, the fund invests at least 80% of net
            assets, plus the amount of any borrowings for investment purposes,
            in common stocks of companies in the technology sector. For
            purposes of the fund's 80% investment policy, companies in the
            technology sector must commit at least half of their assets to the
            technology sector or derive at least half of their revenues or net
            income from that sector. Examples of industries within the
            technology sector are semiconductors, software, telecom equipment,
            computer/hardware, IT services, the Internet and health technology.
            The fund may invest in companies of any size.

            While the fund invests mainly in US stocks, it could invest up to
            35% of net assets in foreign securities.

            The fund's equity investments are mainly common stocks, but may
            also include other types of equities such as preferred or
            convertible stocks.

            In choosing stocks, the portfolio managers use a combination of
            three analytical disciplines:

            BOTTOM-UP RESEARCH. The managers look for individual companies with
            a history of above-average growth, strong competitive positioning,
            attractive prices relative to potential growth, innovative products
            and services, sound financial strength and effective management,
            among other factors.

            GROWTH ORIENTATION. The managers generally look for companies that
            they believe have above-average potential for sustainable growth of
            revenue or earnings and whose market value appears reasonable in
            light of their business prospects.


14 | DWS Technology Fund
<PAGE>

            TOP-DOWN ANALYSIS. The managers consider the economic outlook for
            various industries within the technology sector and look for those
            industries that may benefit from changes in the overall business
            environment.

            In addition, the managers use the support of a quantitative
            analytic group and its tools to attempt to actively manage the
            forecasted volatility risk of the fund as compared to funds with a
            similar investment goal, as well as appropriate benchmarks and peer
            groups. The managers may favor securities from various industries
            and companies within the technology sector at different times.

            The managers will normally sell a stock when they believe its price
            is unlikely to go higher, its fundamental factors have changed,
            other investments offer better opportunities, or in adjusting their
            emphasis on a given technology industry.

            OTHER INVESTMENTS. The fund is permitted, but not required, to use
            various types of derivatives (contracts whose value is based on,
            for example, indices, currencies or securities). Derivatives may be
            used for hedging and for risk management or for non-hedging
            purposes to seek to enhance potential gains. The fund may use
            derivatives in circumstances where portfolio management believes
            they offer an economical means of gaining exposure to a particular
            asset class or to keep cash on hand to meet shareholder redemptions
            or other needs while maintaining exposure to the market.

            In particular, the fund may use futures and options, including
            sales of covered put and call options.

            SECURITIES LENDING. The fund may lend its investment securities in
            an amount up to 33 1/3% of its total assets to approved
            institutional borrowers who need to borrow securities in order to
            complete certain transactions.


                                                       DWS Technology Fund  | 15
<PAGE>

            THE MAIN RISKS OF INVESTING IN THE FUND

            There are several risk factors that could hurt the fund's
            performance, cause you to lose money or cause the fund's
            performance to trail that of other investments.

            STOCK MARKET RISK. The fund is affected by how the stock market
            performs. To the extent the fund invests in a particular
            capitalization, the fund's performance may be proportionately
            affected by that segment's general performance. When stock prices
            fall, you should expect the value of your investment to fall as
            well. Because a stock represents ownership in its issuer, stock
            prices can be hurt by poor management, shrinking product demand and
            other business risks. These factors may affect single companies as
            well as groups of companies. In addition, movements in financial
            markets may adversely affect a stock's price, regardless of how
            well the company performs. The market as a whole may not favor the
            types of investments the fund makes, which could affect the fund's
            ability to sell them at an attractive price.

            CONCENTRATION RISK. The fund concentrates its investments in the
            group of industries constituting the technology sector. As a
            result, factors affecting this sector, such as market price
            movements, market saturation and rapid product obsolescence will
            have a significant impact on the fund's performance. Additionally,
            many technology companies are smaller companies that may have
            limited business lines and limited financial resources, making them
            highly vulnerable to business and economic risks.

            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as amended. This means
            that the fund may invest in securities of relatively few issuers.
            Thus, the performance of one or a small number of portfolio holdings
            can affect overall performance more than if the fund invested in a
            larger number of issuers.

            FOREIGN INVESTMENT RISK. Foreign investments involve certain
            special risks, including:

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed higher taxes.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

This fund is designed for investors who can accept above-average risks and are
interested in exposure to a sector that offers attractive long-term growth
potential.


16 | DWS Technology Fund
<PAGE>

            -  INFORMATION RISK. Companies based in foreign markets are usually
            not subject to accounting, auditing and financial reporting
            standards and practices as stringent as those in the US. Therefore,
            their financial reports may present an incomplete, untimely or
            misleading picture of a company, as compared to the financial
            reports required in the US.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than US exchanges. This
               can make buying and selling certain investments more difficult
               and costly. Relatively small transactions in some instances can
               have a disproportionately large effect on the price and supply
               of securities. In certain situations, it may become virtually
               impossible to sell an investment in an orderly fashion at a
               price that approaches portfolio management's estimate of its
               value. For the same reason, it may at times be difficult to
               value the fund's foreign investments.

            -  REGULATORY RISK. There is generally less government regulation
               of foreign markets, companies and securities dealers than in the
               US.

            -  CURRENCY RISK. The fund invests in securities denominated in
               foreign currencies. Changes in exchange rates between foreign
               currencies and the US dollar may affect the US dollar value of
               foreign securities or the income or gain received on these
               securities.

            -  LIMITED LEGAL RECOURSE RISK. Legal remedies for investors may be
               more limited than the legal remedies available in the US.

            -  TRADING PRACTICE RISK. Brokerage commissions and other fees are
               generally higher for foreign investments than for US
               investments. The procedures and rules governing foreign
               transactions and custody may also involve delays in payment,
               delivery or recovery of money or investments.

            -  TAXES. Foreign withholding and certain other taxes may reduce
               the amount of income available to distribute to shareholders of
               the fund. In addition, special US tax considerations may apply
               to the fund's foreign investments.


                                                       DWS Technology Fund  | 17
<PAGE>

            EMERGING MARKET RISK. All of the risks of investing in foreign
            securities are increased in connection with investments in emerging
            markets securities. In addition, profound social changes and
            business practices that depart from norms in developed countries'
            economies have hindered the orderly growth of emerging economies
            and their markets in the past and have caused instability. High
            levels of debt tend to make emerging economies heavily reliant on
            foreign capital and vulnerable to capital flight. Countries in
            emerging markets are also more likely to experience high levels of
            inflation, deflation or currency devaluation, which could also hurt
            their economies and securities markets. For these and other
            reasons, investments in emerging markets are often considered
            speculative.

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

            SECURITIES LENDING RISK. Any loss in the market price of securities
            loaned by the fund that occurs during the term of the loan would be
            borne by the fund and would adversely affect the fund's
            performance. Also, there may be delays in recovery of securities
            loaned or even a loss of rights in the collateral should the
            borrower of the securities fail financially while the loan is
            outstanding. However, loans will be made only to borrowers selected
            by the fund's delegate after a review of relevant facts and
            circumstances, including the creditworthiness of the borrower.

            IPO RISK. Securities purchased in initial public offerings (IPOs)
            may be very volatile, rising and falling rapidly, often based,
            among other reasons, on investor perceptions rather than on
            economic reasons. Additionally, investments in IPOs may magnify the
            fund's performance if it has a small asset base.


18 | DWS Technology Fund
<PAGE>

            The fund is less likely to experience a similar impact on its
            performance as its assets grow because it is unlikely that the fund
            will be able to obtain proportionately larger IPO allocations.

            Other factors that could affect performance include:

            -  portfolio management could be wrong in the analysis of
               industries, companies, economic trends, the relative
               attractiveness of different securities or other matters.

            -  growth stocks may be out of favor for certain periods.

            -  derivatives could produce disproportionate losses due to a
               variety of factors, including the failure of the counterparty to
               meet its obligations or unexpected price or interest rate
               movements. (See "Secondary Risks" for more information.)


                                                       DWS Technology Fund  | 19
<PAGE>

THE FUND'S PERFORMANCE HISTORY

While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.

The bar chart shows how the performance of the fund's Class A shares has varied
from year to year, which may give some idea of risk. The bar chart does not
reflect sales loads; if it did, total returns would be lower than those shown.
The table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The table includes the effects of maximum sales loads on fund
performance. The performance of both the fund and the index varies over time.
All figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).

The table shows returns for Class A shares on a before-tax and after-tax basis.
After-tax returns are shown for Class A only and will vary for Classes B and C.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

DWS Technology Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - CLASS A (Results do not reflect
sales loads; if they did, total returns would be lower than those shown.)
[GRAPHIC APPEARS HERE]





<TABLE>
<S>        <C>         <C>         <C>         <C>         <C>        <C>       <C>       <C>       <C>
43.59      114.28       -24.31      -34.44      -38.97     48.19       1.63      3.64      0.26     13.94
1998        1999        2000        2001        2002       2003       2004      2005      2006      2007
</TABLE>





<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 57.79%, Q4 1999              WORST QUARTER: -34.76%, Q3 2001
</TABLE>



20 | DWS Technology Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007 (Fund returns include the
effects of maximum sales load.)


<TABLE>
<CAPTION>
                                              1 YEAR      5 YEARS      10 YEARS
<S>                                          <C>         <C>          <C>
 CLASS A
   Return before Taxes                          7.39        10.94         4.59
   Return after Taxes on Distributions          7.39        10.94         3.99
   Return after Taxes on Distributions
   and Sale of Fund Shares                      4.80         9.56         3.97
 CLASS B (Return before Taxes)                  9.56        10.87         4.11
 CLASS C (Return before Taxes)                 12.81        11.17         4.28
 S&P 500 (reflects no deductions for
 fees, expenses or taxes)                       5.49        12.83         5.91
 S&P GOLDMAN SACHS TECHNOLOGY
 INDEX (reflects no deductions for fees,
 expenses or taxes)                            16.94        15.58         5.74
</TABLE>


     Total returns would have been lower if certain operational expenses hadn't
been reduced.


 STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
 index of 500 stocks. The index is designed to measure performance of the broad
 domestic economy through changes in the aggregate market value of 500 stocks
 representing all major industries.

 S&P GOLDMAN SACHS TECHNOLOGY INDEX is an unmanaged capitalization-weighted
 index based on a universe of technology-related stocks.

 In the past, the technology sector has experienced above-average volatility
 that produced significant fluctuations in the fund's performance.


--------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 621-1048 or visit our Web site at www.dws-scudder.com.


--------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.


                                                       DWS Technology Fund  | 21
<PAGE>

HOW MUCH INVESTORS PAY

The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.


<TABLE>
<CAPTION>
FEE TABLE                                        CLASS A         CLASS B       CLASS C
<S>                                         <C>                 <C>          <C>

 SHAREHOLDER FEES, paid directly from your investment
___________________________________________________________________________________________
 Maximum Sales Charge (Load) Imposed
 on Purchases (as % of offering price)           5.75%1         None          None
 Maximum Deferred Sales Charge (Load)
 (as % of redemption proceeds)                   None 2          4.00%         1.00%
 Redemption/Exchange fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 3                           2.00             2.00          2.00

 ANNUAL OPERATING EXPENSES, deducted from fund assets
___________________________________________________________________________________________
 Management Fee                                   0.56  %          0.56%         0.56%
 Distribution/Service (12b-1) Fee                 0.22             0.99          0.99
 Other Expenses                                   0.33             0.70          0.53
 TOTAL ANNUAL OPERATING EXPENSES                  1.11             2.25          2.08
</TABLE>


1   Because of rounding in the calculation of the offering price, the actual
   maximum front-end sales charge paid by an investor may be higher than the
   percentage noted (see "Choosing a Share Class - Class A shares").

2   The redemption of shares purchased at net asset value under the Large Order
   NAV Purchase Privilege (see "Choosing a Share Class - Class A shares") may
   be subject to a contingent deferred sales charge of 1.00% if redeemed
   within 12 months of purchase and 0.50% if redeemed within the following six
   months.

3   This fee is charged on all applicable redemptions or exchanges. Please see
   "Policies You Should Know About - Policies."


22 | DWS Technology Fund
<PAGE>

Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns, and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.


<TABLE>
<CAPTION>
EXAMPLE                1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                   <C>         <C>          <C>          <C>

 EXPENSES, assuming you sold your shares at the end of each period.
_________________________________________________________________________
 Class A shares         $682       $  908       $1,151       $1,849
 Class B shares*         628        1,003        1,405        2,031
 Class C shares          311          652        1,119        2,410

 EXPENSES, assuming you kept your shares.
_________________________________________________________________________
 Class A shares         $682       $  908       $1,151       $1,849
 Class B shares*         228          703        1,205        2,031
 Class C shares          211          652        1,119        2,410
</TABLE>


*   Reflects conversion of Class B to Class A shares, which pay lower fees.
   Conversion occurs six years after purchase.

                                                       DWS Technology Fund  | 23
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

           While the previous pages describe the main points of each fund's
           strategy and risks, there are a few other issues to know about:

           -  Although major changes tend to be infrequent, each fund's Board
              could change a fund's investment objective without seeking
              shareholder approval. However, the Board will provide
              shareholders with at least 60 days' notice prior to making any
              changes to each fund's 80% investment policy as described herein.


           -  As a temporary defensive measure, each fund could shift up to
              100% of its assets into investments such as money market
              securities. This could prevent losses, but, while engaged in a
              temporary defensive position, a fund will not be pursuing its
              investment objective. However, portfolio management may choose
              not to use these strategies for various reasons, even in volatile
              market conditions.


           Secondary risks

           The risk disclosure below applies to each fund, unless otherwise
           noted.

           DERIVATIVES RISK. Risks associated with derivatives include the risk
           that the derivative is not well correlated with the security, index
           or currency to which it relates; the risk that derivatives may
           result in losses or missed opportunities; the risk that the fund
           will be unable to sell the derivative because of an illiquid
           secondary market; the risk that a counterparty is unwilling or
           unable to meet its obligation; and the risk that the derivative
           transaction could expose the fund to the effects of leverage, which
           could increase the fund's exposure to the market and magnify
           potential losses. There is no guarantee that derivatives, to the
           extent employed, will have the intended effect, and their use could
           cause lower returns or even losses to the fund. The use of
           derivatives by the fund to hedge risk may reduce the opportunity for
           gain by offsetting the positive effect of favorable price movements.



           For more information

           This prospectus doesn't tell you about every policy or risk of
           investing in each fund.


24 | Other Policies and Secondary Risks
<PAGE>

           If you want more information on each fund's allowable securities and
           investment practices and the characteristics and risks of each one,
           you may want to request a copy of the Statement of Additional
           Information (the back cover tells you how to do this).

           Keep in mind that there is no assurance that a fund will achieve its
           objective.

           A complete list of each fund's portfolio holdings is posted as of
           the month-end on www.dws-scudder.com (the Web site does not form a
           part of this prospectus) on or after the last day of the following
           month. This posted information generally remains accessible at least
           until the date on which a fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. In addition,
           each fund's top ten equity holdings and other fund information is
           posted on www.dws-scudder.com as of the calendar quarter-end on or
           after the 15th day following quarter-end. Each fund's Statement of
           Additional Information includes a description of a fund's policies
           and procedures with respect to the disclosure of a fund's portfolio
           holdings.


WHO MANAGES AND OVERSEES THE FUNDS


           The investment advisor

           Deutsche Investment Management Americas Inc. ("DIMA" or the
           "Advisor"), with headquarters at 345 Park Avenue, New York, NY
           10154, is the investment advisor for each fund. Under the oversight
           of the Board, the Advisor, or a subadvisor, makes investment
           decisions, buys and sells securities for each fund and conducts
           research that leads to these purchase and sale decisions. The
           Advisor provides a full range of global investment advisory services
           to institutional and retail clients.

           DWS Scudder is part of Deutsche Asset Management, which is the
           marketing name in the US for the asset management activities of
           Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS
           Trust Company.

           Deutsche Asset Management is a global asset management organization
           that offers a wide range of investing expertise and resources,
           including hundreds of portfolio managers and analysts and an office
           network that reaches the world's major


                                        Who Manages and Oversees the Funds  | 25
<PAGE>

           investment centers. This well-resourced global investment platform
           brings together a wide variety of experience and investment insight
           across industries, regions, asset classes and investing styles.

           The Advisor is an indirect, wholly owned subsidiary of Deutsche Bank
           AG. Deutsche Bank AG is a major global banking institution that is
           engaged in a wide range of financial services, including investment
           management, mutual funds, retail, private and commercial banking,
           investment banking and insurance.

           MANAGEMENT FEE. The Advisor receives a management fee from each
           fund. Below are the actual rates paid by each fund for the most
           recent fiscal year, as a percentage of each fund's average daily net
           assets.


<TABLE>
<CAPTION>
FUND NAME                                         FEE PAID
<S>                                             <C>
  DWS Gold & Precious Metals Fund                   0.90  %
  DWS Technology Fund                               0.52%*
</TABLE>


           *   Reflects the effects of expense limitations and/or fee waivers
then in effect.


           Effective October 1, 2007, DWS Gold & Precious Metals Fund pays the
           Advisor under the investment management agreement a fee, calculated
           daily and paid monthly, at the annual rate of 0.885% of the fund's
           average daily net assets up to $500 million, and 0.835% thereafter.

           A discussion regarding the basis for the Board's approval of each
           fund's investment management agreement and, as applicable,
           subadvisory agreement, is contained in the shareholder reports for
           the annual period ended October 31 (see "Shareholder reports" on the
           back cover).

           The Advisor provides administrative services to DWS Gold & Precious
           Metals Fund under a separate administrative services agreement
           between the fund and the Advisor. Under its investment management
           agreement, DWS Technology Fund pays the Advisor for providing most
           of the fund's administrative services.


26 | Who Manages and Oversees the Funds
<PAGE>

           Subadvisor for DWS Gold & Precious Metals Fund

           The subadvisor for DWS Gold & Precious Metals Fund is Deutsche
           Investments Australia Limited ("DIAL"), Level 16, 126 Phillip
           Street, Sydney NSW 200, Australia, an affiliate of the Advisor. DIAL
           serves as both subadvisor for mutual funds and investment advisor
           for certain institutional accounts.

           Pursuant to its subadvisory agreement with the Advisor on behalf of
           the fund, DIAL performs the functions of the Advisor, including
           making the fund's investment decisions, buying and selling
           securities for the fund, conducting research that leads to these
           purchase and sale decisions, selecting brokers and dealers and
           negotiating brokerage commissions and dealer charges. The Advisor
           compensates DIAL out of the management fee it receives from the
           fund.


                                        Who Manages and Oversees the Funds  | 27
<PAGE>

Portfolio management

Each fund is managed by a team of investment professionals who collaborate to
develop and implement each fund's investment strategy. Each portfolio manager
on the teams has authority over all aspects of a fund's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with portfolio holdings.

The following people handle the day-to-day management of the funds.

DWS GOLD & PRECIOUS METALS FUND

Euan Leckie
Director of Deutsche Asset Management and Co-Manager of the fund.
- Joined Deutsche Asset Management in 1988 after 14 years as a senior financial
   analyst for CSR Limited and a mining analyst for Commercial Banking Company
   and Constable and Bain.
- Global equity analyst for Materials Sector; member of Global Materials Sector
   Research Team.
- Prior experience was as an exploration geologist for gold, base metals and
   diamonds in Australia and Indonesia.
- Joined the fund in 2002.
- BSc., University of Tasmania; BEc., Macquarie University, Sydney.

Greg Foulis
Director of Deutsche Asset Management and Co-Manager of the fund.
- Joined Deutsche Asset Management and the fund in October 2004.
- Joined Deutsche Bank in 1997 as a senior analyst after five years of
   financial markets experience. Prior experience includes seven years in the
   mining industry working as a geologist for a variety of senior and junior
   companies.
- BAppSc from NSW Institute of Technology; MComm from University of NSW.


28 | Who Manages and Oversees the Funds
<PAGE>

DWS TECHNOLOGY FUND

Kelly P. Davis
Director of Deutsche Asset Management and Lead Portfolio Manager of the fund.
- Joined Deutsche Asset Management in 2003 after eight years of experience with
   semiconductors as an associate analyst in Equities Research with Credit
   Suisse First Boston, team leader in applications engineering at Advanced
   Micro Devices, and in technical roles at Interactive Silicon, Motorola,
   Inc. and Tellabs Operations, Inc.

- Joined the fund in 2005.
- BS, Purdue University; MBA, University of California, Berkeley.

Each fund's Statement of Additional Information provides additional information
about a portfolio manager's investments in each fund, a description of the
portfolio management compensation structure and information regarding other
accounts managed.


                                        Who Manages and Oversees the Funds  | 29
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of each table are for a single
share. The total return figures represent the percentage that an investor in a
fund would have earned (or lost), assuming all dividends and distributions were
reinvested. The information for DWS Gold & Precious Metals Fund has been
audited by PricewaterhouseCoopers LLP, independent registered public accounting
firm, and the information for DWS Technology Fund has been audited by Ernst &
Young LLP, independent registered public accounting firm, whose report, along
with each fund's financial statements, is included in each fund's annual report
(see "Shareholder reports" on the back cover).


30 | Financial Highlights
<PAGE>

DWS Gold & Precious Metals Fund - Class A


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                          2007          2006           2005          2004          2003
<S>                                          <C>           <C>            <C>           <C>           <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------            -
NET ASSET VALUE, BEGINNING OF PERIOD          $  23.21       $ 16.97       $  19.53      $  20.66       $   9.33
------------------------------------------    --------       -------       --------      --------       --------
Income (loss) from investment
operations:
  Net investment income (loss) a                (  .08)       (  .12)d       (  .17)       (  .25)        (  .18)
__________________________________________    ________       _______       ________      ________       ________
  Net realized and unrealized gain
  (loss)                                          9.19          7.75         (  .73)          .37          11.57
------------------------------------------    --------       -------       --------      --------       --------
  TOTAL FROM INVESTMENT OPERATIONS                9.11          7.63         (  .90)          .12          11.39
__________________________________________    ________       _______       ________      ________       ________
Less distributions from:
  Net investment income                         (  .26)       (  .30)             -        ( 1.25)        (  .06)
__________________________________________    ________       _______       ________      ________       ________
  Net realized gains                            ( 3.98)       ( 1.09)        ( 1.66)            -              -
------------------------------------------    --------       -------       --------      --------       --------
  TOTAL DISTRIBUTIONS                           ( 4.24)       ( 1.39)        ( 1.66)       ( 1.25)        (  .06)
__________________________________________    ________       _______       ________      ________       ________
Redemption fees                                    .00*          .00*           .00*            -              -
------------------------------------------    --------       -------       --------      --------       --------
NET ASSET VALUE, END OF PERIOD                $  28.08       $ 23.21       $  16.97      $  19.53       $  20.66
------------------------------------------    --------       -------       --------      --------       --------
Total Return (%) b                               46.68       46.79d          ( 4.62)       .48c         122.10c
------------------------------------------    --------       -------       --------      --------       --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------     --------
Net assets, end of period ($ millions)             252           191            133           146            134
__________________________________________    ________       _______       ________      ________       ________
Ratio of expenses before expense
reductions (%)                                    1.49          1.55           1.62          1.72           1.90
__________________________________________    ________       _______       ________      ________       ________
Ratio of expenses after expense
reductions (%)                                    1.49          1.55           1.62          1.62           1.85
__________________________________________    ________       _______       ________      ________       ________
Ratio of net investment income (loss)
     (%)                                        (  .39)       (  .53)d       (  .99)       ( 1.34)        ( 1.23)
__________________________________________    ________       _______       ________      ________       ________
Portfolio turnover rate (%)                         52            69             53            76             80
------------------------------------------    --------       -------       --------      --------       --------
</TABLE>


a   Based on average shares outstanding during the period.

b   Total return does not reflect the effect of any sales charges.

c   Total return would have been lower had certain expenses not been reduced.

d   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.008 per share
   and an increase in the ratio of net investment income of 0.03%. Excluding
   this non-recurring income, total return would have been 0.04% lower.

*   Amount is less than $.005.

                                                      Financial Highlights  | 31
<PAGE>

DWS Gold & Precious Metals Fund - Class B


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                        2007         2006         2005        2004       2003
<S>                                        <C>         <C>           <C>         <C>         <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------         -
NET ASSET VALUE, BEGINNING OF PERIOD        $  22.91     $  16.77      $ 19.45     $ 20.55    $   9.31
------------------------------------------  --------     --------      -------     -------    --------
Income (loss) from investment
operations:
  Net investment income (loss) a              (  .24)      (  .29)d     (  .29)     (  .39)     (  .27)
__________________________________________  ________     ________      _______     _______    ________
  Net realized and unrealized gain
  (loss)                                        9.08         7.68       (  .73)        .36       11.51
------------------------------------------  --------     --------      -------     -------    --------
  TOTAL FROM INVESTMENT OPERATIONS              8.84         7.39       ( 1.02)     (  .03)      11.24
__________________________________________  ________     ________      _______     _______    ________
Less distributions from:
  Net investment income                       (  .07)      (  .16)           -      ( 1.07)          -
__________________________________________  ________     ________      _______     _______    ________
  Net realized gains                          ( 3.98)      ( 1.09)      ( 1.66)          -           -
------------------------------------------  --------     --------      -------     -------    --------
  TOTAL DISTRIBUTIONS                         ( 4.05)      ( 1.25)      ( 1.66)     ( 1.07)          -
__________________________________________  ________     ________      _______     _______    ________
Redemption fees                                  .00*         .00*         .00*          -           -
------------------------------------------  --------     --------      -------     -------    --------
NET ASSET VALUE, END OF PERIOD              $  27.70     $  22.91      $ 16.77     $ 19.45    $  20.55
------------------------------------------  --------     --------      -------     -------    --------
Total Return (%) b                             45.53     45.67c,d       ( 5.30)c    (  .26)c  120.73c
------------------------------------------  --------     --------      -------     -------    --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------  --------
Net assets, end of period ($ millions)            60           46           32          32          24
__________________________________________  ________     ________      _______     _______    ________
Ratio of expenses before expense
reductions (%)                                  2.24         2.34         2.41        2.53        2.73
__________________________________________  ________     ________      _______     _______    ________
Ratio of expenses after expense
reductions (%)                                  2.24         2.33         2.36        2.36        2.69
__________________________________________  ________     ________      _______     _______    ________
Ratio of net investment income (loss)
     (%)                                      ( 1.14)      ( 1.31)d     ( 1.73)     ( 2.08)     ( 2.07)
__________________________________________  ________     ________      _______     _______    ________
Portfolio turnover rate (%)                       52           69           53          76          80
------------------------------------------  --------     --------      -------     -------    --------
</TABLE>


a   Based on average shares outstanding during the period.

b   Total return does not reflect the effect of any sales charges.

c   Total return would have been lower had certain expenses not been reduced.

d   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.008 per share
   and an increase in the ratio of net investment income of 0.03%. Excluding
   this non-recurring income, total return would have been 0.04% lower.

*   Amount is less than $.005.

32 | Financial Highlights
<PAGE>

DWS Gold & Precious Metals Fund - Class C


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                        2007        2006        2005        2004       2003
<S>                                        <C>         <C>         <C>         <C>         <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------         -
NET ASSET VALUE, BEGINNING OF PERIOD        $  22.88     $ 16.75    $  19.42     $ 20.53    $   9.29
------------------------------------------  --------     -------    --------     -------    --------
Income (loss) from investment
operations:
  Net investment income (loss) a              (  .24)     (  .28)d    (  .28)     (  .38)     (  .29)
__________________________________________  ________     _______    ________     _______    ________
  Net realized and unrealized gain
  (loss)                                        9.08        7.66      (  .73)        .35       11.53
------------------------------------------  --------     -------    --------     -------    --------
  TOTAL FROM INVESTMENT OPERATIONS              8.84        7.38      ( 1.01)     (  .03)      11.24
__________________________________________  ________     _______    ________     _______    ________
Less distributions from:
  Net investment income                       (  .08)     (  .16)          -      ( 1.08)          -
__________________________________________  ________     _______    ________     _______    ________
  Net realized gains                          ( 3.98)     ( 1.09)     ( 1.66)          -           -
------------------------------------------  --------     -------    --------     -------    --------
  TOTAL DISTRIBUTIONS                         ( 4.06)     ( 1.25)     ( 1.66)     ( 1.08)          -
__________________________________________  ________     _______    ________     _______    ________
Redemption fees                                  .00*        .00*        .00*          -           -
------------------------------------------  --------     -------    --------     -------    --------
NET ASSET VALUE, END OF PERIOD              $  27.66     $ 22.88    $  16.75     $ 19.42    $  20.53
------------------------------------------  --------     -------    --------     -------    --------
Total Return (%) b                             45.57     45.71d       ( 5.26)     (  .25)c  120.99c
------------------------------------------  --------     -------    --------     -------    --------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------  --------
Net assets, end of period ($ millions)           130         100          76          84          40
__________________________________________  ________     _______    ________     _______    ________
Ratio of expenses before expense
reductions (%)                                  2.20        2.29        2.33        2.48        2.71
__________________________________________  ________     _______    ________     _______    ________
Ratio of expenses after expense
reductions (%)                                  2.20        2.29        2.33        2.35        2.63
__________________________________________  ________     _______    ________     _______    ________
Ratio of net investment income (loss)
     (%)                                      ( 1.10)     ( 1.27)d    ( 1.70)     ( 2.07)     ( 2.01)
__________________________________________  ________     _______    ________     _______    ________
Portfolio turnover rate (%)                       52          69          53          76          80
------------------------------------------  --------     -------    --------     -------    --------
</TABLE>


a   Based on average shares outstanding during the period.

b   Total return does not reflect the effect of any sales charges.

c   Total return would have been lower had certain expenses not been reduced.

d   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.008 per share
   and an increase in the ratio of net investment income of 0.03%. Excluding
   this non-recurring income, total return would have been 0.04% lower.

*   Amount is less than $.005.

                                                      Financial Highlights  | 33
<PAGE>

DWS Technology Fund - Class A


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                          2007            2006           2005           2004         2003
<S>                                          <C>            <C>             <C>            <C>           <C>
SELECTED PER SHARE DATA
------------------------------------------------------------------------------------------------------          -
NET ASSET VALUE, BEGINNING OF PERIOD           $  11.42        $ 10.97        $  10.37      $  10.71      $  7.38
------------------------------------------     --------        -------        --------      --------      -------
Income (loss) from investment
operations:
  Net investment income (loss) a                 (  .05)        (  .05)d           .02        (  .08)      (  .07)
__________________________________________     ________        _______        ________      ________      _______
  Net realized and unrealized gain
  (loss)                                           3.24            .50             .58        (  .26)        3.40
------------------------------------------     --------        -------        --------      --------      -------
  TOTAL FROM INVESTMENT OPERATIONS                 3.19            .45             .60        (  .34)        3.33
__________________________________________     ________        _______        ________      ________      _______
Redemption fees                                     .00*           .00*            .00*            -            -
------------------------------------------     --------        -------        --------      --------      -------
NET ASSET VALUE, END OF PERIOD                 $  14.61        $ 11.42        $  10.97      $  10.37      $ 10.71
------------------------------------------     --------        -------        --------      --------      -------
Total Return (%) b                              27.93c        4.10c,d          5.79c          ( 3.08)       45.12
------------------------------------------     --------       --------        --------      --------      -------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------    -------
Net assets, end of period ($ millions)              893            854             945         1,083        1,231
__________________________________________     ________       ________        ________      ________      _______
Ratio of expenses before expense
reductions (%)                                     1.11           1.15            1.18          1.15         1.17
__________________________________________     ________       ________        ________      ________      _______
Ratio of expenses after expense
reductions (%)                                     1.07           1.07            1.11          1.15         1.17
__________________________________________     ________       ________        ________      ________      _______
Ratio of net investment income (loss)
     (%)                                         (  .36)        (  .40)d           .24        (  .71)      (  .82)
__________________________________________     ________       ________        ________      ________      _______
Portfolio turnover rate (%)                          79             58             114            97           51
------------------------------------------     --------       --------        --------      --------      -------
</TABLE>


a   Based on average shares outstanding during the period.

b   Total return does not reflect the effect of any sales charges.

c   Total return would have been lower had certain expenses not been reduced.

d   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.017 per share
   and an increase in the ratio of net investment income of 0.14%. Excluding
   this non-recurring income, total return would have been 0.16% lower.

*   Amount is less than $.005.

34 | Financial Highlights
<PAGE>

DWS Technology Fund - Class B


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                           2007             2006            2005          2004          2003
<S>                                           <C>             <C>              <C>            <C>           <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------           -
NET ASSET VALUE, BEGINNING OF PERIOD            $  9.57          $  9.31         $  8.89       $  9.28       $  6.46
------------------------------------------      -------          -------         -------       -------       -------
Income (loss) from investment
operations:
  Net investment income (loss) a                 (  .14)           ( .14)d         ( .06)        ( .16)        ( .14)
__________________________________________      _______          _______         _______       _______       _______
  Net realized and unrealized gain
  (loss)                                           2.68              .40             .48         ( .23)         2.96
------------------------------------------      -------          -------         -------       -------       -------
  TOTAL FROM INVESTMENT OPERATIONS                 2.54              .26             .42         ( .39)         2.82
__________________________________________      _______          _______         _______       _______       _______
Redemption fees                                     .00*             .00*            .00*            -             -
------------------------------------------      -------          -------         -------       -------       -------
NET ASSET VALUE, END OF PERIOD                  $ 12.11          $  9.57         $  9.31       $  8.89       $  9.28
------------------------------------------      -------          -------         -------       -------       -------
Total Return (%) b                               26.54c         2.79c,d           4.72c          (4.09)        43.65
------------------------------------------      -------         --------         -------       -------       -------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------     -------
Net assets, end of period ($ millions)               44               69             140           213           306
__________________________________________      _______         ________         _______       _______       _______
Ratio of expenses before expense
reductions (%)                                     2.25             2.37            2.24          2.20          2.24
__________________________________________      _______         ________         _______       _______       _______
Ratio of expenses after expense
reductions (%)                                     2.21             2.21            2.17          2.20          2.24
__________________________________________      _______         ________         _______       _______       _______
Ratio of net investment income (loss)
     (%)                                         ( 1.50)           (1.54)d         ( .82)        (1.76)        (1.89)
__________________________________________      _______         ________         _______       _______       _______
Portfolio turnover rate (%)                          79               58             114            97            51
------------------------------------------      -------         --------         -------       -------       -------
</TABLE>


a   Based on average shares outstanding during the period.

b   Total return does not reflect the effect of any sales charges.

c   Total return would have been lower had certain expenses not been reduced.

d   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.017 per share
   and an increase in the ratio of net investment income of 0.14%. Excluding
   this non-recurring income, total return would have been 0.16% lower.

*   Amount is less than $.005.

                                                      Financial Highlights  | 35
<PAGE>

DWS Technology Fund - Class C


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                           2007             2006            2005          2004          2003
<S>                                           <C>             <C>              <C>            <C>           <C>
SELECTED PER SHARE DATA
--------------------------------------------------------------------------------------------------------           -
NET ASSET VALUE, BEGINNING OF PERIOD            $  9.85          $  9.55         $  9.11       $  9.49       $  6.60
------------------------------------------      -------          -------         -------       -------       -------
Income (loss) from investment
operations:
  Net investment income (loss) a                 (  .13)           ( .12)d         ( .05)        ( .15)        ( .14)
__________________________________________      _______          _______         _______       _______       _______
  Net realized and unrealized gain
  (loss)                                           2.76              .42             .49         ( .23)         3.03
------------------------------------------      -------          -------         -------       -------       -------
  TOTAL FROM INVESTMENT OPERATIONS                 2.63              .30             .44         ( .38)         2.89
__________________________________________      _______          _______         _______       _______       _______
Redemption fees                                     .00*             .00*            .00*            -             -
------------------------------------------      -------          -------         -------       -------       -------
NET ASSET VALUE, END OF PERIOD                  $ 12.48          $  9.85         $  9.55       $  9.11       $  9.49
------------------------------------------      -------          -------         -------       -------       -------
Total Return (%) b                               26.70c         3.14c,d           4.83c          (4.00)        43.79
------------------------------------------      -------         --------         -------       -------       -------

RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------     -------
Net assets, end of period ($ millions)               42               42              53            70            90
__________________________________________      _______         ________         _______       _______       _______
Ratio of expenses before expense
reductions (%)                                     2.08             1.98            2.08          2.10          2.19
__________________________________________      _______         ________         _______       _______       _______
Ratio of expenses after expense
reductions (%)                                     2.04             1.91            2.01          2.10          2.19
__________________________________________      _______         ________         _______       _______       _______
Ratio of net investment income (loss)
     (%)                                         ( 1.33)           (1.24)d         ( .66)        (1.66)        (1.84)
__________________________________________      _______         ________         _______       _______       _______
Portfolio turnover rate (%)                          79               58             114            97            51
------------------------------------------      -------         --------         -------       -------       -------
</TABLE>


a   Based on average shares outstanding during the period.

b   Total return does not reflect the effect of any sales charges.

c   Total return would have been lower had certain expenses not been reduced.

d   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.017 per share
   and an increase in the ratio of net investment income of 0.14%. Excluding
   this non-recurring income, total return would have been 0.16% lower.

*   Amount is less than $.005.

36 | Financial Highlights
<PAGE>

HOW TO INVEST IN THE FUNDS
Offered in this prospectus are share classes noted on the cover of the
prospectus. Each class has its own fees and expenses, offering you a choice of
cost structures. Each fund may offer other classes of shares in a separate
prospectus. These shares are intended for investors seeking the advice and
assistance of a financial advisor, who will typically receive compensation for
those services.

THE FOLLOWING PAGES TELL YOU HOW TO INVEST IN A FUND AND WHAT TO EXPECT AS A
SHAREHOLDER. The following pages also tell you about many of the services,
choices and benefits of being a shareholder. You'll also find information on
how to check the status of your account using the method that's most convenient
for you.

If you're investing directly with DWS Scudder, all of this information applies
to you. If you're investing through a "third party provider" - for example, a
workplace retirement plan, financial supermarket or financial advisor - your
provider may have its own policies or instructions and you should follow those.


You can find out more about the topics covered here by speaking with your
FINANCIAL ADVISOR OR A REPRESENTATIVE OF YOUR WORKPLACE RETIREMENT PLAN OR
OTHER INVESTMENT PROVIDER.

Before you invest, take a moment to look over the characteristics of each share
class, so that you can be sure to choose the class that's right for you. YOU
MAY WANT TO ASK YOUR FINANCIAL ADVISOR TO HELP YOU WITH THIS DECISION.
<PAGE>

CHOOSING A SHARE CLASS

We describe each share class in detail on the following pages. But first, you
may want to look at the table below, which gives you a brief description and
comparison of the main features of each class.


<TABLE>
<CAPTION>
 CLASSES AND FEATURES                         POINTS TO HELP YOU COMPARE
<S>                                          <C>
 CLASS A
 -  Sales charge of up to 5.75% charged       -  Some investors may be able to reduce
  when you buy shares                        or eliminate their sales charge; see
                                             "Class A shares"
 -  In most cases, no charge when you
  sell shares                                -  Total annual expenses are lower than
                                             those for Class B or Class C
 -  Up to 0.25% annual shareholder
  servicing fee
 CLASS B
 -  No sales charge when you buy shares       -  The deferred sales charge rate falls to
                                             zero after six years
 -  Deferred sales charge declining from
  4.00%, charged when you sell shares        -  Shares automatically convert to
  you bought within the last six years       Class A after six years, which means
                                             lower annual expenses going forward
 -  0.75% annual distribution fee and up
  to 0.25% annual shareholder servicing
  fee
 CLASS C
 -  No sales charge when you buy shares       -  The deferred sales charge rate for one
                                             year is lower for Class C shares than
 -  Deferred sales charge of 1.00%,
                                             Class B shares, but your shares never
  charged when you sell shares you
                                             convert to Class A, so annual expenses
  bought within the last year
                                             remain higher
 -  0.75% annual distribution fee and up
  to 0.25% annual shareholder servicing
  fee
</TABLE>


Your financial advisor will typically be paid a fee when you buy shares and may
receive different levels of compensation depending upon which class of shares
you buy. Each fund may pay financial advisors or other intermediaries
compensation for the services they provide to their clients. This compensation
may vary depending on the class share and fund you buy. Your financial advisor
may also receive compensation from the Advisor and/or its affiliates. Please
see "Financial intermediary support payments" for more information.



38 | Choosing a Share Class
<PAGE>

           Class A shares

           Class A shares may make sense for long-term investors, especially
           those who are eligible for a reduced or eliminated sales charge.

           Class A shares have a 12b-1 plan, under which a shareholder
           servicing fee of up to 0.25% is deducted from class assets each
           year. Because the shareholder servicing fee is continuous in nature,
           it may, over time, increase the cost of your investment and may cost
           you more than paying other types of sales charges.

           Class A shares have an up-front sales charge that varies with the
           amount you invest:


<TABLE>
<CAPTION>
                              FRONT-END SALES          FRONT-END SALES
                                CHARGE AS %          CHARGE AS % OF YOUR
YOUR INVESTMENT            OF OFFERING PRICE1,2        NET INVESTMENT2
<S>                       <C>                       <C>
  Up to $50,000           5.75%                     6.10%
$    50,000-$99,999       4.50                      4.71
$  100,000-$249,999       3.50                      3.63
$  250,000-$499,999       2.60                      2.67
$  500,000-$999,999       2.00                      2.04
  $1 million or more            see below                see below
</TABLE>


           1   The offering price includes the sales charge.

           2   Because of rounding in the calculation of the offering price,
               the actual front-end sales charge paid by an investor may be
               higher or lower than the percentages noted.


           YOU MAY BE ABLE TO LOWER YOUR CLASS A SALES CHARGE IF:

           -  you plan to invest at least $50,000 in Class A shares (including
              Class A shares in other retail DWS funds) over the next 24 months
              ("Letter of Intent")

           -  the amount of Class A shares you already own (including Class A
              shares in other retail DWS funds) plus the amount you're
              investing now in Class A shares is at least $50,000 ("Cumulative
              Discount")

           -  you are investing a total of $50,000 or more in Class A shares of
              several retail DWS funds on the same day ("Combined Purchases")

                                                    Choosing a Share Class  | 39
<PAGE>

           The point of these three features is to let you count investments
           made at other times or in certain other funds for purposes of
           calculating your present sales charge. Any time you can use the
           privileges to "move" your investment into a lower sales charge
           category, it's generally beneficial for you to do so.

           For purposes of determining whether you are eligible for a reduced
           Class A sales charge, you and your immediate family (your spouse or
           life partner and your children or stepchildren age 21 or younger)
           may aggregate your investments in the DWS family of funds. This
           includes, for example, investments held in a retirement account, an
           employee benefit plan or at a financial advisor other than the one
           handling your current purchase. These combined investments will be
           valued at their current offering price to determine whether your
           current investment qualifies for a reduced sales charge.

           To receive a reduction in your Class A initial sales charge, you
           must let your financial advisor or Shareholder Services know at the
           time you purchase shares that you qualify for such a reduction. You
           may be asked by your financial advisor or Shareholder Services to
           provide account statements or other information regarding related
           accounts of you or your immediate family in order to verify your
           eligibility for a reduced sales charge.

           For more information about sales charge discounts, please visit
           www.dws-scudder.com (click on the link entitled "Fund Sales Charge
           and Breakpoint Schedule"), consult with your financial advisor or
           refer to the section entitled "Purchase or Redemption of Shares" in
           each fund's Statement of Additional Information.

           IN CERTAIN CIRCUMSTANCES, YOU MAY BE ABLE TO BUY CLASS A SHARES
           WITHOUT A SALES CHARGE. For example, the sales charge will be waived
           if you are reinvesting dividends or distributions or if you are
           exchanging an investment in Class A shares of another fund in the
           DWS family of funds for an investment in Class A shares of a fund.
           In addition, a sales charge waiver may apply to transactions by
           certain retirement plans and certain other entities or persons
           (e.g., affiliated persons of Deutsche Asset Management or the DWS
           funds) and with respect to certain types of investments (e.g., an
           investment advisory or agency commission program under which you pay
           a fee to an investment advisor or other firm for portfolio
           management or brokerage services).


40 | Choosing a Share Class
<PAGE>

           Details regarding the types of investment programs and categories of
           investors eligible for a sales charge waiver are provided in each
           fund's Statement of Additional Information.

           There are a number of additional provisions that apply in order to
           be eligible for a sales charge waiver. Each fund may waive the sales
           charge for investors in other situations as well. Your financial
           advisor or Shareholder Services can answer your questions and help
           you determine if you are eligible.

           IF YOU'RE INVESTING $1 MILLION OR MORE, either as a lump sum or
           through one of the sales charge reduction features described above,
           you may be eligible to buy Class A shares without a sales charge
           ("Large Order NAV Purchase Privilege"). However, you may be charged
           a contingent deferred sales charge (CDSC) of 1.00% on any shares you
           sell within 12 months of owning them and a similar charge of 0.50%
           on shares you sell within the following six months. This CDSC is
           waived under certain circumstances (see "Policies You Should Know
           About"). Your financial advisor or Shareholder Services can answer
           your questions and help you determine if you're eligible.


           Class B shares

           Class B shares may make sense for long-term investors who prefer to
           see all of their investment go to work right away and can accept
           somewhat higher annual expenses. Please note, however, that since
           not all DWS funds offer Class B shares, exchange options may be
           limited.

           With Class B shares, you pay no up-front sales charge to a fund.
           Class B shares have a 12b-1 plan, under which a distribution fee of
           0.75% and a shareholder servicing fee of up to 0.25% are deducted
           from class assets each year. This means the annual expenses for
           Class B shares are somewhat higher (and their performance
           correspondingly lower) compared to Class A shares. However, unlike
           Class A shares, your entire investment goes to work immediately.
           After six years, Class B shares automatically convert on a tax-free
           basis to Class A shares, which has the net effect of lowering the
           annual expenses from the seventh year on.


                                                    Choosing a Share Class  | 41
<PAGE>

           Class B shares have a CDSC. This charge declines over the years you
           own shares and disappears completely after six years of ownership.
           But for any shares you sell within those six years, you may be
           charged as follows:


<TABLE>
<CAPTION>
    YEAR AFTER YOU BOUGHT SHARES               CDSC ON SHARES YOU SELL
<S>                                    <C>
  First year                           4.00%
  Second or third year                 3.00
  Fourth or fifth year                 2.00
  Sixth year                           1.00
  Seventh year and later               None (automatic conversion to Class A)
</TABLE>


           This CDSC is waived under certain circumstances (see "Policies You
           Should Know About"). Your financial advisor or Shareholder Services
           can answer your questions and help you determine if you're eligible.


           While Class B shares don't have any front-end sales charge, their
           higher annual expenses mean that over the years you could end up
           paying more than the equivalent of the maximum allowable front-end
           sales charge.

           If you are thinking of making a large purchase in Class B shares or
           if you already own a large amount of Class A shares of a fund or
           other DWS funds, it may be more cost efficient to purchase Class A
           shares instead. Orders to purchase Class B shares of $100,000 or
           more will be declined with the exception of orders received from
           financial representatives acting for clients whose shares are held
           in an omnibus account and certain employer-sponsored employee
           benefit plans.


42 | Choosing a Share Class
<PAGE>

           Class C shares

           Class C shares may appeal to investors who plan to sell some or all
           of their shares within six years of buying them or who aren't
           certain of their investment time horizon.

           With Class C shares, you pay no up-front sales charge to a fund.
           Class C shares have a 12b-1 plan, under which a distribution fee of
           0.75% and a shareholder servicing fee of up to 0.25% are deducted
           from class assets each year. Because of these fees, the annual
           expenses for Class C shares are similar to those of Class B shares,
           but higher than those for Class A shares (and the performance of
           Class C shares is correspondingly lower than that of Class A
           shares).

           Unlike Class B shares, Class C shares do NOT automatically convert
           to Class A shares after six years, so they continue to have higher
           annual expenses.

           Class C shares have a CDSC, but only on shares you sell within one
           year of buying them:


<TABLE>
<CAPTION>
   YEAR AFTER YOU BOUGHT SHARES        CDSC ON SHARES YOU SELL
<S>                                   <C>
  First year                                   1.00%
  Second year and later                         None
</TABLE>


           This CDSC is waived under certain circumstances (see "Policies You
           Should Know About"). Your financial advisor or Shareholder Services
           can answer your questions and help you determine if you're eligible.


           While Class C shares do not have an up-front sales charge, their
           higher annual expenses mean that, over the years, you could end up
           paying more than the equivalent of the maximum allowable up-front
           sales charge.

           Orders to purchase Class C shares of $500,000 or more will be
           declined with the exception of orders received from financial
           representatives acting for clients whose shares are held in an
           omnibus account and certain employer-sponsored employee benefit
           plans.


                                                    Choosing a Share Class  | 43
<PAGE>

How to BUY Class A, B and C Shares



<TABLE>
<CAPTION>
 FIRST INVESTMENT                                ADDITIONAL INVESTMENTS
<S>                                             <C>
 $1,000 or more for most accounts                $50 or more for regular accounts and
 $500 or more for IRAs                          IRAs
 $500 or more for an account with an            $50 or more for an account with an
 Automatic Investment Plan                      Automatic Investment Plan
 THROUGH A FINANCIAL ADVISOR
 -  To obtain an application, contact your      -  Contact your advisor using the
  advisor                                       method that's most convenient for you
 BY MAIL OR EXPRESS MAIL (SEE BELOW)
 -  Fill out and sign an application            -  Send a check made payable to "DWS
                                                Scudder" and an investment slip to us
 -  Send it to us at the appropriate
  address, along with an investment             -  If you don't have an investment slip,
  check made payable to "DWS                    simply include a letter with your
  Scudder"                                      name, account number, the full name
                                                of the fund and the share class and
                                                your investment instructions
 BY WIRE
 -  Call (800) 621-1048 for instructions        -  Call (800) 621-1048 for instructions
 BY PHONE
 Not available                                  -  Call (800) 621-1048 for instructions
 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on our              -  To set up regular investments from a
  application including a check for the         bank checking account call (800) 621-
  initial investment and a voided check         1048 ($50 minimum)
 USING QuickBuy
 Not available                                  -  Call (800) 621-1048 to make sure
                                                QuickBuy is set up on your account; if
                                                it is, you can request a transfer from
                                                your bank account of any amount
                                                between $50 and $250,000
 ON THE INTERNET
 Not available                                  -  Call (800) 621-1048 to ensure you have
                                                electronic services
                                                -  Register at www.dws-scudder.com or
                                                log in if already registered
                                                -  Follow the instructions for buying
                                                shares with money from your bank
                                                account
</TABLE>


--------------------------------------------------------------------------------
REGULAR MAIL:

First Investment: DWS Scudder, PO Box 219356, Kansas City, MO 64121-9356
Additional Investments: DWS Scudder, PO Box 219154, Kansas City, MO 64121-9154

EXPRESS, REGISTERED OR CERTIFIED MAIL:
DWS Scudder, 210 West 10th Street, Kansas City, MO 64105-1614

44 | How to Buy Class A, B and C Shares
<PAGE>

How to EXCHANGE or SELL Class A, B and C Shares

<TABLE>
<CAPTION>
 EXCHANGING INTO ANOTHER FUND                    SELLING SHARES
<S>                                             <C>
                                                 Some transactions, including most for
 -  Exchanges into existing accounts:
                                                over $100,000, can only be ordered in
  $50 minimum per fund
                                                writing with a signature guarantee;
 -  Exchanges into new accounts:
                                                please see "Signature Guarantee"
  $1,000 minimum per fund for most
  accounts
  $500 minimum for IRAs
 THROUGH A FINANCIAL ADVISOR
 -  Contact your advisor using the              -  Contact your advisor by the method
  method that's most convenient for you         that's most convenient for you
 BY PHONE                                        BY PHONE OR WIRE
 -  Call (800) 621-1048 for instructions        -  Call (800) 621-1048 for instructions
 BY MAIL OR EXPRESS MAIL
 (see previous page for address)
 Write a letter that includes:                  Write a letter that includes:
 -  the fund, class and account number          -  the fund, class and account number
  you're exchanging out of                      from which you want to sell shares
 -  the dollar amount or number of shares       -  the dollar amount or number of shares
  you want to exchange                          you want to sell
 -  the name and class of the fund you          -  your name(s), signature(s) and
  want to exchange into                         address, as they appear on your
                                                account
 -  your name(s), signature(s) and
  address, as they appear on your               -  a daytime telephone number
  account
 -  a daytime telephone number
 WITH AN AUTOMATIC EXCHANGE PLAN                 WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a          -  Call (800) 621-1048 (minimum $50)
  fund account, call (800) 621-1048
 USING QuickSell
 Not available                                  -  Call (800) 621-1048 to make sure
                                                QuickSell is set up on your account; if
                                                it is, you can request a transfer to your
                                                bank account of any amount between
                                                $50 and $250,000
 ON THE INTERNET
 -  Register at www.dws-scudder.com or          -  Register at www.dws-scudder.com or
  log in if already registered                  log in if already registered
 -  Follow the instructions for making on-      -  Follow the instructions for making on-
  line exchanges                                line redemptions
</TABLE>


--------------------------------------------------------------------------------

<TABLE>
<S>               <C>
TO REACH US:      WEB SITE: www.dws-scudder.com
                  TELEPHONE REPRESENTATIVE: (800) 621-1048, M-F, 9 a.m. - 6 p.m. ET
                  TDD LINE: (800) 972-3006, M-F, 9 a.m. - 6 p.m. ET
</TABLE>



                           How to Exchange or Sell Class A, B and C Shares  | 45
<PAGE>

           Financial intermediary support payments

           The Advisor, DWS Scudder Distributors, Inc. (the "Distributor")
           and/or their affiliates may pay additional compensation, out of
           their own assets and not as an additional charge to each fund, to
           selected affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/or servicing of fund investors and fund
           shares ("revenue sharing"). Such revenue sharing payments are in
           addition to any distribution or service fees payable under any Rule
           12b-1 or service plan of each fund, any record keeping/sub-transfer
           agency/networking fees payable by each fund (generally through the
           Distributor or an affiliate) and/or the Distributor to certain
           financial advisors for performing such services and any sales
           charge, commissions, non-cash compensation arrangements expressly
           permitted under applicable rules of the Financial Industry
           Regulatory Authority or other concessions described in the fee table
           or elsewhere in this prospectus or the Statement of Additional
           Information as payable to all financial advisors. For example, the
           Advisor, the Distributor and/or their affiliates may compensate
           financial advisors for providing a fund with "shelf space" or access
           to a third party platform or fund offering list or other marketing
           programs, including, without limitation, inclusion of the fund on
           preferred or recommended sales lists, mutual fund "supermarket"
           platforms and other formal sales programs; granting the Distributor
           access to the financial advisor's sales force; granting the
           Distributor access to the financial advisor's conferences and
           meetings; assistance in training and educating the financial
           advisor's personnel; and obtaining other forms of marketing support.


           The level of revenue sharing payments made to financial advisors may
           be a fixed fee or based upon one or more of the following factors:
           gross sales, current assets and/or number of accounts of each fund
           attributable to the financial advisor, the particular fund or fund
           type or other measures as agreed to by the Advisor, the Distributor
           and/or their affiliates and the financial advisors or any
           combination thereof. The amount of these revenue sharing payments is
           determined at the discretion of the Advisor, the Distributor and/or
           their affiliates from time to time, may be substantial, and may be
           different for different financial advisors based on, for example,
           the nature of the services provided by the financial advisor.


46 | How to Exchange or Sell Class A, B and C Shares
<PAGE>

           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS Fund shares or the retention
           and/or servicing of investors and DWS Fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of each fund serviced and maintained by the financial
           advisor, .10% to .25% of sales of each fund attributable to the
           financial advisor, a flat fee of $12,500 up to $500,000, or any
           combination thereof. These amounts are subject to change at the
           discretion of the Advisor, the Distributor and/or their affiliates.
           Receipt of, or the prospect of receiving, this additional
           compensation may influence your financial advisor's recommendation
           of each fund or of any particular share class of each fund. You
           should review your financial advisor's compensation disclosure
           and/or talk to your financial advisor to obtain more information on
           how this compensation may have influenced your financial advisor's
           recommendation of each fund. Additional information regarding these
           revenue sharing payments is included in each fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).

           The Advisor, the Distributor and/or their affiliates may also make
           such revenue sharing payments to financial advisors under the terms
           discussed above in connection with the distribution of both DWS
           funds and non-DWS funds by financial advisors to retirement plans
           that obtain record keeping services from ADP, Inc. on the DWS
           Scudder branded retirement plan platform (the "Platform") with the
           level of revenue sharing payments being based upon sales of both the
           DWS funds and the non-DWS funds by the financial advisor on the
           Platform or current assets of both the DWS funds and the non-DWS
           funds serviced and maintained by the financial advisor on the
           Platform.

           It is likely that broker-dealers that execute portfolio transactions
           for each fund will include firms that also sell shares of the DWS
           funds to their customers. However, the Advisor will not consider
           sales of DWS fund shares as a factor in the selection of
           broker-dealers to execute portfolio transactions for the DWS funds.
           Accordingly, the Advisor has implemented policies and procedures
           reasonably designed to prevent its traders from considering sales of
           DWS fund shares as a factor in the selection of


                           How to Exchange or Sell Class A, B and C Shares  | 47
<PAGE>

           broker-dealers to execute portfolio transactions for each fund. In
           addition, the Advisor, the Distributor and/or their affiliates will
           not use fund brokerage to pay for their obligation to provide
           additional compensation to financial advisors as described above.


POLICIES YOU SHOULD KNOW ABOUT

           Along with the information on the previous pages, the policies below
           may affect you as a shareholder. Some of this information, such as
           the section on distributions and taxes, applies to all investors,
           including those investing through a financial advisor.

           If you are investing through a financial advisor or through a
           retirement plan, check the materials you received from them about
           how to buy and sell shares because particular financial advisors or
           other intermediaries may adopt policies, procedures or limitations
           that are separate from those described by a fund. Please note that a
           financial advisor may charge fees separate from those charged by a
           fund and may be compensated by a fund.

           Keep in mind that the information in this prospectus applies only to
           the shares offered herein. Other share classes are described in
           separate prospectuses and have different fees, requirements and
           services.

           In order to reduce the amount of mail you receive and to help reduce
           expenses, we generally send a single copy of any shareholder report
           and prospectus to each household. If you do not want the mailing of
           these documents to be combined with those for other members of your
           household, please contact your financial advisor or call (800)
           621-1048.


           Policies about transactions

           EACH FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
           is open. Each fund calculates its share price for each class every
           business day, as of the close of regular trading on the New York
           Stock Exchange (typically 4:00 p.m. Eastern time, but sometimes
           earlier, as in the case of scheduled half-day trading or unscheduled
           suspensions of trading). You can place an order to buy or sell
           shares at any time.


48 | Policies You Should Know About
<PAGE>

           To help the government fight the funding of terrorism and money
           laundering activities, federal law requires all financial
           institutions to obtain, verify and record information that
           identifies each person who opens an account. What this means to you:
           When you open an account, we will ask for your name, address, date
           of birth and other information that will allow us to identify you.
           Some or all of this information will be used to verify the identity
           of all persons opening an account.

           We might request additional information about you (which may include
           certain documents, such as articles of incorporation for companies)
           to help us verify your identity and, in some cases, the information
           and/or documents may be required to conduct the verification. The
           information and documents will be used solely to verify your
           identity.

           We will attempt to collect any missing required and requested
           information by contacting you or your financial advisor. If we are
           unable to obtain this information within the time frames established
           by each fund, then we may reject your application and order.

           Each fund will not invest your purchase until all required and
           requested identification information has been provided and your
           application has been submitted in "good order." After we receive all
           the information, your application is deemed to be in good order and
           we accept your purchase, you will receive the net asset value per
           share next calculated, less any applicable sales charge.

           If we are unable to verify your identity within time frames
           established by each fund, after a reasonable effort to do so, you
           will receive written notification.

           With certain limited exceptions, only US residents may invest in
           each fund.

           Because orders placed through a financial advisor must be forwarded
           to the transfer agent before they can be processed, you'll need to
           allow extra time. Your financial advisor should be able to tell you
           approximately when your order will be processed. It is the
           responsibility of your financial advisor to forward your order to
           the transfer agent in a timely manner.

           INITIAL PURCHASE. The minimum initial investment for Class A, B and
           C shares is $1,000, except for investments on behalf of participants
           in certain fee-based and wrap programs offered through certain
           financial intermediaries approved by the Advisor,


                                            Policies You Should Know About  | 49
<PAGE>

           for which there is no minimum initial investment; and IRAs, for
           which the minimum initial investment is $500 per account. The
           minimum initial investment is $500 per account if you establish an
           automatic investment plan. Group retirement plans and certain other
           accounts have similar or lower minimum share balance requirements.

           SUB-MINIMUM BALANCES. Each fund may close your account and send you
           the proceeds if your balance falls below $1,000 ($250 for retirement
           accounts and $500 for accounts with an Automatic Investment Plan
           funded with $50 or more per month in subsequent investments). We
           will give you 60 days' notice (90 days for retirement accounts) so
           you can either increase your balance or close your account (these
           policies don't apply to investors with $100,000 or more in DWS fund
           shares, investors in certain fee-based and wrap programs offered
           through certain financial intermediaries approved by the Advisor, or
           group retirement plans and certain other accounts having lower
           minimum share balance requirements).

           SUBSEQUENT INVESTMENTS. The minimum subsequent investment is $50.
           However, there is no minimum investment requirement for subsequent
           investments in Class A shares on behalf of participants in certain
           fee-based and wrap programs offered through certain financial
           intermediaries approved by the Advisor.

           MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive
           trading of fund shares may present risks to long-term shareholders,
           including potential dilution in the value of fund shares,
           interference with the efficient management of a fund's portfolio
           (including losses on the sale of investments), taxable gains to
           remaining shareholders and increased brokerage and administrative
           costs. These risks may be more pronounced if a fund invests in
           certain securities, such as those that trade in foreign markets, are
           illiquid or do not otherwise have "readily available market
           quotations." Certain investors may seek to employ short-term trading
           strategies aimed at exploiting variations in portfolio valuation
           that arise from the nature of the securities held by a fund (e.g.,
           "time zone arbitrage"). Each fund discourages short-term and
           excessive trading and has adopted policies and procedures that are
           intended to detect and deter short-term and excessive trading.


50 | Policies You Should Know About
<PAGE>

           Pursuant to its policies, each fund will impose a 2% redemption fee
           on fund shares held for less than a specified holding period
           (subject to certain exceptions discussed below under "Redemption
           fees"). Each fund also reserves the right to reject or cancel a
           purchase or exchange order for any reason without prior notice. For
           example, a fund may in its discretion reject or cancel a purchase or
           an exchange order even if the transaction is not subject to the
           specific roundtrip transaction limitation described below if the
           Advisor believes that there appears to be a pattern of short-term or
           excessive trading activity by a shareholder or deems any other
           trading activity harmful or disruptive to a fund. Each fund, through
           its Advisor and transfer agent, will measure short-term and
           excessive trading by the number of roundtrip transactions within a
           shareholder's account during a rolling 12-month period. A
           "roundtrip" transaction is defined as any combination of purchase
           and redemption activity (including exchanges) of the same fund's
           shares. Each fund may take other trading activity into account if a
           fund believes such activity is of an amount or frequency that may be
           harmful to long-term shareholders or disruptive to portfolio
           management.

           Shareholders are limited to four roundtrip transactions in the same
           DWS Fund (excluding money market funds) over a rolling 12-month
           period. Shareholders with four or more roundtrip transactions in the
           same DWS Fund within a rolling 12-month period generally will be
           blocked from making additional purchases of, or exchanges into, that
           DWS Fund. Each fund has sole discretion whether to remove a block
           from a shareholder's account. The rights of a shareholder to redeem
           shares of a DWS Fund are not affected by the four roundtrip
           transaction limitation, but all redemptions remain subject to each
           fund's redemption fee policy (see "Redemption fees" described
           below).

           Each fund may make exceptions to the roundtrip transaction policy
           for certain types of transactions if, in the opinion of the Advisor,
           the transactions do not represent short-term or excessive trading or
           are not abusive or harmful to a fund, such as, but not limited to,
           systematic transactions, required minimum retirement distributions,
           transactions initiated by a fund or administrator and transactions
           by certain qualified fund-of-fund(s).


                                            Policies You Should Know About  | 51
<PAGE>

           In certain circumstances where shareholders hold shares of a fund
           through a financial intermediary, the fund may rely upon the
           financial intermediary's policy to deter short-term or excessive
           trading if the Advisor believes that the financial intermediary's
           policy is reasonably designed to detect and deter transactions that
           are not in the best interests of a fund. A financial intermediary's
           policy relating to short-term or excessive trading may be more or
           less restrictive than the DWS Funds' policy, may permit certain
           transactions not permitted by the DWS Funds' policies, or prohibit
           transactions not subject to the DWS Funds' policies.

           The Advisor may also accept undertakings from a financial
           intermediary to enforce short-term or excessive trading policies on
           behalf of a fund that provide a substantially similar level of
           protection for each fund against such transactions. For example,
           certain financial intermediaries may have contractual, legal or
           operational restrictions that prevent them from blocking an account.
           In such instances, the financial intermediary may use alternate
           techniques that the Advisor considers to be a reasonable substitute
           for such a block.

           In addition, if a fund invests some portion of its assets in foreign
           securities, it has adopted certain fair valuation practices intended
           to protect the fund from "time zone arbitrage" with respect to its
           foreign securities holdings and other trading practices that seek to
           exploit variations in portfolio valuation that arise from the nature
           of the securities held by a fund. (See "How each fund calculates
           share price.")

           There is no assurance that these policies and procedures will be
           effective in limiting short-term and excessive trading in all cases.
           For example, the Advisor may not be able to effectively monitor,
           detect or limit short-term or excessive trading by underlying
           shareholders that occurs through omnibus accounts maintained by
           broker-dealers or other financial intermediaries. The Advisor
           reviews trading activity at the omnibus level to detect short-term
           or excessive trading. If the Advisor has reason to suspect that
           short-term or excessive trading is occurring at the omnibus level,
           the Advisor will contact the financial intermediary to request
           underlying shareholder level activity. Depending on the amount of
           fund shares held in such omnibus accounts (which may represent most
           of a fund's shares) short-term and/or excessive trading of fund
           shares could adversely affect long-term shareholders in a fund. If
           short-term or excessive trading is identified, the Advisor will take
           appropriate action.


52 | Policies You Should Know About
<PAGE>

           Each fund's market timing policies and procedures may be modified or
           terminated at any time.

           REDEMPTION FEES. Each fund imposes a redemption fee of 2% of the
           total redemption amount (calculated at net asset value, without
           regard to the effect of any contingent deferred sales charge; any
           contingent deferred sales charge is also assessed on the total
           redemption amount without regard to the assessment of the 2%
           redemption fee) on all fund shares redeemed or exchanged within 15
           days of buying them (either by purchase or exchange). The redemption
           fee is paid directly to each fund and is designed to encourage
           long-term investment and to offset transaction and other costs
           associated with short-term or excessive trading. For purposes of
           determining whether the redemption fee applies, shares held the
           longest time will be treated as being redeemed first and shares held
           the shortest time will be treated as being redeemed last.

           The redemption fee is applicable to fund shares purchased either
           directly or through a financial intermediary, such as a
           broker-dealer. Transactions through financial intermediaries
           typically are placed with a fund on an omnibus basis and include
           both purchase and sale transactions placed on behalf of multiple
           investors. These purchase and sale transactions are generally netted
           against one another and placed on an aggregate basis; consequently
           the identities of the individuals on whose behalf the transactions
           are placed generally are not known to a fund. For this reason, each
           fund has undertaken to notify financial intermediaries of their
           obligation to assess the redemption fee on customer accounts and to
           collect and remit the proceeds to each fund. However, due to
           operational requirements, the intermediaries' methods for tracking
           and calculating the fee may be inadequate or differ in some respects
           from each fund's. Subject to approval by the Advisor or each fund's
           Board, intermediaries who transact business on an omnibus basis may
           implement the redemption fees according to their own operational
           guidelines (which may be different than the funds' policies) and
           remit the fees to the funds.

           The redemption fee will not be charged in connection with the
           following exchange or redemption transactions: (i) transactions on
           behalf of participants in certain research wrap programs; (ii)
           transactions on behalf of a shareholder to return any excess IRA
           contributions to the shareholder; (iii) transactions on behalf of a
           shareholder to effect a required minimum distribution on an IRA;
           (iv) transactions on behalf of any mutual fund advised by


                                            Policies You Should Know About  | 53
<PAGE>

           the Advisor and its affiliates (e.g., "funds of funds") or, in the
           case of a master/feeder relationship, redemptions by the feeder fund
           from the master portfolio; (v) transactions on behalf of certain
           unaffiliated mutual funds operating as funds of funds; (vi)
           transactions following death or disability of any registered
           shareholder, beneficial owner or grantor of a living trust with
           respect to shares purchased before death or disability; (vii)
           transactions involving hardship of any registered shareholder;
           (viii) systematic transactions with pre-defined trade dates for
           purchases, exchanges or redemptions, such as automatic account
           rebalancing, or loan origination and repayments; (ix) transactions
           involving shares purchased through the reinvestment of dividends or
           other distributions; (x) transactions involving shares transferred
           from another account in the same fund or converted from another
           class of the same fund (the redemption fee period will carry over to
           the acquired shares); (xi) transactions initiated by a fund or
           administrator (e.g., redemptions for not meeting account minimums,
           to pay account fees funded by share redemptions, or in the event of
           the liquidation or merger of the fund); or (xii) transactions in
           cases when there are legal or contractual limitations or
           restrictions on the imposition of the redemption fee (as determined
           by a fund or its agents in their sole discretion). It is the policy
           of the DWS funds to permit approved fund platform providers to
           execute transactions within the funds without the imposition of a
           redemption fee if such providers have implemented alternative
           measures that are determined by the Advisor to provide controls on
           short-term and excessive trading that are comparable to the DWS
           funds' policies.

           THE AUTOMATED INFORMATION LINE IS AVAILABLE 24 HOURS A DAY BY
           CALLING (800) 621-1048. You can use our automated phone services to
           get information on DWS funds generally and on accounts held directly
           at DWS Scudder. You can also use this service to make exchanges and
           to purchase and sell shares.

           QUICKBUY AND QUICKSELL let you set up a link between a DWS fund
           account and a bank account. Once this link is in place, you can move
           money between the two with a phone call. You'll need to make sure
           your bank has Automated Clearing House (ACH) services. Transactions
           take two to three days to be completed and there is a $50 minimum
           and a $250,000 maximum. To set up QuickBuy or QuickSell on a new
           account, see the account application; to add it to an existing
           account, call (800) 621-1048.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The DWS Scudder Web site can be a valuable resource for shareholders with
Internet access. Go to WWW.DWS-SCUDDER.COM to get up-to-date information, review
balances or even place orders for exchanges.



54 | Policies You Should Know About
<PAGE>

           TELEPHONE AND ELECTRONIC TRANSACTIONS. Generally, you are
           automatically entitled to telephone and electronic transaction
           privileges, but you may elect not to have them when you open your
           account or by contacting Shareholder Services at (800) 621-1048 at a
           later date.

           Since many transactions may be initiated by telephone or
           electronically, it's important to understand that as long as we take
           reasonable steps to ensure that an order to purchase or redeem
           shares is genuine, such as recording calls or requesting
           personalized security codes or other information, we are not
           responsible for any losses that may occur as a result. For
           transactions conducted over the Internet, we recommend the use of a
           secure Internet browser. In addition, you should verify the accuracy
           of your confirmation statements immediately after you receive them.

           EACH FUND DOES NOT ISSUE SHARE CERTIFICATES. However, if you
           currently have shares in certificated form, you must include the
           share certificates properly endorsed or accompanied by a duly
           executed stock power when exchanging or redeeming shares. You may
           not exchange or redeem shares in certificate form by telephone or
           via the Internet.

           WHEN YOU ASK US TO SEND OR RECEIVE A WIRE, please note that while we
           don't charge a fee to send or receive wires, it's possible that your
           bank may do so. Wire transactions are generally completed within 24
           hours. Each fund can only send wires of $1,000 or more and accept
           wires of $50 or more.

           EACH FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by check,
           bank or Federal Funds wire transfer or by electronic bank transfer.
           Please note that a fund does not accept cash, money orders,
           traveler's checks, starter checks, third party checks (except checks
           for retirement plan asset transfers and rollovers or for Uniform
           Gifts to Minors Act/Uniform Transfers to Minors Act accounts),
           checks drawn on foreign banks or checks issued by credit card
           companies or Internet-based companies. Thus, subject to the
           foregoing exceptions for certain third party checks, checks that are
           otherwise permissible must be drawn by the account holder on a
           domestic bank and must be payable to a fund.

           SIGNATURE GUARANTEE. When you want to sell more than $100,000 worth
           of shares or send proceeds to a third party or to a new address,
           you'll usually need to place your order in writing and include a
           signature guarantee. However, if you want money




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

If you ever have difficulty placing an order by phone or Internet, you can send
us your order in writing.



                                            Policies You Should Know About  | 55
<PAGE>

           wired to a bank account that is already on file with us, you don't
           need a signature guarantee. Also, generally you don't need a
           signature guarantee for an exchange, although we may require one in
           certain other circumstances.

           A signature guarantee is simply a certification of your signature -
           a valuable safeguard against fraud. You can get a signature
           guarantee from an eligible guarantor institution, including
           commercial banks, savings and loans, trust companies, credit unions,
           member firms of a national stock exchange or any member or
           participant of an approved signature guarantor program. Note that
           you can't get a signature guarantee from a notary public and we must
           be provided the original guarantee.

           SELLING SHARES OF TRUST ACCOUNTS AND BUSINESS OR ORGANIZATION
           ACCOUNTS may require additional documentation. Please call (800)
           621-1048 or contact your financial advisor for more information.

           WHEN YOU SELL SHARES THAT HAVE A CDSC, we calculate the CDSC as a
           percentage of what you paid for the shares or what you are selling
           them for - whichever results in the lower charge to you. In
           processing orders to sell shares, the shares with the lowest CDSC
           are sold first. Exchanges from one fund into another don't affect
           CDSCs; for each investment you make, the date you first bought
           shares is the date we use to calculate a CDSC on that particular
           investment.

           There are certain cases in which you may be exempt from a CDSC.
           These include:

           -  the death or disability of an account owner (including a joint
              owner). This waiver applies only under certain conditions. Please
              contact your financial advisor or Shareholder Services to
              determine if the conditions exist

           -  withdrawals made through an automatic withdrawal plan up to a
              maximum of 12% per year of the net asset value of the account

           -  withdrawals related to certain retirement or benefit plans

           -  redemptions for certain loan advances, hardship provisions or
              returns of excess contributions from retirement plans

           -  for Class A shares purchased through the Large Order NAV Purchase
              Privilege, redemption of shares whose dealer of record at the
              time of the investment notifies the Distributor that the dealer
              waives the applicable commission

56 | Policies You Should Know About
<PAGE>

           -  for Class C shares, redemption of shares purchased through a
           dealer-sponsored asset allocation program maintained on an omnibus
           record-keeping system, provided the dealer of record has waived the
           advance of the first year distribution and service fees applicable
           to such shares and has agreed to receive such fees quarterly

           In each of these cases, there are a number of additional provisions
           that apply in order to be eligible for a CDSC waiver. Your financial
           advisor or Shareholder Services can answer your questions and help
           you determine if you are eligible.

           IF YOU SELL SHARES IN A DWS FUND AND THEN DECIDE TO INVEST WITH DWS
           SCUDDER AGAIN WITHIN SIX MONTHS, you may be able to take advantage
           of the "reinstatement feature." With this feature, you can put your
           money back into the same class of a DWS fund at its current NAV and,
           for purposes of a sales charge, it will be treated as if it had
           never left DWS Scudder.

           You'll be reimbursed (in the form of fund shares) for any CDSC you
           paid when you sold. Future CDSC calculations will be based on your
           original investment date, rather than your reinstatement date. There
           is also an option that lets investors who sold Class B shares buy
           Class A shares (if available) with no sales charge, although they
           won't be reimbursed for any CDSC they paid. You can only use the
           reinstatement feature once for any given group of shares. To take
           advantage of this feature, contact Shareholder Services or your
           financial advisor.

           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are other
           circumstances when it could be longer, including, but not limited
           to, when you are selling shares you bought recently by check or ACH
           (the funds will be placed under a 10 calendar day hold to ensure
           good funds) or when unusual circumstances prompt the SEC to allow
           further delays. Certain expedited redemption processes may also be
           delayed when you are selling recently purchased shares or in the
           event of closing of the Federal Reserve Bank's wire payment system.
           In addition, each fund reserves the right to suspend or postpone
           redemptions as permitted pursuant to Section 22(e) of the Investment
           Company Act of 1940. Generally, those circumstances are when 1) the
           New York Stock Exchange is closed other than customary weekend or
           holiday closings; 2) trading on the New York Stock Exchange is
           restricted; 3) an emergency


                                            Policies You Should Know About  | 57
<PAGE>

           exists which makes the disposal of securities owned by a fund or the
           fair determination of the value of a fund's net assets not
           reasonably practicable; or 4) the SEC, by order, permits the
           suspension of the right of redemption. Redemption payments by wire
           may also be delayed in the event of a non-routine closure of the
           Federal Reserve wire payment system. For additional rights reserved
           by each fund, please see "Other rights we reserve."

           You may obtain additional information about other ways to sell your
           shares by contacting your financial advisor.


           How each fund calculates share price

           To calculate net asset value, or NAV, each share class uses the
           following equation:


<TABLE>
<S>                                                     <C> <C>
            TOTAL ASSETS - TOTAL LIABILITIES
           -----------------------------------------    =    NAV
               TOTAL NUMBER OF SHARES OUTSTANDING
</TABLE>


           The price at which you buy shares is based on the NAV per share
           calculated after the order is received by the transfer agent,
           although for Class A shares it will be adjusted to allow for any
           applicable sales charge (see "Choosing a Share Class"). The price at
           which you sell shares is also based on the NAV per share calculated
           after the order is received by the transfer agent, although a CDSC
           may be taken out of the proceeds (see "Choosing a Share Class").

           EACH FUND CHARGES A REDEMPTION FEE EQUAL TO 2.00% of the value of
           shares redeemed or exchanged within 15 days of purchase. Please see
           "Policies about transactions - Redemption fees" for further
           information.

           WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
           INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
           However, we may use methods approved by a fund's Board, such as a
           fair valuation model, which are intended to reflect fair value when
           pricing service information or market quotations are not readily
           available or when a security's value or a meaningful portion of the
           value of a fund's portfolio is believed to have been materially
           affected by a significant event, such as a natural disaster, an
           economic event like a bankruptcy filing, or a substantial
           fluctuation in domestic or foreign markets that has occurred between
           the close of the exchange or market on which the security is
           principally traded (for example, a foreign


58 | Policies You Should Know About
<PAGE>

           exchange or market) and the close of the New York Stock Exchange. In
           such a case, a fund's value for a security is likely to be different
           from the last quoted market price or pricing service information. In
           addition, due to the subjective and variable nature of fair value
           pricing, it is possible that the value determined for a particular
           asset may be materially different from the value realized upon such
           asset's sale. It is expected that the greater the percentage of fund
           assets that is invested in non-US securities, the more extensive
           will be a fund's use of fair value pricing. This is intended to
           reduce a fund's exposure to "time zone arbitrage" and other harmful
           trading practices. (See "Market timing policies and procedures.")

           TO THE EXTENT THAT A FUND INVESTS IN SECURITIES THAT ARE TRADED
           PRIMARILY IN FOREIGN MARKETS, the value of its holdings could change
           at a time when you aren't able to buy or sell fund shares. This is
           because some foreign markets are open on days or at times when a
           fund doesn't price its shares. (Note that prices for securities that
           trade on foreign exchanges can change significantly on days when the
           New York Stock Exchange is closed and you cannot buy or sell fund
           shares. Price changes in the securities a fund owns may ultimately
           affect the price of fund shares the next time the NAV is
           calculated.)


           Other rights we reserve

           You should be aware that we may do any of the following:

           -  withdraw or suspend the offering of shares at any time

           -  withhold a portion of your distributions and redemption proceeds
              for federal income tax purposes if we have been notified by the
              IRS that you are subject to backup withholding or if you fail to
              provide us with a correct taxpayer ID number and certain
              certifications including certification that you are not subject
              to backup withholding

           -  reject a new account application if you don't provide any
              required or requested identifying information, or for any other
              reason

                                            Policies You Should Know About  | 59
<PAGE>

           -  refuse, cancel, limit or rescind any purchase or exchange order,
           without prior notice; freeze any account (meaning you will not be
           able to purchase fund shares in your account); suspend account
           services; and/or involuntarily redeem your account if we think that
           the account is being used for fraudulent or illegal purposes; one or
           more of these actions will be taken when, at our sole discretion,
           they are deemed to be in a fund's best interests or when a fund is
           requested or compelled to do so by governmental authority or by
           applicable law

           -  close and liquidate your account if we are unable to verify your
              identity, or for other reasons; if we decide to close your
              account, your fund shares will be redeemed at the net asset value
              per share next calculated after we determine to close your
              account (less any applicable sales charge or redemption fee); you
              may recognize a gain or loss on the redemption of your fund
              shares and you may incur a tax liability

           -  pay you for shares you sell by "redeeming in kind," that is, by
              giving you securities (which typically will involve brokerage
              costs for you to liquidate) rather than cash, but which will be
              taxable to the same extent as a redemption for cash; a fund
              generally won't make a redemption in kind unless your requests
              over a 90-day period total more than $250,000 or 1% of the value
              of a fund's net assets, whichever is less

           -  change, add or withdraw various services, fees and account
              policies (for example, we may adjust a fund's investment minimums
              at any time)


60 | Policies You Should Know About
<PAGE>

UNDERSTANDING DISTRIBUTIONS AND TAXES

           Each fund intends to distribute to its shareholders virtually all of
           its net earnings. Each fund can earn money in two ways: by receiving
           interest, dividends or other income from securities it holds and by
           selling securities for more than it paid for them. (Each fund's
           earnings are separate from any gains or losses stemming from your
           own purchase and sale of shares.) Each fund may not always pay a
           dividend or distribution for a given period.

           EACH FUND INTENDS TO PAY DIVIDENDS AND DISTRIBUTIONS to its
           shareholders annually in December. If necessary, the funds may
           distribute at other times as needed.

           Dividends or distributions declared to shareholders of record in the
           last quarter of a given calendar year are treated for federal income
           tax purposes as if they were received on December 31 of that year,
           provided such dividends or distributions are paid by the end of the
           following January.

           For federal income tax purposes, income and capital gains
           distributions are generally taxable to shareholders. However,
           dividends and distributions received by retirement plans qualifying
           for tax exemption under federal income tax laws generally will not
           be taxable.

           YOU CAN CHOOSE HOW TO RECEIVE YOUR DIVIDENDS AND DISTRIBUTIONS. You
           can have them all automatically reinvested in fund shares (at NAV),
           all deposited directly to your bank account or all sent to you by
           check, have one type reinvested and the other sent to you by check
           or have them invested in a different fund. Tell us your preference
           on your application. If you don't indicate a preference, your
           dividends and distributions will all be reinvested in shares of the
           fund without a sales charge (if applicable). Distributions are
           treated the same for federal income tax purposes whether you receive
           them in cash or reinvest them in additional shares. For
           employer-sponsored qualified plans, and retirement plans,
           reinvestment (at NAV) is the only option.

           BUYING, SELLING OR EXCHANGING FUND SHARES WILL USUALLY HAVE FEDERAL
           INCOME TAX CONSEQUENCES FOR YOU (except in employer-sponsored
           qualified plans, IRAs or other tax-advantaged accounts). Your sale
           of shares may result in a capital




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

Because each shareholder's tax situation is unique, ask your tax professional
about the tax consequences of your investments, including any state and local
tax consequences.


                                     Understanding Distributions and Taxes  | 61
<PAGE>

           gain or loss. The gain or loss will be long-term or short-term
           depending on how long you owned the shares that were sold. For
           federal income tax purposes, an exchange is treated the same as a
           sale.

           THE FEDERAL INCOME TAX STATUS of a fund's earnings you receive and
           your own fund transactions generally depend on their type:


<TABLE>
<CAPTION>
GENERALLY TAXED AT LONG-TERM                          GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES:                                   INCOME RATES:
<S>                                                   <C>

DISTRIBUTIONS FROM A FUND
- gains from the sale of                              -  gains from the sale of
  securities held (or treated as                         securities held by a fund for
  held) by a fund for more than                          one year or less
  one year                                            -  all other taxable income
- qualified dividend income

TRANSACTIONS INVOLVING FUND
SHARES
- gains from selling fund                             -  gains from selling fund
  shares held for more than                              shares held for one year or
  one year                                               less
</TABLE>


           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY A FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, a fund's yield
           on those securities would generally be decreased. DWS Gold &
           Precious Metals Fund may elect to pass through to its shareholders a
           credit or deduction for foreign taxes it has paid if at the end of
           its year more than 50% of the fund's total assets are stocks or
           securities of foreign corporations. DWS Technology Fund generally
           will not be entitled to claim a credit or deduction with respect to
           foreign taxes paid by the fund. In addition, any investments in
           foreign securities or foreign currencies may increase or accelerate
           a fund's recognition of ordinary income and may affect the timing or
           amount of the fund's distributions. If you invest in a fund through
           a taxable account, your after-tax return could be negatively
           impacted.

           To the extent that a fund invests in certain debt obligations or
           certain other securities, investments in these obligations or
           securities may cause a fund to recognize taxable income in excess of
           the cash generated by such obligations. Thus, a fund could be
           required at times to liquidate other investments in order to satisfy
           its distribution requirements.


62 | Understanding Distributions and Taxes
<PAGE>

           For taxable years beginning before January 1, 2011, distributions to
           individuals and other noncorporate shareholders of investment income
           designated by a fund as derived from qualified dividend income are
           eligible for taxation for federal income tax purposes at the more
           favorable long-term capital gain rates. Qualified dividend income
           generally includes dividends from domestic and some foreign
           corporations. It does not include income from investments in debt
           securities or, generally, from REITs. In addition, a fund must meet
           certain holding period and other requirements with respect to the
           dividend-paying stocks in its portfolio and the shareholder must
           meet certain holding period and other requirements with respect to a
           fund's shares for the lower tax rates to apply.

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains
           recognized by individuals and other noncorporate shareholders has
           been reduced to 15%. For taxable years beginning on or after January
           1, 2011, the long-term capital gain rate is scheduled to return to
           20%.

           YOUR FUND WILL SEND YOU DETAILED FEDERAL INCOME TAX INFORMATION
           EVERY JANUARY. These statements tell you the amount and the federal
           income tax classification of any dividends or distributions you
           received. They also have certain details on your purchases and sales
           of shares.

           IF YOU INVEST RIGHT BEFORE A FUND PAYS A DIVIDEND, you'll be getting
           some of your investment back as a taxable dividend. You can avoid
           this by investing after a fund declares a dividend. In
           tax-advantaged retirement accounts you do not need to worry about
           this.

           CORPORATIONS are taxed at the same rates on ordinary income and
           capital gains but may be eligible for a dividends-received deduction
           for a portion of the income dividends they receive from a fund,
           provided certain holding period and other requirements are met.

           The above discussion summarizes certain federal income tax
           consequences for shareholders who are US persons. If you are a
           non-US person, please consult your own tax advisor with respect to
           the US tax consequences to you of an investment in a fund. For more
           information, see "Taxes" in the Statement of Additional Information.



                                     Understanding Distributions and Taxes  | 63
<PAGE>

APPENDIX
--------------------------------------------------------------------------------
           Hypothetical Expense Summary


           Using the annual fund operating expense ratios presented in the fee
           tables in the fund prospectus, the Hypothetical Expense Summary
           shows the estimated fees and expenses, in actual dollars, that would
           be charged on a hypothetical investment of $10,000 in the fund held
           for the next 10 years and the impact of such fees and expenses on
           fund returns for each year and cumulatively, assuming a 5% return
           for each year. The tables also assume that all dividends and
           distributions are reinvested and that Class B shares convert to
           Class A shares after six years. The annual fund expense ratios shown
           are net of any contractual fee waivers or expense reimbursements, if
           any, for the period of the contractual commitment. The tables
           reflect the maximum initial sales charge, if any, but do not reflect
           any contingent deferred sales charge or redemption fees, if any,
           which may be payable upon redemption. If contingent deferred sales
           charges or redemption fees were shown, the "Hypothetical Year-End
           Balance After Fees and Expenses" amounts shown would be lower and
           the "Annual Fees and Expenses" amounts shown would be higher. Also,
           please note that if you are investing through a third party
           provider, that provider may have fees and expenses separate from
           those of the fund that are not reflected here. Mutual fund fees and
           expenses fluctuate over time and actual expenses may be higher or
           lower than those shown.

           The Hypothetical Expense Summary should not be used or construed as
           an offer to sell, a solicitation of an offer to buy or a
           recommendation or endorsement of any specific mutual fund. You
           should carefully review the fund's prospectus to consider the
           investment objectives, risks, expenses and charges of the fund prior
           to investing.


64 | Appendix
<PAGE>

DWS Gold & Precious Metals Fund - Class A



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.47%             -2.42%       $  9,757.70        $   715.99
   2           10.25%        1.47%              1.02%       $ 10,102.15        $   145.97
   3           15.76%        1.47%              4.59%       $ 10,458.76        $   151.12
   4           21.55%        1.47%              8.28%       $ 10,827.95        $   156.46
   5           27.63%        1.47%             12.10%       $ 11,210.18        $   161.98
   6           34.01%        1.47%             16.06%       $ 11,605.90        $   167.70
   7           40.71%        1.47%             20.16%       $ 12,015.58        $   173.62
   8           47.75%        1.47%             24.40%       $ 12,439.73        $   179.75
   9           55.13%        1.47%             28.79%       $ 12,878.86        $   186.09
  10           62.89%        1.47%             33.33%       $ 13,333.48        $   192.66
  TOTAL                                                                        $ 2,231.34
</TABLE>


DWS Gold & Precious Metals Fund - Class B




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        2.22%              2.78%       $ 10,278.00        $   225.09
   2           10.25%        2.22%              5.64%       $ 10,563.73        $   231.34
   3           15.76%        2.22%              8.57%       $ 10,857.40        $   237.77
   4           21.55%        2.22%             11.59%       $ 11,159.24        $   244.38
   5           27.63%        2.22%             14.69%       $ 11,469.46        $   251.18
   6           34.01%        2.22%             17.88%       $ 11,788.31        $   258.16
   7           40.71%        1.47%             22.04%       $ 12,204.44        $   176.35
   8           47.75%        1.47%             26.35%       $ 12,635.26        $   182.57
   9           55.13%        1.47%             30.81%       $ 13,081.28        $   189.02
  10           62.89%        1.47%             35.43%       $ 13,543.05        $   195.69
  TOTAL                                                                        $ 2,191.55
</TABLE>



                                                                  Appendix  | 65
<PAGE>

DWS Gold & Precious Metals Fund - Class C



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        2.18%              2.82%       $ 10,282.00        $   221.07
   2           10.25%        2.18%              5.72%       $ 10,571.95        $   227.31
   3           15.76%        2.18%              8.70%       $ 10,870.08        $   233.72
   4           21.55%        2.18%             11.77%       $ 11,176.62        $   240.31
   5           27.63%        2.18%             14.92%       $ 11,491.80        $   247.09
   6           34.01%        2.18%             18.16%       $ 11,815.87        $   254.05
   7           40.71%        2.18%             21.49%       $ 12,149.07        $   261.22
   8           47.75%        2.18%             24.92%       $ 12,491.68        $   268.58
   9           55.13%        2.18%             28.44%       $ 12,843.94        $   276.16
  10           62.89%        2.18%             32.06%       $ 13,206.14        $   283.95
  TOTAL                                                                        $ 2,513.46
</TABLE>


DWS Technology Fund - Class A




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               5.75%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.11%             -2.08%       $  9,791.63        $   681.65
   2           10.25%        1.11%              1.73%       $ 10,172.53        $   110.80
   3           15.76%        1.11%              5.68%       $ 10,568.24        $   115.11
   4           21.55%        1.11%              9.79%       $ 10,979.34        $   119.59
   5           27.63%        1.11%             14.06%       $ 11,406.44        $   124.24
   6           34.01%        1.11%             18.50%       $ 11,850.15        $   129.07
   7           40.71%        1.11%             23.11%       $ 12,311.12        $   134.10
   8           47.75%        1.11%             27.90%       $ 12,790.02        $   139.31
   9           55.13%        1.11%             32.88%       $ 13,287.56        $   144.73
  10           62.89%        1.11%             38.04%       $ 13,804.44        $   150.36
  TOTAL                                                                        $ 1,848.96
</TABLE>



66 | Appendix
<PAGE>

DWS Technology Fund - Class B



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        2.25%              2.75%       $ 10,275.00        $   228.09
   2           10.25%        2.25%              5.58%       $ 10,557.56        $   234.37
   3           15.76%        2.25%              8.48%       $ 10,847.90        $   240.81
   4           21.55%        2.25%             11.46%       $ 11,146.21        $   247.43
   5           27.63%        2.25%             14.53%       $ 11,452.73        $   254.24
   6           34.01%        2.25%             17.68%       $ 11,767.68        $   261.23
   7           40.71%        1.11%             22.25%       $ 12,225.45        $   133.16
   8           47.75%        1.11%             27.01%       $ 12,701.02        $   138.34
   9           55.13%        1.11%             31.95%       $ 13,195.09        $   143.72
  10           62.89%        1.11%             37.08%       $ 13,708.37        $   149.31
  TOTAL                                                                        $ 2,030.70
</TABLE>


DWS Technology Fund - Class C




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                  ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                       OF RETURN:
               0.00%                   $10,000                             5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER         ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND          FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES          EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        2.08%              2.92%       $ 10,292.00        $    211.04
   2           10.25%        2.08%              5.93%       $ 10,592.53        $    217.20
   3           15.76%        2.08%              9.02%       $ 10,901.83        $    223.54
   4           21.55%        2.08%             12.20%       $ 11,220.16        $    230.07
   5           27.63%        2.08%             15.48%       $ 11,547.79        $    236.79
   6           34.01%        2.08%             18.85%       $ 11,884.99        $    243.70
   7           40.71%        2.08%             22.32%       $ 12,232.03        $    250.82
   8           47.75%        2.08%             25.89%       $ 12,589.20        $    258.14
   9           55.13%        2.08%             29.57%       $ 12,956.81        $    265.68
  10           62.89%        2.08%             33.35%       $ 13,335.15        $    273.44
  TOTAL                                                                        $  2,410.42
</TABLE>



                                                                  Appendix  | 67
<PAGE>

TO GET MORE INFORMATION

SHAREHOLDER REPORTS - These include commentary from a fund's management team
about recent market conditions and the effects of a fund's strategies on its
performance. They also have detailed performance figures, a list of everything
a fund owns, and its financial statements. Shareholders get these reports
automatically.

STATEMENT OF ADDITIONAL INFORMATION (SAI) - This tells you more about a fund's
features and policies, including additional risk information. The SAI is
incorporated by reference into this document (meaning that it's legally part of
this prospectus).

For a free copy of any of these documents or to request other information about
a fund, call (800) 621-1048, or contact DWS Scudder at the address listed
below. Each fund's SAI and shareholder reports are also available through the
DWS Scudder Web site at www.dws-scudder.com. These documents and other
information about each fund are available from the EDGAR Database on the SEC's
Internet site at www.sec.gov. If you like, you may obtain copies of this
information, after paying a copying fee, by e-mailing a request to
publicinfo@sec.gov or by writing the SEC at the address listed below. You can
also review and copy these documents and other information about each fund,
including each fund's SAI, at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the SEC's Public Reference Room may be
obtained by calling (800) SEC-0330.


<TABLE>
<CAPTION>
DWS SCUDDER              SEC                     DISTRIBUTOR
---------------------    --------------------    -------------------------------
<S>                      <C>                     <C>
PO Box 219151            100 F Street, N.E.      DWS Scudder Distributors, Inc.
Kansas City, MO          Washington, D.C.        222 South Riverside Plaza
64121-9151               20549-0102              Chicago, IL 60606-5808
WWW.DWS-SCUDDER.COM      WWW.SEC.GOV             (800) 621-1148
(800) 621-1048           (800) SEC-0330
</TABLE>



<TABLE>
<S>                         <C>                                  <C>
SEC FILE NUMBER:
DWS Mutual Funds, Inc.      DWS Gold & Precious Metals Fund      811-5565
                                        DWS Technology Fund      811-0547
</TABLE>




(03/01/08) DSSF2-1
[RECYCLE GRAPHIC APPEARS HERE]

                                                                       [Logo]DWS
                                                                         SCUDDER
                                                             Deutsche Bank Group




<PAGE>


                                 MARCH 1, 2008







                                   PROSPECTUS
                              ------------------
                              INSTITUTIONAL CLASS

                        DWS GOLD & PRECIOUS METALS FUND


                              DWS TECHNOLOGY FUND


As with all mutual funds, the Securities and Exchange Commission (SEC) does not
approve or disapprove these shares or determine whether the information in this
prospectus is truthful or complete. It is a criminal offense for anyone to
inform you otherwise.


                            ONE GLOBAL FORCE. ONE FOCUS. YOU. [DWS SCUDDER Logo]
                                                             Deutsche Bank Group




<PAGE>

CONTENTS




<TABLE>
<S>      <C>
HOW EACH FUND WORKS
  4      DWS Gold & Precious Metals
         Fund
 13      DWS Technology Fund
 22      Other Policies and Secondary
         Risks
 23      Who Manages and Oversees
         the Funds
 27      Financial Highlights


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUNDS
 30      Buying and Selling
         Institutional Class Shares
 36      Policies You Should Know
         About
 47      Understanding Distributions
         and Taxes
 51      Appendix
</TABLE>

<PAGE>

HOW EACH FUND WORKS

On the next few pages, you'll find information about each fund's investment
objective, the main strategies each uses to pursue that objective and the main
risks that could affect performance.

Whether you are considering investing in a fund or are already a shareholder,
you'll want to LOOK THIS INFORMATION OVER CAREFULLY. You may want to keep it on
hand for reference as well.

Remember that mutual funds are investments, not bank deposits. They're not
insured or guaranteed by the FDIC or any other government agency. Their share
prices will go up and down, and you could lose money by investing in them.

You can find DWS prospectuses on the Internet at WWW.DWS-SCUDDER.COM (the Web
site does not form a part of this prospectus).
<PAGE>


<TABLE>
<S>                                    <C>
                                         Institutional Class
  fund number                            1419

    DWS GOLD & PRECIOUS METALS FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks maximum return (principal change and
            income).

            The fund invests at least 80% of net assets, plus the amount of any
            borrowings for investment purposes, in common stocks and other
            equities of US and foreign companies engaged in activities related
            to gold, silver, platinum or other precious metals, and in gold
            coin and bullion directly. These companies may be involved in
            activities such as exploration, mining, fabrication, processing and
            distribution.

            While the fund invests mainly in common stocks, it may invest up to
            20% of net assets in:

            -  high-quality debt securities of companies in precious metals and
               minerals operations; and

            -  debt securities whose return is linked to precious metals
               prices.

            The fund's equity investments are mainly common stocks, but may
            also include other types of equities such as preferred or
            convertible stocks.

            In choosing individual securities, the portfolio managers use a
            combination of two analytical disciplines:

            -  BOTTOM-UP RESEARCH. The managers look for companies with strong
               management and highly marketable securities. They also consider
               the quality of metals and minerals mined by a company, its
               fabrication techniques and costs, and its unmined reserves,
               among other factors.

            -  GROWTH ORIENTATION. The managers generally look for companies
               that they believe have above-average potential for sustainable
               growth of revenue or earnings and whose market value appears
               reasonable in light of their business prospects.


4 | DWS Gold & Precious Metals Fund
<PAGE>

            The managers may focus on the securities of particular issuers or
            industries within the gold and precious metals sector, or on
            particular countries or regions at different times.

            The managers will normally sell a stock when the managers believe
            its price is unlikely to go higher, its fundamentals have
            deteriorated, other investments offer better opportunities or in
            the course of adjusting the fund's emphasis on a given industry.

            OTHER INVESTMENTS. The fund is permitted, but not required, to use
            various types of derivatives (contracts whose value is based on,
            for example, indices, currencies or securities). Derivatives may be
            used for hedging and for risk management or for non-hedging
            purposes to seek to enhance potential gains. The fund may use
            derivatives in circumstances where portfolio management believes
            they offer an economical means of gaining exposure to a particular
            asset class or to keep cash on hand to meet shareholder redemptions
            or other needs while maintaining exposure to the market.

            In particular, the fund may use futures and options.

            SECURITIES LENDING. The fund may lend its investment securities in
            an amount up to 33 1/3% of its total assets to approved
            institutional borrowers who need to borrow securities in order to
            complete certain transactions.


            THE MAIN RISKS OF INVESTING IN THE FUND

            There are several risk factors that could hurt the fund's
            performance, cause you to lose money or cause the fund's
            performance to trail that of other investments.

                       SECTOR RISK. An important factor with this fund is
                       fluctuations in market prices for gold and other
                       precious metals. When gold or other precious metals
                       prices fall, you should expect the value of your
                       investment to fall as well. Gold and other precious
                       metals prices can be influenced by a variety of
                       economic, financial and political factors, especially
                       inflation: when inflation is low or expected to fall,
                       prices tend to be weak.

                       STOCK MARKET RISK. The fund is affected by how the stock
                       market performs. To the extent the fund invests in a
                       particular capitalization, the fund's performance may be
                       proportionately affected by





THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS


This fund is designed for investors interested in broad exposure to the gold and
precious metals market and who understand the risks connected with it.




                                            DWS Gold & Precious Metals Fund  | 5
<PAGE>

            that segment's general performance. When stock prices fall, you
            should expect the value of your investment to fall as well. Because
            a stock represents ownership in its issuer, stock prices can be
            hurt by poor management, shrinking product demand and other
            business risks. These factors may affect single companies as well
            as groups of companies. In addition, movements in financial markets
            may adversely affect a stock's price, regardless of how well the
            company performs. The market as a whole may not favor the types of
            investments the fund makes, which could affect the fund's ability
            to sell them at an attractive price.

            Prices of gold or other precious metals and minerals-related stocks
            may move up and down rapidly, and have historically offered lower
            long-term performance than the stock market as a whole.

            CONCENTRATION RISK. The fund concentrates its investments in
            securities related to gold and other precious metals and minerals.
            As a result, market price movements, regulatory changes, or
            economic conditions affecting companies in these industries will
            have a significant impact on the fund's performance.

            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as amended. This means
            that the fund may invest in securities of relatively few issuers.
            Thus, the performance of one or a small number of portfolio
            holdings can affect overall performance more than if the fund
            invested in a larger number of issuers.

            FOREIGN INVESTMENT RISK. Foreign investments involve certain
            special risks, including:

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed higher taxes.

            -  INFORMATION RISK. Companies based in foreign markets are usually
               not subject to accounting, auditing and financial reporting
               standards and practices as stringent as those in the US.
               Therefore, their financial reports may present an incomplete,
               untimely or misleading picture of a company, as compared to the
               financial reports required in the US.


6 | DWS Gold & Precious Metals Fund
<PAGE>

            -  LIQUIDITY RISK. Investments that trade less can be more
            difficult or more costly to buy, or to sell, than more liquid or
            active investments. This liquidity risk is a factor of the trading
            volume of a particular investment, as well as the size and
            liquidity of the entire local market. On the whole, foreign
            exchanges are smaller and less liquid than US exchanges. This can
            make buying and selling certain investments more difficult and
            costly. Relatively small transactions in some instances can have a
            disproportionately large effect on the price and supply of
            securities. In certain situations, it may become virtually
            impossible to sell an investment in an orderly fashion at a price
            that approaches portfolio management's estimate of its value. For
            the same reason, it may at times be difficult to value the fund's
            foreign investments.

            -  REGULATORY RISK. There is generally less government regulation
               of foreign markets, companies and securities dealers than in the
               US.

            -  CURRENCY RISK. The fund invests in securities denominated in
               foreign currencies. Changes in exchange rates between foreign
               currencies and the US dollar may affect the US dollar value of
               foreign securities or the income or gain received on these
               securities.

            -  LIMITED LEGAL RECOURSE RISK. Legal remedies for investors may be
               more limited than the legal remedies available in the US.

            -  TRADING PRACTICE RISK. Brokerage commissions and other fees are
               generally higher for foreign investments than for US
               investments. The procedures and rules governing foreign
               transactions and custody may also involve delays in payment,
               delivery or recovery of money or investments.

            -  TAXES. Foreign withholding and certain other taxes may reduce
               the amount of income available to distribute to shareholders of
               the fund. In addition, special US tax considerations may apply
               to the fund's foreign investments.

            EMERGING MARKET RISK. All of the risks of investing in foreign
            securities are increased in connection with investments in emerging
            markets securities. In addition, profound social changes and
            business practices that depart from norms in developed countries'
            economies have hindered the orderly growth of emerging economies
            and their markets in the past


                                            DWS Gold & Precious Metals Fund  | 7
<PAGE>

            and have caused instability. High levels of debt tend to make
            emerging economies heavily reliant on foreign capital and
            vulnerable to capital flight. Countries in emerging markets are
            also more likely to experience high levels of inflation, deflation
            or currency devaluation, which could also hurt their economies and
            securities markets. For these and other reasons, investments in
            emerging markets are often considered speculative.

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

            SECURITIES LENDING RISK. Any loss in the market price of securities
            loaned by the fund that occurs during the term of the loan would be
            borne by the fund and would adversely affect the fund's
            performance. Also, there may be delays in recovery of securities
            loaned or even a loss of rights in the collateral should the
            borrower of the securities fail financially while the loan is
            outstanding. However, loans will be made only to borrowers selected
            by the fund's delegate after a review of relevant facts and
            circumstances, including the creditworthiness of the borrower.


8 | DWS Gold & Precious Metals Fund
<PAGE>

            Other factors that could affect performance include:

            -  portfolio management could be wrong in the analysis of
               industries, companies, economic trends, the relative
               attractiveness of different securities or other matters.

            -  a bond could fall in credit quality, go into default, or
               decrease in value for various reasons, including a change in
               prevailing interest rates.

            -  derivatives could produce disproportionate losses due to a
               variety of factors, including the failure of the counterparty to
               meet its obligations or unexpected price or interest rate
               movements. (See "Secondary Risks" for more information.)

            -  the fund may purchase securities that are subject to legal or
               contractual restriction on resale ("restricted securities"). The
               fund may be unable to sell a restricted security and it may be
               more difficult to determine a market value for a restricted
               security. This investment practice, therefore, could increase
               the level of illiquidity of the fund.


                                            DWS Gold & Precious Metals Fund  | 9
<PAGE>

THE FUND'S PERFORMANCE HISTORY

While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.

The bar chart shows how the performance of the fund's Institutional Class
shares has varied from year to year, which may give some idea of risk. The
table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The performance of both the fund and the index varies over time. All
figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).

The table shows returns for Institutional Class shares on a before-tax and
after-tax basis. After-tax returns are estimates calculated using the
historical highest individual federal marginal income tax rates and do not
reflect the impact of state and local taxes. Actual after-tax returns depend on
an investor's tax situation and may differ from those shown in the table.
After-tax returns shown are not relevant for investors who hold their shares
through tax-deferred arrangements, such as 401(k) plans or individual
retirement accounts.

Institutional Class shares commenced operations on or about March 1, 2008. In
the bar chart and table, the performance figures reflect the historical
performance of the fund's original share class (Class S). Institutional Class
shares are invested in the same portfolio of securities as Class S shares and
would have had substantially similar performance. Performance would differ only
to the extent that Institutional Class shares and Class S shares do not have
the same expenses. Class S shares are offered in a separate prospectus.

DWS Gold & Precious Metals Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[GRAPHIC APPEARS HERE]





<TABLE>
<S>         <C>       <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
-16.71       9.06      -8.99     16.04      66.84      94.50       -8.92     20.83      29.27      25.41
 1998       1999      2000       2001       2002       2003       2004       2005       2006        2007
</TABLE>





<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 44.33%, Q3 2003              WORST QUARTER: -18.89%, Q2 2004
</TABLE>




10 | DWS Gold & Precious Metals Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007


<TABLE>
<CAPTION>
                                              1 YEAR       5 YEARS      10 YEARS
<S>                                         <C>           <C>          <C>
 CLASS S
   Return before Taxes                          25.41        28.25        18.75
   Return after Taxes on Distributions          21.23        24.99        17.07
   Return after Taxes on Distributions
   and Sale of Fund Shares                      20.52        23.95        16.37
 S&P 500 (reflects no deductions for
 fees, expenses or taxes)                        5.49        12.83         5.91
 S&P/CITIGROUP GOLD & PRECIOUS
 METALS INDEX (reflects no deductions
 for fees, expenses or taxes)                   23.04        26.91        20.01
</TABLE>


     Total returns would have been lower if operating expenses hadn't been
reduced.


 STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
 index of 500 stocks. The index is designed to measure performance of the broad
 domestic economy through changes in the aggregate market value of 500 stocks
 representing all major industries.

 S&P/CITIGROUP GOLD & PRECIOUS METALS INDEX is an unmanaged index that
 represents the precious metals industry component of the S&P/Citigroup Global
 Equity family of indices, which include more than 7,000 companies in more than
 50 countries. On October 19, 2007, the S&P/Citigroup Gold & Precious Metals
 Index replaced the London Bullion Market Association Gold PM Fix Price/USD as
 the fund's secondary index because the Advisor believes that it more
 accurately reflects the fund's investment strategy.


--------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 730-1313 or visit our Web site at www.dws-scudder.com.


--------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.


                                           DWS Gold & Precious Metals Fund  | 11
<PAGE>

HOW MUCH INVESTORS PAY

The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.


<TABLE>
<CAPTION>
FEE TABLE
<S>                                            <C>
 SHAREHOLDER FEES, paid directly from your investment
_____________________________________________________________________________
 Redemption/Exchange Fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 1                                    2.00%

 ANNUAL OPERATING EXPENSES, deducted from fund assets
_____________________________________________________________________________
 Management Fee                                            0.87%
 Distribution and/or Service (12b-1) Fees                  None
 Other Expenses 2                                          0.28
 Acquired Funds (Underlying Funds) Fees
 and Expenses 3                                            0.01
 TOTAL ANNUAL OPERATING EXPENSES4                          1.16
</TABLE>


1   This fee is charged on all applicable redemptions or exchanges. Please see
   "Policies You Should Know About - Policies about transactions" for further
   information.

2   "Other Expenses" include an administrative services fee paid to the Advisor
   in the amount of 0.10%. "Other Expenses" are based on estimated amounts for
   the current fiscal year. Actual expenses may be different.

3   The amount indicated is based on the indirect net expenses associated with
   the fund's investment in the acquired funds (underlying funds) for the
   fiscal year ended October 31, 2007.

4   Through September 30, 2008, the Advisor has contractually agreed to waive
   all or a portion of its fees and reimburse or pay operating expenses of the
   fund so that total operating expenses will not exceed 1.23% for
   Institutional Class shares, excluding certain expenses such as
   extraordinary expenses, taxes, brokerage, interest and expenses of acquired
   funds (underlying funds). Although there can be no assurance that the
   current waiver/expense reimbursement arrangement will be maintained beyond
   September 30, 2008, the Advisor has committed to review the continuance of
   waiver/expense reimbursement arrangements by September 30, 2008.

Based on the costs above, this example helps you compare the expenses of the
Fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.


<TABLE>
<CAPTION>
EXAMPLE                    1 YEAR      3 YEARS      5 YEARS
<S>                       <C>         <C>          <C>
 Institutional Class        $118         $369        $639
</TABLE>



12 | DWS Gold & Precious Metals Fund
<PAGE>


<TABLE>
<S>                        <C>
                             Institutional Class
  ticker symbol              KTCIX
    fund number              511

    DWS TECHNOLOGY FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks growth of capital.

            Under normal circumstances, the fund invests at least 80% of net
            assets, plus the amount of any borrowings for investment purposes,
            in common stocks of companies in the technology sector. For
            purposes of the fund's 80% investment policy, companies in the
            technology sector must commit at least half of their assets to the
            technology sector or derive at least half of their revenues or net
            income from that sector. Examples of industries within the
            technology sector are semiconductors, software, telecom equipment,
            computer/hardware, IT services, the Internet and health technology.
            The fund may invest in companies of any size.

            While the fund invests mainly in US stocks, it could invest up to
            35% of net assets in foreign securities.

            The fund's equity investments are mainly common stocks, but may
            also include other types of equities such as preferred or
            convertible stocks.

            In choosing stocks, the portfolio managers use a combination of
            three analytical disciplines:

            BOTTOM-UP RESEARCH. The managers look for individual companies with
            a history of above-average growth, strong competitive positioning,
            attractive prices relative to potential growth, innovative products
            and services, sound financial strength and effective management,
            among other factors.

            GROWTH ORIENTATION. The managers generally look for companies that
            they believe have above-average potential for sustainable growth of
            revenue or earnings and whose market value appears reasonable in
            light of their business prospects.


                                                       DWS Technology Fund  | 13
<PAGE>

            TOP-DOWN ANALYSIS. The managers consider the economic outlook for
            various industries within the technology sector and look for those
            industries that may benefit from changes in the overall business
            environment.

            In addition, the managers use the support of a quantitative
            analytic group and its tools to attempt to actively manage the
            forecasted volatility risk of the fund as compared to funds with a
            similar investment goal, as well as appropriate benchmarks and peer
            groups. The managers may favor securities from various industries
            and companies within the technology sector at different times.

            The managers will normally sell a stock when they believe its price
            is unlikely to go higher, its fundamental factors have changed,
            other investments offer better opportunities, or in adjusting their
            emphasis on a given technology industry.

            OTHER INVESTMENTS. The fund is permitted, but not required, to use
            various types of derivatives (contracts whose value is based on,
            for example, indices, currencies or securities). Derivatives may be
            used for hedging and for risk management or for non-hedging
            purposes to seek to enhance potential gains. The fund may use
            derivatives in circumstances where portfolio management believes
            they offer an economical means of gaining exposure to a particular
            asset class or to keep cash on hand to meet shareholder redemptions
            or other needs while maintaining exposure to the market.

            In particular, the fund may use futures and options, including
            sales of covered put and call options.

            SECURITIES LENDING. The fund may lend its investment securities in
            an amount up to 33 1/3% of its total assets to approved
            institutional borrowers who need to borrow securities in order to
            complete certain transactions.


14 | DWS Technology Fund
<PAGE>

            THE MAIN RISKS OF INVESTING IN THE FUND

            There are several risk factors that could hurt the fund's
            performance, cause you to lose money or cause the fund's
            performance to trail that of other investments.

            STOCK MARKET RISK. The fund is affected by how the stock market
            performs. To the extent the fund invests in a particular
            capitalization, the fund's performance may be proportionately
            affected by that segment's general performance. When stock prices
            fall, you should expect the value of your investment to fall as
            well. Because a stock represents ownership in its issuer, stock
            prices can be hurt by poor management, shrinking product demand and
            other business risks. These factors may affect single companies as
            well as groups of companies. In addition, movements in financial
            markets may adversely affect a stock's price, regardless of how
            well the company performs. The market as a whole may not favor the
            types of investments the fund makes, which could affect the fund's
            ability to sell them at an attractive price.

            CONCENTRATION RISK. The fund concentrates its investments in the
            group of industries constituting the technology sector. As a
            result, factors affecting this sector, such as market price
            movements, market saturation and rapid product obsolescence will
            have a significant impact on the fund's performance. Additionally,
            many technology companies are smaller companies that may have
            limited business lines and limited financial resources, making them
            highly vulnerable to business and economic risks.

            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as
            amended. This means that the fund may invest in securities of
            relatively few issuers. Thus, the performance of one or a small
            number of portfolio holdings can affect overall performance more
            than if the fund invested in a larger number of issuers.

            FOREIGN INVESTMENT RISK. Foreign investments involve certain
            special risks, including:

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed higher taxes.




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

This fund is designed for investors who can accept above-average risks and are
interested in exposure to a sector that offers attractive long-term growth
potential.
                                                       DWS Technology Fund  | 15
<PAGE>

            -  INFORMATION RISK. Companies based in foreign markets are usually
            not subject to accounting, auditing and financial reporting
            standards and practices as stringent as those in the US. Therefore,
            their financial reports may present an incomplete, untimely or
            misleading picture of a company, as compared to the financial
            reports required in the US.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than US exchanges. This
               can make buying and selling certain investments more difficult
               and costly. Relatively small transactions in some instances can
               have a disproportionately large effect on the price and supply
               of securities. In certain situations, it may become virtually
               impossible to sell an investment in an orderly fashion at a
               price that approaches portfolio management's estimate of its
               value. For the same reason, it may at times be difficult to
               value the fund's foreign investments.

            -  REGULATORY RISK. There is generally less government regulation
               of foreign markets, companies and securities dealers than in the
               US.

            -  CURRENCY RISK. The fund invests in securities denominated in
               foreign currencies. Changes in exchange rates between foreign
               currencies and the US dollar may affect the US dollar value of
               foreign securities or the income or gain received on these
               securities.

            -  LIMITED LEGAL RECOURSE RISK. Legal remedies for investors may be
               more limited than the legal remedies available in the US.

            -  TRADING PRACTICE RISK. Brokerage commissions and other fees are
               generally higher for foreign investments than for US
               investments. The procedures and rules governing foreign
               transactions and custody may also involve delays in payment,
               delivery or recovery of money or investments.

            -  TAXES. Foreign withholding and certain other taxes may reduce
               the amount of income available to distribute to shareholders of
               the fund. In addition, special US tax considerations may apply
               to the fund's foreign investments.


16 | DWS Technology Fund
<PAGE>

            EMERGING MARKET RISK. All of the risks of investing in foreign
            securities are increased in connection with investments in emerging
            markets securities. In addition, profound social changes and
            business practices that depart from norms in developed countries'
            economies have hindered the orderly growth of emerging economies
            and their markets in the past and have caused instability. High
            levels of debt tend to make emerging economies heavily reliant on
            foreign capital and vulnerable to capital flight. Countries in
            emerging markets are also more likely to experience high levels of
            inflation, deflation or currency devaluation, which could also hurt
            their economies and securities markets. For these and other
            reasons, investments in emerging markets are often considered
            speculative.

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

            SECURITIES LENDING RISK. Any loss in the market price of securities
            loaned by the fund that occurs during the term of the loan would be
            borne by the fund and would adversely affect the fund's
            performance. Also, there may be delays in recovery of securities
            loaned or even a loss of rights in the collateral should the
            borrower of the securities fail financially while the loan is
            outstanding. However, loans will be made only to borrowers selected
            by the fund's delegate after a review of relevant facts and
            circumstances, including the creditworthiness of the borrower.

            IPO RISK. Securities purchased in initial public offerings (IPOs)
            may be very volatile, rising and falling rapidly, often based,
            among other reasons, on investor perceptions rather than on
            economic reasons. Additionally, investments in IPOs may magnify the
            fund's performance if it has a small asset base.


                                                       DWS Technology Fund  | 17
<PAGE>

            The fund is less likely to experience a similar impact on its
            performance as its assets grow because it is unlikely that the fund
            will be able to obtain proportionately larger IPO allocations.

            Other factors that could affect performance include:

            -  portfolio management could be wrong in the analysis of
               industries, companies, economic trends, the relative
               attractiveness of different securities or other matters.

            -  growth stocks may be out of favor for certain periods.

            -  derivatives could produce disproportionate losses due to a
               variety of factors, including the failure of the counterparty to
               meet its obligations or unexpected price or interest rate
               movements. (See "Secondary Risks" for more information.)

18 | DWS Technology Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.

The bar chart shows how the performance of the fund's Institutional Class
shares has varied from year to year, which may give some idea of risk. The
table on the following page shows how fund performance compares to relevant
index performance (which, unlike fund performance, does not reflect fees or
expenses). The performance of both the fund and the index varies over time. All
figures assume reinvestment of dividends and distributions (in the case of
after-tax returns, reinvested net of assumed tax rates).

The table shows returns for Institutional Class shares on a before-tax and
after-tax basis. After-tax returns are estimates calculated using the
historical highest individual federal marginal income tax rates and do not
reflect the impact of state and local taxes. Actual after-tax returns depend on
an investor's tax situation and may differ from those shown in the table.
After-tax returns shown are not relevant for investors who hold their shares
through tax-deferred arrangements, such as 401(k) plans or individual
retirement accounts.

DWS Technology Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Institutional Class
[GRAPHIC APPEARS HERE]





<TABLE>
<S>        <C>       <C>       <C>       <C>
49.13       2.86      4.09      0.75     14.44
2003       2004      2005      2006      2007
</TABLE>





<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 20.05%, Q2 2003              WORST QUARTER: -11.78%, Q2 2006
</TABLE>



                                                       DWS Technology Fund  | 19
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007


<TABLE>
<CAPTION>
                                               1 YEAR       5 YEARS      SINCE INCEPTION*
<S>                                          <C>           <C>          <C>
 INSTITUTIONAL CLASS
   Return before Taxes                           14.44        12.98            10.47
   Return after Taxes on Distributions           14.44        12.98            10.47
   Return after Taxes on Distributions
   and Sale of Fund Shares                        9.39        11.39             9.16
 S&P 500 (reflects no deductions for
 fees, expenses or taxes)                         5.49        12.83            11.27
 S&P GOLDMAN SACHS TECHNOLOGY
 INDEX (reflects no deductions for fees,
 expenses or taxes)                              16.94        15.58            14.64
</TABLE>


 *   Institutional Class shares commenced operations on August 19, 2002. Index
     returns begin August 31, 2002.

     Total returns would have been lower if operating expenses hadn't been
 reduced.

 STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
 index of 500 stocks. The index is designed to measure performance of the broad
 domestic economy through changes in the aggregate market value of 500 stocks
 representing all major industries.

 S&P GOLDMAN SACHS TECHNOLOGY INDEX is an unmanaged capitalization-weighted
 index based on a universe of technology-related stocks.

 In the past, the technology sector has experienced above-average volatility
 that produced significant fluctuations in the fund's performance.


--------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 730-1313 or visit our Web site at www.dws-scudder.com.


--------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.


20 | DWS Technology Fund
<PAGE>

HOW MUCH INVESTORS PAY

The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.


<TABLE>
<CAPTION>
FEE TABLE
<S>                                            <C>
 SHAREHOLDER FEES, paid directly from your investment
_____________________________________________________________________________
 Redemption/Exchange Fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 1                                    2.00%

 ANNUAL OPERATING EXPENSES, deducted from fund assets
_____________________________________________________________________________
 Management Fees                                           0.56%
 Distribution and/or Service (12b-1) Fees                  None
 Other Expenses                                            0.16
 TOTAL ANNUAL OPERATING EXPENSES                           0.72
</TABLE>


1   This fee is charged on all applicable redemptions or exchanges. Please see
   "Policies You Should Know About - Policies about transactions" for further
   information.

Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns, reinvested all dividends and distributions and sold your shares at the
end of each period. This is only an example; actual expenses will be different.



<TABLE>
<CAPTION>
EXAMPLE                    1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                       <C>         <C>          <C>          <C>
 Institutional Class         $74         $230         $401         $894
</TABLE>



                                                       DWS Technology Fund  | 21
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

           While the previous pages describe the main points of each fund's
           strategy and risks, there are a few other issues to know about:

           -  Although major changes tend to be infrequent, each fund's Board
              could change a fund's investment objective without seeking
              shareholder approval. In addition, the Board will provide
              shareholders with at least 60 days' notice prior to making any
              changes to the fund's 80% investment policy as described herein.

           -  As a temporary defensive measure, each fund could shift up to
              100% of its assets into investments such as money market
              securities. This could prevent losses, but, while engaged in a
              temporary defensive position, a fund will not be pursuing its
              investment objective. However, portfolio management may choose
              not to use these strategies for various reasons, even in volatile
              market conditions.


           Secondary risks

           The risk disclosure below applies to each fund, unless otherwise
           noted.

           DERIVATIVES RISK. Risks associated with derivatives include the risk
           that the derivative is not well correlated with the security, index
           or currency to which it relates; the risk that derivatives may
           result in losses or missed opportunities; the risk that the fund
           will be unable to sell the derivative because of an illiquid
           secondary market; the risk that a counterparty is unwilling or
           unable to meet its obligation; and the risk that the derivative
           transaction could expose the fund to the effects of leverage, which
           could increase the fund's exposure to the market and magnify
           potential losses. There is no guarantee that derivatives, to the
           extent employed, will have the intended effect, and their use could
           cause lower returns or even losses to the fund. The use of
           derivatives by the fund to hedge risk may reduce the opportunity for
           gain by offsetting the positive effect of favorable price movements.



           For more information

           This prospectus doesn't tell you about every policy or risk of
           investing in each fund.


22 | Other Policies and Secondary Risks
<PAGE>

           If you want more information on each fund's allowable securities and
           investment practices and the characteristics and risks of each one,
           you may want to request a copy of the Statement of Additional
           Information (the back cover tells you how to do this).

           Keep in mind that there is no assurance that a fund will achieve its
           objective.

           A complete list of each fund's portfolio holdings is posted as of
           the month-end on www.dws-scudder.com (the Web site does not form a
           part of this prospectus) on or after the last day of the following
           month. This posted information generally remains accessible at least
           until the date on which a fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. In addition, the
           fund's top ten equity holdings and other fund information is posted
           on www.dws-scudder.com as of the calendar quarter-end on or after
           the 15th day following quarter-end. Each fund's Statement of
           Additional Information includes a description of a fund's policies
           and procedures with respect to the disclosure of a fund's portfolio
           holdings.


WHO MANAGES AND OVERSEES THE FUNDS


           The investment advisor

           Deutsche Investment Management Americas Inc. ("DIMA" or the
           "Advisor"), with headquarters at 345 Park Avenue, New York, NY
           10154, is the investment advisor for the fund. Under the oversight
           of the Board, the Advisor, or a subadvisor, makes investment
           decisions, buys and sells securities for the fund and conducts
           research that leads to these purchase and sale decisions. The
           Advisor provides a full range of global investment advisory services
           to institutional and retail clients.

           DWS Scudder is part of Deutsche Asset Management, which is the
           marketing name in the US for the asset management activities of
           Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS
           Trust Company.

           Deutsche Asset Management is a global asset management organization
           that offers a wide range of investing expertise and resources,
           including hundreds of portfolio managers and analysts and an office
           network that reaches the world's major


                                        Who Manages and Oversees the Funds  | 23
<PAGE>

           investment centers. This well-resourced global investment platform
           brings together a wide variety of experience and investment insight
           across industries, regions, asset classes and investing styles.

           The Advisor is an indirect, wholly owned subsidiary of Deutsche Bank
           AG. Deutsche Bank AG is a major global banking institution that is
           engaged in a wide range of financial services, including investment
           management, mutual funds, retail, private and commercial banking,
           investment banking and insurance.

           MANAGEMENT FEE. The Advisor receives a management fee from each
           fund. Below is the actual rate paid by each fund for the most recent
           fiscal year, as a percentage of each fund's average daily net
           assets.


<TABLE>
<CAPTION>
FUND NAME                                         FEE PAID
<S>                                             <C>
  DWS Gold & Precious Metals Fund                   0.90  %
  DWS Technology Fund                               0.52%*
</TABLE>


           *   Reflects the effects of expense limitations and/or fee waivers
then in effect.


           Effective October 1, 2007, DWS Gold & Precious Metals Fund pays the
           Advisor under the investment management agreement a fee, calculated
           daily and paid monthly, at the annual rate of 0.885% of the fund's
           average daily net assets up to $500 million, and 0.835% thereafter.

           A discussion regarding the basis for the Board's approval of each
           fund's investment management agreement and, as applicable,
           subadvisory agreement, is contained in the shareholder reports for
           the annual period ended October 31 (see "Shareholder reports" on the
           back cover).

           The Advisor provides administrative services to DWS Gold & Precious
           Metals Fund under a separate administrative services agreement
           between the fund and the Advisor. Under its investment management
           agreement, DWS Technology Fund pays the Advisor for providing most
           of the fund's administrative services.


24 | Who Manages and Oversees the Funds
<PAGE>

           Subadvisor for DWS Gold & Precious Metals Fund

           The subadvisor for DWS Gold & Precious Metals Fund is Deutsche
           Investments Australia Limited ("DIAL"), Level 16, 126 Phillip
           Street, Sydney NSW 200, Australia, an affiliate of the Advisor. DIAL
           serves as both subadvisor for mutual funds and investment advisor
           for certain institutional accounts.

           Pursuant to its subadvisory agreement with the Advisor on behalf of
           the fund, DIAL performs the functions of the Advisor, including
           making the fund's investment decisions, buying and selling
           securities for the fund, conducting research that leads to these
           purchase and sale decisions, selecting brokers and dealers and
           negotiating brokerage commissions and dealer charges. The Advisor
           compensates DIAL out of the management fee it receives from the
           fund.


                                        Who Manages and Oversees the Funds  | 25
<PAGE>

Portfolio management

Each fund is managed by a team of investment professionals who collaborate to
develop and implement each fund's investment strategy. Each portfolio manager
on the teams has authority over all aspects of a fund's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with portfolio holdings.

The following people handle the day-to-day management of the funds.

DWS GOLD & PRECIOUS METALS FUND

Euan Leckie
Director of Deutsche Asset Management and Co-Manager of the fund.
- Joined Deutsche Asset Management in 1988 after 14 years as a senior financial
   analyst for CSR Limited and a mining analyst for Commercial Banking Company
   and Constable and Bain.
- Global equity analyst for Materials Sector; member of Global Materials Sector
   Research Team.
- Prior experience was as an exploration geologist for gold, base metals and
   diamonds in Australia and Indonesia.
- Joined the fund in 2002.
- BSc., University of Tasmania; BEc., Macquarie University, Sydney.

Greg Foulis
Director of Deutsche Asset Management and Co-Manager of the fund.
- Joined Deutsche Asset Management and the fund in October 2004.
- Joined Deutsche Bank in 1997 as a senior analyst after five years of
   financial markets experience. Prior experience includes seven years in the
   mining industry working as a geologist for a variety of senior and junior
   companies.
- BAppSc from NSW Institute of Technology; MComm from University of NSW.


DWS TECHNOLOGY FUND

Kelly P. Davis
Director of Deutsche Asset Management and Lead Portfolio Manager of the fund.
- Joined Deutsche Asset Management in 2003 after eight years of experience with
   semiconductors as an associate analyst in Equities Research with Credit
   Suisse First Boston, team leader in applications engineering at Advanced
   Micro Devices, and in technical roles at Interactive Silicon, Motorola,
   Inc. and Tellabs Operations, Inc.
- Joined the fund in 2005.
- BS, Purdue University; MBA, University of California, Berkeley.

Each fund's Statement of Additional Information provides additional information
about a portfolio manager's investments in each fund, a description of the
portfolio management compensation structure and information regarding other
accounts managed.


26 | Who Manages and Oversees the Funds
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of the table are for a single share.
The total return figures represent the percentage that an investor in a fund
would have earned (or lost), assuming all dividends and distributions were
reinvested. This information has been audited by Ernst & Young LLP, independent
registered public accounting firm, whose report, along with each fund's
financial statements, is included in each fund's annual report (see
"Shareholder reports" on the back cover). Institutional Class shares of DWS
Gold & Precious Metals Fund commenced operations on or about March 1, 2008 and,
therefore, financial highlights information is not available.


                                                      Financial Highlights  | 27
<PAGE>

DWS Technology Fund - Institutional Class


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                          2007            2006           2005          2004         2003
<S>                                          <C>            <C>             <C>           <C>           <C>
SELECTED PER SHARE DATA
-----------------------------------------------------------------------------------------------------          -
NET ASSET VALUE, BEGINNING OF PERIOD           $  11.76       $   11.25      $  10.58       $ 10.80      $  7.38
------------------------------------------     --------       ---------      --------       -------      -------
Income (loss) from investment
operations:
  Net investment income (loss) a                    .01           .00 c*          .07        (  .03)      (  .04)
__________________________________________     ________       _________      ________       _______      _______
  Net realized and unrealized gain
  (loss)                                           3.35             .51           .60        (  .19)        3.46
------------------------------------------     --------       ---------      --------       -------      -------
  TOTAL FROM INVESTMENT OPERATIONS                 3.36             .51           .67        (  .22)        3.42
__________________________________________     ________       _________      ________       _______      _______
Redemption fees                                     .00*            .00*          .00*            -            -
------------------------------------------     --------       ---------      --------       -------      -------
NET ASSET VALUE, END OF PERIOD                 $  15.12       $   11.76      $  11.25       $ 10.58      $ 10.80
------------------------------------------     --------       ---------      --------       -------      -------
Total Return (%)                                28.57b         4.53b,c         6.33b         ( 1.94)b      46.34
------------------------------------------     --------       ---------      --------       -------      -------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------    -------
Net assets, end of period ($ millions)                9               3             1             1            1
__________________________________________     ________       _________      ________       _______      _______
Ratio of expenses before expense
reductions (%)                                      .72             .78           .86           .86          .80
__________________________________________     ________       _________      ________       _______      _______
Ratio of expenses after expense
reductions (%)                                      .63             .63           .62           .76          .80
__________________________________________     ________       _________      ________       _______      _______
Ratio of net investment income (loss)
     (%)                                            .08            .04c           .73        (  .31)      (  .45)
__________________________________________     ________       _________      ________       _______      _______
Portfolio turnover rate (%)                          79              58           114            97           51
------------------------------------------     --------       ---------      --------       -------      -------
</TABLE>


a   Based on average shares outstanding during the period.

b  Total return would have been lower had certain expenses not been reduced.


c   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.017 per share
   and an increase in the ratio of net investment income of 0.14%. Excluding
   this non-recurring income, total return would have been 0.16% lower.

*   Amount is less than $.005.

28 | Financial Highlights
<PAGE>

HOW TO INVEST IN THE FUNDS

THE FOLLOWING PAGES TELL YOU HOW TO INVEST IN A FUND AND WHAT TO EXPECT AS A
SHAREHOLDER. The following pages also tell you about many of the services,
choices and benefits of being a shareholder. You'll also find information on
how to check the status of your account using the method that's most convenient
for you.

If you're investing directly with DWS Scudder, all of this information applies
to you. If you're investing through a "third party provider" - for example, a
workplace retirement plan, financial supermarket or financial advisor - your
provider may have its own policies or instructions and you should follow those.


You can find out more about the topics covered here by speaking with your
FINANCIAL ADVISOR OR A REPRESENTATIVE OF YOUR WORKPLACE RETIREMENT PLAN OR
OTHER INVESTMENT PROVIDER.

<PAGE>

Buying and Selling INSTITUTIONAL CLASS Shares


           You may buy Institutional Class shares through your securities
           dealer or through any financial institution that is authorized to
           act as a shareholder servicing agent ("financial advisor"). Contact
           them for details on how to place and pay for your order. Your
           financial advisor may also receive compensation from the Advisor
           and/or its affiliates. For more information, please see "Financial
           intermediary support payments."

           You may also buy Institutional Class shares by sending your check
           (along with a completed account application) directly to DWS Scudder
           Investments Service Company (the "transfer agent"). Your purchase
           order may not be accepted if a fund withdraws the offering of fund
           shares, the sale of fund shares has been suspended or if it is
           determined that your purchase would be detrimental to the interests
           of a fund's shareholders.


           Eligibility requirements

           You may buy Institutional Class shares if you are any of the
           following:

           -  An eligible institution (e.g., a financial institution,
              corporation, trust, estate or educational, religious or
              charitable institution).

           -  An employee benefit plan with assets of at least $50 million.

           -  A registered investment advisor or financial planner purchasing
              on behalf of clients and charging an asset-based or
              hourly fee.

           -  A client of the private banking division of Deutsche Bank AG.

           -  A current or former director or trustee of the Deutsche or DWS
              mutual funds.

           -  An employee, the employee's spouse or life partner and children
              or stepchildren age 21 or younger of Deutsche Bank or its
              affiliates or a subadvisor to any fund in the DWS family of funds
              or a broker-dealer authorized to sell shares in the funds.


           Investment minimum

           Your initial investment must be for at least $1,000,000. There are
           no minimum subsequent investment requirements.

           The minimum initial investment is waived for:

30 | Buying and Selling Institutional Class Shares
<PAGE>

           -  Shareholders with existing accounts prior to August 13, 2004 who
           met the previous minimum investment eligibility requirement.

           -  Investment advisory affiliates of Deutsche Bank Securities, Inc.,
              DWS funds or Deutsche funds purchasing shares for the accounts of
              their investment advisory clients.

           -  Employee benefit plans with assets of at least $50 million.

           -  Clients of the private banking division of Deutsche Bank AG.

           -  Institutional clients and qualified purchasers that are clients
              of a division of Deutsche Bank AG.

           -  A current or former director or trustee of the Deutsche or DWS
              mutual funds.

           -  An employee, the employee's spouse or life partner and children
              or stepchildren age 21 or younger of Deutsche Bank or its
              affiliates or a subadvisor to any fund in the DWS family of funds
              or a broker-dealer authorized to sell shares of the funds.

           -  Registered investment advisors who trade through platforms
              approved by the Advisor and whose client assets in the fund in
              the aggregate meet (or, in the Advisor's judgment, will meet
              within a reasonable period of time) the $1,000,000 minimum
              investment.

           Each fund reserves the right to modify the above eligibility
           requirements and investment minimum at any time.


           How to contact the transfer agent


<TABLE>
<S>                       <C>
  BY PHONE:                (800) 730-1313
  FIRST INVESTMENTS        DWS Scudder Investments Service Company
  BY MAIL:                P.O. Box 219210
                          Kansas City, MO 64121-9210
  ADDITIONAL               DWS Scudder Investments Service Company
  INVESTMENTS BY          P.O. Box 219210
  MAIL:                   Kansas City, MO 64121-9210
  BY OVERNIGHT MAIL:       DWS Scudder Investments Service Company
                          210 West 10th Street
                          Kansas City, MO 64105-1614
</TABLE>


           You can reach the automated information line, 24 hours a day,
           7 days a week by calling (800) 621-1048.


                             Buying and Selling Institutional Class Shares  | 31
<PAGE>

           How to open your fund account

<TABLE>
<S>                  <C>
  MAIL:               Complete and sign the account application that
                     accompanies this prospectus. (You may obtain
                     additional applications by calling the transfer agent.)
                     Mail the completed application along with a check
                     payable to the fund you have selected to the transfer
                     agent. Be sure to include the fund number. The
                     applicable addresses are shown under "How to
                     contact the transfer agent."
  WIRE:               Call the transfer agent to set up a wire account.
  FUND NAME AND       Please use the complete fund name. Refer to "The
  FUND NUMBER:       Fund's Main Investment Strategy" above for the fund
                     number.
</TABLE>


           Please note that your account cannot become activated until we
           receive a completed account application.


           How to BUY and SELL shares

           MAIL:

           BUYING: Send your check, payable to the fund you have selected, to
           the transfer agent. Be sure to include the fund number and your
           account number on your check. If you are investing in more than one
           fund, make your check payable to "DWS Scudder" and include your
           account number, the names and numbers of the funds you have
           selected, and the dollar amount or percentage you would like
           invested in each fund. Mailing addresses are shown under "How to
           contact the transfer agent."

           SELLING: Send a signed letter to the transfer agent with your name,
           your fund number and account number, the fund's name, and either the
           number of shares you wish to sell or the dollar amount you wish to
           receive. See "Signature Guarantee" for any applicable additional
           requirements. Unless exchanging into another DWS fund, you must
           submit a written authorization to sell shares in a retirement
           account.


32 | Buying and Selling Institutional Class Shares
<PAGE>

           WIRE:

           BUYING: You may buy shares by wire only if your account is
           authorized to do so. Please note that you or your financial advisor
           must call Institutional Investment Services at (800) 730-1313 to
           notify us in advance of a wire transfer purchase. After you inform
           Institutional Investment Services of the amount of your purchase,
           you will receive a trade confirmation number. Instruct your bank to
           send payment by wire using the wire instructions noted below. All
           wires must be received by 4:00 p.m. Eastern time the next business
           day following your purchase. If your wire is not received by 4:00
           p.m. Eastern time on the next business day after the fund receives
           your request to purchase shares, your transaction will be canceled
           at your expense and risk.


<TABLE>
<S>                <C>
  BANK NAME:        State Street Bank Boston
  ROUTING NO:       011000028
  ATTN:             DWS Scudder
  DDA NO:           9903-5552
  FBO:              (Account name) (Account number)
  CREDIT:           (Fund name, Fund number and, if applicable, class
                   name) (see "How to open your fund account")
</TABLE>


           Refer to your account statement for the account name and number.
           Wire transfers normally take two or more hours to complete. Wire
           transfers may be restricted on holidays and at certain other times.

           SELLING: You may sell shares by wire only if your account is
           authorized to do so. You will be paid for redeemed shares by wire
           transfer of funds to your financial advisor or bank upon receipt of
           a duly authorized redemption request as promptly as feasible. For
           your protection, you may not change the destination bank account
           over the phone. To sell by wire, contact your financial advisor or
           Institutional Investment Services at (800) 730-1313. After you
           inform Institutional Investment Services of the amount of your
           redemption, you will receive a trade confirmation number. The
           minimum redemption by wire is $1,000. We must receive your order by
           4:00 p.m. Eastern time to wire your account the next business day.


                             Buying and Selling Institutional Class Shares  | 33
<PAGE>

           TELEPHONE TRANSACTIONS:

           You may place orders to buy and sell over the phone by calling your
           financial advisor or Institutional Investment Services at (800)
           730-1313. If your shares are in an account with the transfer agent,
           you may (1) redeem by check in an amount up to $100,000, or by wire
           (minimum $1,000), or (2) exchange the shares for Institutional
           shares of another DWS fund by calling the transfer agent.

           You may make regular investments from a bank checking account. For
           more information on setting up an automatic investment plan or
           payroll investment plan, call Institutional Investment Services at
           (800) 730-1313.


           Financial intermediary support payments

           The Advisor, DWS Scudder Distributors, Inc. (the "Distributor")
           and/or their affiliates may pay additional compensation, out of
           their own assets and not as an additional charge to each fund, to
           selected affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/or servicing of fund investors and fund
           shares ("revenue sharing"). Such revenue sharing payments are in
           addition to any distribution or service fees payable under any Rule
           12b-1 or service plan of each fund, any record keeping/sub-transfer
           agency/networking fees payable by each fund (generally through the
           Distributor or an affiliate) and/or the Distributor to certain
           financial advisors for performing such services and any sales
           charge, commissions, non-cash compensation arrangements expressly
           permitted under applicable rules of the Financial Industry
           Regulatory Authority or other concessions described in the fee table
           or elsewhere in this prospectus or the Statement of Additional
           Information as payable to all financial advisors. For example, the
           Advisor, the Distributor and/or their affiliates may compensate
           financial advisors for providing a fund with "shelf space" or access
           to a third party platform or fund offering list or other marketing
           programs, including, without limitation, inclusion of the fund on
           preferred or recommended sales lists, mutual fund "supermarket"
           platforms and other formal sales programs; granting the Distributor
           access to the financial


34 | Buying and Selling Institutional Class Shares
<PAGE>

           advisor's sales force; granting the Distributor access to the
           financial advisor's conferences and meetings; assistance in training
           and educating the financial advisor's personnel; and obtaining other
           forms of marketing support.

           The level of revenue sharing payments made to financial advisors may
           be a fixed fee or based upon one or more of the following factors:
           gross sales, current assets and/or number of accounts of each fund
           attributable to the financial advisor, the particular fund or fund
           type or other measures as agreed to by the Advisor, the Distributor
           and/or their affiliates and the financial advisors or any
           combination thereof. The amount of these revenue sharing payments is
           determined at the discretion of the Advisor, the Distributor and/or
           their affiliates from time to time, may be substantial, and may be
           different for different financial advisors based on, for example,
           the nature of the services provided by the financial advisor.

           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS Fund shares or the retention
           and/or servicing of investors and DWS Fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of each fund serviced and maintained by the financial
           advisor, .10% to .25% of sales of each fund attributable to the
           financial advisor, a flat fee of $12,500 up to $500,000, or any
           combination thereof. These amounts are subject to change at the
           discretion of the Advisor, the Distributor and/or their affiliates.
           Receipt of, or the prospect of receiving, this additional
           compensation may influence your financial advisor's recommendation
           of each fund or of any particular share class of each fund. You
           should review your financial advisor's compensation disclosure
           and/or talk to your financial advisor to obtain more information on
           how this compensation may have influenced your financial advisor's
           recommendation of each fund. Additional information regarding these
           revenue sharing payments is included in each fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).

           The Advisor, the Distributor and/or their affiliates may also make
           such revenue sharing payments to financial advisors under the terms
           discussed above in connection with the distribution of both DWS
           funds and non-DWS funds by financial advisors to


                             Buying and Selling Institutional Class Shares  | 35
<PAGE>

           retirement plans that obtain record keeping services from ADP, Inc.
           on the DWS Scudder branded retirement plan platform (the "Platform")
           with the level of revenue sharing payments being based upon sales of
           both the DWS funds and the non-DWS funds by the financial advisor on
           the Platform or current assets of both the DWS funds and the non-DWS
           funds serviced and maintained by the financial advisor on the
           Platform.

           It is likely that broker-dealers that execute portfolio transactions
           for each fund will include firms that also sell shares of the DWS
           funds to their customers. However, the Advisor will not consider
           sales of DWS fund shares as a factor in the selection of
           broker-dealers to execute portfolio transactions for the DWS funds.
           Accordingly, the Advisor has implemented policies and procedures
           reasonably designed to prevent its traders from considering sales of
           DWS fund shares as a factor in the selection of broker-dealers to
           execute portfolio transactions for each fund. In addition, the
           Advisor, the Distributor and/or their affiliates will not use fund
           brokerage to pay for their obligation to provide additional
           compensation to financial advisors as described above.


POLICIES YOU SHOULD KNOW ABOUT

           Along with the information on the previous pages, the policies below
           may affect you as a shareholder. Some of this information, such as
           the section on distributions and taxes, applies to all investors,
           including those investing through a financial advisor.

           If you are investing through a financial advisor or through a
           retirement plan, check the materials you received from them about
           how to buy and sell shares because particular financial advisors or
           other intermediaries may adopt policies, procedures or limitations
           that are separate from those described by a fund. Please note that a
           financial advisor may charge fees separate from those charged by a
           fund and may be compensated by a fund.

           Keep in mind that the information in this prospectus applies only to
           the shares offered herein. Other share classes are described in
           separate prospectuses and have different fees, requirements and
           services.


36 | Policies You Should Know About
<PAGE>

           In order to reduce the amount of mail you receive and to help reduce
           expenses, we generally send a single copy of any shareholder report
           and prospectus to each household. If you do not want the mailing of
           these documents to be combined with those for other members of your
           household, please contact your financial advisor or call (800)
           730-1313.


           Policies about transactions

           EACH FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
           is open. Each fund calculates its share price for each class every
           business day, as of the close of regular trading on the New York
           Stock Exchange (typically 4:00 p.m. Eastern time, but sometimes
           earlier, as in the case of scheduled half-day trading or unscheduled
           suspensions of trading). You can place an order to buy or sell
           shares at any time.

           To help the government fight the funding of terrorism and money
           laundering activities, federal law requires all financial
           institutions to obtain, verify and record information that
           identifies each person who opens an account. What this means to you:
           When you open an account, we will ask for your name, address, date
           of birth and other information that will allow us to identify you.
           Some or all of this information will be used to verify the identity
           of all persons opening an account.

           We might request additional information about you (which may include
           certain documents, such as articles of incorporation for companies)
           to help us verify your identity and, in some cases, the information
           and/or documents may be required to conduct the verification. The
           information and documents will be used solely to verify your
           identity.

           We will attempt to collect any missing required and requested
           information by contacting you or your financial advisor. If we are
           unable to obtain this information within the time frames established
           by each fund, then we may reject your application and order.

           Each fund will not invest your purchase until all required and
           requested identification information has been provided and your
           application has been submitted in "good order." After we receive all
           the information, your application is deemed to be in good order and
           we accept your purchase, you will receive the net asset value per
           share next calculated.


                                            Policies You Should Know About  | 37
<PAGE>

           If we are unable to verify your identity within time frames
           established by each fund, after a reasonable effort to do so, you
           will receive written notification.

           With certain limited exceptions, only US residents may invest in
           each fund.

           Because orders placed through a financial advisor must be forwarded
           to the transfer agent before they can be processed, you'll need to
           allow extra time. Your financial advisor should be able to tell you
           approximately when your order will be processed. It is the
           responsibility of your financial advisor to forward your order to
           the transfer agent in a timely manner.

           SUB-MINIMUM BALANCES. Each fund may redeem your shares and close
           your account on 60 days' notice if it fails to meet the minimum
           account balance requirement of $1,000,000 for any reason other than
           a change in market value.

           MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive
           trading of fund shares may present risks to long-term shareholders,
           including potential dilution in the value of fund shares,
           interference with the efficient management of a fund's portfolio
           (including losses on the sale of investments), taxable gains to
           remaining shareholders and increased brokerage and administrative
           costs. These risks may be more pronounced if a fund invests in
           certain securities, such as those that trade in foreign markets, are
           illiquid or do not otherwise have "readily available market
           quotations." Certain investors may seek to employ short-term trading
           strategies aimed at exploiting variations in portfolio valuation
           that arise from the nature of the securities held by a fund (e.g.,
           "time zone arbitrage"). Each fund discourages short-term and
           excessive trading and has adopted policies and procedures that are
           intended to detect and deter short-term and excessive trading.

           Pursuant to its policies, each fund will impose a 2% redemption fee
           on fund shares held for less than a specified holding period
           (subject to certain exceptions discussed below under "Redemption
           fees"). Each fund also reserves the right to reject or cancel a
           purchase or exchange order for any reason without prior notice. For
           example, a fund may in its discretion reject or cancel a purchase or
           an exchange order even if the transaction is not subject to the
           specific roundtrip transaction limitation described below if the
           Advisor believes that there appears to be a pattern of short-term or
           excessive trading activity by a shareholder or deems any other
           trading activity harmful or


38 | Policies You Should Know About
<PAGE>

           disruptive to a fund. Each fund, through its Advisor and transfer
           agent, will measure short-term and excessive trading by the number
           of roundtrip transactions within a shareholder's account during a
           rolling 12-month period. A "roundtrip" transaction is defined as any
           combination of purchase and redemption activity (including
           exchanges) of the same fund's shares. Each fund may take other
           trading activity into account if a fund believes such activity is of
           an amount or frequency that may be harmful to long-term shareholders
           or disruptive to portfolio management.

           Shareholders are limited to four roundtrip transactions in the same
           DWS Fund (excluding money market funds) over a rolling 12-month
           period. Shareholders with four or more roundtrip transactions in the
           same DWS Fund within a rolling 12-month period generally will be
           blocked from making additional purchases of, or exchanges into, that
           DWS Fund. Each fund has sole discretion whether to remove a block
           from a shareholder's account. The rights of a shareholder to redeem
           shares of a DWS Fund are not affected by the four roundtrip
           transaction limitation, but all redemptions remain subject to each
           fund's redemption fee policy (see "Redemption fees" described
           below).

           Each fund may make exceptions to the roundtrip transaction policy
           for certain types of transactions if, in the opinion of the Advisor,
           the transactions do not represent short-term or excessive trading or
           are not abusive or harmful to a fund, such as, but not limited to,
           systematic transactions, required minimum retirement distributions,
           transactions initiated by a fund or administrator and transactions
           by certain qualified fund-of-fund(s).

           In certain circumstances where shareholders hold shares of a fund
           through a financial intermediary, the fund may rely upon the
           financial intermediary's policy to deter short-term or excessive
           trading if the Advisor believes that the financial intermediary's
           policy is reasonably designed to detect and deter transactions that
           are not in the best interests of a fund. A financial intermediary's
           policy relating to short-term or excessive trading may be more or
           less restrictive than the DWS Funds' policy, may permit certain
           transactions not permitted by the DWS Funds' policies, or prohibit
           transactions not subject to the DWS Funds' policies.


                                            Policies You Should Know About  | 39
<PAGE>

           The Advisor may also accept undertakings from a financial
           intermediary to enforce short-term or excessive trading policies on
           behalf of a fund that provide a substantially similar level of
           protection for each fund against such transactions. For example,
           certain financial intermediaries may have contractual, legal or
           operational restrictions that prevent them from blocking an account.
           In such instances, the financial intermediary may use alternate
           techniques that the Advisor considers to be a reasonable substitute
           for such a block.

           In addition, if a fund invests some portion of its assets in foreign
           securities, it has adopted certain fair valuation practices intended
           to protect the fund from "time zone arbitrage" with respect to its
           foreign securities holdings and other trading practices that seek to
           exploit variations in portfolio valuation that arise from the nature
           of the securities held by a fund. (See "How each fund calculates
           share price.")

           There is no assurance that these policies and procedures will be
           effective in limiting short-term and excessive trading in all cases.
           For example, the Advisor may not be able to effectively monitor,
           detect or limit short-term or excessive trading by underlying
           shareholders that occurs through omnibus accounts maintained by
           broker-dealers or other financial intermediaries. The Advisor
           reviews trading activity at the omnibus level to detect short-term
           or excessive trading. If the Advisor has reason to suspect that
           short-term or excessive trading is occurring at the omnibus level,
           the Advisor will contact the financial intermediary to request
           underlying shareholder level activity. Depending on the amount of
           fund shares held in such omnibus accounts (which may represent most
           of a fund's shares) short-term and/or excessive trading of fund
           shares could adversely affect long-term shareholders in a fund. If
           short-term or excessive trading is identified, the Advisor will take
           appropriate action.

           Each fund's market timing policies and procedures may be modified or
           terminated at any time.

           REDEMPTION FEES. Each fund imposes a redemption fee of 2% of the
           total redemption amount (calculated at net asset value) on all fund
           shares redeemed or exchanged within 15 days of buying them (either
           by purchase or exchange). The redemption fee is paid directly to
           each fund and is designed to encourage long-term investment and to
           offset transaction and other costs


40 | Policies You Should Know About
<PAGE>

           associated with short-term or excessive trading. For purposes of
           determining whether the redemption fee applies, shares held the
           longest time will be treated as being redeemed first and shares held
           the shortest time will be treated as being redeemed last.

           The redemption fee is applicable to fund shares purchased either
           directly or through a financial intermediary, such as a
           broker-dealer. Transactions through financial intermediaries
           typically are placed with a fund on an omnibus basis and include
           both purchase and sale transactions placed on behalf of multiple
           investors. These purchase and sale transactions are generally netted
           against one another and placed on an aggregate basis; consequently
           the identities of the individuals on whose behalf the transactions
           are placed generally are not known to a fund. For this reason, each
           fund has undertaken to notify financial intermediaries of their
           obligation to assess the redemption fee on customer accounts and to
           collect and remit the proceeds to each fund. However, due to
           operational requirements, the intermediaries' methods for tracking
           and calculating the fee may be inadequate or differ in some respects
           from each fund's.

           The redemption fee will not be charged in connection with the
           following exchange or redemption transactions: (i) transactions on
           behalf of participants in certain research wrap programs; (ii)
           transactions on behalf of a shareholder to return any excess IRA
           contributions to the shareholder; (iii) transactions on behalf of a
           shareholder to effect a required minimum distribution on an IRA;
           (iv) transactions on behalf of any mutual fund advised by the
           Advisor and its affiliates (e.g., "funds of funds") or, in the case
           of a master/feeder relationship, redemptions by the feeder fund from
           the master portfolio; (v) transactions on behalf of certain
           unaffiliated mutual funds operating as funds of funds; (vi)
           transactions following death or disability of any registered
           shareholder, beneficial owner or grantor of a living trust with
           respect to shares purchased before death or disability; (vii)
           transactions involving hardship of any registered shareholder;
           (viii) systematic transactions with pre-defined trade dates for
           purchases, exchanges or redemptions, such as automatic account
           rebalancing, or loan origination and repayments; (ix) transactions
           involving shares purchased through the reinvestment of dividends or
           other distributions; (x) transactions involving shares transferred
           from another account in the same fund or converted from another
           class of the same fund (the redemption fee period will carry over to
           the acquired shares);


                                            Policies You Should Know About  | 41
<PAGE>

           (xi) transactions initiated by a fund or administrator (e.g.,
           redemptions for not meeting account minimums, to pay account fees
           funded by share redemptions, or in the event of the liquidation or
           merger of the fund); or (xii) transactions in cases when there are
           legal or contractual limitations or restrictions on the imposition
           of the redemption fee (as determined by a fund or its agents in
           their sole discretion). It is the policy of the DWS funds to permit
           approved fund platform providers to execute transactions within the
           funds without the imposition of a redemption fee if such providers
           have implemented alternative measures that are determined by the
           Advisor to provide controls on short-term and excessive trading that
           are comparable to the DWS funds' policies.

           THE AUTOMATED INFORMATION LINE IS AVAILABLE 24 HOURS A DAY BY
           CALLING (800) 621-1048. You can use our automated phone services to
           get information on DWS funds generally and on accounts held directly
           at DWS Scudder.

           QUICKBUY AND QUICKSELL let you set up a link between a DWS fund
           account and a bank account. Once this link is in place, you can move
           money between the two with a phone call. You'll need to make sure
           your bank has Automated Clearing House (ACH) services. Transactions
           take two to three days to be completed and there is a $50 minimum
           and a $250,000 maximum. To set up QuickBuy or QuickSell on a new
           account, see the account application; to add it to an existing
           account, call (800) 730-1313.

           TELEPHONE AND ELECTRONIC TRANSACTIONS. Generally, you are
           automatically entitled to telephone and electronic transaction
           privileges, but you may elect not to have them when you open your
           account or by contacting Institutional Investment Services at (800)
           730-1313 at a later date.

           Since many transactions may be initiated by telephone or
           electronically, it's important to understand that as long as we take
           reasonable steps to ensure that an order to purchase or redeem
           shares is genuine, such as recording calls or requesting
           personalized security codes or other information, we are not
           responsible for any losses that may occur as a result. For
           transactions conducted over the Internet, we recommend the use of a
           secure Internet browser. In addition, you should verify the accuracy
           of your confirmation statements immediately after you receive them.




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The DWS Scudder Web site can be a valuable resource for shareholders with
Internet access. Go to WWW.DWS-SCUDDER.COM to get up-to-date information, review
balances or even place orders for exchanges.


42 | Policies You Should Know About
<PAGE>

           EACH FUND DOES NOT ISSUE SHARE CERTIFICATES. However, if you
           currently have shares in certificated form, you must include the
           share certificates properly endorsed or accompanied by a duly
           executed stock power when exchanging or redeeming shares. You may
           not exchange or redeem shares in certificate form by telephone or
           via the Internet.

           WHEN YOU ASK US TO SEND OR RECEIVE A WIRE, please note that while we
           don't charge a fee to send or receive wires, it's possible that your
           bank may do so. Wire transactions are generally completed within 24
           hours. Each fund can only send wires of $1,000 or more and accept
           wires of $50 or more.

           EACH FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by check,
           bank or Federal Funds wire transfer or by electronic bank transfer.
           Please note that a fund does not accept cash, money orders,
           traveler's checks, starter checks, third party checks (except checks
           for retirement plan asset transfers and rollovers or for Uniform
           Gifts to Minors Act/Uniform Transfers to Minors Act accounts),
           checks drawn on foreign banks or checks issued by credit card
           companies or Internet-based companies. Thus, subject to the
           foregoing exceptions for certain third party checks, checks that are
           otherwise permissible must be drawn by the account holder on a
           domestic bank and must be payable to a fund.

           IF YOU PAY FOR SHARES BY CHECK and the check fails to clear, or if
           you order shares by phone and fail to pay for them by 4:00 p.m.
           Eastern time the next business day, we have the right to cancel your
           order, hold you liable or charge you or your account for any losses
           or fees the fund or its agents have incurred. To sell shares, you
           must state whether you would like to receive the proceeds by wire or
           check.

           SIGNATURE GUARANTEE. When you want to sell more than $100,000 worth
           of shares or send proceeds to a third party or to a new address,
           you'll usually need to place your order in writing and include a
           signature guarantee. However, if you want money wired to a bank
           account that is already on file with us, you don't need a signature
           guarantee. Also, generally you don't need a signature guarantee for
           an exchange, although we may require one in certain other
           circumstances.

           A signature guarantee is simply a certification of your signature -
           a valuable safeguard against fraud. You can get a signature
           guarantee from an eligible guarantor institution, including
           commercial banks, savings and loans, trust


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

If you ever have difficulty placing an order by phone or Internet, you can send
us your order in writing.


                                            Policies You Should Know About  | 43
<PAGE>

           companies, credit unions, member firms of a national stock exchange
           or any member or participant of an approved signature guarantor
           program. Note that you can't get a signature guarantee from a notary
           public and we must be provided the original guarantee.

           SELLING SHARES OF TRUST ACCOUNTS AND BUSINESS OR ORGANIZATION
           ACCOUNTS may require additional documentation. Please call (800)
           730-1313 or contact your financial advisor for more information.

           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are other
           circumstances when it could be longer, including, but not limited
           to, when you are selling shares you bought recently by check or ACH
           (the funds will be placed under a 10 calendar day hold to ensure
           good funds) or when unusual circumstances prompt the SEC to allow
           further delays. Certain expedited redemption processes may also be
           delayed when you are selling recently purchased shares or in the
           event of closing of the Federal Reserve Bank's wire payment system.
           In addition, each fund reserves the right to suspend or postpone
           redemptions as permitted pursuant to Section 22(e) of the Investment
           Company Act of 1940. Generally, those circumstances are when 1) the
           New York Stock Exchange is closed other than customary weekend or
           holiday closings; 2) trading on the New York Stock Exchange is
           restricted; 3) an emergency exists which makes the disposal of
           securities owned by a fund or the fair determination of the value of
           a fund's net assets not reasonably practicable; or 4) the SEC, by
           order, permits the suspension of the right of redemption. Redemption
           payments by wire may also be delayed in the event of a non-routine
           closure of the Federal Reserve wire payment system. For additional
           rights reserved by each fund, please see "Other rights we reserve."

           You may obtain additional information about other ways to sell your
           shares by contacting your financial advisor.

           ACCOUNT STATEMENTS. We or your financial advisor will generally
           furnish you with a written confirmation of every transaction that
           affects your account balance. You will also receive periodic
           statements reflecting the balances in your account.


44 | Policies You Should Know About
<PAGE>

           How each fund calculates share price

           To calculate net asset value, or NAV, each share class uses the
           following equation:


<TABLE>
<S>                                                     <C> <C>
            TOTAL ASSETS - TOTAL LIABILITIES
           -----------------------------------------    =    NAV
               TOTAL NUMBER OF SHARES OUTSTANDING
</TABLE>


           The price at which you buy and sell shares is the NAV.


           EACH FUND CHARGES A REDEMPTION FEE EQUAL TO 2.00% of the value of
           shares redeemed or exchanged within 15 days of purchase. Please see
           "Policies about transactions - Redemption fees" for further
           information.

           WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
           INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
           However, we may use methods approved by a fund's Board, such as a
           fair valuation model, which are intended to reflect fair value when
           pricing service information or market quotations are not readily
           available or when a security's value or a meaningful portion of the
           value of a fund's portfolio is believed to have been materially
           affected by a significant event, such as a natural disaster, an
           economic event like a bankruptcy filing, or a substantial
           fluctuation in domestic or foreign markets that has occurred between
           the close of the exchange or market on which the security is
           principally traded (for example, a foreign exchange or market) and
           the close of the New York Stock Exchange. In such a case, a fund's
           value for a security is likely to be different from the last quoted
           market price or pricing service information. In addition, due to the
           subjective and variable nature of fair value pricing, it is possible
           that the value determined for a particular asset may be materially
           different from the value realized upon such asset's sale. It is
           expected that the greater the percentage of fund assets that is
           invested in non-US securities, the more extensive will be the fund's
           use of fair value pricing. This is intended to reduce the fund's
           exposure to "time zone arbitrage" and other harmful trading
           practices. (See "Market timing policies and procedures.")

           TO THE EXTENT THAT A FUND INVESTS IN SECURITIES THAT ARE TRADED
           PRIMARILY IN FOREIGN MARKETS, the value of its holdings could change
           at a time when you aren't able to buy or sell fund shares. This is
           because some foreign markets are open on days or at times when a
           fund doesn't price its shares. (Note that prices for securities that
           trade on foreign exchanges can change


                                            Policies You Should Know About  | 45
<PAGE>

           significantly on days when the New York Stock Exchange is closed and
           you cannot buy or sell fund shares. Price changes in the securities
           a fund owns may ultimately affect the price of fund shares the next
           time the NAV is calculated.)


           Other rights we reserve

           You should be aware that we may do any of the following:

           -  withdraw or suspend the offering of shares at any time

           -  withhold a portion of your distributions and redemption proceeds
              for federal income tax purposes if we have been notified by the
              IRS that you are subject to backup withholding or if you fail to
              provide us with a correct taxpayer ID number and certain
              certifications including certification that you are not subject
              to backup withholding

           -  reject a new account application if you don't provide any
              required or requested identifying information, or for any other
              reason

           -  refuse, cancel, limit or rescind any purchase or exchange order,
              without prior notice; freeze any account (meaning you will not be
              able to purchase fund shares in your account); suspend account
              services; and/or involuntarily redeem your account if we think
              that the account is being used for fraudulent or illegal
              purposes; one or more of these actions will be taken when, at our
              sole discretion, they are deemed to be in a fund's best interests
              or when a fund is requested or compelled to do so by governmental
              authority or by applicable law

           -  close and liquidate your account if we are unable to verify your
              identity, or for other reasons; if we decide to close your
              account, your fund shares will be redeemed at the net asset value
              per share next calculated after we determine to close your
              account (less any applicable redemption fee); you may recognize a
              gain or loss on the redemption of your fund shares and you may
              incur a tax liability

           -  pay you for shares you sell by "redeeming in kind," that is, by
              giving you securities (which typically will involve brokerage
              costs for you to liquidate) rather than cash, but which will be
              taxable to the same extent as a redemption for cash; the fund
              generally won't make a redemption in kind unless your requests
              over a 90-day period total more than $250,000 or 1% of the value
              of the fund's net assets, whichever is less

46 | Policies You Should Know About
<PAGE>

           -  change, add or withdraw various services, fees and account
           policies (for example, we may adjust a fund's investment minimums at
           any time)


UNDERSTANDING DISTRIBUTIONS AND TAXES

           Each fund intends to distribute to its shareholders virtually all of
           its net earnings. Each fund can earn money in two ways: by receiving
           interest, dividends or other income from securities it holds and by
           selling securities for more than it paid for them. (Each fund's
           earnings are separate from any gains or losses stemming from your
           own purchase and sale of shares.) Each fund may not always pay a
           dividend or distribution for a given period.

           EACH FUND INTENDS TO PAY DIVIDENDS AND DISTRIBUTIONS to its
           shareholders annually in December. If necessary, the funds may
           distribute at other times as needed.

           Dividends or distributions declared to shareholders of record in the
           last quarter of a given calendar year are treated for federal income
           tax purposes as if they were received on December 31 of that year,
           provided such dividends or distributions are paid by the end of the
           following January.

           For federal income tax purposes, income and capital gains
           distributions are generally taxable to shareholders. However,
           dividends and distributions received by retirement plans qualifying
           for tax exemption under federal income tax laws generally will not
           be taxable.

           YOU CAN CHOOSE HOW TO RECEIVE YOUR DIVIDENDS AND DISTRIBUTIONS. You
           can have them all automatically reinvested in fund shares (at NAV),
           all deposited directly to your bank account or all sent to you by
           check, have one type reinvested and the other sent to you by check
           or have them invested in a different fund. Tell us your preference
           on your application. If you don't indicate a preference, your
           dividends and distributions will all be reinvested in shares of the
           fund without a sales charge (if applicable). Distributions are
           treated the same for federal income tax purposes whether you receive
           them in cash or reinvest them in additional shares. For
           employer-sponsored qualified plans, and retirement plans,
           reinvestment (at NAV) is the only option.



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

Because each shareholder's tax situation is unique, ask your tax professional
about the tax consequences of your investments, including any state and local
tax consequences.


                                     Understanding Distributions and Taxes  | 47
<PAGE>

           BUYING, SELLING OR EXCHANGING FUND SHARES WILL USUALLY HAVE FEDERAL
           INCOME TAX CONSEQUENCES FOR YOU (except in employer-sponsored
           qualified plans, IRAs or other tax-advantaged accounts). Your sale
           of shares may result in a capital gain or loss. The gain or loss
           will be long-term or short-term depending on how long you owned the
           shares that were sold. For federal income tax purposes, an exchange
           is treated the same as a sale.

           THE FEDERAL INCOME TAX STATUS of a fund's earnings you receive and
           your own fund transactions generally depend on their type:


<TABLE>
<CAPTION>
GENERALLY TAXED AT LONG-TERM                          GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES:                                   INCOME RATES:
<S>                                                   <C>

DISTRIBUTIONS FROM A FUND
- gains from the sale of                              -  gains from the sale of
  securities held (or treated as                         securities held by a fund for
  held) by a fund for more than                          one year or less
  one year                                            -  all other taxable income
- qualified dividend income

TRANSACTIONS INVOLVING FUND
SHARES
- gains from selling fund                             -  gains from selling fund
  shares held for more than                              shares held for one year or
  one year                                               less
</TABLE>


           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY A FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, a fund's yield
           on those securities would generally be decreased. DWS Gold &
           Precious Metals Fund may elect to pass through to its shareholders a
           credit or deduction for foreign taxes it has paid if at the end of
           its year more than 50% of the fund's total assets are stocks or
           securities of foreign corporations. DWS Technology Fund generally
           will not be entitled to claim a credit or deduction with respect to
           foreign taxes paid by the fund. In addition, any investments in
           foreign securities or foreign currencies may increase or accelerate
           a fund's recognition of ordinary income and may affect the timing or
           amount of the fund's distributions. If you invest in a fund through
           a taxable account, your after-tax return could be negatively
           impacted.


48 | Understanding Distributions and Taxes
<PAGE>

           To the extent that a fund invests in certain debt obligations or
           certain other securities, investments in these obligations or
           securities may cause a fund to recognize taxable income in excess of
           the cash generated by such obligations. Thus, a fund could be
           required at times to liquidate other investments in order to satisfy
           its distribution requirements.

           For taxable years beginning before January 1, 2011, distributions to
           individuals and other noncorporate shareholders of investment income
           designated by a fund as derived from qualified dividend income are
           eligible for taxation for federal income tax purposes at the more
           favorable long-term capital gain rates. Qualified dividend income
           generally includes dividends from domestic and some foreign
           corporations. It does not include income from investments in debt
           securities or, generally, from REITs. In addition, a fund must meet
           certain holding period and other requirements with respect to the
           dividend-paying stocks in its portfolio and the shareholder must
           meet certain holding period and other requirements with respect to a
           fund's shares for the lower tax rates to apply.

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains
           recognized by individuals and other noncorporate shareholders has
           been reduced to 15%. For taxable years beginning on or after January
           1, 2011, the long-term capital gain rate is scheduled to return to
           20%.

           YOUR FUND WILL SEND YOU DETAILED FEDERAL INCOME TAX INFORMATION
           EVERY JANUARY. These statements tell you the amount and the federal
           income tax classification of any dividends or distributions you
           received. They also have certain details on your purchases and sales
           of shares.

           IF YOU INVEST RIGHT BEFORE A FUND PAYS A DIVIDEND, you'll be getting
           some of your investment back as a taxable dividend. You can avoid
           this by investing after a fund declares a dividend. In
           tax-advantaged retirement accounts you do not need to worry about
           this.

           CORPORATIONS are taxed at the same rates on ordinary income and
           capital gains but may be eligible for a dividends-received deduction
           for a portion of the income dividends they receive from a fund,
           provided certain holding period and other requirements are met.


                                     Understanding Distributions and Taxes  | 49
<PAGE>

           The above discussion summarizes certain federal income tax
           consequences for shareholders who are US persons. If you are a
           non-US person, please consult your own tax advisor with respect to
           the US tax consequences to you of an investment in a fund. For more
           information, see "Taxes" in the Statement of Additional Information.



50 | Understanding Distributions and Taxes
<PAGE>

APPENDIX
--------------------------------------------------------------------------------
           Hypothetical Expense Summary


           Using the annual fund operating expense ratios presented in the fee
           tables in the fund prospectus, the Hypothetical Expense Summary
           shows the estimated fees and expenses, in actual dollars, that would
           be charged on a hypothetical investment of $10,000 in the fund held
           for the next 10 years and the impact of such fees and expenses on
           fund returns for each year and cumulatively, assuming a 5% return
           for each year. The tables also assume that all dividends and
           distributions are reinvested. The annual fund expense ratios shown
           are net of any contractual fee waivers or expense reimbursements, if
           any, for the period of the contractual commitment. The tables do not
           reflect redemption fees, if any, which may be payable upon
           redemption. If redemption fees were shown, the "Hypothetical
           Year-End Balance After Fees and Expenses" amounts shown would be
           lower and the "Annual Fees and Expenses" amounts shown would be
           higher. Also, please note that if you are investing through a third
           party provider, that provider may have fees and expenses separate
           from those of the fund that are not reflected here. Mutual fund fees
           and expenses fluctuate over time and actual expenses may be higher
           or lower than those shown.

           The Hypothetical Expense Summary should not be used or construed as
           an offer to sell, a solicitation of an offer to buy or a
           recommendation or endorsement of any specific mutual fund. You
           should carefully review the fund's prospectus to consider the
           investment objectives, risks, expenses and charges of the fund prior
           to investing.


                                                                  Appendix  | 51
<PAGE>

DWS Gold & Precious Metals Fund - Institutional Class



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.16%              3.84%       $ 10,383.80        $   118.43
   2           10.25%        1.16%              7.82%       $ 10,782.33        $   122.98
   3           15.76%        1.16%             11.96%       $ 11,196.16        $   127.70
   4           21.55%        1.16%             16.26%       $ 11,625.86        $   132.60
   5           27.63%        1.16%             20.72%       $ 12,072.07        $   137.68
   6           34.01%        1.16%             25.35%       $ 12,535.39        $   142.97
   7           40.71%        1.16%             30.16%       $ 13,016.50        $   148.46
   8           47.75%        1.16%             35.16%       $ 13,516.07        $   154.15
   9           55.13%        1.16%             40.35%       $ 14,034.82        $   160.07
  10           62.89%        1.16%             45.73%       $ 14,573.48        $   166.21
  TOTAL                                                                        $ 1,411.25
</TABLE>


DWS Technology Fund - Institutional Class




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        0.72%              4.28%       $ 10,428.00         $  73.54
   2           10.25%        0.72%              8.74%       $ 10,874.32         $  76.69
   3           15.76%        0.72%             13.40%       $ 11,339.74         $  79.97
   4           21.55%        0.72%             18.25%       $ 11,825.08         $  83.39
   5           27.63%        0.72%             23.31%       $ 12,331.19         $  86.96
   6           34.01%        0.72%             28.59%       $ 12,858.97         $  90.68
   7           40.71%        0.72%             34.09%       $ 13,409.33         $  94.57
   8           47.75%        0.72%             39.83%       $ 13,983.25         $  98.61
   9           55.13%        0.72%             45.82%       $ 14,581.74         $ 102.83
  10           62.89%        0.72%             52.06%       $ 15,205.83         $ 107.24
  TOTAL                                                                         $ 894.48
</TABLE>



52 | Appendix
<PAGE>

TO GET MORE INFORMATION

SHAREHOLDER REPORTS - These include commentary from a fund's management team
about recent market conditions and the effects of a fund's strategies on its
performance. They also have detailed performance figures, a list of everything
a fund owns, and its financial statements. Shareholders get these reports
automatically.

STATEMENT OF ADDITIONAL INFORMATION (SAI) - This tells you more about a fund's
features and policies, including additional risk information. The SAI is
incorporated by reference into this document (meaning that it's legally part of
this prospectus).

For a free copy of any of these documents or to request other information about
a fund, call (800) 730-1313, or contact DWS Scudder at the address listed
below. Each fund's SAI and shareholder reports are also available through the
DWS Scudder Web site at www.dws-scudder.com. These documents and other
information about each fund are available from the EDGAR Database on the SEC's
Internet site at www.sec.gov. If you like, you may obtain copies of this
information, after paying a copying fee, by e-mailing a request to
publicinfo@sec.gov or by writing the SEC at the address listed below. You can
also review and copy these documents and other information about each fund,
including each fund's SAI, at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the SEC's Public Reference Room may be
obtained by calling (800) SEC-0330.


<TABLE>
<CAPTION>
DWS SCUDDER              SEC                     DISTRIBUTOR
---------------------    --------------------    -------------------------------
<S>                      <C>                     <C>
PO Box 219210            100 F Street, N.E.      DWS Scudder Distributors, Inc.
Kansas City, MO          Washington, D.C.        222 South Riverside Plaza
64121-9210               20549-0102              Chicago, IL 60606-5808
WWW.DWS-SCUDDER.COM      WWW.SEC.GOV             (800) 621-1148
(800) 730-1313           (800) SEC-0330
</TABLE>



<TABLE>
<S>                         <C>                                  <C>
SEC FILE NUMBER:
DWS Mutual Funds, Inc.      DWS Gold & Precious Metals Fund      811-5565
                                        DWS Technology Fund      811-0547
</TABLE>




(03/01/08) DSSF2-1-IN
[RECYCLE GRAPHIC APPEARS HERE]
                                                                       [Logo]DWS
                                                                         SCUDDER
                                                             Deutsche Bank Group




<PAGE>

                                 MARCH 1, 2008







                                   PROSPECTUS
                              ------------------
                                    CLASS S

                        DWS GOLD & PRECIOUS METALS FUND


                              DWS TECHNOLOGY FUND


As with all mutual funds, the Securities and Exchange Commission (SEC) does not
approve or disapprove these shares or determine whether the information in this
prospectus is truthful or complete. It is a criminal offense for anyone to
inform you otherwise.

                            ONE GLOBAL FORCE. ONE FOCUS. YOU. [DWS SCUDDER Logo]
                                                             Deutsche Bank Group




<PAGE>

CONTENTS




<TABLE>
<S>      <C>
HOW EACH FUND WORKS
  4      DWS Gold & Precious Metals
         Fund
 13      DWS Technology Fund
 22      Other Policies and Secondary
         Risks
 23      Who Manages and Oversees
         the Funds
 28      Financial Highlights


</TABLE>
<TABLE>
<S>      <C>
HOW TO INVEST IN THE FUNDS
 32      How to Buy Shares
 33      How to Exchange or Sell
         Shares
 36      Policies You Should Know
         About
 48      Understanding Distributions
         and Taxes
 51      Appendix
</TABLE>

<PAGE>

HOW EACH FUND WORKS
On the next few pages, you'll find information about each fund's investment
objective, the main strategies each uses to pursue that objective and the main
risks that could affect performance.

Whether you are considering investing in a fund or are already a shareholder,
you'll want to LOOK THIS INFORMATION OVER CAREFULLY. You may want to keep it on
hand for reference as well.

CLASS S shares are generally only available to new investors through fee-based
programs of investment dealers that have special agreements with each fund's
distributor, through certain group retirement plans and through certain
registered investment advisors. These dealers and advisors typically charge
ongoing fees for services they provide.

Remember that mutual funds are investments, not bank deposits. They're not
insured or guaranteed by the FDIC or any other government agency. Their share
prices will go up and down, and you could lose money by investing in them.

You can find DWS prospectuses on the Internet at WWW.DWS-SCUDDER.COM (the Web
site does not form a part of this prospectus).
<PAGE>


<TABLE>
<S>                                    <C>
                                         Class S
  ticker symbol                          SCGDX
    fund number                          2019

    DWS GOLD & PRECIOUS METALS FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks maximum return (principal change and
            income).

            The fund invests at least 80% of net assets, plus the amount of any
            borrowings for investment purposes, in common stocks and other
            equities of US and foreign companies engaged in activities related
            to gold, silver, platinum or other precious metals, and in gold
            coin and bullion directly. These companies may be involved in
            activities such as exploration, mining, fabrication, processing and
            distribution.

            While the fund invests mainly in common stocks, it may invest up to
            20% of net assets in:

            -  high-quality debt securities of companies in precious metals and
               minerals operations; and

            -  debt securities whose return is linked to precious metals
               prices.

            The fund's equity investments are mainly common stocks, but may
            also include other types of equities such as preferred or
            convertible stocks.

            In choosing individual securities, the portfolio managers use a
            combination of two analytical disciplines:

            -  BOTTOM-UP RESEARCH. The managers look for companies with strong
               management and highly marketable securities. They also consider
               the quality of metals and minerals mined by a company, its
               fabrication techniques and costs, and its unmined reserves,
               among other factors.

            -  GROWTH ORIENTATION. The managers generally look for companies
               that they believe have above-average potential for sustainable
               growth of revenue or earnings and whose market value appears
               reasonable in light of their business prospects.

4 | DWS Gold & Precious Metals Fund
<PAGE>

            The managers may focus on the securities of particular issuers or
            industries within the gold and precious metals sector, or on
            particular countries or regions at different times.

            The managers will normally sell a stock when the managers believe
            its price is unlikely to go higher, its fundamentals have
            deteriorated, other investments offer better opportunities or in
            the course of adjusting the fund's emphasis on a given industry.

            OTHER INVESTMENTS. The fund is permitted, but not required, to use
            various types of derivatives (contracts whose value is based on,
            for example, indices, currencies or securities). Derivatives may be
            used for hedging and for risk management or for non-hedging
            purposes to seek to enhance potential gains. The fund may use
            derivatives in circumstances where portfolio management believes
            they offer an economical means of gaining exposure to a particular
            asset class or to keep cash on hand to meet shareholder redemptions
            or other needs while maintaining exposure to the market.

            In particular, the fund may use futures and options.

            SECURITIES LENDING. The fund may lend its investment securities in
            an amount up to 33 1/3% of its total assets to approved
            institutional borrowers who need to borrow securities in order to
            complete certain transactions.


            THE MAIN RISKS OF INVESTING IN THE FUND

            There are several risk factors that could hurt the fund's
            performance, cause you to lose money or cause the fund's
            performance to trail that of other investments.

            SECTOR RISK. An important factor with this fund is fluctuations
            in market prices for gold and other precious metals. When gold or
            other precious metals prices fall, you should expect the value of
            your investment to fall as well. Gold and other precious metals
            prices can be influenced by a variety of economic, financial and
            political factors, especially inflation: when inflation is low or
            expected to fall, prices tend to be weak.

            STOCK MARKET RISK. The fund is affected by how the stock market
            performs. To the extent the fund invests in a particular
            capitalization, the fund's performance may be proportionately
            affected by that segment's general performance. When stock prices
            fall, you should expect the value of your investment to



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

This fund is designed for investors interested in broad exposure to the gold and
precious metals market and who understand the risks connected with it.


                                            DWS Gold & Precious Metals Fund  | 5
<PAGE>

            fall as well. Because a stock represents ownership in its issuer,
            stock prices can be hurt by poor management, shrinking product
            demand and other business risks. These factors may affect single
            companies as well as groups of companies. In addition, movements in
            financial markets may adversely affect a stock's price, regardless
            of how well the company performs. The market as a whole may not
            favor the types of investments the fund makes, which could affect
            the fund's ability to sell them at an attractive price.

            Prices of gold or other precious metals and minerals-related stocks
            may move up and down rapidly, and have historically offered lower
            long-term performance than the stock market as a whole.

            CONCENTRATION RISK. The fund concentrates its investments in
            securities related to gold and other precious metals and minerals.
            As a result, market price movements, regulatory changes, or
            economic conditions affecting companies in these industries will
            have a significant impact on the fund's performance.

            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as amended. This means
            that the fund may invest in securities of relatively few issuers.
            Thus, the performance of one or a small number of portfolio
            holdings can affect overall performance more than if the fund
            invested in a larger number of issuers.

            FOREIGN INVESTMENT RISK. Foreign investments involve certain
            special risks, including:

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed higher taxes.

            -  INFORMATION RISK. Companies based in foreign markets are usually
               not subject to accounting, auditing and financial reporting
               standards and practices as stringent as those in the US.
               Therefore, their financial reports may present an incomplete,
               untimely or misleading picture of a company, as compared to the
               financial reports required in the US.

6 | DWS Gold & Precious Metals Fund
<PAGE>

            -  LIQUIDITY RISK. Investments that trade less can be more
            difficult or more costly to buy, or to sell, than more liquid or
            active investments. This liquidity risk is a factor of the trading
            volume of a particular investment, as well as the size and
            liquidity of the entire local market. On the whole, foreign
            exchanges are smaller and less liquid than US exchanges. This can
            make buying and selling certain investments more difficult and
            costly. Relatively small transactions in some instances can have a
            disproportionately large effect on the price and supply of
            securities. In certain situations, it may become virtually
            impossible to sell an investment in an orderly fashion at a price
            that approaches portfolio management's estimate of its value. For
            the same reason, it may at times be difficult to value the fund's
            foreign investments.

            -  REGULATORY RISK. There is generally less government regulation
               of foreign markets, companies and securities dealers than in the
               US.

            -  CURRENCY RISK. The fund invests in securities denominated in
               foreign currencies. Changes in exchange rates between foreign
               currencies and the US dollar may affect the US dollar value of
               foreign securities or the income or gain received on these
               securities.

            -  LIMITED LEGAL RECOURSE RISK. Legal remedies for investors may be
               more limited than the legal remedies available in the US.

            -  TRADING PRACTICE RISK. Brokerage commissions and other fees are
               generally higher for foreign investments than for US
               investments. The procedures and rules governing foreign
               transactions and custody may also involve delays in payment,
               delivery or recovery of money or investments.

            -  TAXES. Foreign withholding and certain other taxes may reduce
               the amount of income available to distribute to shareholders of
               the fund. In addition, special US tax considerations may apply
               to the fund's foreign investments.

            EMERGING MARKET RISK. All of the risks of investing in foreign
            securities are increased in connection with investments in emerging
            markets securities. In addition, profound social changes and
            business practices that depart from norms in developed countries'
            economies have hindered the orderly growth of emerging economies
            and their markets in the past


                                            DWS Gold & Precious Metals Fund  | 7
<PAGE>

            and have caused instability. High levels of debt tend to make
            emerging economies heavily reliant on foreign capital and
            vulnerable to capital flight. Countries in emerging markets are
            also more likely to experience high levels of inflation, deflation
            or currency devaluation, which could also hurt their economies and
            securities markets. For these and other reasons, investments in
            emerging markets are often considered speculative.

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

            SECURITIES LENDING RISK. Any loss in the market price of securities
            loaned by the fund that occurs during the term of the loan would be
            borne by the fund and would adversely affect the fund's
            performance. Also, there may be delays in recovery of securities
            loaned or even a loss of rights in the collateral should the
            borrower of the securities fail financially while the loan is
            outstanding. However, loans will be made only to borrowers selected
            by the fund's delegate after a review of relevant facts and
            circumstances, including the creditworthiness of the borrower.


8 | DWS Gold & Precious Metals Fund
<PAGE>

            Other factors that could affect performance include:

            -  portfolio management could be wrong in the analysis of
               industries, companies, economic trends, the relative
               attractiveness of different securities or other matters.

            -  a bond could fall in credit quality, go into default, or
               decrease in value for various reasons, including a change in
               prevailing interest rates.

            -  derivatives could produce disproportionate losses due to a
               variety of factors, including the failure of the counterparty to
               meet its obligations or unexpected price or interest rate
               movements. (See "Secondary Risks" for more information.)

            -  the fund may purchase securities that are subject to legal or
               contractual restriction on resale ("restricted securities"). The
               fund may be unable to sell a restricted security and it may be
               more difficult to determine a market value for a restricted
               security. This investment practice, therefore, could increase
               the level of illiquidity of the fund.


                                            DWS Gold & Precious Metals Fund  | 9
<PAGE>

THE FUND'S PERFORMANCE HISTORY

While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.

The bar chart shows how the performance of the fund's Class S shares has varied
from year to year, which may give some idea of risk. The table on the following
page shows how fund performance compares to relevant index performance (which,
unlike fund performance, does not reflect fees or expenses). The performance of
both the fund and the index varies over time. All figures assume reinvestment
of dividends and distributions (in the case of after-tax returns, reinvested
net of assumed tax rates).

The table shows returns for Class S shares on a before-tax and after-tax basis.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

DWS Gold & Precious Metals Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[GRAPHIC APPEARS HERE]





<TABLE>
<S>         <C>       <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
-16.71       9.06      -8.99     16.04      66.84      94.50       -8.92     20.83      29.27      25.41
 1998       1999      2000       2001       2002       2003       2004       2005       2006        2007
</TABLE>





<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 44.33%, Q3 2003              WORST QUARTER: -18.89%, Q2 2004
</TABLE>



10 | DWS Gold & Precious Metals Fund
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007


<TABLE>
<CAPTION>
                                              1 YEAR       5 YEARS      10 YEARS
<S>                                         <C>           <C>          <C>
 CLASS S
   Return before Taxes                          25.41        28.25        18.75
   Return after Taxes on Distributions          21.23        24.99        17.07
   Return after Taxes on Distributions
   and Sale of Fund Shares                      20.52        23.95        16.37
 S&P 500 (reflects no deductions for
 fees, expenses or taxes)                        5.49        12.83         5.91
 S&P/CITIGROUP GOLD & PRECIOUS
 METALS INDEX (reflects no deductions
 for fees, expenses or taxes)                   23.04        26.91        20.01
</TABLE>


     Total returns would have been lower if operating expenses hadn't been
reduced.


 STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
 index of 500 stocks. The index is designed to measure performance of the broad
 domestic economy through changes in the aggregate market value of 500 stocks
 representing all major industries.

 S&P/CITIGROUP GOLD & PRECIOUS METALS INDEX is an unmanaged index that
 represents the precious metals industry component of the S&P/Citigroup Global
 Equity family of indices, which include more than 7,000 companies in more than
 50 countries. On October 19, 2007, the S&P/Citigroup Gold & Precious Metals
 Index replaced the London Bullion Market Association Gold PM Fix Price/USD as
 the fund's secondary index because the Advisor believes that it more
 accurately reflects the fund's investment strategy.


--------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 728-3337 or visit our Web site at www.dws-scudder.com.


--------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.


                                           DWS Gold & Precious Metals Fund  | 11
<PAGE>

HOW MUCH INVESTORS PAY

The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.


<TABLE>
<CAPTION>
FEE TABLE                                             CLASS S
<S>                                         <C>
 SHAREHOLDER FEES, paid directly from your investment
__________________________________________________________________________
 Redemption/Exchange Fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 1                                 2.00%

 ANNUAL OPERATING EXPENSES, deducted from fund assets
__________________________________________________________________________
 Management Fee 2                                       0.87%
 Distribution/Service (12b-1) Fee                       None
 Other Expenses 3                                       0.36
 Acquired Funds (Underlying Funds) Fees
 and Expenses 4                                         0.01
 TOTAL ANNUAL OPERATING EXPENSES 5                      1.24
</TABLE>


1   This fee is charged on applicable redemptions or exchanges. Please see
   "Policies You Should Know About - Policies about transactions" for further
   information.

2   Restated on an annualized basis to reflect fee changes which took effect on
   October 1, 2007.

3   "Other Expenses" include an administrative services fee paid to the Advisor
   in the amount of 0.10%.

4   The amount indicated is based on the indirect net expenses associated with
   the fund's investment in the acquired funds (underlying funds) for the
   fiscal year ended October 31, 2007.

5   Through September 30, 2008, the Advisor has contractually agreed to waive
   all or a portion of its fees and reimburse or pay operating expenses of the
   fund to the extent necessary to maintain the fund's total operating
   expenses at 1.23% for Class S, excluding certain expense such as
   extraordinary expenses, taxes, brokerage, interest and expenses of acquired
   funds (underlying funds). Although there can be no assurance that the
   current waiver/expense reimbursement arrangement will be maintained beyond
   September 30, 2008, the Advisor has committed to review the continuance of
   waiver/
     expense reimbursement arrangements by September 30, 2008.

Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same. It also assumes that you invested $10,000, earned 5% annual
returns and reinvested all dividends and distributions. If the fund's expenses
show capped expenses in the fee table above, the expense example includes the
capped expenses for the period provided in the footnotes. This is only an
example; actual expenses will be different.


<TABLE>
<CAPTION>
EXAMPLE               1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                  <C>         <C>          <C>          <C>
 Class S shares        $126         $393         $681       $1,500
</TABLE>



12 | DWS Gold & Precious Metals Fund
<PAGE>


<TABLE>
<S>                        <C>
                             Class S
  ticker symbol              KTCSX
    fund number              2313

    DWS TECHNOLOGY FUND


</TABLE>

            THE FUND'S MAIN INVESTMENT STRATEGY

            The fund seeks growth of capital.

            Under normal circumstances, the fund invests at least 80% of net
            assets, plus the amount of any borrowings for investment purposes,
            in common stocks of companies in the technology sector. For
            purposes of the fund's 80% investment policy, companies in the
            technology sector must commit at least half of their assets to the
            technology sector or derive at least half of their revenues or net
            income from that sector. Examples of industries within the
            technology sector are semiconductors, software, telecom equipment,
            computer/hardware, IT services, the Internet and health technology.
            The fund may invest in companies of any size.

            While the fund invests mainly in US stocks, it could invest up to
            35% of net assets in foreign securities.

            The fund's equity investments are mainly common stocks, but may
            also include other types of equities such as preferred or
            convertible stocks.

            In choosing stocks, the portfolio managers use a combination of
            three analytical disciplines:

            BOTTOM-UP RESEARCH. The managers look for individual companies with
            a history of above-average growth, strong competitive positioning,
            attractive prices relative to potential growth, innovative products
            and services, sound financial strength and effective management,
            among other factors.

            GROWTH ORIENTATION. The managers generally look for companies that
            they believe have above-average potential for sustainable growth of
            revenue or earnings and whose market value appears reasonable in
            light of their business prospects.


                                                       DWS Technology Fund  | 13
<PAGE>

            TOP-DOWN ANALYSIS. The managers consider the economic outlook for
            various industries within the technology sector and look for those
            industries that may benefit from changes in the overall business
            environment.

            In addition, the managers use the support of a quantitative
            analytic group and its tools to attempt to actively manage the
            forecasted volatility risk of the fund as compared to funds with a
            similar investment goal, as well as appropriate benchmarks and peer
            groups. The managers may favor securities from various industries
            and companies within the technology sector at different times.

            The managers will normally sell a stock when they believe its price
            is unlikely to go higher, its fundamental factors have changed,
            other investments offer better opportunities, or in adjusting their
            emphasis on a given technology industry.

            OTHER INVESTMENTS. The fund is permitted, but not required, to use
            various types of derivatives (contracts whose value is based on,
            for example, indices, currencies or securities). Derivatives may be
            used for hedging and for risk management or for non-hedging
            purposes to seek to enhance potential gains. The fund may use
            derivatives in circumstances where portfolio management believes
            they offer an economical means of gaining exposure to a particular
            asset class or to keep cash on hand to meet shareholder redemptions
            or other needs while maintaining exposure to the market.

            In particular, the fund may use futures and options, including
            sales of covered put and call options.

            SECURITIES LENDING. The fund may lend its investment securities in
            an amount up to 33 1/3% of its total assets to approved
            institutional borrowers who need to borrow securities in order to
            complete certain transactions.


14 | DWS Technology Fund
<PAGE>

            THE MAIN RISKS OF INVESTING IN THE FUND

            There are several risk factors that could hurt the fund's
            performance, cause you to lose money or cause the fund's
            performance to trail that of other investments.

            STOCK MARKET RISK. The fund is affected by how the stock market
            performs. To the extent the fund invests in a particular
            capitalization, the fund's performance may be proportionately
            affected by that segment's general performance. When stock prices
            fall, you should expect the value of your investment to fall as
            well. Because a stock represents ownership in its issuer, stock
            prices can be hurt by poor management, shrinking product demand and
            other business risks. These factors may affect single companies as
            well as groups of companies. In addition, movements in financial
            markets may adversely affect a stock's price, regardless of how
            well the company performs. The market as a whole may not favor the
            types of investments the fund makes, which could affect the fund's
            ability to sell them at an attractive price.

            CONCENTRATION RISK. The fund concentrates its investments in the
            group of industries constituting the technology sector. As a
            result, factors affecting this sector, such as market price
            movements, market saturation and rapid product obsolescence will
            have a significant impact on the fund's performance. Additionally,
            many technology companies are smaller companies that may have
            limited business lines and limited financial resources, making them
            highly vulnerable to business and economic risks.

            NON-DIVERSIFICATION RISK. The fund is classified as non-diversified
            under the Investment Company Act of 1940, as amended. This means
            that the fund may invest in securities of relatively few issuers.
            Thus, the performance of one or a small number of portfolio holdings
            can affect overall performance more than if the fund invested in a
            larger number of issuers.

            FOREIGN INVESTMENT RISK. Foreign investments involve certain
            special risks, including:

            -  POLITICAL RISK. Some foreign governments have limited the
               outflow of profits to investors abroad, imposed restrictions on
               the exchange or export of foreign currency, extended diplomatic
               disputes to include trade and financial relations, seized
               foreign investment and imposed higher taxes.




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

This fund is designed for investors who can accept above-average risks and are
interested in exposure to a sector that offers attractive long-term growth
potential.

                                       DWS Technology Fund  | 15
<PAGE>

            -  INFORMATION RISK. Companies based in foreign markets are usually
            not subject to accounting, auditing and financial reporting
            standards and practices as stringent as those in the US. Therefore,
            their financial reports may present an incomplete, untimely or
            misleading picture of a company, as compared to the financial
            reports required in the US.

            -  LIQUIDITY RISK. Investments that trade less can be more
               difficult or more costly to buy, or to sell, than more liquid or
               active investments. This liquidity risk is a factor of the
               trading volume of a particular investment, as well as the size
               and liquidity of the entire local market. On the whole, foreign
               exchanges are smaller and less liquid than US exchanges. This
               can make buying and selling certain investments more difficult
               and costly. Relatively small transactions in some instances can
               have a disproportionately large effect on the price and supply
               of securities. In certain situations, it may become virtually
               impossible to sell an investment in an orderly fashion at a
               price that approaches portfolio management's estimate of its
               value. For the same reason, it may at times be difficult to
               value the fund's foreign investments.

            -  REGULATORY RISK. There is generally less government regulation
               of foreign markets, companies and securities dealers than in the
               US.

            -  CURRENCY RISK. The fund invests in securities denominated in
               foreign currencies. Changes in exchange rates between foreign
               currencies and the US dollar may affect the US dollar value of
               foreign securities or the income or gain received on these
               securities.

            -  LIMITED LEGAL RECOURSE RISK. Legal remedies for investors may be
               more limited than the legal remedies available in the US.

            -  TRADING PRACTICE RISK. Brokerage commissions and other fees are
               generally higher for foreign investments than for US
               investments. The procedures and rules governing foreign
               transactions and custody may also involve delays in payment,
               delivery or recovery of money or investments.

            -  TAXES. Foreign withholding and certain other taxes may reduce
               the amount of income available to distribute to shareholders of
               the fund. In addition, special US tax considerations may apply
               to the fund's foreign investments.


16 | DWS Technology Fund
<PAGE>

            EMERGING MARKET RISK. All of the risks of investing in foreign
            securities are increased in connection with investments in emerging
            markets securities. In addition, profound social changes and
            business practices that depart from norms in developed countries'
            economies have hindered the orderly growth of emerging economies
            and their markets in the past and have caused instability. High
            levels of debt tend to make emerging economies heavily reliant on
            foreign capital and vulnerable to capital flight. Countries in
            emerging markets are also more likely to experience high levels of
            inflation, deflation or currency devaluation, which could also hurt
            their economies and securities markets. For these and other
            reasons, investments in emerging markets are often considered
            speculative.

            PRICING RISK. At times, market conditions may make it difficult to
            value some investments, and the fund may use certain valuation
            methodologies for some of its investments, such as fair value
            pricing. Given the subjective nature of such valuation
            methodologies, it is possible that the value determined for an
            investment may be different than the value realized upon such
            investment's sale. If the fund has valued its securities too
            highly, you may pay too much for fund shares when you buy into the
            fund. If the fund has underestimated the price of its securities,
            you may not receive the full market value when you sell your fund
            shares.

            SECURITIES LENDING RISK. Any loss in the market price of securities
            loaned by the fund that occurs during the term of the loan would be
            borne by the fund and would adversely affect the fund's
            performance. Also, there may be delays in recovery of securities
            loaned or even a loss of rights in the collateral should the
            borrower of the securities fail financially while the loan is
            outstanding. However, loans will be made only to borrowers selected
            by the fund's delegate after a review of relevant facts and
            circumstances, including the creditworthiness of the borrower.

            IPO RISK. Securities purchased in initial public offerings (IPOs)
            may be very volatile, rising and falling rapidly, often based,
            among other reasons, on investor perceptions rather than on
            economic reasons. Additionally, investments in IPOs may magnify the
            fund's performance if it has a small asset base.


                                                       DWS Technology Fund  | 17
<PAGE>

            The fund is less likely to experience a similar impact on its
            performance as its assets grow because it is unlikely that the fund
            will be able to obtain proportionately larger IPO allocations.

            Other factors that could affect performance include:

            -  portfolio management could be wrong in the analysis of
               industries, companies, economic trends, the relative
               attractiveness of different securities or other matters.

            -  growth stocks may be out of favor for certain periods.

            -  derivatives could produce disproportionate losses due to a
               variety of factors, including the failure of the counterparty to
               meet its obligations or unexpected price or interest rate
               movements. (See "Secondary Risks" for more information.)


18 | DWS Technology Fund
<PAGE>

THE FUND'S PERFORMANCE HISTORY

While a fund's past performance (before and after taxes) isn't necessarily a
sign of how it will do in the future, it can be valuable for an investor to
know.

The bar chart shows how the performance of the fund's Class S shares has varied
from year to year, which may give some idea of risk. The table on the following
page shows how fund performance compares to relevant index performance (which,
unlike fund performance, does not reflect fees or expenses). The performance of
both the fund and the index varies over time. All figures assume reinvestment
of dividends and distributions (in the case of after-tax returns, reinvested
net of assumed tax rates).

The table shows returns for Class S shares on a before-tax and after-tax basis.
After-tax returns are estimates calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on an investor's tax
situation and may differ from those shown in the table. After-tax returns shown
are not relevant for investors who hold their shares through tax-deferred
arrangements, such as 401(k) plans or individual retirement accounts.

DWS Technology Fund

ANNUAL TOTAL RETURN (%) AS OF 12/31 EACH YEAR - Class S
[GRAPHIC APPEARS HERE]





<TABLE>
<S>       <C>       <C>
 3.73      0.26     13.93
2005      2006      2007
</TABLE>





<TABLE>
<CAPTION>
FOR THE PERIODS INCLUDED IN THE BAR CHART:
<S>                                        <C>
BEST QUARTER: 8.94%, Q2 2007               WORST QUARTER: -11.85%, Q2 2006
</TABLE>



                                                       DWS Technology Fund  | 19
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS (%) as of 12/31/2007


<TABLE>
<CAPTION>
                                               1 YEAR       SINCE INCEPTION*
<S>                                          <C>           <C>
 CLASS S
   Return before Taxes                           13.93             6.25
   Return after Taxes on Distributions           13.93             6.25
   Return after Taxes on Distributions
   and Sale of Fund Shares                        9.06             5.36
 S&P 500 (reflects no deductions for
 fees, expenses or taxes)                         5.49             8.62
 S&P GOLDMAN SACHS TECHNOLOGY
 INDEX (reflects no deductions for fees,
 expenses or taxes)                              16.94             9.15
</TABLE>


 *   Class S shares commenced operations on December 20, 2004. Index returns
     begin December 31, 2004.

     Total returns would have been lower if certain operating expenses hadn't
been reduced.

 STANDARD & POOR'S 500 INDEX (S&P 500) is an unmanaged, capitalization-weighted
 index of 500 stocks. The index is designed to measure performance of the broad
 domestic economy through changes in the aggregate market value of 500 stocks
 representing all major industries.

 S&P GOLDMAN SACHS TECHNOLOGY INDEX is an unmanaged capitalization-weighted
 index based on a universe of technology-related stocks.

 In the past, the technology sector has experienced above-average volatility
 that produced significant fluctuations in the fund's performance.


--------------------------------------------------------------------------------
Current performance may be higher or lower than the performance data quoted
above. For more recent performance information, call your financial advisor or
(800) 728-3337 or visit our Web site at www.dws-scudder.com.


--------------------------------------------------------------------------------
RETURN AFTER TAXES ON DISTRIBUTIONS assumes that an investor holds fund shares
at the end of the period. The return reflects taxes only on the fund's
distributions and not on a shareholder's gain or loss from selling fund shares.


RETURN AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES assumes that an
investor sold his or her fund shares at the end of the period. The return
reflects taxes on both the fund's distributions and a shareholder's gain or
loss from selling fund shares.


20 | DWS Technology Fund
<PAGE>

HOW MUCH INVESTORS PAY

The table below describes the fees and expenses that you may pay if you buy and
hold fund shares. This information doesn't include any fees that may be charged
by your financial advisor.


<TABLE>
<CAPTION>
FEE TABLE                                        CLASS S
<S>                                    <C>
 SHAREHOLDER FEES, paid directly from your investment
_____________________________________________________________________
 Redemption/Exchange Fee on shares
 owned less than 15 days (as % of
 redemption proceeds) 1                            2.00%

 ANNUAL OPERATING EXPENSES, deducted from fund assets
_____________________________________________________________________
 Management Fee                                    0.56%
 Distribution/Service (12b-1) Fee                  None
 Other Expenses                                    0.56
 TOTAL ANNUAL OPERATING EXPENSES                   1.12
</TABLE>


1   This fee is charged on applicable redemptions or exchanges. Please see
   "Policies You Should Know About - Policies about transactions" for further
   information.

Based on the costs above, this example helps you compare the expenses of the
fund to those of other mutual funds. This example assumes the expenses above
remain the same, that you invested $10,000, earned 5% annual returns and
reinvested all dividends and distributions and sold your shares at the end of
each period. This is only an example; actual expenses will be different.


<TABLE>
<CAPTION>
EXAMPLE               1 YEAR      3 YEARS      5 YEARS      10 YEARS
<S>                  <C>         <C>          <C>          <C>
 Class S shares        $114         $356         $617       $1,363
</TABLE>



                                                       DWS Technology Fund  | 21
<PAGE>

OTHER POLICIES AND SECONDARY RISKS

           While the previous pages describe the main points of each fund's
           strategy and risks, there are a few other issues to know about:

           -  Although major changes tend to be infrequent, each fund's Board
              could change a fund's investment objective without seeking
              shareholder approval. However, the Board will provide
              shareholders with at least 60 days' notice prior to making any
              changes to each fund's 80% investment policy as described herein.


           -  As a temporary defensive measure, each fund could shift up to
              100% of its assets into investments such as money market
              securities. This could prevent losses, but, while engaged in a
              temporary defensive position, a fund will not be pursuing its
              investment objective. However, portfolio management may choose
              not to use these strategies for various reasons, even in volatile
              market conditions.


           Secondary risks

           The risk disclosure below applies to each fund, unless otherwise
           noted.

           DERIVATIVES RISK. Risks associated with derivatives include the risk
           that the derivative is not well correlated with the security, index
           or currency to which it relates; the risk that derivatives may
           result in losses or missed opportunities; the risk that the fund
           will be unable to sell the derivative because of an illiquid
           secondary market; the risk that a counterparty is unwilling or
           unable to meet its obligation; and the risk that the derivative
           transaction could expose the fund to the effects of leverage, which
           could increase the fund's exposure to the market and magnify
           potential losses. There is no guarantee that derivatives, to the
           extent employed, will have the intended effect, and their use could
           cause lower returns or even losses to the fund. The use of
           derivatives by the fund to hedge risk may reduce the opportunity for
           gain by offsetting the positive effect of favorable price movements.



           For more information

           This prospectus doesn't tell you about every policy or risk of
           investing in each fund.


22 | Other Policies and Secondary Risks
<PAGE>

           If you want more information on each fund's allowable securities and
           investment practices and the characteristics and risks of each one,
           you may want to request a copy of the Statement of Additional
           Information (the back cover tells you how to do this).

           Keep in mind that there is no assurance that a fund will achieve its
           objective.

           A complete list of each fund's portfolio holdings is posted as of
           the month-end on www.dws-scudder.com (the Web site does not form a
           part of this prospectus) on or after the last day of the following
           month. This posted information generally remains accessible at least
           until the date on which a fund files its Form N-CSR or N-Q with the
           Securities and Exchange Commission for the period that includes the
           date as of which the posted information is current. In addition,
           each fund's top ten equity holdings and other fund information is
           posted on www.dws-scudder.com as of the calendar quarter-end on or
           after the 15th day following quarter-end. Each fund's Statement of
           Additional Information includes a description of a fund's policies
           and procedures with respect to the disclosure of a fund's portfolio
           holdings.


WHO MANAGES AND OVERSEES THE FUNDS


           The investment advisor

           Deutsche Investment Management Americas Inc. ("DIMA" or the
           "Advisor"), with headquarters at 345 Park Avenue, New York, NY
           10154, is the investment advisor for each fund. Under the oversight
           of the Board, the Advisor, or a subadvisor, makes investment
           decisions, buys and sells securities for each fund and conducts
           research that leads to these purchase and sale decisions. The
           Advisor provides a full range of global investment advisory services
           to institutional and retail clients.

           DWS Scudder is part of Deutsche Asset Management, which is the
           marketing name in the US for the asset management activities of
           Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS
           Trust Company.

           Deutsche Asset Management is a global asset management organization
           that offers a wide range of investing expertise and resources,
           including hundreds of portfolio managers and analysts and an office
           network that reaches the world's major


                                        Who Manages and Oversees the Funds  | 23
<PAGE>

           investment centers. This well-resourced global investment platform
           brings together a wide variety of experience and investment insight
           across industries, regions, asset classes and investing styles.

           The Advisor is an indirect, wholly owned subsidiary of Deutsche Bank
           AG. Deutsche Bank AG is a major global banking institution that is
           engaged in a wide range of financial services, including investment
           management, mutual funds, retail, private and commercial banking,
           investment banking and insurance.

           MANAGEMENT FEE. The Advisor receives a management fee from each
           fund. Below are the actual rates paid by each fund for the most
           recent fiscal year, as a percentage of each fund's average daily net
           assets.


<TABLE>
<CAPTION>
FUND NAME                                         FEE PAID
<S>                                             <C>
  DWS Gold & Precious Metals Fund                  0.90  %
  DWS Technology Fund                               0.52%*
</TABLE>


           *   Reflects the effects of expense limitations and/or fee waivers
then in effect.


           Effective October 1, 2007, DWS Gold & Precious Metals Fund pays the
           Advisor under the investment management agreement a fee, calculated
           daily and paid monthly, at the annual rate of 0.885% of the fund's
           average daily net assets up to $500 million, and 0.835% thereafter.

           A discussion regarding the basis for the Board's approval of each
           fund's investment management agreement and, as applicable,
           subadvisory agreement, is contained in the shareholder reports for
           the annual period ended October 31 (see "Shareholder reports" on the
           back cover).

           The Advisor provides administrative services to DWS Gold & Precious
           Metals Fund under a separate administrative services agreement
           between the fund and the Advisor. Under its investment management
           agreement, DWS Technology Fund pays the Advisor for providing most
           of the fund's administrative services.


24 | Who Manages and Oversees the Funds
<PAGE>

           Subadvisor for DWS Gold & Precious Metals Fund

           The subadvisor for DWS Gold & Precious Metals Fund is Deutsche
           Investments Australia Limited ("DIAL"), Level 16, 126 Phillip
           Street, Sydney NSW 200, Australia, an affiliate of the Advisor. DIAL
           serves as both subadvisor for mutual funds and investment advisor
           for certain institutional accounts.

           Pursuant to its subadvisory agreement with the Advisor on behalf of
           the fund, DIAL performs the functions of the Advisor, including
           making the fund's investment decisions, buying and selling
           securities for the fund, conducting research that leads to these
           purchase and sale decisions, selecting brokers and dealers and
           negotiating brokerage commissions and dealer charges. The Advisor
           compensates DIAL out of the management fee it receives from the
           fund.


                                        Who Manages and Oversees the Funds  | 25
<PAGE>

Portfolio management

Each fund is managed by a team of investment professionals who collaborate to
develop and implement each fund's investment strategy. Each portfolio manager
on the teams has authority over all aspects of a fund's investment portfolio,
including but not limited to, purchases and sales of individual securities,
portfolio construction techniques, portfolio risk assessment and the management
of daily cash flows in accordance with portfolio holdings.

The following people handle the day-to-day management of the funds.

DWS GOLD & PRECIOUS METALS FUND

Euan Leckie
Director of Deutsche Asset Management and Co-Manager of the fund.
- Joined Deutsche Asset Management in 1988 after 14 years as a senior financial
   analyst for CSR Limited and a mining analyst for Commercial Banking Company
   and Constable and Bain.
- Global equity analyst for Materials Sector; member of Global Materials Sector
   Research Team.
- Prior experience was as an exploration geologist for gold, base metals and
   diamonds in Australia and Indonesia.
- Joined the fund in 2002.
- BSc., University of Tasmania; BEc., Macquarie University, Sydney.

Greg Foulis
Director of Deutsche Asset Management and Co-Manager of the fund.
- Joined Deutsche Asset Management and the fund in October 2004.
- Joined Deutsche Bank in 1997 as a senior analyst after five years of
   financial markets experience. Prior experience includes seven years in the
   mining industry working as a geologist for a variety of senior and junior
   companies.
- BAppSc from NSW Institute of Technology; MComm from University of NSW.


26 | Who Manages and Oversees the Funds
<PAGE>

DWS TECHNOLOGY FUND

Kelly P. Davis
Director of Deutsche Asset Management and Lead Portfolio Manager of the fund.
- Joined Deutsche Asset Management in 2003 after eight years of experience with
   semiconductors as an associate analyst in Equities Research with Credit
   Suisse First Boston, team leader in applications engineering at Advanced
   Micro Devices, and in technical roles at Interactive Silicon, Motorola,
   Inc. and Tellabs Operations, Inc.

- Joined the fund in 2005.
- BS, Purdue University; MBA, University of California, Berkeley.

Each fund's Statement of Additional Information provides additional information
about a portfolio manager's investments in each fund, a description of the
portfolio management compensation structure and information regarding other
accounts managed.


                                        Who Manages and Oversees the Funds  | 27
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are designed to help you understand recent financial
performance. The figures in the first part of each table are for a single
share. The total return figures represent the percentage that an investor in a
fund would have earned (or lost), assuming all dividends and distributions were
reinvested. The information for DWS Gold & Precious Metals Fund has been
audited by PricewaterhouseCoopers LLP, independent registered public accounting
firm, and the information for DWS Technology Fund has been audited by Ernst &
Young LLP, independent registered public accounting firm, whose report, along
with each fund's financial statements, is included in each fund's annual report
(see "Shareholder reports" on the back cover).


28 | Financial Highlights
<PAGE>

DWS Gold & Precious Metals Fund - Class S


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                          2007          2006           2005          2004          2003
<S>                                          <C>           <C>            <C>           <C>           <C>
SELECTED PER SHARE DATA
---------------------------------------------------------------------------------------------------            -
NET ASSET VALUE, BEGINNING OF PERIOD          $  23.26       $ 17.01       $  19.52      $  20.65       $   9.34
------------------------------------------    --------       -------       --------      --------       --------
Income (loss) from investment
operations:
  Net investment income (loss) a                (  .04)       (  .06)c       (  .13)       (  .20)        (  .12)
__________________________________________    ________       _______       ________      ________       ________
  Net realized and unrealized gain
  (loss)                                          9.21          7.76         (  .72)          .36          11.52
------------------------------------------    --------       -------       --------      --------       --------
  TOTAL FROM INVESTMENT OPERATIONS                9.17          7.70         (  .85)          .16          11.40
__________________________________________    ________       _______       ________      ________       ________
Less distributions from:
  Net investment income                            (32)       (  .36)             -        ( 1.29)        (  .09)
__________________________________________    ________       _______       ________      ________       ________
  Net realized gains                            ( 3.98)       ( 1.09)        ( 1.66)            -              -
------------------------------------------    --------       -------       --------      --------       --------
  TOTAL DISTRIBUTIONS                           ( 4.30)       ( 1.45)        ( 1.66)       ( 1.29)        (  .09)
__________________________________________    ________       _______       ________      ________       ________
Redemption fees                                    .00*          .00*           .00*            -              -
------------------------------------------    --------       -------       --------      --------       --------
NET ASSET VALUE, END OF PERIOD                $  28.13       $ 23.26       $  17.01      $  19.52       $  20.65
------------------------------------------    --------       -------       --------      --------       --------
Total Return (%)                                 47.01       47.12c          ( 4.34)       .70b         122.39b
------------------------------------------    --------       -------       --------      --------       --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------     --------
Net assets, end of period ($ millions)             403           303            215           240            248
__________________________________________    ________       _______       ________      ________       ________
Ratio of expenses before expense
reductions (%)                                    1.26          1.29           1.37          1.47           1.66
__________________________________________    ________       _______       ________      ________       ________
Ratio of expenses after expense
reductions (%)                                    1.26          1.29           1.37          1.33           1.64
__________________________________________    ________       _______       ________      ________       ________
Ratio of net investment income (loss)
     (%)                                        (  .16)       (  .27)c       (  .74)       ( 1.05)        ( 1.02)
__________________________________________    ________       _______       ________      ________       ________
Portfolio turnover rate (%)                         52            69             53            76             80
------------------------------------------    --------       -------       --------      --------       --------
</TABLE>


a   Based on average shares outstanding during the period.

b   Total return would have been lower had certain expenses not been reduced.

c   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.008 per share
   and an increase in the ratio of net investment income of 0.03%. Excluding
   this non-recurring income, total return would have been 0.04% lower.

*   Amount is less than $.005.

                                                      Financial Highlights  | 29
<PAGE>

DWS Technology Fund - Class S


<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,                                2007           2006           2005 A
<S>                                               <C>            <C>            <C>
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------          -
NET ASSET VALUE, BEGINNING OF PERIOD                $  11.42       $  10.98       $  11.09
-------------------------------------------------   --------       --------       --------
Income (loss) from investment operations:
  Net investment income (loss) b                      (  .04)        (  .05)d       (  .06)
_________________________________________________   ________       ________       ________
  Net realized and unrealized gain (loss)               3.24            .49         (  .05)
-------------------------------------------------   --------       --------       --------
  TOTAL FROM INVESTMENT OPERATIONS                      3.20            .44         (  .11)
_________________________________________________   ________       ________       ________
Redemption fees                                          .00***         .00***         .00***
-------------------------------------------------   --------       --------       --------
NET ASSET VALUE, END OF PERIOD                      $  14.62       $  11.42       $  10.98
-------------------------------------------------   --------       --------       --------
Total Return (%)                                     28.02c        4.01c,d          (  .99)**
-------------------------------------------------   --------       --------       --------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
-------------------------------------------------------------------------------   --------
Net assets, end of period ($ millions)                   124            125            142
_________________________________________________   ________       ________       ________
Ratio of expenses before expense reductions (%)         1.12           1.25           1.36*
_________________________________________________   ________       ________       ________
Ratio of expenses after expense reductions (%)          1.05           1.06           1.05*
_________________________________________________   ________       ________       ________
Ratio of net investment income (loss) (%)             (  .34)        (  .39)d       (  .69)*
_________________________________________________   ________       ________       ________
Portfolio turnover rate (%)                               79             58            114
-------------------------------------------------   --------       --------       --------
</TABLE>


a   For the period from December 20, 2004 (commencement of operations of Class
   S shares) to October 31, 2005.

b   Based on average shares outstanding during the period.

c   Total return would have been lower had certain expenses not been reduced.

d   Includes non-recurring income from the Advisor recorded as a result of an
   administrative proceeding regarding disclosure of brokerage allocation
   practices in connection with sales of DWS Scudder Funds. The non-recurring
   income resulted in an increase in net investment income of $0.017 per share
   and an increase in the ratio of net investment income of 0.14%. Excluding
   this non-recurring income, total return would have been 0.16% lower.

*   Annualized

**   Not annualized

***   Amount is less than $.005.

30 | Financial Highlights
<PAGE>

HOW TO INVEST IN THE FUNDS

THE FOLLOWING PAGES TELL YOU HOW TO INVEST IN A FUND AND WHAT TO EXPECT AS A
SHAREHOLDER. The following pages also tell you about many of the services,
choices and benefits of being a shareholder. You'll also find information on
how to check the status of your account using the method that's most convenient
for you.

If you're investing directly with DWS Scudder, all of this information applies
to you. If you're investing through a "third party provider" - for example, a
workplace retirement plan, financial supermarket or financial advisor - your
provider may have its own policies or instructions and you should follow those.


Please remember, CLASS S shares are generally only available to new investors
through fee-based programs of investment dealers that have special agreements
with the funds' distributor, through certain group retirement plans and through
certain registered investment advisors. These dealers and advisors typically
charge ongoing fees for services they provide.

You can find out more about the topics covered here by speaking with your
FINANCIAL ADVISOR OR A REPRESENTATIVE OF YOUR WORKPLACE RETIREMENT PLAN OR
OTHER INVESTMENT PROVIDER.

<PAGE>

How to BUY Shares



<TABLE>
<CAPTION>
 FIRST INVESTMENT                              ADDITIONAL INVESTMENTS
<S>                                           <C>
 $2,500 or more for regular accounts           $50 or more for regular accounts and
 $1,000 or more for IRAs and UTMAs/           IRAs
 UGMAs                                        $50 or more for an account with an
 $1,000 or more for an account with an        Automatic Investment Plan
 Automatic Investment Plan
 BY MAIL OR EXPRESS MAIL (SEE BELOW)
                                              Send a DWS Scudder investment slip or
 -  Fill out and sign an application
                                              short note that includes:
 -  Send it to us at the appropriate
                                              -  fund and class name
  address, along with an investment
  check made payable to "DWS                  -  account number
  Scudder"                                    -  check payable to "DWS Scudder"
 BY WIRE
 -  Call (800) 728-3337 for instructions      -  Call (800) 728-3337 for instructions
 BY PHONE
 Not available                                -  Call (800) 728-3337 for instructions
 WITH AN AUTOMATIC INVESTMENT PLAN
 -  Fill in the information on our            -  To set up regular investments from a
  application including a check for the       bank checking account, call
  initial investment and a voided check       (800) 728-3337 (minimum $50)
 USING QuickBuy
 Not available                                -  Call (800) 728-3337 to make sure
                                              QuickBuy is set up on your account; if
                                              it is, you can request a transfer from
                                              your bank account of any amount
                                              between $50 and $250,000
 ON THE INTERNET
 -  Register at www.dws-scudder.com or        -  Call (800) 728-3337 to ensure you have
  log in if already registered                electronic services
 -  Print out a prospectus and a new          -  Register at www.dws-scudder.com
  account application                         or log in if already registered
 -  Complete and return the application       -  Follow the instructions for buying
  with your check                             shares with money from your bank
                                              account
</TABLE>


--------------------------------------------------------------------------------
REGULAR MAIL:

First Investment: DWS Scudder, PO Box 219356, Kansas City, MO 64121-9356
Additional Investments: DWS Scudder, PO Box 219154, Kansas City, MO 64121-9154

EXPRESS, REGISTERED OR CERTIFIED MAIL:
DWS Scudder, 210 West 10th Street, Kansas City, MO 64105-1614


32 | How to Buy Shares
<PAGE>

How to EXCHANGE or SELL Shares



<TABLE>
<CAPTION>
 EXCHANGING INTO ANOTHER FUND                    SELLING SHARES
<S>                                             <C>
                                                 Some transactions, including most for
 -  Exchanges into existing accounts:
                                                over $100,000, can only be ordered in
  $50 minimum per fund
                                                writing with a signature guarantee;
 -  Exchanges into new accounts:
                                                please see "Signature Guarantee"
  $2,500 minimum per fund
  $1,000 minimum for IRAs and UTMAs/
  UGMAs
 BY PHONE                                        BY PHONE OR WIRE
 -  Call (800) 728-3337 for instructions        -  Call (800) 728-3337 for instructions
 USING THE AUTOMATED INFORMATION LINE
 -  Call (800) 728-3337 for instructions        -  Call (800) 728-3337 for instructions
 BY MAIL OR EXPRESS MAIL
 (see previous page for address)
 Your instructions should include:              Your instructions should include:
 -  the fund, class and account number          -  the fund, class and account number
  you're exchanging out of                      from which you want to sell shares
 -  the dollar amount or number of shares       -  the dollar amount or number of shares
  you want to exchange                          you want to sell
 -  the name and class of the fund you          -  your name(s), signature(s) and
  want to exchange into                         address, as they appear on your
                                                account
 -  your name(s), signature(s) and
  address, as they appear on your               -  a daytime telephone number
  account
 -  a daytime telephone number
 WITH AN AUTOMATIC EXCHANGE PLAN                 WITH AN AUTOMATIC WITHDRAWAL PLAN
 -  To set up regular exchanges from a          -  To set up regular cash payments from
  fund account, call (800) 728-3337             a DWS fund account, call
                                                (800) 728-3337
 USING QuickSell
 Not available                                  -  Call (800) 728-3337 to make sure
                                                QuickSell is set up on your account; if
                                                it is, you can request a transfer to your
                                                bank account of any amount between
                                                $50 and $250,000
 ON THE INTERNET
 -  Register at www.dws-scudder.com or          -  Register at www.dws-scudder.com or
  log in if already registered                  log in if already registered
 -  Follow the instructions for making on-      -  Follow the instructions for making on-
  line exchanges                                line redemptions
</TABLE>


--------------------------------------------------------------------------------

<TABLE>
<S>               <C>
TO REACH US:      WEB SITE: www.dws-scudder.com
                  TELEPHONE REPRESENTATIVE: (800) 728-3337, M-F, 9 a.m.- 6 p.m. ET
                  TDD LINE: (800) 972-3006, M-F, 9 a.m.- 6 p.m. ET
</TABLE>



                                            How to Sell or Exchange Shares  | 33
<PAGE>

           Financial intermediary support payments

           The Advisor, DWS Scudder Distributors, Inc. (the "Distributor")
           and/or their affiliates may pay additional compensation, out of
           their own assets and not as an additional charge to each fund, to
           selected affiliated and unaffiliated brokers, dealers, participating
           insurance companies or other financial intermediaries ("financial
           advisors") in connection with the sale and/or distribution of fund
           shares or the retention and/or servicing of fund investors and fund
           shares ("revenue sharing"). Such revenue sharing payments are in
           addition to any distribution or service fees payable under any Rule
           12b-1 or service plan of each fund, any record keeping/sub-transfer
           agency/networking fees payable by each fund (generally through the
           Distributor or an affiliate) and/or the Distributor to certain
           financial advisors for performing such services and any sales
           charge, commissions, non-cash compensation arrangements expressly
           permitted under applicable rules of the Financial Industry
           Regulatory Authority or other concessions described in the fee table
           or elsewhere in this prospectus or the Statement of Additional
           Information as payable to all financial advisors. For example, the
           Advisor, the Distributor and/or their affiliates may compensate
           financial advisors for providing a fund with "shelf space" or access
           to a third party platform or fund offering list or other marketing
           programs, including, without limitation, inclusion of the fund on
           preferred or recommended sales lists, mutual fund "supermarket"
           platforms and other formal sales programs; granting the Distributor
           access to the financial advisor's sales force; granting the
           Distributor access to the financial advisor's conferences and
           meetings; assistance in training and educating the financial
           advisor's personnel; and obtaining other forms of marketing support.


           The level of revenue sharing payments made to financial advisors may
           be a fixed fee or based upon one or more of the following factors:
           gross sales, current assets and/or number of accounts of each fund
           attributable to the financial advisor, the particular fund or fund
           type or other measures as agreed to by the Advisor, the Distributor
           and/or their affiliates and the financial advisors or any
           combination thereof. The amount of these revenue sharing payments is
           determined at the discretion of the Advisor, the Distributor and/or
           their affiliates from time to time, may be substantial, and may be
           different for different financial advisors based on, for example,
           the nature of the services provided by the financial advisor.


34 | How to Sell or Exchange Shares
<PAGE>

           The Advisor, the Distributor and/or their affiliates currently make
           revenue sharing payments from their own assets in connection with
           the sale and/or distribution of DWS Fund shares or the retention
           and/or servicing of investors and DWS Fund shares to financial
           advisors in amounts that generally range from .01% up to .50% of
           assets of each fund serviced and maintained by the financial
           advisor, .10% to .25% of sales of each fund attributable to the
           financial advisor, a flat fee of $12,500 up to $500,000, or any
           combination thereof. These amounts are subject to change at the
           discretion of the Advisor, the Distributor and/or their affiliates.
           Receipt of, or the prospect of receiving, this additional
           compensation may influence your financial advisor's recommendation
           of each fund or of any particular share class of each fund. You
           should review your financial advisor's compensation disclosure
           and/or talk to your financial advisor to obtain more information on
           how this compensation may have influenced your financial advisor's
           recommendation of each fund. Additional information regarding these
           revenue sharing payments is included in each fund's Statement of
           Additional Information, which is available to you on request at no
           charge (see the back cover of this prospectus for more information
           on how to request a copy of the Statement of Additional
           Information).

           The Advisor, the Distributor and/or their affiliates may also make
           such revenue sharing payments to financial advisors under the terms
           discussed above in connection with the distribution of both DWS
           funds and non-DWS funds by financial advisors to retirement plans
           that obtain record keeping services from ADP, Inc. on the DWS
           Scudder branded retirement plan platform (the "Platform") with the
           level of revenue sharing payments being based upon sales of both the
           DWS funds and the non-DWS funds by the financial advisor on the
           Platform or current assets of both the DWS funds and the non-DWS
           funds serviced and maintained by the financial advisor on the
           Platform.

           It is likely that broker-dealers that execute portfolio transactions
           for each fund will include firms that also sell shares of the DWS
           funds to their customers. However, the Advisor will not consider
           sales of DWS fund shares as a factor in the selection of
           broker-dealers to execute portfolio transactions for the DWS funds.
           Accordingly, the Advisor has implemented policies and procedures
           reasonably designed to prevent its traders from considering sales of
           DWS fund shares as a factor in the selection of


                                            How to Sell or Exchange Shares  | 35
<PAGE>

           broker-dealers to execute portfolio transactions for each fund. In
           addition, the Advisor, the Distributor and/or their affiliates will
           not use fund brokerage to pay for their obligation to provide
           additional compensation to financial advisors as described above.


POLICIES YOU SHOULD KNOW ABOUT

           Along with the information on the previous pages, the policies below
           may affect you as a shareholder. Some of this information, such as
           the section on distributions and taxes, applies to all investors,
           including those investing through a financial advisor.

           If you are investing through a financial advisor or through a
           retirement plan, check the materials you received from them about
           how to buy and sell shares because particular financial advisors or
           other intermediaries may adopt policies, procedures or limitations
           that are separate from those described by a fund. Please note that a
           financial advisor may charge fees separate from those charged by a
           fund and may be compensated by a fund.

           Keep in mind that the information in this prospectus applies only to
           the shares offered herein. Other share classes are described in
           separate prospectuses and have different fees, requirements and
           services.

           In order to reduce the amount of mail you receive and to help reduce
           expenses, we generally send a single copy of any shareholder report
           and prospectus to each household. If you do not want the mailing of
           these documents to be combined with those for other members of your
           household, please contact your financial advisor or call (800)
           728-3337.


           Policies about transactions

           EACH FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
           is open. Each fund calculates its share price for each class every
           business day, as of the close of regular trading on the New York
           Stock Exchange (typically 4:00 p.m. Eastern time, but sometimes
           earlier, as in the case of scheduled half-day trading or unscheduled
           suspensions of trading). You can place an order to buy or sell
           shares at any time.




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

Questions? You can speak to a DWS Scudder representative between 9 a.m. and 6
p.m. Eastern time on any fund business day by calling (800) 728-3337.

36 | Policies You Should Know About
<PAGE>

           To help the government fight the funding of terrorism and money
           laundering activities, federal law requires all financial
           institutions to obtain, verify and record information that
           identifies each person who opens an account. What this means to you:
           When you open an account, we will ask for your name, address, date
           of birth and other information that will allow us to identify you.
           Some or all of this information will be used to verify the identity
           of all persons opening an account.

           We might request additional information about you (which may include
           certain documents, such as articles of incorporation for companies)
           to help us verify your identity and, in some cases, the information
           and/or documents may be required to conduct the verification. The
           information and documents will be used solely to verify your
           identity.

           We will attempt to collect any missing required and requested
           information by contacting you or your financial advisor. If we are
           unable to obtain this information within the time frames established
           by each fund, then we may reject your application and order.

           Each fund will not invest your purchase until all required and
           requested identification information has been provided and your
           application has been submitted in "good order." After we receive all
           the information, your application is deemed to be in good order and
           we accept your purchase, you will receive the net asset value per
           share next calculated.

           If we are unable to verify your identity within time frames
           established by each fund, after a reasonable effort to do so, you
           will receive written notification.

           With certain limited exceptions, only US residents may invest in
           each fund.

           Because orders placed through a financial advisor must be forwarded
           to the transfer agent before they can be processed, you'll need to
           allow extra time. Your financial advisor should be able to tell you
           approximately when your order will be processed. It is the
           responsibility of your financial advisor to forward your order to
           the transfer agent in a timely manner.

           INITIAL PURCHASE. The minimum initial investment is $2,500, except
           for investments on behalf of participants in certain fee-based and
           wrap programs offered through certain financial intermediaries
           approved by the Advisor, for which there is no
           minimum initial investment; and fiduciary accounts such as IRAs


                                            Policies You Should Know About  | 37
<PAGE>

           and custodial accounts such as Uniform Gifts to Minors Act and
           Uniform Transfers to Minors Act accounts for which the minimum
           initial investment is $1,000 per account. In addition, the minimum
           initial investment is $1,000 if an automatic investment plan of $50
           per month is established. Group retirement plans and certain other
           accounts have similar or lower minimum share balance requirements.

           SUB-MINIMUM BALANCES. Each fund may close your account and send you
           the proceeds if your balance falls below $2,500 ($1,000 with an
           Automatic Investment Plan funded with $50 or more per month in
           subsequent investments); $250 for retirement accounts. We will give
           you 60 days' notice (90 days for retirement accounts) so you can
           either increase your balance or close your account (these policies
           don't apply to investors with $100,000 or more in DWS fund shares,
           investors in certain fee-based and wrap programs offered through
           certain financial intermediaries approved by the Advisor, or group
           retirement plans and certain other accounts having lower minimum
           share balance requirements).

           Because of the high cost of servicing accounts with low balances, an
           account maintenance fee of $6.25 per quarter (for a $25 annual fee)
           will be assessed on accounts whose balances fail to meet the minimum
           initial investment requirement for a period of 90 days prior to the
           assessment date. The quarterly assessment will occur on or about the
           15th of the last month in each calendar quarter. Please note that
           the fee will be assessed on accounts that fall below the minimum for
           any reason, including due to market value fluctuations, redemptions
           or exchanges. The account maintenance fee will apply to all
           shareholders of the DWS Funds except for: accounts with an automatic
           investment plan, accounts held in an omnibus account through a
           financial services firm, accounts maintained on behalf of
           participants in certain fee based and wrap programs offered through
           certain financial intermediaries approved by the Advisor and
           participant level accounts in group retirement plans held on the
           records of a retirement plan record keeper.

           SUBSEQUENT INVESTMENTS. The minimum subsequent investment is $50.
           However, there is no minimum investment requirement for subsequent
           investments on behalf of participants in certain fee-based and wrap
           programs offered through certain financial intermediaries approved
           by the Advisor.


38 | Policies You Should Know About
<PAGE>

           MARKET TIMING POLICIES AND PROCEDURES. Short-term and excessive
           trading of fund shares may present risks to long-term shareholders,
           including potential dilution in the value of fund shares,
           interference with the efficient management of a fund's portfolio
           (including losses on the sale of investments), taxable gains to
           remaining shareholders and increased brokerage and administrative
           costs. These risks may be more pronounced if a fund invests in
           certain securities, such as those that trade in foreign markets, are
           illiquid or do not otherwise have "readily available market
           quotations." Certain investors may seek to employ short-term trading
           strategies aimed at exploiting variations in portfolio valuation
           that arise from the nature of the securities held by a fund (e.g.,
           "time zone arbitrage"). Each fund discourages short-term and
           excessive trading and has adopted policies and procedures that are
           intended to detect and deter short-term and excessive trading.

           Pursuant to its policies, each fund will impose a 2% redemption fee
           on fund shares held for less than a specified holding period
           (subject to certain exceptions discussed below under "Redemption
           fees"). Each fund also reserves the right to reject or cancel a
           purchase or exchange order for any reason without prior notice. For
           example, a fund may in its discretion reject or cancel a purchase or
           an exchange order even if the transaction is not subject to the
           specific roundtrip transaction limitation described below if the
           Advisor believes that there appears to be a pattern of short-term or
           excessive trading activity by a shareholder or deems any other
           trading activity harmful or disruptive to a fund. Each fund, through
           its Advisor and transfer agent, will measure short-term and
           excessive trading by the number of roundtrip transactions within a
           shareholder's account during a rolling 12-month period. A
           "roundtrip" transaction is defined as any combination of purchase
           and redemption activity (including exchanges) of the same fund's
           shares. Each fund may take other trading activity into account if a
           fund believes such activity is of an amount or frequency that may be
           harmful to long-term shareholders or disruptive to portfolio
           management.

           Shareholders are limited to four roundtrip transactions in the same
           DWS Fund (excluding money market funds) over a rolling 12-month
           period. Shareholders with four or more roundtrip transactions in the
           same DWS Fund within a rolling 12-month period generally will be
           blocked from making additional purchases of, or exchanges into, that
           DWS Fund. Each fund has sole discretion whether to remove a block
           from a shareholder's


                                            Policies You Should Know About  | 39
<PAGE>

           account. The rights of a shareholder to redeem shares of a DWS Fund
           are not affected by the four roundtrip transaction limitation, but
           all redemptions remain subject to each fund's redemption fee policy
           (see "Redemption fees" described below).

           Each fund may make exceptions to the roundtrip transaction policy
           for certain types of transactions if, in the opinion of the Advisor,
           the transactions do not represent short-term or excessive trading or
           are not abusive or harmful to a fund, such as, but not limited to,
           systematic transactions, required minimum retirement distributions,
           transactions initiated by a fund or administrator and transactions
           by certain qualified fund-of-fund(s).

           In certain circumstances where shareholders hold shares of a fund
           through a financial intermediary, the fund may rely upon the
           financial intermediary's policy to deter short-term or excessive
           trading if the Advisor believes that the financial intermediary's
           policy is reasonably designed to detect and deter transactions that
           are not in the best interests of a fund. A financial intermediary's
           policy relating to short-term or excessive trading may be more or
           less restrictive than the DWS Funds' policy, may permit certain
           transactions not permitted by the DWS Funds' policies, or prohibit
           transactions not subject to the DWS Funds' policies.

           The Advisor may also accept undertakings from a financial
           intermediary to enforce short-term or excessive trading policies on
           behalf of a fund that provide a substantially similar level of
           protection for each fund against such transactions. For example,
           certain financial intermediaries may have contractual, legal or
           operational restrictions that prevent them from blocking an account.
           In such instances, the financial intermediary may use alternate
           techniques that the Advisor considers to be a reasonable substitute
           for such a block.

           In addition, if a fund invests some portion of its assets in foreign
           securities, it has adopted certain fair valuation practices intended
           to protect the fund from "time zone arbitrage" with respect to its
           foreign securities holdings and other trading practices that seek to
           exploit variations in portfolio valuation that arise from the nature
           of the securities held by a fund. (See "How each fund calculates
           share price.")


40 | Policies You Should Know About
<PAGE>

           There is no assurance that these policies and procedures will be
           effective in limiting short-term and excessive trading in all cases.
           For example, the Advisor may not be able to effectively monitor,
           detect or limit short-term or excessive trading by underlying
           shareholders that occurs through omnibus accounts maintained by
           broker-dealers or other financial intermediaries. The Advisor
           reviews trading activity at the omnibus level to detect short-term
           or excessive trading. If the Advisor has reason to suspect that
           short-term or excessive trading is occurring at the omnibus level,
           the Advisor will contact the financial intermediary to request
           underlying shareholder level activity. Depending on the amount of
           fund shares held in such omnibus accounts (which may represent most
           of a fund's shares) short-term and/or excessive trading of fund
           shares could adversely affect long-term shareholders in a fund. If
           short-term or excessive trading is identified, the Advisor will take
           appropriate action.

           Each fund's market timing policies and procedures may be modified or
           terminated at any time.

           REDEMPTION FEES. Each fund imposes a redemption fee of 2% of the
           total redemption amount (calculated at net asset value) on all fund
           shares redeemed or exchanged within 15 days of buying them (either
           by purchase or exchange). The redemption fee is paid directly to
           each fund and is designed to encourage long-term investment and to
           offset transaction and other costs associated with short-term or
           excessive trading. For purposes of determining whether the
           redemption fee applies, shares held the longest time will be treated
           as being redeemed first and shares held the shortest time will be
           treated as being redeemed last.

           The redemption fee is applicable to fund shares purchased either
           directly or through a financial intermediary, such as a
           broker-dealer. Transactions through financial intermediaries
           typically are placed with a fund on an omnibus basis and include
           both purchase and sale transactions placed on behalf of multiple
           investors. These purchase and sale transactions are generally netted
           against one another and placed on an aggregate basis; consequently
           the identities of the individuals on whose behalf the transactions
           are placed generally are not known to a fund. For this reason, each
           fund has undertaken to notify financial intermediaries of their
           obligation to assess the redemption fee


                                            Policies You Should Know About  | 41
<PAGE>

           on customer accounts and to collect and remit the proceeds to each
           fund. However, due to operational requirements, the intermediaries'
           methods for tracking and calculating the fee may be inadequate or
           differ in some respects from each fund's.

           The redemption fee will not be charged in connection with the
           following exchange or redemption transactions: (i) transactions on
           behalf of participants in certain research wrap programs; (ii)
           transactions on behalf of a shareholder to return any excess IRA
           contributions to the shareholder; (iii) transactions on behalf of a
           shareholder to effect a required minimum distribution on an IRA;
           (iv) transactions on behalf of any mutual fund advised by the
           Advisor and its affiliates (e.g., "funds of funds") or, in the case
           of a master/feeder relationship, redemptions by the feeder fund from
           the master portfolio; (v) transactions on behalf of certain
           unaffiliated mutual funds operating as funds of funds; (vi)
           transactions following death or disability of any registered
           shareholder, beneficial owner or grantor of a living trust with
           respect to shares purchased before death or disability; (vii)
           transactions involving hardship of any registered shareholder;
           (viii) systematic transactions with pre-defined trade dates for
           purchases, exchanges or redemptions, such as automatic account
           rebalancing, or loan origination and repayments; (ix) transactions
           involving shares purchased through the reinvestment of dividends or
           other distributions; (x) transactions involving shares transferred
           from another account in the same fund or converted from another
           class of the same fund (the redemption fee period will carry over to
           the acquired shares); (xi) transactions initiated by a fund or
           administrator (e.g., redemptions for not meeting account minimums,
           to pay account fees funded by share redemptions, or in the event of
           the liquidation or merger of the fund); or (xii) transactions in
           cases when there are legal or contractual limitations or
           restrictions on the imposition of the redemption fee (as determined
           by a fund or its agents in their sole discretion). It is the policy
           of the DWS funds to permit approved fund platform providers to
           execute transactions within the funds without the imposition of a
           redemption fee if such providers have implemented alternative
           measures that are determined by the Advisor to provide controls on
           short-term and excessive trading that are comparable to the DWS
           funds' policies.


42 | Policies You Should Know About
<PAGE>

           THE AUTOMATED INFORMATION LINE IS AVAILABLE 24 HOURS A DAY BY
           CALLING (800) 728-3337. You can use our automated phone services to
           get information on DWS funds generally and on accounts held directly
           at DWS Scudder. You can also use this service to make exchanges and
           to purchase and sell shares.

           QUICKBUY AND QUICKSELL let you set up a link between a DWS fund
           account and a bank account. Once this link is in place, you can move
           money between the two with a phone call. You'll need to make sure
           your bank has Automated Clearing House (ACH) services. Transactions
           take two to three days to be completed and there is a $50 minimum
           and a $250,000 maximum. To set up QuickBuy or QuickSell on a new
           account, see the account application; to add it to an existing
           account, call (800) 728-3337.

           TELEPHONE AND ELECTRONIC TRANSACTIONS. Generally, you are
           automatically entitled to telephone and electronic transaction
           privileges, but you may elect not to have them when you open your
           account or by contacting Shareholder Services at (800) 728-3337 at a
           later date.

           Since many transactions may be initiated by telephone or
           electronically, it's important to understand that as long as we take
           reasonable steps to ensure that an order to purchase or redeem
           shares is genuine, such as recording calls or requesting
           personalized security codes or other information, we are not
           responsible for any losses that may occur as a result. For
           transactions conducted over the Internet, we recommend the use of a
           secure Internet browser. In addition, you should verify the accuracy
           of your confirmation statements immediately after you receive them.

           EACH FUND DOES NOT ISSUE SHARE CERTIFICATES. However, if you
           currently have shares in certificated form, you must include the
           share certificates properly endorsed or accompanied by a duly
           executed stock power when exchanging or redeeming shares. You may
           not exchange or redeem shares in certificate form by telephone or
           via the Internet.

           WHEN YOU ASK US TO SEND OR RECEIVE A WIRE, please note that while we
           don't charge a fee to send or receive wires, it's possible that your
           bank may do so. Wire transactions are generally completed within 24
           hours. Each fund can only send wires of $1,000 or more and accept
           wires of $50 or more.



THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

The DWS Scudder Web site can be a valuable resource for shareholders with
Internet access. Go to WWW.DWS-SCUDDER.COM to get up-to-date information, review
balances or even place orders for exchanges.

                                            Policies You Should Know About  | 43
<PAGE>

           EACH FUND ACCEPTS PAYMENT FOR SHARES ONLY IN US DOLLARS by check,
           bank or Federal Funds wire transfer or by electronic bank transfer.
           Please note that a fund does not accept cash, money orders,
           traveler's checks, starter checks, third party checks (except checks
           for retirement plan asset transfers and rollovers or for Uniform
           Gifts to Minors Act/Uniform Transfers to Minors Act accounts),
           checks drawn on foreign banks or checks issued by credit card
           companies or Internet-based companies. Thus, subject to the
           foregoing exceptions for certain third party checks, checks that are
           otherwise permissible must be drawn by the account holder on a
           domestic bank and must be payable to a fund.

           SIGNATURE GUARANTEE. When you want to sell more than $100,000 worth
           of shares or send proceeds to a third party or to a new address,
           you'll usually need to place your order in writing and include a
           signature guarantee. However, if you want money wired to a bank
           account that is already on file with us, you don't need a signature
           guarantee. Also, generally you don't need a signature guarantee for
           an exchange, although we may require one in certain other
           circumstances.

           A signature guarantee is simply a certification of your signature -
           a valuable safeguard against fraud. You can get a signature
           guarantee from an eligible guarantor institution, including
           commercial banks, savings and loans, trust companies, credit unions,
           member firms of a national stock exchange or any member or
           participant of an approved signature guarantor program. Note that
           you can't get a signature guarantee from a notary public and we must
           be provided the original guarantee.

           SELLING SHARES OF TRUST ACCOUNTS AND BUSINESS OR ORGANIZATION
           ACCOUNTS may require additional documentation. Please call (800)
           728-3337 or contact your financial advisor for more information.

           MONEY FROM SHARES YOU SELL is normally sent out within one business
           day of when your order is processed (not when it is received),
           although it could be delayed for up to seven days. There are other
           circumstances when it could be longer, including, but not limited
           to, when you are selling shares you bought recently by check or ACH
           (the funds will be placed under a 10 calendar day hold to ensure
           good funds) or when unusual circumstances prompt the SEC to allow
           further delays. Certain expedited redemption processes may also be
           delayed when




THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

If you ever have difficulty placing an order by phone or Internet, you can send
us your order in writing.


44 | Policies You Should Know About
<PAGE>

           you are selling recently purchased shares or in the event of closing
           of the Federal Reserve Bank's wire payment system. In addition, each
           fund reserves the right to suspend or postpone redemptions as
           permitted pursuant to Section 22(e) of the Investment Company Act of
           1940. Generally, those circumstances are when 1) the New York Stock
           Exchange is closed other than customary weekend or holiday closings;
           2) trading on the New York Stock Exchange is restricted; 3) an
           emergency exists which makes the disposal of securities owned by a
           fund or the fair determination of the value of a fund's net assets
           not reasonably practicable; or 4) the SEC, by order, permits the
           suspension of the right of redemption. Redemption payments by wire
           may also be delayed in the event of a non-routine closure of the
           Federal Reserve wire payment system. For additional rights reserved
           by each fund, please see "Other rights we reserve."

           You may obtain additional information about other ways to sell your
           shares by contacting your financial advisor.


           How each fund calculates share price

           To calculate net asset value, or NAV, each share class uses the
           following equation:


<TABLE>
<S>                                                     <C> <C>
            TOTAL ASSETS - TOTAL LIABILITIES
           -----------------------------------------    =    NAV
               TOTAL NUMBER OF SHARES OUTSTANDING
</TABLE>


           The price at which you buy and sell shares is the NAV.


           EACH FUND CHARGES A REDEMPTION FEE EQUAL TO 2.00% of the value of
           shares redeemed or exchanged within 15 days of purchase. Please see
           "Policies about transactions - Redemption fees" for further
           information.


                                            Policies You Should Know About  | 45
<PAGE>

           WE TYPICALLY VALUE SECURITIES USING INFORMATION FURNISHED BY AN
           INDEPENDENT PRICING SERVICE OR MARKET QUOTATIONS, WHERE APPROPRIATE.
           However, we may use methods approved by a fund's Board, such as a
           fair valuation model, which are intended to reflect fair value when
           pricing service information or market quotations are not readily
           available or when a security's value or a meaningful portion of the
           value of a fund's portfolio is believed to have been materially
           affected by a significant event, such as a natural disaster, an
           economic event like a bankruptcy filing, or a substantial
           fluctuation in domestic or foreign markets that has occurred between
           the close of the exchange or market on which the security is
           principally traded (for example, a foreign exchange or market) and
           the close of the New York Stock Exchange. In such a case, a fund's
           value for a security is likely to be different from the last quoted
           market price or pricing service information. In addition, due to the
           subjective and variable nature of fair value pricing, it is possible
           that the value determined for a particular asset may be materially
           different from the value realized upon such asset's sale. It is
           expected that the greater the percentage of fund assets that is
           invested in non-US securities, the more extensive will be a fund's
           use of fair value pricing. This is intended to reduce a fund's
           exposure to "time zone arbitrage" and other harmful trading
           practices. (See "Market timing policies and procedures.")

           TO THE EXTENT THAT A FUND INVESTS IN SECURITIES THAT ARE TRADED
           PRIMARILY IN FOREIGN MARKETS, the value of its holdings could change
           at a time when you aren't able to buy or sell fund shares. This is
           because some foreign markets are open on days or at times when a
           fund doesn't price its shares. (Note that prices for securities that
           trade on foreign exchanges can change significantly on days when the
           New York Stock Exchange is closed and you cannot buy or sell fund
           shares. Price changes in the securities a fund owns may ultimately
           affect the price of fund shares the next time the NAV is
           calculated.)


46 | Policies You Should Know About
<PAGE>

           Other rights we reserve

           You should be aware that we may do any of the following:

           -  withdraw or suspend the offering of shares at any time

           -  withhold a portion of your distributions and redemption proceeds
              for federal income tax purposes if we have been notified by the
              IRS that you are subject to backup withholding or if you fail to
              provide us with a correct taxpayer ID number and certain
              certifications including certification that you are not subject
              to backup withholding

           -  reject a new account application if you don't provide any
              required or requested identifying information, or for any other
              reason

           -  refuse, cancel, limit or rescind any purchase or exchange order,
              without prior notice; freeze any account (meaning you will not be
              able to purchase fund shares in your account); suspend account
              services; and/or involuntarily redeem your account if we think
              that the account is being used for fraudulent or illegal
              purposes; one or more of these actions will be taken when, at our
              sole discretion, they are deemed to be in a fund's best interests
              or when a fund is requested or compelled to do so by governmental
              authority or by applicable law

           -  close and liquidate your account if we are unable to verify your
              identity, or for other reasons; if we decide to close your
              account, your fund shares will be redeemed at the net asset value
              per share next calculated after we determine to close your
              account (less any applicable redemption fee); you may recognize a
              gain or loss on the redemption of your fund shares and you may
              incur a tax liability

           -  pay you for shares you sell by "redeeming in kind," that is, by
              giving you securities (which typically will involve brokerage
              costs for you to liquidate) rather than cash, but which will be
              taxable to the same extent as a redemption for cash; a fund
              generally won't make a redemption in kind unless your requests
              over a 90-day period total more than $250,000 or 1% of the value
              of a fund's net assets, whichever is less

           -  change, add or withdraw various services, fees and account
              policies (for example, we may adjust a fund's investment minimums
              at any time)


                                            Policies You Should Know About  | 47
<PAGE>

UNDERSTANDING DISTRIBUTIONS AND TAXES

           Each fund intends to distribute to its shareholders virtually all of
           its net earnings. Each fund can earn money in two ways: by receiving
           interest, dividends or other income from securities it holds and by
           selling securities for more than it paid for them. (Each fund's
           earnings are separate from any gains or losses stemming from your
           own purchase and sale of shares.) Each fund may not always pay a
           dividend or distribution for a given period.

           EACH FUND INTENDS TO PAY DIVIDENDS AND DISTRIBUTIONS to its
           shareholders annually in December. If necessary, the funds may
           distribute at other times as needed.

           Dividends or distributions declared to shareholders of record in the
           last quarter of a given calendar year are treated for federal income
           tax purposes as if they were received on December 31 of that year,
           provided such dividends or distributions are paid by the end of the
           following January.

           For federal income tax purposes, income and capital gains
           distributions are generally taxable to shareholders. However,
           dividends and distributions received by retirement plans qualifying
           for tax exemption under federal income tax laws generally will not
           be taxable.

           YOU CAN CHOOSE HOW TO RECEIVE YOUR DIVIDENDS AND DISTRIBUTIONS. You
           can have them all automatically reinvested in fund shares (at NAV),
           all deposited directly to your bank account or all sent to you by
           check, have one type reinvested and the other sent to you by check
           or have them invested in a different fund. Tell us your preference
           on your application. If you don't indicate a preference, your
           dividends and distributions will all be reinvested in shares of the
           fund without a sales charge (if applicable). Distributions are
           treated the same for federal income tax purposes whether you receive
           them in cash or reinvest them in additional shares. For
           employer-sponsored qualified plans, and retirement plans,
           reinvestment (at NAV) is the only option.

           BUYING, SELLING OR EXCHANGING FUND SHARES WILL USUALLY HAVE FEDERAL
           INCOME TAX CONSEQUENCES FOR YOU (except in employer-sponsored
           qualified plans, IRAs or other tax-advantaged accounts). Your sale
           of shares may result in a capital

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS

Because each shareholder's tax situation is unique, ask your tax professional
about the tax consequences of your investments, including any state and local
tax consequences.


48 | Understanding Distributions and Taxes
<PAGE>

           gain or loss. The gain or loss will be long-term or short-term
           depending on how long you owned the shares that were sold. For
           federal income tax purposes, an exchange is treated the same as a
           sale.

           THE FEDERAL INCOME TAX STATUS of a fund's earnings you receive and
           your own fund transactions generally depend on their type:


<TABLE>
<CAPTION>
GENERALLY TAXED AT LONG-TERM                          GENERALLY TAXED AT ORDINARY
CAPITAL GAIN RATES:                                   INCOME RATES:
<S>                                                   <C>
DISTRIBUTIONS FROM A FUND
- gains from the sale of                              -  gains from the sale of
  securities held (or treated as                         securities held by a fund for
  held) by a fund for more than                          one year or less
  one year                                            -  all other taxable income
- qualified dividend income
TRANSACTIONS INVOLVING FUND
SHARES
- gains from selling fund                             -  gains from selling fund
  shares held for more than                              shares held for one year or
  one year                                               less
</TABLE>


           ANY DIRECT INVESTMENTS IN FOREIGN SECURITIES BY A FUND MAY BE
           SUBJECT TO FOREIGN WITHHOLDING TAXES. In that case, a fund's yield
           on those securities would generally be decreased. DWS Gold &
           Precious Metals Fund may elect to pass through to its shareholders a
           credit or deduction for foreign taxes it has paid if at the end of
           its year more than 50% of the fund's total assets are stocks or
           securities of foreign corporations. DWS Technology Fund generally
           will not be entitled to claim a credit or deduction with respect to
           foreign taxes paid by the fund. In addition, any investments in
           foreign securities or foreign currencies may increase or accelerate
           a fund's recognition of ordinary income and may affect the timing or
           amount of the fund's distributions. If you invest in a fund through
           a taxable account, your after-tax return could be negatively
           impacted.

           To the extent that a fund invests in certain debt obligations or
           certain other securities, investments in these obligations or
           securities may cause a fund to recognize taxable income in excess of
           the cash generated by such obligations. Thus, a fund could be
           required at times to liquidate other investments in order to satisfy
           its distribution requirements.


                                     Understanding Distributions and Taxes  | 49
<PAGE>

           For taxable years beginning before January 1, 2011, distributions to
           individuals and other noncorporate shareholders of investment income
           designated by a fund as derived from qualified dividend income are
           eligible for taxation for federal income tax purposes at the more
           favorable long-term capital gain rates. Qualified dividend income
           generally includes dividends from domestic and some foreign
           corporations. It does not include income from investments in debt
           securities or, generally, from REITs. In addition, a fund must meet
           certain holding period and other requirements with respect to the
           dividend-paying stocks in its portfolio and the shareholder must
           meet certain holding period and other requirements with respect to a
           fund's shares for the lower tax rates to apply.

           For taxable years beginning before January 1, 2011, the maximum
           federal income tax rate imposed on long-term capital gains
           recognized by individuals and other noncorporate shareholders has
           been reduced to 15%. For taxable years beginning on or after January
           1, 2011, the long-term capital gain rate is scheduled to return to
           20%.

           YOUR FUND WILL SEND YOU DETAILED FEDERAL INCOME TAX INFORMATION
           EVERY JANUARY. These statements tell you the amount and the federal
           income tax classification of any dividends or distributions you
           received. They also have certain details on your purchases and sales
           of shares.

           IF YOU INVEST RIGHT BEFORE A FUND PAYS A DIVIDEND, you'll be getting
           some of your investment back as a taxable dividend. You can avoid
           this by investing after a fund declares a dividend. In
           tax-advantaged retirement accounts you do not need to worry about
           this.

           CORPORATIONS are taxed at the same rates on ordinary income and
           capital gains but may be eligible for a dividends-received deduction
           for a portion of the income dividends they receive from a fund,
           provided certain holding period and other requirements are met.

           The above discussion summarizes certain federal income tax
           consequences for shareholders who are US persons. If you are a
           non-US person, please consult your own tax advisor with respect to
           the US tax consequences to you of an investment in a fund. For more
           information, see "Taxes" in the Statement of Additional Information.



50 | Understanding Distributions and Taxes
<PAGE>

APPENDIX
--------------------------------------------------------------------------------
           Hypothetical Expense Summary


           Using the annual fund operating expense ratios presented in the fee
           tables in the fund prospectus, the Hypothetical Expense Summary
           shows the estimated fees and expenses, in actual dollars, that would
           be charged on a hypothetical investment of $10,000 in the fund held
           for the next 10 years and the impact of such fees and expenses on
           fund returns for each year and cumulatively, assuming a 5% return
           for each year. The tables also assume that all dividends and
           distributions are reinvested. The annual fund expense ratios shown
           are net of any contractual fee waivers or expense reimbursements, if
           any, for the period of the contractual commitment. The tables do not
           reflect redemption fees, if any, which may be payable upon
           redemption. If redemption fees were shown, the "Hypothetical
           Year-End Balance After Fees and Expenses" amounts shown would be
           lower and the "Annual Fees and Expenses" amounts shown would be
           higher. Also, please note that if you are investing through a third
           party provider, that provider may have fees and expenses separate
           from those of the fund that are not reflected here. Mutual fund fees
           and expenses fluctuate over time and actual expenses may be higher
           or lower than those shown.

           The Hypothetical Expense Summary should not be used or construed as
           an offer to sell, a solicitation of an offer to buy or a
           recommendation or endorsement of any specific mutual fund. You
           should carefully review the fund's prospectus to consider the
           investment objectives, risks, expenses and charges of the fund prior
           to investing.


                                                                  Appendix  | 51
<PAGE>

DWS Gold & Precious Metals Fund - Class S



<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER      ANNUAL FEES
              FEES AND        EXPENSE        FEES AND           FEES AND            AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.24%              3.76%       $ 10,376.00        $   126.33
   2           10.25%        1.24%              7.66%       $ 10,766.14        $   131.08
   3           15.76%        1.24%             11.71%       $ 11,170.94        $   136.01
   4           21.55%        1.24%             15.91%       $ 11,590.97        $   141.12
   5           27.63%        1.24%             20.27%       $ 12,026.79        $   146.43
   6           34.01%        1.24%             24.79%       $ 12,479.00        $   151.94
   7           40.71%        1.24%             29.48%       $ 12,948.21        $   157.65
   8           47.75%        1.24%             34.35%       $ 13,435.06        $   163.58
   9           55.13%        1.24%             39.40%       $ 13,940.22        $   169.73
  10           62.89%        1.24%             44.64%       $ 14,464.37        $   176.11
  TOTAL                                                                        $ 1,499.98
</TABLE>


DWS Technology Fund - Class S




<TABLE>
<CAPTION>
              MAXIMUM           INITIAL HYPOTHETICAL                 ASSUMED RATE
           SALES CHARGE:             INVESTMENT:                      OF RETURN:
               0.00%                   $10,000                            5%
                                                              HYPOTHETICAL
             CUMULATIVE        ANNUAL       CUMULATIVE          YEAR-END
           RETURN BEFORE        FUND       RETURN AFTER      BALANCE AFTER        ANNUAL
              FEES AND        EXPENSE        FEES AND           FEES AND         FEES AND
YEAR          EXPENSES         RATIOS        EXPENSES           EXPENSES         EXPENSES
<S>       <C>                <C>          <C>               <C>                <C>
   1            5.00%        1.12%              3.88%       $ 10,388.00        $   114.17
   2           10.25%        1.12%              7.91%       $ 10,791.05        $   118.60
   3           15.76%        1.12%             12.10%       $ 11,209.75        $   123.20
   4           21.55%        1.12%             16.45%       $ 11,644.69        $   127.98
   5           27.63%        1.12%             20.96%       $ 12,096.50        $   132.95
   6           34.01%        1.12%             25.66%       $ 12,565.84        $   138.11
   7           40.71%        1.12%             30.53%       $ 13,053.40        $   143.47
   8           47.75%        1.12%             35.60%       $ 13,559.87        $   149.03
   9           55.13%        1.12%             40.86%       $ 14,085.99        $   154.82
  10           62.89%        1.12%             46.33%       $ 14,632.53        $   160.82
  TOTAL                                                                        $ 1,363.15
</TABLE>



52 | Appendix
<PAGE>

TO GET MORE INFORMATION

SHAREHOLDER REPORTS - These include commentary from a fund's management team
about recent market conditions and the effects of a fund's strategies on its
performance. They also have detailed performance figures, a list of everything
a fund owns, and its financial statements. Shareholders get these reports
automatically.

STATEMENT OF ADDITIONAL INFORMATION (SAI) - This tells you more about a fund's
features and policies, including additional risk information. The SAI is
incorporated by reference into this document (meaning that it's legally part of
this prospectus).

For a free copy of any of these documents or to request other information about
a fund, call (800) 728-3337, or contact DWS Scudder at the address listed
below. Each fund's SAI and shareholder reports are also available through the
DWS Scudder Web site at www.dws-scudder.com. These documents and other
information about each fund are available from the EDGAR Database on the SEC's
Internet site at www.sec.gov. If you like, you may obtain copies of this
information, after paying a copying fee, by e-mailing a request to
publicinfo@sec.gov or by writing the SEC at the address listed below. You can
also review and copy these documents and other information about each fund,
including each fund's SAI, at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the SEC's Public Reference Room may be
obtained by calling (800) SEC-0330.


<TABLE>
<CAPTION>
DWS SCUDDER              SEC                     DISTRIBUTOR
---------------------    --------------------    -------------------------------
<S>                      <C>                     <C>
PO Box 219151            100 F Street, N.E.      DWS Scudder Distributors, Inc.
Kansas City, MO          Washington, D.C.        222 South Riverside Plaza
64121-9151               20549-0102              Chicago, IL 60606-5808
WWW.DWS-SCUDDER.COM      WWW.SEC.GOV             (800) 621-1148
(800) 728-3337           (800) SEC-0330
</TABLE>



<TABLE>
<S>                         <C>                                  <C>
SEC FILE NUMBER:
DWS Mutual Funds, Inc.      DWS Gold & Precious Metals Fund      811-5565
                                        DWS Technology Fund      811-0547
</TABLE>






(03/01/08) 19/313-2
[RECYCLE GRAPHIC APPEARS HERE]
                                                                       [Logo]DWS
                                                                         SCUDDER
                                                             Deutsche Bank Group





<PAGE>

Supplement to the currently effective Statement of Additional Information of
each of the listed funds/portfolios:

--------------------------------------------------------------------------------

Cash Management Fund Institutional
Cash Reserve Fund, Inc.
    Prime Series
Cash Reserve Fund Institutional
NY Tax Free Money Fund
Tax Free Money Fund Investment
DWS Capital Growth Fund
DWS Climate Change Fund
DWS Commodity Securities Fund
DWS Communications Fund
DWS Core Fixed Income Fund
DWS Core Plus Income Fund
DWS EAFE(R) Equity Index Fund
DWS Emerging Markets Equity Fund
DWS Emerging Markets Fixed Income Fund
DWS Enhanced S&P 500 Index Fund
DWS Equity 500 Index Fund
DWS Equity Income Fund
DWS Equity Partners Fund
DWS Europe Equity Fund
DWS Floating Rate Plus Fund
DWS Global Bond Fund
DWS Global Opportunities Fund
DWS Global Thematic Fund
DWS GNMA Fund
DWS Gold & Precious Metals Fund
DWS Growth & Income Fund
DWS Health Care Fund
DWS High Income Plus Fund
DWS High Yield Tax Free Fund
DWS Inflation Protected Plus Fund
DWS Intermediate Tax/AMT Free Fund
DWS International Fund
DWS International Select Equity Fund
DWS International Value Opportunities Fund
DWS Investments VIT Funds
    DWS Equity 500 Index VIP
    DWS RREEF Real Estate Securities VIP
    DWS Small Cap Index VIP
DWS Japan Equity Fund
DWS Large Company Growth Fund
DWS Latin America Equity Fund
DWS LifeCompass 2015 Fund
DWS LifeCompass 2020 Fund
DWS LifeCompass 2030 Fund
DWS LifeCompass 2040 Fund
DWS LifeCompass Retirement Fund
DWS Lifecycle Long Range Fund
DWS Managed Municipal Bond Fund
DWS Massachusetts Tax-Free Fund
DWS Micro Cap Fund
DWS Mid Cap Growth Fund
DWS Money Market Series
DWS RREEF Global Real Estate Securities Fund
DWS RREEF Real Estate Securities Fund
DWS S&P 500 Index Fund
DWS Short Duration Fund
DWS Short Duration Plus Fund
DWS Short-Term Municipal Bond Fund
DWS Small Cap Core Fund
DWS Small Cap Growth Fund
DWS Small Cap Value Fund
DWS U.S. Bond Index Fund
DWS Value Builder Fund
DWS Variable Series I
    DWS Bond VIP
    DWS Capital Growth VIP
    DWS Global Opportunities VIP
    DWS Growth & Income VIP
    DWS Health Care VIP
    DWS International VIP


At present, substantially all DWS mutual funds are overseen by one of two boards
of  trustees/directors  (the  "Boards").  Each Board,  including  the Board that
oversees your Fund (the "New York Board"),  has determined that the formation of
a single consolidated Board overseeing  substantially all DWS mutual funds is in
the best interests of the Funds and their shareholders. In this connection, each
Board  has  approved  a  plan  outlining  the  process  for   implementing   the
consolidation of the New York Board with the other primary DWS mutual fund board
(the "Chicago  Board").  (The geographic  references in the preceding  sentences
merely indicate where each Board historically held most of its meetings.)

The consolidation of the two Boards is expected to take effect on or about April
1, 2008 (the  "Consolidation  Date"). To accomplish the  consolidation,  the New
York Board will nominate and elect four individuals (John W. Ballantine, Paul K.
Freeman,  William  McClayton and Robert H. Wadsworth) who currently serve on the
Chicago  Board to the Board of your Fund and each other fund overseen by the New
York Board.  Information regarding these four individuals is set forth below. In
addition,  the Chicago  Board has  determined  to nominate  and  recommend  that
shareholders  of each fund  overseen by that Board  elect eight  members of your
Fund's Board (Henry P. Becton, Jr., Dawn-Marie  Driscoll,  Keith R. Fox, Kenneth
C. Froewiss,  Richard J. Herring,  Rebecca W. Rimel,  William N. Searcy, Jr. and
Jean  Gleason  Stromberg).  As a result,  as of the  Consolidation  Date,  it is
expected  that the four Chicago  Board  members and eight New York Board members
named above (each of whom will be an Independent  Board  Member),  together with
Axel  Schwarzer,  CEO of DWS  Scudder,  will  constitute  the  Board of each DWS
Scudder mutual fund (134 funds), including your Fund.


<PAGE>

To  facilitate  the Board  consolidation,  three  members  of the New York Board
(Martin J. Gruber, Graham E. Jones and Carl W. Vogt) have agreed to resign as of
the  Consolidation  Date,  which  is prior to  their  normal  retirement  dates.
Independent  Board Members of the New York Board do not receive  benefits  under
any pension or retirement plan. However,  the New York Board has determined that
it would be  appropriate  to provide those three  Independent  Board Members who
agreed to resign prior to the Board's normal  retirement  date with a retirement
agreement,  the terms of which include a one-time  benefit.  As DIMA, the Funds'
investment adviser, will also benefit from the administrative  efficiencies of a
consolidated  Board, DIMA has agreed to reimburse the Funds for the full cost of
this one-time  benefit  (which for each retiring  Independent  Board Member will
equal his annual  compensation  immediately  preceding  the  Consolidation  Date
multiplied  by the lesser of (i) two;  or (ii) the  number of years (or  portion
thereof)  from  the  Consolidation  Date  to his  normal  retirement  date).  As
consideration  for this  benefit,  each  retiring  Independent  Board Member has
agreed not to serve on the board of another  mutual fund without  prior  consent
for a specified  period.  In  addition,  pursuant to an  agreement  between each
retiring  Independent  Board Member,  the New York Funds and DIMA, each retiring
Independent Board Member has received certain assurances regarding  continuation
of insurance and indemnification rights.

Following the  Consolidation  Date, it is expected that the  consolidated  Board
will implement  certain  changes to the Fund's current  committee  structure and
other  governance  practices,  including the appointment of new committee chairs
and members. Additional information regarding these changes will be set forth in
the Fund's statement of additional information upon implementation.


<PAGE>






<TABLE>
<CAPTION>
                                                                                                      Position with
                                                                                                      the DWS Funds
                                                Business Experience and Directorships                 and Length of
     Name and Year of Birth                            During the Past 5 Years                         Time Served
---------------------------------- ---------------------------------------------------------------- ------------------
Chicago Board Members to be
   Elected to New York Board
---------------------------------- ---------------------------------------------------------------- ------------------
<S>                                <C>                                                              <C>
John W. Ballantine (1946)          Retired; formerly, Executive Vice President and Chief Risk       Chicago Board
                                   Management Officer, First Chicago NBD Corporation/The First      Member since
                                   National Bank of Chicago (1996-1998); Executive Vice President   1999.
                                   and Head of International Banking (1995-1996).
                                   Directorships:  Healthways Inc. (provider of disease and care
                                   management services); Portland General Electric (utility
                                   company); Stockwell Capital Investments PLC (private equity).
                                   Former Directorships: First Oak Brook Bancshares, Inc. and Oak
                                   Brook Bank
---------------------------------- ---------------------------------------------------------------- ------------------
Paul K. Freeman (1950)             Consultant, World Bank/Inter-American Development Bank;          Chicago Board
                                   formerly, Project Leader, International Institute for Applied    Member since
                                   Systems Analysis (1998-2001); Chief Executive Officer, The       2002,
                                   Eric Group, Inc. (environmental insurance) (1986-1998).          Chairperson
                                   Formerly, Trustee of funds managed by DIMA or its affiliates     since 2007.
                                   (1993-2002).
---------------------------------- ---------------------------------------------------------------- ------------------
William McClayton (1944)           Chief Administrative Officer, Diamond Management & Technology    Chicago Board
                                   Consultants, Inc. (global management consulting firm)            Member since
                                   (2001-present); formerly, Senior Partner, Arthur Andersen LLP    2004.
                                   (accounting) (1966-2001).  Directorships: Board of Managers,
                                   YMCA of Metropolitan Chicago; formerly, Trustee, Ravinia
                                   Festival.
---------------------------------- ---------------------------------------------------------------- ------------------
Robert H. Wadsworth (1940)         President, Robert H. Wadsworth & Associates, Inc. (consulting    Chicago Board
                                   firm) (1983 to present).  Formerly, Trustee of funds managed     Member since
                                   by DIMA or its affiliates (1999-2004).                           2004.
---------------------------------- ---------------------------------------------------------------- ------------------


</TABLE>











                            Please Retain This Supplement for Future Reference


November 26, 2007


<PAGE>




                             DWS MUTUAL FUNDS, INC.

                         DWS Gold & Precious Metals Fund



                     Class A, B, C and Institutional Shares








                       STATEMENT OF ADDITIONAL INFORMATION


                                  March 1, 2008



This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Class A, B, C and the Institutional Class prospectuses
dated March 1, 2008, as amended from time to time, for DWS Gold & Precious
Metals Fund (the "Fund"), copies of which may be obtained without charge by
contacting DWS Scudder Distributors, Inc., 222 South Riverside Plaza, Chicago,
Illinois 60606, 1-800-621-1148, or from the firm from which this Statement of
Additional Information was obtained and are available along with other materials
on the Securities and Exchange Commission's Internet Web site
(http://www.sec.gov).

Portions of the Annual Report to Shareholders of the Fund, dated October 31,
2007, are incorporated herein by reference, as specified herein. A copy of the
Fund's Annual Report may be obtained without charge from Shareholder Services by
calling (800) 621-1048.

This Statement of Additional Information ("SAI") is incorporated by reference
into the prospectuses.





<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
INVESTMENT RESTRICTIONS........................................................2

INVESTMENT POLICIES AND TECHNIQUES.............................................4
   Portfolio Holdings Information.............................................26

MANAGEMENT OF THE FUND........................................................27
   Investment Advisor.........................................................27
   Compensation of Portfolio Managers.........................................30

FUND SERVICE PROVIDERS........................................................35
   Administrator..............................................................35
   Distributor................................................................36
   Independent Registered Public Accounting Firm..............................41
   Legal Counsel..............................................................41
   Custodian..................................................................41
   Transfer Agent.............................................................41

PORTFOLIO TRANSACTIONS........................................................42

PURCHASE AND REDEMPTION OF SHARES.............................................44

DIVIDENDS.....................................................................60

TAXES.........................................................................61

NET ASSET VALUE...............................................................66

DIRECTORS AND OFFICERS........................................................67

FUND ORGANIZATION.............................................................76

PROXY VOTING GUIDELINES.......................................................78

FINANCIAL STATEMENTS..........................................................79

ADDITIONAL INFORMATION........................................................79

APPENDIX......................................................................80



                                       i
<PAGE>
                             INVESTMENT RESTRICTIONS

Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. There can be
no assurance that the Fund's objective will be met.

Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after and is caused by an acquisition or
encumbrance of securities or assets of, or borrowings by, the Fund.

The Fund has elected to be classified as a non-diversified series of an open-end
management investment company.

A non-diversified fund may invest a greater proportion of its assets in the
obligations of a small number of issuers, and may be subject to greater risk and
substantial losses as a result of changes in the financial condition or the
market's assessment of the issuers. While not limited by the Investment Company
Act of 1940, as amended (the "1940 Act"), as to the proportion of its assets
that it may invest in obligations of a single issuer, the Fund will comply with
the diversification requirements imposed by the Internal Revenue Code of 1986,
as amended (the "Code") for qualification as a regulated investment company.

As a matter of fundamental policy, the Fund may not:

(1)      borrow money, except as permitted under the 1940 Act, as amended, and
         as interpreted or modified by regulatory authority having jurisdiction,
         from time to time;

(2)      issue senior securities, except as permitted under the 1940 Act, as
         amended, and as interpreted or modified by regulatory authority having
         jurisdiction, from time to time;

(3)      engage in the business of underwriting securities issued by others,
         except to the extent that the Fund may be deemed to be an underwriter
         in connection with the disposition of portfolio securities;

(4)      purchase or sell real estate, which term does not include securities of
         companies which deal in real estate or mortgages or investments secured
         by real estate or interests therein, except that the Fund reserves
         freedom of action to hold and to sell real estate acquired as a result
         of the Fund's ownership of securities;

(5)      purchase or sell commodities, except as permitted by the 1940 Act, as
         amended, and as interpreted or modified by the regulatory authority
         having jurisdiction from time to time;

(6)      make loans to other persons, except (i) loans of portfolio securities,
         and (ii) to the extent that entry into repurchase agreements and the
         purchase of debt instruments or interests in indebtedness in accordance
         with the Fund's investment objective and policies may be deemed to be
         loans; or

(7)      concentrate its investments in a particular industry, as the term is
         used in the 1940 Act, and as interpreted or modified by regulatory
         authority having jurisdiction, from time to time, except that the Fund
         may concentrate in securities issued by wholly owned subsidiaries of
         DWS Mutual Funds, Inc. and securities of companies that are primarily
         engaged in the exploration, mining, fabrication, processing or
         distribution of gold and other precious metals and in gold, silver,
         platinum and palladium bullion and coins.

A fundamental policy may not be changed without the approval of a majority of
the outstanding voting securities of the Fund which, under the 1940 Act and the
rules thereunder and as used in this Statement of Additional Information, means
the lesser of (1) 67% or more of the voting securities present at a meeting of
shareholders, if the holders of more than 50% of the outstanding voting
securities of the Fund are present or represented by proxy, or (2) more than 50%
of the outstanding voting securities of the Fund.

The Directors of the Corporation have voluntarily adopted certain policies and
restrictions, which are observed in the conduct of the Fund's affairs. These
represent intentions of the Directors based upon current circumstances.


                                       2
<PAGE>

Non-fundamental policies may be changed by the Directors of the Corporation
without requiring prior notice to or approval of shareholders.

As a matter of non-fundamental policy, the Fund currently does not intend to:

(a)      borrow money in an amount greater than 5% of its total assets, except
         (i) for temporary or emergency purposes and (ii) by engaging in reverse
         repurchase agreements, dollar rolls, or other investments or
         transactions described in the Fund's registration statement which may
         be deemed to be borrowings;

(b)      enter into either reverse repurchase agreements or dollar rolls in an
         amount greater than 5% of its total assets;

(c)      purchase securities on margin or make short sales, except (i) short
         sales against the box, (ii) in connection with arbitrage transactions,
         (iii) for margin deposits in connection with futures contracts, options
         or other permitted investments, (iv) that transactions in futures
         contracts and options shall not be deemed to constitute selling
         securities short, and (v) that the Fund may obtain such short-term
         credits as may be necessary for the clearance of securities
         transactions;

(d)      purchase options, unless the aggregate premiums paid on all such
         options held by the Fund at any time do not exceed 20% of its total
         assets; or sell put options, if as a result, the aggregate value of the
         obligations underlying such put options would exceed 50% of its total
         assets;

(e)      enter into futures contracts or purchase options thereon unless
         immediately after the purchase, the value of the aggregate initial
         margin with respect to such futures contracts entered into on behalf of
         the Fund and the premiums paid for such options on futures contracts
         does not exceed 5% of the fair market value of the Fund's total assets;
         provided that in the case of an option that is in-the-money at the time
         of purchase, the in-the-money amount may be excluded in computing the
         5% limit;

(f)      purchase warrants if as a result, such securities, taken at the lower
         of cost or market value, would represent more than 5% of the value of
         the Fund's total assets (for this purpose, warrants acquired in units
         or attached to securities will be deemed to have no value);

(g)      lend portfolio securities in an amount greater than 33 1/3% of its
         total assets;

(h)      acquire securities of registered open-end investment companies or
         registered unit investment trusts in reliance on Sections 12(d)(1)(F)
         and 12(d)(1)(G) of the 1940 Act; or

(i)      invest more than 5% of its net assets directly in securities of local
         Russian issuers.

The Fund will not purchase illiquid securities, including repurchase agreements
maturing in more than seven days, if, as a result thereof, more than 15% of the
Fund's net assets, valued at the time of the transaction, would be invested in
such securities.

The Fund "concentrates" (for the purposes of the 1940 Act) its assets in
securities of companies that are primarily engaged in the exploration, mining,
fabrication, processing or distribution of gold and other precious metals and in
gold, silver, platinum and palladium bullion and coins. As a result, the Fund
may be subject to greater market fluctuation than the Fund which has securities
representing a broader range of investment alternatives. The subsidiaries will
incur expenses for the storage and insurance of precious metals purchased.
However, the subsidiaries may realize capital gains from the sale of metals and
may pay distributions to the Fund from such gains. Currently, Scudder Precious
Metals, Inc. is the Corporation's only subsidiary. In general, in order to
qualify for special tax treatment as a regulated investment company, the Fund
must, among other things, derive 90% of its gross income from certain specified
sources ("good income"). The Fund's investment in a wholly-owned Cayman
subsidiary is expected to generate good income. However, there is a risk that
the Internal Revenue Service could recharacterize this investment in such a
manner that it could generate bad income. If this were to occur, the Fund could
be subject to federal income tax at regular corporate rates, reducing the yield
to you. The Fund believes that


                                       3
<PAGE>

the risk of such a recharacterization is remote. Investments in precious metals
and in precious metals-related securities and companies involve a relatively
high degree of risk. Prices of gold and other precious metals can be influenced
by a variety of global economic, financial and political factors and may
fluctuate markedly over short periods of time. Among other things, precious
metals values can be affected by changes in inflation, investment speculation,
metal sales by governments or central banks, changes in industrial and
commercial demand, and any governmental restrictions on private ownership of
gold or other precious metals. In addition, when market conditions warrant, the
Fund reserves the freedom to concentrate its assets in securities related to
other precious metals and in those metals directly. The means by which the Fund
seeks exposure to commodities, both directly and indirectly, including through
derivatives, may be limited by the Fund's intention to qualify as a regulated
investment company under the Code.

The Fund has adopted an operating policy of limiting to 10% the portion of the
Fund's total assets that may be invested directly in gold, silver, platinum and
palladium bullion and in gold and silver coins. In addition, the Fund's assets
may be invested in wholly-owned subsidiaries of the Corporation that invest in
gold, silver, platinum and palladium bullion and in gold and silver coins.

With respect to 30% of its assets, the Fund may make short sales of common
stocks if, at all times when a short position is open, the Fund owns the stock
or owns preferred stocks or debt securities convertible or exchangeable, without
payment of further consideration, into the shares of common stock sold short.
Short sales of this kind are referred to as short sales "against the box." The
Fund may engage in short sales against-the-box, although it is the Fund's
current intention that no more than 5% of its net assets will be at risk.

Temporary Defensive Policy. For temporary defensive purposes, the Fund may vary
from its investment policies during periods when the Advisor determines that it
is advisable to do so because of conditions in the securities markets or other
economic or political conditions. For temporary purposes, the Fund may invest,
without limit, in cash and cash equivalents (including foreign money market
instruments, such as bankers' acceptances, certificates of deposit, commercial
paper, short-term government and corporate obligations, and repurchase
agreements), obligations issued or guaranteed by the US government, its agencies
or instrumentalities ("Government Securities"), domestic repurchase agreements,
money market instruments, high quality debt securities without equity features.

The Fund may also, for hedging purposes, invest up to 10% of its assets in
foreign currencies in the form of bank deposits.

Master/Feeder Fund Structure. The Board of Directors has the discretion to
retain the current distribution arrangement for the Fund while investing in a
master fund in a master/feeder fund structure as described below.

A master/feeder fund structure is one in which the Fund (a "feeder fund"),
instead of investing directly in a portfolio of securities, invests most or all
of its investment assets in a separate registered investment company (the
"master fund") with substantially the same investment objective and policies as
the feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.

                       INVESTMENT POLICIES AND TECHNIQUES

The Fund is a series of an open-end management investment company which
continuously offers and redeems shares at net asset value. The Fund is a company
of the type commonly known as a mutual fund. DWS Gold & Precious Metals Fund is
a series of DWS Mutual Funds, Inc. and offers five classes of shares: Class A,
Class B, Class C, Institutional Class and Class S.


                                       4
<PAGE>

Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which the Fund may engage (such as short
selling, hedging, etc.) or a financial instrument which the Fund may purchase
(such as options, forward currency contracts, etc.) are meant to describe the
spectrum of investments that the Advisor or subadvisor, in its discretion,
might, but is not required to, use in managing the Fund's portfolio assets. The
Advisor or subadvisor may, in its discretion, at any time, employ such practice,
technique or instrument for one or more funds but not for all funds advised by
it. Furthermore, it is possible that certain types of financial instruments
described herein may not be available, permissible, economically feasible or
effective for their intended purposes in all markets. Certain practices,
techniques, or instruments may not be principal activities of the Fund, but, to
the extent employed, could, from time to time, have a material impact on the
Fund's performance.

It is possible that certain investment practices and techniques described below
may not be permissible for the Fund based on its investment restrictions, as
described herein, and in the prospectus of the Fund.

Advance Refunded Bonds. The Fund may purchase Municipal Securities that are
subsequently refunded by the issuance and delivery of a new issue of bonds prior
to the date on which the outstanding issue of bonds can be redeemed or paid. The
proceeds from the new issue of bonds are typically placed in an escrow fund
consisting of US Government obligations that are used to pay the interest,
principal and call premium on the issue being refunded. The Fund may also
purchase Municipal Securities that have been refunded prior to purchase by the
Fund.

Asset-Backed Securities. Asset-backed securities may include pools of mortgages
(mortgage-backed securities), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. For purposes of determining the percentage of
the Fund's total assets invested in securities of issuers having their principal
business activities in a particular industry, asset backed securities will be
classified separately, based on the nature of the underlying assets, according
to the following categories: captive auto, diversified, retail and consumer
loans, captive equipment and business, business trade receivables, nuclear fuel
and capital and mortgage lending. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral may not, in some cases, be available
to support payments on these securities. Asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failures by obligors on underlying assets to
make payments, the securities may contain elements of credit support which fall
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
results from payment of the insurance obligations on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination of
such approaches. The Fund will not pay any additional or separate fees for
credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security. The availability of asset-backed securities
may be affected by legislative or regulatory developments. It is possible that
such developments may require the Fund to dispose of any then existing holdings
of such securities.

Asset-Indexed Securities. The Fund may purchase asset-indexed securities which
are debt securities usually issued by companies in precious metals related
businesses such as mining, the principal amount, redemption terms, or interest
rates of which are related to the market price of a specified precious metal.
The Fund will only enter into transactions in publicly traded asset-indexed
securities. Market prices of asset-indexed securities will relate primarily to
changes in the market prices of the precious metals to which the securities are
indexed rather than to changes in market rates of interest. However, there may
not be a perfect correlation between the price movements of the asset-indexed
securities and the underlying precious metals. Asset-indexed securities
typically bear interest or pay dividends at below market rates (and in certain
cases at nominal rates). The Fund may purchase asset-indexed securities to the
extent permitted by law.


                                       5
<PAGE>

Borrowing. As a matter of fundamental policy, the Fund will not borrow money,
except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time. While the Fund's
Board of Directors does not currently intend to borrow for investment leveraging
purposes, if such a strategy were implemented in the future it would increase
the Fund's volatility and the risk of loss in a declining market. Borrowing by
the Fund will involve special risk considerations. Although the principal of the
Fund's borrowings will be fixed, the Fund's assets may change in value during
the time a borrowing is outstanding, thus increasing exposure to capital risk.

Collateralized Mortgage Obligations ("CMOs"). CMOs are hybrids between
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal are paid, in most cases, semiannually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments. The prices of certain CMOs,
depending on their structure and the rate of prepayments, can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction, a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal risk of CMOs results from the rate of prepayments on underlying
mortgages serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.

Common Stocks. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate interest in the issuing companies.
Therefore, the Fund participates in the success or failure of any company in
which it holds stock. The market values of common stock can fluctuate
significantly, reflecting the business performance of the issuing company,
investor perception and general economic and financial market movements. Despite
the risk of price volatility, however, common stocks have historically offered a
greater potential for long-term gain on investment, compared to other classes of
financial assets such as bonds or cash equivalents, although there can be no
assurance that this will be true in the future.

Concentration. The Fund "concentrates," for purposes of the 1940 Act, its assets
in securities related to a particular industry or group of industries which
means that at least 25% of its net assets will be invested in these assets at
all times. As a result, the Fund may be subject to greater market fluctuation
than the Fund which has securities representing a broader range of investment
alternatives.

Convertible Securities. The Fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stock. Investments in convertible securities can provide
an opportunity for capital appreciation and/or income through interest and
dividend payments by virtue of their conversion or exchange features.


                                       6
<PAGE>

The convertible securities in which the Fund may invest are either fixed income
or zero coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock. The
exchange ratio for any particular convertible security may be adjusted from time
to time due to stock splits, dividends, spin-offs, other corporate distributions
or scheduled changes in the exchange ratio. Convertible debt securities and
convertible preferred stocks, until converted, have general characteristics
similar to both debt and equity securities. Although to a lesser extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion or exchange
feature, the market value of convertible securities typically changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow movements in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.

Of course, like all debt securities, there can be no assurance of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer-term bonds are,
however, generally more volatile than bonds with shorter maturities.

Correlation of Gold and Gold Securities. The Advisor believes that the value of
the securities of firms that deal in gold will correspond generally, over time,
with the prices of the underlying metal. At any given time, however, changes in
the price of gold may not strongly correlate with changes in the value of
securities related to gold, which are expected to constitute the principal part
of the Fund's assets. In fact, there may be periods in which the price of gold
stocks and gold will move in different directions. The reason for this potential
disparity is that political and economic factors, including behaviors of stock
markets, may have differing impacts on gold versus gold stocks.

Depositary Receipts. The Fund may invest in sponsored or unsponsored American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), International Depositary Receipts ("IDRs") and
other types of Depositary Receipts (which, together with ADRs, EDRs, GDRs and
IDRs are hereinafter referred to as "Depositary Receipts"). Depositary Receipts
provide indirect investment in securities of foreign issuers. Prices of
unsponsored Depositary Receipts may be more volatile than if they were sponsored
by the issuer of the underlying securities. Depositary Receipts may not
necessarily be denominated in the same currency as the underlying securities
into which they may be converted. In addition, the issuers of the stock of
unsponsored Depositary Receipts are not obligated to disclose material
information in the United States and, therefore, there may not be a correlation
between such information and the market value of the Depositary Receipts. ADRs
are


                                       7
<PAGE>

Depositary Receipts which are bought and sold in the United States and are
typically issued by a US bank or trust company which evidence ownership of
underlying securities by a foreign corporation. GDRs, IDRs and other types of
Depositary Receipts are typically issued by foreign banks or trust companies,
although they may also be issued by United States banks or trust companies, and
evidence ownership of underlying securities issued by either a foreign or a
United States corporation. Generally, Depositary Receipts in registered form are
designed for use in the United States securities markets and Depositary Receipts
in bearer form are designed for use in securities markets outside the United
States. For purposes of the Fund's investment policies, the Fund's investments
in ADRs, GDRs and other types of Depositary Receipts will be deemed to be
investments in the underlying securities. Depositary Receipts, including those
denominated in US dollars will be subject to foreign currency exchange rate
risk. However, by investing in US dollar-denominated 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. However, certain Depositary Receipts may not be listed on an exchange
and therefore may be illiquid securities.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by the
Fund to a bank or broker/dealer (the counterparty) of GNMA certificates or other
mortgage-backed securities together with a commitment to purchase from the
counterparty similar, but not identical, securities at a future date, at the
same price. The counterparty receives all principal and interest payments,
including prepayments, made on the security while it is the holder. The Fund
receives a fee from the counterparty as consideration for entering into the
commitment to purchase. Dollar rolls may be renewed over a period of several
months with a different purchase and repurchase price fixed and a cash
settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which the Fund agrees to buy a security on a future date.

The Fund will segregate cash, US Government securities or other liquid assets in
an amount sufficient to meet its purchase obligations under the transactions. In
the alternative, the Fund may also maintain asset coverage of at least 300% for
all outstanding firm commitments, dollar rolls and other borrowings.

Dollar rolls may be treated for purposes of the 1940 Act, as borrowings of the
Fund because they involve the sale of a security coupled with an agreement to
repurchase. A dollar roll involves costs to the Fund. For example, while the
Fund receives a fee as consideration for agreeing to repurchase the security,
the Fund forgoes the right to receive all principal and interest payments while
the counterparty holds the security. These payments to the counterparty may
exceed the fee received by the Fund, thereby effectively charging the Fund
interest on its borrowing. Further, although the Fund can estimate the amount of
expected principal prepayment over the term of the dollar roll, a variation in
the actual amount of prepayment could increase or decrease the cost of the
Fund's borrowing.

The entry into dollar rolls involves potential risks of loss that are different
from those related to the securities underlying the transactions. For example,
if the counterparty becomes insolvent, the Fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before the Fund is able to purchase them. Similarly, the Fund
may be required to purchase securities in connection with a dollar roll at a
higher price than may otherwise be available on the open market. Since, as noted
above, the counterparty is required to deliver a similar, but not identical
security to the Fund, the security that the Fund is required to buy under the
dollar roll may be worth less than an identical security. Finally, there can be
no assurance that the Fund's use of the cash that it receives from a dollar roll
will provide a return that exceeds borrowing costs.

Eurodollar Instruments. The Fund may make investments in Eurodollar instruments
for hedging purposes or to enhance potential gain. Eurodollar instruments are US
dollar-denominated futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign currency-denominated
instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain
a fixed rate for borrowings. The Fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed income instruments are linked.

Eurodollar Obligations. Eurodollar bank obligations are US dollar-denominated
certificates of deposit and time deposits issued outside the US capital markets
by foreign branches of US banks and US branches of foreign banks. Eurodollar
obligations are subject to the same risks that pertain to domestic issues,
notably credit risk, market risk and liquidity risk. Additionally, Eurodollar
obligations are subject to certain sovereign risks.

                                       8
<PAGE>

Foreign Currencies. Because investments in foreign securities usually will
involve currencies of foreign countries, and because the Fund may hold foreign
currencies and forward contracts, futures contracts and options on foreign
currencies and foreign currency futures contracts, the value of the assets of
the Fund as measured in US dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
the Fund may incur costs and experience conversion difficulties and
uncertainties in connection with conversions between various currencies.
Fluctuations in exchange rates may also affect the earning power and asset value
of the foreign entity issuing the security.

The strength or weakness of the US dollar against these currencies is
responsible for part of the Fund's investment performance. If the dollar falls
in value relative to the Japanese yen, for example, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. Many foreign
currencies have experienced significant devaluation relative to the dollar.

Although the Fund values its assets daily in terms of US dollars, it does not
intend to convert its holdings of foreign currencies into US dollars on a daily
basis. It will do so from time to time, and investors should be aware of the
costs of currency conversion. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer. The Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through entering into
options or forward or futures contracts to purchase or sell foreign currencies.

Foreign Fixed Income Securities. Since most foreign fixed income securities are
not rated, the Fund will invest in foreign fixed income securities based on the
Advisor's analysis without relying on published ratings. Since such investments
will be based upon the Advisor's analysis rather than upon published ratings,
achievement of the Fund's goals may depend more upon the abilities of the
Advisor than would otherwise be the case.

The value of the foreign fixed income securities held by the Fund, and thus the
net asset value of the Fund's shares, generally will fluctuate with (a) changes
in the perceived creditworthiness of the issuers of those securities, (b)
movements in interest rates, and (c) changes in the relative values of the
currencies in which the Fund's investments in fixed income securities are
denominated with respect to the US Dollar. The extent of the fluctuation will
depend on various factors, such as the average maturity of the Fund's
investments in foreign fixed income securities, and the extent to which the Fund
hedges its interest rate, credit and currency exchange rate risks. A longer
average maturity generally is associated with a higher level of volatility in
the market value of such securities in response to changes in market conditions.

Investments in sovereign debt, including Brady Bonds, involve special risks.
Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and the Fund may be unable to
collect all or any part of its investment in a particular issue. Foreign
investment in certain sovereign debt is restricted or controlled to varying
degrees, including requiring governmental approval for the repatriation of
income, capital or proceed of sales by foreign investors. These restrictions or
controls may at times limit or preclude foreign investment in certain sovereign
debt or increase the costs and expenses of the Fund. Sovereign debt may be
issued as part of debt restructuring and such debt is to be considered
speculative. There is a history of defaults with respect to commercial bank
loans by public and private entities issuing Brady Bonds. All or a portion of
the interest payments and/or principal repayment with respect to Brady Bonds may
be uncollateralized.

                                       9
<PAGE>

Foreign Investment. While the Fund that invests in foreign countries offers the
potential for substantial appreciation over time, it also involves above-average
investment risk in comparison to a mutual fund investing in a broad range of US
equity securities. The Fund is designed as a long-term investment and not for
short-term trading purposes. The Fund should not be considered a complete
investment program. The Fund's net asset value per share, or share price, can
fluctuate significantly with changes in stock market levels, political
developments, movements in currencies, global investment flows and other
factors.

Foreign Securities. Investing in foreign securities involves certain special
considerations, including those set forth below, which are not typically
associated with investing in US securities and which may favorably or
unfavorably affect the Fund's performance. As foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
companies, there may be less publicly available information about a foreign
company than about a domestic company. Many foreign securities markets, while
growing in volume of trading activity, have substantially less volume than the
US market, and securities of some foreign issuers are less liquid and more
volatile than securities of domestic issuers. Similarly, volume and liquidity in
most foreign bond markets is less than in the US and, at times, volatility of
price can be greater than in the US. Fixed commissions on some foreign
securities exchanges and bid to asked spreads in foreign bond markets are
generally higher than commissions or bid to asked spreads on US markets,
although the Advisor will endeavor to achieve the most favorable net results on
its portfolio transactions. There is generally less governmental supervision and
regulation of securities exchanges, brokers and listed companies in foreign
countries than in the US. It may be more difficult for the Fund's agents to keep
currently informed about corporate actions in foreign countries which may affect
the prices of portfolio securities. Communications between the US and foreign
countries may be less reliable than within the US, thus increasing the risk of
delayed settlements of portfolio transactions or loss of certificates for
portfolio securities. Payment for securities without delivery may be required in
certain foreign markets. In addition, with respect to certain foreign countries,
there is the possibility of expropriation or confiscatory taxation, political or
social instability, or diplomatic developments which could affect US investments
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. The management of the Fund seeks to mitigate the
risks associated with the foregoing considerations through continuous
professional management.

Gold or Precious Metals Custody. Gold and other precious metals held by or on
behalf of the Fund may be held on either an allocated or an unallocated basis
inside or outside the US. Placing gold or precious metals in an allocated
custody account gives the Fund a direct interest in specified gold bars or
precious metals, whereas an unallocated deposit does not and instead gives the
Fund a right only to compel the counterparty to deliver a specific amount of
gold or precious metals, as applicable. Consequently, the Fund could experience
a loss if the counterparty to an unallocated depository arrangement becomes
bankrupt or fails to deliver the gold or precious metals as requested. An
allocated gold or precious metals custody account also involves the risk that
the gold or precious metals will be stolen or damaged while in transit. Both
allocated and unallocated arrangements require the Fund as seller to deliver,
either by book entry or physically, the gold or precious metals sold in advance
of the receipt of payment.

High Yield/High Risk Bonds. The Fund may also purchase debt securities which are
rated below investment grade (commonly referred to as "junk bonds"), that is,
rated below Baa by Moody's Investors Service, Inc. ("Moody's") or below BBB by
Standard & Poor's Rating Services ("S&P") or Fitch Investors Services ("Fitch")
and unrated securities judged to be of equivalent quality as determined by the
Advisor or subadvisor. These securities usually entail greater risk (including
the possibility of default or bankruptcy of the issuers of such securities),
generally involve greater volatility of price and risk to principal and income,
and may be less liquid, than securities in the higher rating categories. The
lower the ratings of such debt securities, the more their risks render them like
equity securities. Securities rated D may be in default with respect to payment
of principal or interest. See the Appendix to this Statement of Additional
Information for a more complete description of the ratings assigned by these
ratings organizations and their respective characteristics.

Issuers of such high-yield securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such


                                       10
<PAGE>

periods, such issuers may not have sufficient revenues to meet their interest
payment obligations. The issuer's ability to service its debt obligations may
also be adversely affected by specific corporate developments, or the issuer's
inability to meet specific projected business forecasts, or the unavailability
of additional financing. The risk of loss from default by the issuer is
significantly greater for the holders of high yield securities because such
securities are generally unsecured and are often subordinated to other creditors
of the issuer. Prices and yields of high yield securities will fluctuate over
time and, during periods of economic uncertainty, volatility of high yield
securities may adversely affect the Fund's net asset value. In addition,
investments in high yield zero coupon or paying kind bonds, rather than
income-bearing high yield securities, may be more speculative and may be subject
to greater fluctuations in value due to changes in interest rates.

The Fund may have difficulty disposing of certain high-yield securities because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, the Fund anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market may have an adverse effect on the market price and the
Fund's ability to dispose of particular issues and may also make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund's assets. Market quotations generally are available on many
high yield issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield securities. These securities may also involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties.

Credit quality in the high yield securities market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high yield security. For these reasons, it is
generally the policy of the Advisor not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of the Fund's
investment objective by investment in such securities may be more dependent on
the Advisor's credit analysis than is the case for higher quality bonds. Should
the rating of a portfolio security be downgraded, the Advisor will determine
whether it is in the best interests of the Fund to retain or dispose of such
security. Prices for below investment grade securities may be affected by
legislative and regulatory developments. Also, Congress has from time to time
considered legislation which would restrict or eliminate the corporate tax
deduction for interest payments in these securities and regulate corporate
restructurings. Such legislation may significantly depress the prices of
outstanding securities of this type.

Prices for high-yield securities may be affected by legislative and regulatory
developments. Also, Congress has from time to time considered legislation which
would restrict or eliminate the corporate tax deduction for interest payments in
these securities and regulate corporate restructurings. Such legislation may
significantly depress the prices of outstanding securities of this type.

A portion of the high-yield securities acquired by the Fund may be purchased
upon issuance, which may involve special risks because the securities so
acquired are new issues. In such instances, the Fund may be a substantial
purchaser of the issue and therefore have the opportunity to participate in
structuring the terms of the offering. Although this may enable the Fund to seek
to protect itself against certain risks, the considerations discussed herein
would nevertheless remain applicable.

Illiquid Securities and Restricted Securities. The Fund may purchase securities
that are subject to legal or contractual restrictions on resale ("restricted
securities"). Generally speaking, restricted securities may be sold (i) only to
qualified institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers; (iii) in limited quantities after they have been
held for a specified period of time and other conditions are met pursuant to an
exemption from registration; or (iv) in a public offering for which a
registration statement is in effect under the Securities Act of 1933, as amended
(the "1933 Act"). Issuers of restricted securities may not be subject to the
disclosure and other investor protection requirements that would be applicable
if their securities were publicly traded.

Restricted securities are often illiquid, but they may also be liquid. For
example, restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid. The Fund's Board has approved guidelines for use by
the Advisor in determining whether a security is liquid or illiquid. Among the
factors the Advisor or subadvisor may


                                       11
<PAGE>

consider in reaching liquidity decisions relating to Rule 144A securities are:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers wishing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the market for the security
(i.e., the time needed to dispose of the security, the method of soliciting
offers, and the mechanics of the transfer. Issuers of restricted securities may
not be subject to the disclosure and other investor protection requirement that
would be applicable if their securities were publicly traded. Where a
registration statement is required for the resale of restricted securities, the
Fund may be required to bear all or part of the registration expenses. The Fund
may be deemed to be an "underwriter" for purposes of the 1933 Act, as amended
when selling restricted securities to the public and, in such event, the Fund
may be liable to purchasers of such securities if the registration statement
prepared by the issuer is materially inaccurate or misleading.

The Fund may also purchase securities that are not subject to legal or
contractual restrictions on resale, but that are deemed illiquid. Such
securities may be illiquid, for example, because there is a limited trading
market for them.

The Fund may be unable to sell a restricted or illiquid security. In addition,
it may be more difficult to determine a market value for restricted or illiquid
securities. Moreover, if adverse market conditions were to develop during the
period between the Fund's decision to sell a restricted or illiquid security and
the point at which the Fund is permitted or able to sell such security, the Fund
might obtain a price less favorable than the price that prevailed when it
decided to sell. This investment practice, therefore, could have the effect of
increasing the level of illiquidity of the Fund.

Impact of Large Redemptions and Purchases of Fund shares. From time to time,
shareholders of the Fund (which may include affiliated and/or non-affiliated
registered investment companies that invest in the Fund) may make relatively
large redemptions or purchases of Fund shares. These transactions may cause the
Fund to have to sell securities or invest additional cash, as the case may be.
While it is impossible to predict the overall impact of these transactions over
time, there could be adverse effects on the Fund's performance to the extent
that the Fund may be required to sell securities or invest cash at times when it
would not otherwise do so. These transactions could also accelerate the
realization of taxable income if sales of securities resulted in capital gains
or other income and could also increase transaction costs, which may impact the
Fund's expense ratio.

Impact of Sub-Prime Mortgage Market. The Fund may invest in companies that may
be affected by the downturn in the sub-prime mortgage lending market in the US.
Sub-prime loans, which tend to have higher interest rates, are made to borrowers
who do not qualify for prime rate loans because of their low credit ratings or
other factors that suggest that they have a higher probability of defaulting.
The downturn in the sub-prime mortgage-lending market has had, and may continue
to have, a far-reaching impact on the broader securities market, especially in
the sub-prime, asset-backed and other debt related securities markets. In
addition to performance issues, the reduced investor demand for sub-prime,
asset-backed and other debt related securities as a result of the downturn has
created liquidity and valuation issues for these securities. The Fund's
investments related to or impacted by the downturn in the sub-prime mortgage
lending market may cause the overall value of the Fund to decrease.

IPO Risk. Securities issued through an initial public offering ("IPO") can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The Fund may engage in short-term trading
in connection with its IPO investments, which could produce higher trading costs
and adverse tax consequences. The number of securities issued in an IPO is
limited, so it is likely that IPO securities will represent a smaller component
of the Fund's portfolio as the Fund's assets increase (and thus have a more
limited effect on the Fund's performance).

Interfund Borrowing and Lending Program. The Fund has received exemptive relief
from the Securities and Exchange Commission ("SEC"), which permits the Fund to
participate in an interfund lending program among certain investment companies
advised by the Advisor. The interfund lending program allows the participating
funds to borrow money from and loan money to each other for temporary or
emergency purposes. The program is subject to a number of conditions designed to
ensure fair and equitable treatment of all participating funds, including the
following: (1) no fund may borrow money through the program unless it receives a
more favorable interest rate than a rate approximating the lowest interest rate
at which bank loans would be available to any of the participating funds


                                       12
<PAGE>

under a loan agreement; and (2) no fund may lend money through the program
unless it receives a more favorable return than that available from an
investment in repurchase agreements and, to the extent applicable, money market
cash sweep arrangements. In addition, the Fund may participate in the program
only if and to the extent that such participation is consistent with the Fund's
investment objectives and policies (for instance, money market funds would
normally participate only as lenders and tax exempt funds only as borrowers).
Interfund loans and borrowings may extend overnight, but could have a maximum
duration of seven days. Loans may be called on one day's notice. The Fund may
have to borrow from a bank at a higher interest rate if an interfund loan is
called or not renewed. Any delay in repayment to a lending fund could result in
a lost investment opportunity or additional costs. The program is subject to the
oversight and periodic review of the Boards of the participating funds. To the
extent the Fund are actually engaged in borrowing through the interfund lending
program, the Fund, as a matter of non-fundamental policy, may not borrow for
other than temporary or emergency purposes (and not for leveraging), except that
the Fund may engage in reverse repurchase agreements and dollar rolls for any
purpose.

Investing in Emerging Markets. The Fund's investments in foreign securities may
be in developed countries or in countries considered by the Fund's Advisor to
have developing or "emerging" markets, which involves 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 the 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,
the 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 Advisor
believes that these characteristics may be expected to continue in the future.
Most emerging securities markets have substantially less volume and are subject
to less governmental supervision than US securities markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than securities
of comparable domestic issuers. In addition, there is less regulation of
securities exchanges, securities dealers, and listed and unlisted companies in
emerging markets than in the US.

In addition, the Fund may be required to establish special custody or other
arrangements before making investments in securities traded in emerging markets.
For example, ownership of shares in foreign companies of certain countries may
be recorded by the companies themselves and by registrars instead of through a
central registration system. It is possible that the Fund's ownership rights
could be lost or diluted through fraud or negligence. Since certain foreign
banking institutions and registrars may not be guaranteed by the foreign
government in which the company is located, the Fund may be limited in its
ability to successfully pursue claims on behalf of the Fund's shareholders.

Emerging markets also have different clearance and settlement procedures, and in
certain markets there have been times when settlements have not kept pace with
the volume of securities transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Fund is uninvested and no
return is earned thereon. The inability of the Fund to make intended security
purchases due to settlement problems could cause the Fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Fund due to subsequent
declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser. Costs associated with transactions in foreign securities are
generally higher than costs associated with transactions in US securities. Such
transactions also involve additional costs for the purchase or sale of foreign
currency.

Certain emerging markets require prior governmental approval of investments by
foreign persons, limit the amount of investment by foreign persons in a
particular company, limit the investment by foreign persons only to a specific
class of securities of a company that may have less advantageous rights than the
classes available for purchase by domiciliaries of the countries and/or impose
additional taxes on foreign investors. Certain emerging markets may also
restrict investment opportunities in issuers in industries deemed important to
national interest.

                                       13
<PAGE>

Certain emerging markets may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if a deterioration occurs in an emerging market's
balance of payments or for other reasons, a country could impose temporary
restrictions on foreign capital remittances. The Fund could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation of capital, as well as by the application to the Fund of any
restrictions on investments.

In the course of investment in emerging markets, the Fund will be exposed to the
direct or indirect consequences of political, social and economic changes in one
or more emerging markets. While the Fund will manage its assets in a manner that
will seek to minimize the exposure to such risks, there can be no assurance that
adverse political, social or economic changes will not cause the Fund to suffer
a loss of value in respect of the securities in the Fund's portfolio.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's securities in such markets may
not be readily available. The Fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if the Fund believes that appropriate circumstances exist, it will promptly
apply to the SEC for a determination that an emergency is present. During the
period commencing from the Fund's identification of such condition until the
date of the SEC action, the Fund's securities in the affected markets will be
valued at fair value determined in good faith by or under the direction of the
Fund's Board.

Volume and liquidity in most foreign markets are less than in the US, and
securities of many foreign companies are less liquid and more volatile than
securities of comparable US companies. Fixed commissions on foreign securities
exchanges are generally higher than negotiated commissions on US exchanges,
although the Fund endeavors to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and
regulation of business and industry practices, securities exchanges, brokers,
dealers and listed companies than in the US Mail service between the US and
foreign countries may be slower or less reliable than within the US, thus
increasing the risk of delayed settlements of portfolio transactions or loss of
certificates for certificated portfolio securities. In addition, with respect to
certain emerging markets, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect the Fund's investments in those countries.
Moreover, individual emerging market economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

The Fund may have limited legal recourse in the event of a default with respect
to certain debt obligations it holds. If the issuer of a fixed-income security
owned by the Fund defaults, the Fund may incur additional expenses to seek
recovery. Debt obligations issued by emerging market country governments differ
from debt obligations of private entities; remedies from defaults on debt
obligations issued by emerging market governments, unlike those on private debt,
must be pursued in the courts of the defaulting party itself. The Fund's ability
to enforce its rights against private issuers may be limited. The ability to
attach assets to enforce a judgment may be limited. Legal recourse is therefore
somewhat diminished. Bankruptcy, moratorium and other similar laws applicable to
private issuers of debt obligations may be substantially different from those of
other countries. The political context, expressed as an emerging market
governmental issuer's willingness to meet the terms of the debt obligation, for
example, is of considerable importance. In addition, no assurance can be given
that the holders of commercial bank debt may not contest payments to the holders
of debt obligations in the event of default under commercial bank loan
agreements.

Income from securities held by the Fund could be reduced by a withholding tax at
the source or other taxes imposed by the emerging market countries in which the
Fund makes its investments. The Fund's net asset value may also be affected by
changes in the rates or methods of taxation applicable to the Fund or to
entities in which the Fund has invested. The Advisor will consider the cost of
any taxes in determining whether to acquire any particular investments, but can
provide no assurance that the taxes will not be subject to change.

Many emerging markets have experienced substantial, and, in some periods,
extremely high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain emerging market
countries. In an attempt to control inflation, wage


                                       14
<PAGE>

and price controls have been imposed in certain countries. Of these countries,
some, in recent years, have begun to control inflation through prudent economic
policies.

Emerging market governmental issuers are among the largest debtors to commercial
banks, foreign governments, international financial organizations and other
financial institutions. Certain emerging market governmental issuers have not
been able to make payments of interest on or principal of debt obligations as
those payments have come due. Obligations arising from past restructuring
agreements may affect the economic performance and political and social
stability of those issuers.

Governments of many emerging market countries have exercised and continue to
exercise substantial influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in any
given country. As a result, government actions in the future could have a
significant effect on economic conditions in emerging markets, which in turn,
may adversely affect companies in the private sector, general market conditions
and prices and yields of certain of the securities in the Fund's portfolio.
Expropriation, confiscatory taxation, nationalization, political, economic or
social instability or other similar developments have occurred frequently over
the history of certain emerging markets and could adversely affect the Fund's
assets should these conditions recur.

The ability of emerging market country governmental issuers to make timely
payments on their obligations is likely to be influenced strongly by the
issuer's balance of payments, including export performance, and its access to
international credits and investments. An emerging market whose exports are
concentrated in a few commodities could be vulnerable to a decline in the
international prices of one or more of those commodities. Increased
protectionism on the part of an emerging market's trading partners could also
adversely affect the country's exports and diminish its trade account surplus,
if any. To the extent that emerging markets receive payment for its exports in
currencies other than dollars or non-emerging market currencies, its ability to
make debt payments denominated in dollars or non-emerging market currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country. Fluctuations
in the level of these reserves affect the amount of foreign exchange readily
available for external debt payments and thus could have a bearing on the
capacity of emerging market countries to make payments on these debt
obligations.

To the extent that an emerging market country cannot generate a trade surplus,
it must depend on continuing loans from foreign governments, multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external funding may not be certain, and a withdrawal of external funding
could adversely affect the capacity of emerging market country governmental
issuers to make payments on their obligations. In addition, the cost of
servicing emerging market debt obligations can be affected by a change in
international interest rates since the majority of these obligations carry
interest rates that are adjusted periodically based upon international rates.

Investment Company Securities. The Fund may acquire securities of other
investment companies to the extent consistent with its investment objective and
subject to the limitations of the 1940 Act. The Fund will indirectly bear its
proportionate share of any management fees and other expenses paid by such other
investment companies.

For example, the Fund may invest in a variety of investment companies which seek
to track the composition and performance of specific indexes or a specific
portion of an index. These index-based investments hold substantially all of
their assets in securities representing their specific index. Accordingly, the
main risk of investing in index-based investments is the same as investing in a
portfolio of equity securities comprising the index. The market prices of
index-based investments will fluctuate in accordance with both changes in the
market value of their underlying portfolio securities and due to supply and
demand for the instruments on the exchanges on which they are traded (which may
result in their trading at a discount or premium to their NAVs). Index-based
investments may not replicate exactly the performance of their specified index
because of transaction costs and because of the temporary unavailability of
certain component securities of the index.

Examples of index-based investments include:

                                       15
<PAGE>

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are
based on the S&P 500 Composite Stock Price Index. They are issued by the SPDR
Trust, a unit investment trust that holds shares of substantially all the
companies in the S&P 500 in substantially the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are
issued by the MidCap SPDR Trust, a unit investment trust that holds a portfolio
of securities consisting of substantially all of the common stocks in the S&P
MidCap 400 Index in substantially the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or
group of industries that are represented by a specified Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end management investment company with nine
portfolios that each seeks to closely track the price performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM): DIAMONDS are based on the Dow Jones Industrial Average(SM). They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100 Trust, a unit investment trust that holds a portfolio
consisting of substantially all of the securities, in substantially the same
weighting, as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

Investment-Grade Bonds. The Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or
Fitch or, if unrated, judged to be of equivalent quality as determined by the
Advisor or subadvisor. Moody's considers bonds it rates Baa to have speculative
elements as well as investment-grade characteristics. To the extent that the
Fund invests in higher-grade securities, the Fund will not be able to avail
itself of opportunities for higher income which may be available at lower
grades.

Investment of Uninvested Cash Balances. The Fund may have cash balances that
have not been invested in portfolio securities ("Uninvested Cash"). Uninvested
Cash may result from a variety of sources, including dividends or interest
received from portfolio securities, unsettled securities transactions, reserves
held for investment strategy purposes, scheduled maturity of investments,
liquidation of investment securities to meet anticipated redemptions and
dividend payments, and new cash received from investors. Uninvested Cash may be
invested directly in money market instruments or other short-term debt
obligations. Pursuant to an Exemptive Order issued by the SEC, the Fund may use
Uninvested Cash to purchase shares of affiliated funds including money market
funds, short-term bond funds and Cash Management QP Trust, or one or more future
entities for which the Advisor acts as trustee or investment advisor that
operate as cash management investment vehicles and that are excluded from the
definition of investment company pursuant to Section 3(c)(1) or 3(c)(7) of the
1940 Act (collectively, the "Central Funds") in excess of the limitations of
Section 12(d)(1) of the 1940 Act. Investment by the Fund in shares of the
Central Funds will be in accordance with the Fund's investment policies and
restrictions as set forth in its registration statement.

Certain of the Central Funds comply with Rule 2a-7 under the 1940 Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance the Fund's ability to
manage Uninvested Cash.

The Fund will invest Uninvested Cash in Central Funds only to the extent that
the Fund's aggregate investment in the Central Funds does not exceed 25% of its
total assets. Purchases and sales of shares of Central Funds are made at net
asset value.

Lending of Portfolio Securities. The Fund may lend its investment securities to
approved institutional borrowers who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities or completing arbitrage operations. By lending its
investment securities, the Fund


                                       16
<PAGE>

attempts to increase its net investment income through the receipt of interest
on the loan. Any gain or loss in the market price of the securities loaned that
might occur during the term of the loan would belong to the Fund. The Fund may
lend its investment securities so long as the terms, structure and the aggregate
amount of such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the SEC thereunder, which currently require
that (a) the borrower pledge and maintain with the Fund collateral consisting of
liquid, unencumbered assets having a value at all times not less than 100% of
the value of the securities loaned, (b) the borrower add to such collateral
whenever the price of the securities loaned rises (i.e., the borrower "marks to
the market" on a daily basis), (c) the loan be made subject to termination by
the Fund at any time, and (d) the Fund receives reasonable interest on the loan
(which may include the Fund's investing any cash collateral in interest-bearing
short-term investments), and distributions on the loaned securities and any
increase in their market value. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans will be made only to borrowers
selected by the Fund's delegate after a commercially reasonable review of
relevant facts and circumstances, including the creditworthiness of the
borrower.

At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Directors. In addition, voting rights may pass
with the loaned securities, but if a material event occurs affecting an
investment on loan, the loan will be called and the securities voted. Pursuant
to an exemptive order granted by the SEC, cash collateral received by the Fund
may be invested in a money market fund managed by the Advisor (or one of its
affiliates).

Loan Participations and Assignments. The Fund may invest in fixed- and
floating-rate loans ("Loans") arranged through private negotiations between an
issuer of debt instruments and one or more financial institutions ("Lenders").
The Fund's investments in Loans are expected in most instances to be in the form
of participations in Loans ("Participations") and assignments of portions of
Loans ("Assignments") from third parties. Participations typically will result
in the Fund having a contractual relationship only with the Lender and not with
the borrower. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the Loan, nor any rights of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund will assume the
credit risk of both the borrower and the Lender that is selling the
Participation. In the event of the insolvency of the Lender selling a
Participation, the Fund may be treated as a general creditor of the Lender and
may not benefit from any set-off between the Lender and the borrower. The Fund
will acquire Participations only if the Lender interpositioned between the Fund
and the borrower is determined by the Advisor to be creditworthy.

When the Fund purchases Assignments from Lenders, it will acquire direct rights
against the borrower on the Loan. Because Assignments are arranged through
private negotiations between potential assignees and potential assignors,
however, the rights and obligations acquired by the Fund as the purchaser of an
Assignment may differ from, and may be more limited than, those held by the
assigning Lender.

The Fund may have difficulty disposing of Assignments and Participations.
Because no liquid market for these obligations typically exists, the Fund
anticipates that these obligations could be sold only to a limited number of
institutional investors. The lack of a liquid secondary market will have an
adverse effect on the Fund's ability to dispose of particular Assignments or
Participations when necessary to meet the Fund's liquidity needs or in response
to a specific economic event, such as a deterioration in the creditworthiness of
the borrower. The lack of a liquid secondary market for Assignments and
Participations may also make it more difficult for the Fund to assign a value to
those securities for purposes of valuing the Fund's portfolio and calculating
its net asset value.

Mining and Exploration Risks. The business of gold mining by its nature involves
significant risks and hazards, including environmental hazards, industrial
accidents, labor disputes, discharge of toxic chemicals, fire, drought, flooding
and natural acts. The occurrence of any of these hazards can delay production,
increase production costs and result in liability to the operator of the mines.
A mining operation may become subject to liability for pollution


                                       17
<PAGE>

or other hazards against which it has not insured or cannot insure, including
those in respect of past mining activities for which it was not responsible.

Exploration for gold and other precious metals is speculative in nature,
involves many risks and frequently is unsuccessful. There can be no assurance
that any mineralisation discovered will result in an increase in the proven and
probable reserves of a mining operation. If reserves are developed, it can take
a number of years from the initial phases of drilling and identification of
mineralisation until production is possible, during which time the economic
feasibility of production may change. Substantial expenditures are required to
establish ore reserves properties and to construct mining and processing
facilities. As a result of these uncertainties, no assurance can be given that
the exploration programs undertaken by a particular mining operation will
actually result in any new commercial mining.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. The Fund's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the enterprises in which the Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization of management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as an enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which the Fund may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering, these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
operate effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Repurchase Agreements. The Fund may invest in repurchase agreements pursuant to
its investment guidelines. In a repurchase agreement, the Fund acquires
ownership of a security and simultaneously commits to resell that security to
the seller, typically a bank or broker-dealer.

A repurchase agreement provides a means for the Fund to earn income on funds for
periods as short as overnight. It is an arrangement under which the purchaser
(i.e., the Fund) acquires a security ("Obligation") and the seller agrees, at
the time of sale, to repurchase the Obligation at a specified time and price.
Securities subject to a repurchase agreement are held in a segregated account
and the value of such securities is kept at least equal to the repurchase price
on a daily basis. The repurchase price may be higher than the purchase price,
the difference being income to the Fund, or the purchase and repurchase prices
may be the same, with interest at a stated rate due to the Fund


                                       18
<PAGE>


together with the repurchase price upon repurchase. In either case, the income
to the Fund is unrelated to the interest rate on the Obligation itself.
Obligations will be held by the custodian or in the Federal Reserve Book Entry
System.

It is not clear whether a court would consider the Obligation purchased by the
Fund subject to a repurchase agreement as being owned by that fund or as being
collateral for a loan by that fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the Obligation before repurchase of the Obligation under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Delays may involve loss of interest or decline in price of
the Obligation. If the court characterizes the transaction as a loan and the
Fund has not perfected a security interest in the Obligation, that fund may be
required to return the Obligation to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt Obligation purchased for the Fund, the
Advisor seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
Obligation. Apart from the risk of bankruptcy or insolvency proceedings, there
is also the risk that the seller may fail to repurchase the Obligation, in which
case the Fund may incur a loss if the proceeds to that fund of the sale to a
third party are less than the repurchase price. However, if the market value
(including interest) of the Obligation subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Fund will
direct the seller of the Obligation to deliver additional securities so that the
market value (including interest) of all securities subject to the repurchase
agreement will equal or exceed the repurchase price.

Reverse Repurchase Agreements. The Fund may enter into "reverse repurchase
agreements," which are repurchase agreements in which the Fund, as the seller of
the securities, agrees to repurchase such securities at an agreed time and
price. The Fund segregates assets in an amount at least equal to its obligation
under outstanding reverse repurchase agreements. The Fund will enter into
reverse repurchase agreements only when the Advisor believes that the interest
income to be earned from the investment of the proceeds of the transaction will
be greater than the interest expense of the transaction. Such transactions may
increase fluctuations in the market value of fund assets and its yield.

Short Sales Against the Box. The Fund may make short sales of common stocks if,
at all times when a short position is open, the Fund owns the stock or owns
preferred stocks or debt securities convertible or exchangeable, without payment
of further consideration, into the shares of common stock sold short. Short
sales of this kind are referred to as short sales "against the box." The
broker/dealer that executes a short sale generally invests cash proceeds of the
sale until they are paid to the Fund. Arrangements may be made with the
broker/dealer to obtain a portion of the interest earned by the broker on the
investment of short sale proceeds. The Fund will segregate the common stock or
convertible or exchangeable preferred stock or debt securities in a special
account with the custodian. Uncertainty regarding the tax effects of short sales
of appreciated investments may limit the extent to which the Fund may enter into
short sales against the box.

Strategic Transactions and Derivatives. The Fund may, but is not required to,
utilize various other investment strategies as described below for a variety of
purposes, such as hedging various market risks, managing the effective maturity
or duration of the fixed-income securities in the Fund's portfolio or enhancing
potential gain. These strategies may be executed through the use of derivative
contracts.

In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon, enter into various transactions such as swaps,
caps, floors, collars, currency forward contracts, currency futures contracts,
currency swaps or options on currencies, or currency futures and various other
currency transactions (collectively, all the above are called "Strategic
Transactions"). In addition, Strategic Transactions may also include new
techniques, instruments or strategies that are permitted as regulatory changes
occur. Strategic Transactions may be used without limit (subject to certain
limits imposed by the 1940 Act) to attempt to protect against possible changes
in the market value of securities held in or to be purchased for the Fund's
portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the Fund's portfolio,
or to establish a position in the derivatives markets as a substitute for
purchasing or selling particular securities. Some Strategic Transactions may


                                       19
<PAGE>


also be used to enhance potential gain although no more than 5% of the Fund's
assets will be committed to certain Strategic Transactions entered into for
non-hedging purposes. Any or all of these investment techniques may be used at
any time and in any combination, and there is no particular strategy that
dictates the use of one technique rather than another, as use of any Strategic
Transaction is a function of numerous variables including market conditions. The
ability of the Fund to utilize these Strategic Transactions successfully will
depend on the Advisor's ability to predict pertinent market movements, which
cannot be assured. The Fund will comply with applicable regulatory requirements
when implementing these strategies, techniques and instruments. Strategic
Transactions will not be used to alter fundamental investment purposes and
characteristics of the Fund, and the Fund will segregate assets (or as provided
by applicable regulations, enter into certain offsetting positions) as required
by law.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to the Fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation the Fund can realize on its investments or
cause the Fund to hold a security it might otherwise sell. The use of currency
transactions can result in the Fund incurring losses as a result of a number of
factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.

Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the US, (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, the Fund's purchase of a put option on a security might be designed to
protect its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the Fund
the right to sell such instrument at the option exercise price. A call option,
upon payment of a premium, gives the purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price. The Fund's purchase of a call option on a security, financial future,
index, currency or other instrument might be intended to protect the Fund
against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An


                                       20
<PAGE>

American style put or call option may be exercised at any time during the option
period while a European style put or call option may be exercised only upon
expiration or during a fixed period prior thereto. The Fund is authorized to
purchase and sell exchange listed options and over-the-counter options ("OTC
options"). Exchange listed options are issued by a regulated intermediary such
as the Options Clearing Corporation ("OCC"), which guarantees the performance of
the obligations of the parties to such options. The discussion below uses the
OCC as an example, but is also applicable to other financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

The Fund's ability to close out its position as a purchaser or seller of an OCC
or exchange listed put or call option is dependent, in part, upon the liquidity
of the option market. Among the possible reasons for the absence of a liquid
option market on an exchange are: (i) insufficient trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities including reaching daily
price limits; (iv) interruption of the normal operations of the OCC or an
exchange; (v) inadequacy of the facilities of an exchange or OCC to handle
current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Fund will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Fund to require the Counterparty
to sell the option back to the Fund at a formula price within seven days. The
Fund expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, the Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Fund will engage in OTC option transactions only with US
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker-dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-term credit rating of A-1 from S&P or P-1 from
Moody's or an equivalent rating from any nationally recognized statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions, are
determined to be of equivalent credit quality by the Advisor. The staff of the
SEC currently takes the position that OTC options purchased by the Fund, and
portfolio securities "covering" the amount of the Fund's obligation pursuant to
an OTC option sold by it (the cost of the sell-back plus the in-the-money
amount, if any) are illiquid, and are subject to the Fund's limitation on
investing no more than 15% of its net assets in illiquid securities.

                                       21
<PAGE>

If the Fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.

The Fund may purchase and sell call options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments that are traded on US and foreign securities
exchanges and in the over-the-counter markets, and on securities indices,
currencies and futures contracts. All calls sold by the Fund must be "covered"
(i.e., the Fund must own the securities or futures contract subject to the call)
or must meet the asset segregation requirements described below as long as the
call is outstanding. Even though the Fund will receive the option premium to
help protect it against loss, a call sold by the Fund exposes the Fund during
the term of the option to possible loss of opportunity to realize appreciation
in the market price of the underlying security or instrument and may require the
Fund to hold a security or instrument which it might otherwise have sold.

The Fund may purchase and sell put options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments (whether or not it holds the above securities in its
portfolio), and on securities indices, currencies and futures contracts other
than futures on individual corporate debt and individual equity securities. The
Fund will not sell put options if, as a result, more than 50% of the Fund's
total assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.

General Characteristics of Futures. The Fund may enter into futures contracts or
purchase or sell put and call options on such futures as a hedge against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by the Fund, as seller, to deliver to
the buyer the specific type of financial instrument called for in the contract
at a specific future time for a specified price (or, with respect to index
futures and Eurodollar instruments, the net cash amount). Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract and obligates the seller to deliver such
position.

The Fund has claimed exclusion from the definition of the term "commodity pool
operator" under the Commodity Exchange Act. Therefore, the Fund is not subject
to commodity pool operator registration and regulation under the Commodity
Exchange Act. Futures and options on futures may be entered into for bona fide
hedging, risk management (including duration management) or other portfolio and
return enhancement management purposes to the extent consistent with the
exclusion from commodity pool operator registration. Typically, maintaining a
futures contract or selling an option thereon requires the Fund to deposit with
a financial intermediary or futures commissions merchant as security for its
obligations an amount of cash or other specified assets (initial margin) which
initially is typically 1% to 10% of the face amount of the contract (but may be
higher in some circumstances). Additional cash or assets (variation margin) may
be required to be deposited thereafter on a daily basis as the marked to market
value of the contract fluctuates. The purchase of an option on financial futures
involves payment of a premium for the option without any further obligation on
the part of the Fund. If the Fund exercises an option on a futures contract it
will be obligated to post initial margin (and potential subsequent variation
margin) for the resulting futures position just as it would for any position.
Futures contracts and options thereon are generally settled by entering into an
offsetting transaction but there can be no assurance that the position can be
offset prior to settlement at an advantageous price, nor that delivery will
occur.

Options on Securities Indices and Other Financial Indices. The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level


                                       22
<PAGE>

of the index upon which the option is based exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option (except if,
in the case of an OTC option, physical delivery is specified). This amount of
cash is equal to the excess of the closing price of the index over the exercise
price of the option, which also may be multiplied by a formula value. The seller
of the option is obligated, in return for the premium received, to make delivery
of this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. The Fund may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. The Fund may enter into currency
transactions with Counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the Advisor.

The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps generally
will be limited to hedging involving either specific transactions or portfolio
positions except as described below. Transaction hedging is entering into a
currency transaction with respect to specific assets or liabilities of the Fund,
which will generally arise in connection with the purchase or sale of its
portfolio securities or the receipt of income therefrom. Position hedging is
entering into a currency transaction with respect to portfolio security
positions denominated or generally quoted in that currency.

The Fund generally will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.

The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for US dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. Currency hedging involves some of the same
risks and considerations as other transactions with similar instruments.
Currency transactions can result in losses to the Fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived correlation between
various currencies may not be present or may not be present during the
particular time that the Fund is engaging in proxy hedging. If the Fund enters
into a currency hedging transaction, the Fund will comply with the asset
segregation requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments.


                                       23
<PAGE>

These can result in losses to the Fund if it is unable to deliver or receive
currency or funds in settlement of obligations and could also cause hedges it
has entered into to be rendered useless, resulting in full currency exposure as
well as incurring transaction costs. Buyers and sellers of currency futures are
subject to the same risks that apply to the use of futures generally. Further,
settlement of a currency futures contract for the purchase of most currencies
must occur at a bank based in the issuing nation. Trading options on currency
futures is relatively new, and the ability to establish and close out positions
on such options is subject to the maintenance of a liquid market which may not
always be available. Currency exchange rates may fluctuate based on factors
extrinsic to that country's economy.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, currency, index and other swaps and the
purchase or sale of related caps, floors and collars. The Fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Fund will not sell interest rate caps or floors where it does not own
securities or other instruments providing the income stream the Fund may be
obligated to pay. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate cash or liquid
assets with its custodian to the extent fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by the Fund to
pay or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or liquid assets at least equal to
the current amount of the obligation must be segregated with the custodian. The
segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. For
example, a call option written by the Fund will require the Fund to hold the
securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate cash or liquid
assets sufficient to purchase and deliver the securities if the call is
exercised. A call option sold by the Fund on an index will require the Fund to
own portfolio securities which correlate with the index or to segregate cash or
liquid assets equal to the excess of the index value over the exercise price on
a current basis. A put option written by the Fund requires the Fund to segregate
cash or liquid assets equal to the exercise price. Except when the Fund enters
into a forward contract for the purchase or sale of a security denominated in a
particular currency, which requires no segregation, a currency contract which
obligates the Fund to buy or sell currency will generally require the Fund to
hold an amount of that currency or liquid assets denominated in that currency
equal to the Fund's obligations or to segregate cash or liquid assets equal to
the amount of the Fund's obligation. OTC options entered into by the Fund,
including those on securities, currency, financial instruments or indices and
OCC issued and exchange listed index options, will generally provide for cash
settlement. As a result, when the Fund sells these instruments it will only
segregate an amount of cash or liquid assets equal to its accrued net
obligations, as there is no requirement for payment or delivery of amounts in
excess of the net amount. These amounts will equal 100% of the exercise price in
the case of a non cash-settled put, the same as an OCC guaranteed listed option
sold by the Fund, or the in-the-money amount plus any sell-back formula amount
in the case of a cash-settled put or call. In addition, when the Fund sells a
call option on an index at a time when the in-the-money amount exceeds the
exercise price, the Fund will segregate, until the option expires or is closed
out, cash or cash equivalents equal in value to such excess. OCC issued and
exchange listed options sold by the Fund other than those above generally settle
with physical delivery, or with an election of either physical delivery or cash
settlement and the Fund will segregate an amount of cash or liquid assets equal
to the full value of the option. OTC


                                       24
<PAGE>

options settling with physical delivery, or with an election of either physical
delivery or cash settlement, will be treated the same as other options settling
with physical delivery.

In the case of a futures contract or an option thereon, the Fund must deposit
initial margin and possible daily variation margin in addition to segregating
cash or liquid assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such liquid assets may consist of cash, cash
equivalents, liquid debt or equity securities or other acceptable assets. With
respect to swaps, the Fund will accrue the net amount of the excess, if any, of
its obligations over its entitlements with respect to each swap on a daily basis
and will segregate an amount of cash or liquid assets having a value equal to
the accrued excess. Caps, floors and collars require segregation of assets with
a value equal to the Fund's net obligation, if any.

Strategic Transactions may be covered by other means when consistent with
applicable regulatory policies. The Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, the Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating cash or liquid assets if the
Fund held a futures or forward contract, it could purchase a put option on the
same futures or forward contract with a strike price as high or higher than the
price of the contract held. Other Strategic Transactions may also be offset in
combinations. If the offsetting transaction terminates at the time of or after
the primary transaction no segregation is required, but if it terminates prior
to such time, cash or liquid assets equal to any remaining obligation would need
to be segregated.

Combined Transactions. The Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Advisor or subadvisor, it is in the best interests of the Fund to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Advisor's or subadvisor's judgment that the combined
strategies will reduce risk or otherwise more effectively achieve the desired
portfolio management goal, it is possible that the combination will instead
increase such risks or hinder achievement of the portfolio management objective.

Supranational Entities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel Community, The
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational entities are backed by the guarantee of one or more foreign
governmental parties which sponsor the entity.

Warrants. The holder of a warrant has the right, until the warrant expires, to
purchase a given number of shares of a particular issuer at a specified price.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move, however, in tandem with the prices of the underlying
securities and are, therefore, considered speculative investments. Warrants pay
no dividends and confer no rights other than a purchase option. Thus, if a
warrant held by the Fund were not exercised by the date of its expiration, the
Fund would lose the entire purchase price of the warrant.

When-Issued Securities. The Fund may from time to time purchase equity and debt
securities on a "when-issued," "delayed delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
securities takes place at a later date. During the period between purchase and
settlement, no payment is made by the Fund to the issuer and no interest accrues
to the Fund. When the Fund purchases such securities, it immediately assumes the
risks of ownership, including the risk of price fluctuation. Failure to deliver
a security purchased on this basis may result in a loss or missed opportunity to
make an alternative investment.


                                       25
<PAGE>

To the extent that assets of the Fund are held in cash pending the settlement of
a purchase of securities, the Fund would earn no income. While such securities
may be sold prior to the settlement date, the Fund intends to purchase them with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
security on this basis, it will record the transaction and reflect the value of
the security in determining its net asset value. The market value of the
securities may be more or less than the purchase price. The Fund will segregate
cash or liquid assets at least equal in value to commitments for such
securities.

Zero Coupon Securities. The Fund may invest in zero coupon securities which pay
no cash income and are sold at substantial discounts from their value at
maturity. When held to maturity, their entire income, which consists of
accretion of discount, comes from the difference between the issue price and
their value at maturity. The effect of owning instruments which do not make
current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount accretion during the
life of the obligation. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest distributions at a rate as high
as the implicit yield on the zero coupon bond, but at the same time eliminates
any opportunity to reinvest earnings at higher rates. For this reason, zero
coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than those of comparable securities
that pay interest currently, which fluctuation is greater as the period to
maturity is longer. Zero coupon securities which are convertible into common
stock offer the opportunity for capital appreciation (or depreciation) as
increases (or decreases) in market value of such securities closely follow the
movements in the market value of the underlying common stock. Zero coupon
convertible securities generally are expected to be less volatile than the
underlying common stocks, as they usually are issued with maturities of 15 years
or less and are issued with options and/or redemption features exercisable by
the holder of the obligation entitling the holder to redeem the obligation and
receive a defined cash payment.

Portfolio Holdings Information

In addition to the public disclosure of Fund portfolio holdings through required
Securities and Exchange Commission ("SEC") quarterly filings, the Fund may make
its portfolio holdings information publicly available on the DWS Funds' Web site
as described in the Fund's prospectus. The Fund does not disseminate non-public
information about portfolio holdings except in accordance with policies and
procedures adopted by the Fund.

The Fund's procedures permit non-public portfolio holdings information to be
shared with Deutsche Asset Management and its affiliates (collectively "DeAM"),
subadvisors, if any, custodians, independent registered public accounting firms,
attorneys, officers and directors and each of their respective affiliates and
advisers who require access to this information to fulfill their duties to the
Fund and are subject to the duties of confidentiality, including the duty not to
trade on non-public information, imposed by law or contract, or by the Fund's
procedures. This non-public information may also be disclosed, subject to the
requirements described below, to securities lending agents, financial printers,
proxy voting firms, mutual fund analysts and rating and tracking agencies, or to
shareholders in connection with in-kind redemptions (collectively, "Authorized
Third Parties").

Prior to any disclosure of the Fund's non-public portfolio holdings information
to Authorized Third Parties, a person authorized by the Fund's Directors must
make a good faith determination in light of the facts then known that the Fund
has a legitimate business purpose for providing the information, that the
disclosure is in the best interest of the Fund, and that the recipient assents
or otherwise has a duty to keep the information confidential and to not trade
based on the information received while the information remains non-public. No
compensation is received by the Fund or DeAM for disclosing non-public holdings
information. Periodic reports regarding these procedures will be provided to the
Fund's Directors.

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing requirements.
Non-public portfolio holding information does not include portfolio
characteristics (other than holdings or subsets of holdings) about the Fund and
information derived therefrom, including, but not limited to, how the Fund's
investments are divided among various sectors, industries, countries, value and
growth stocks, bonds, currencies and cash, types of bonds, bond maturities,
duration, bond coupons and bond credit quality ratings so long as the Fund's
holdings could not be derived from such information.



                                       26
<PAGE>

Registered investment companies that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies, and neither DeAM nor the
Trust's Directors exercise control over such policies. In addition, separate
account clients of DeAM have access to their portfolio holdings and are not
subject to the Fund's portfolio holdings disclosure policy. The portfolio
holdings of some of the funds sub-advised by DeAM and some of the separate
accounts managed by DeAM may substantially overlap with the portfolio holdings
of the Fund.

DeAM also manages certain unregistered commingled trusts and creates model
portfolios, the portfolio holdings of which may substantially overlap with the
portfolio holdings of the Fund. To the extent that investors in these commingled
trusts or recipients of model portfolio holdings information may receive
portfolio holdings information of their trust or of a model portfolio on a
different basis from that on which Fund portfolio holdings information is made
public, DeAM has implemented procedures reasonably designed to encourage such
investors and recipients to keep such information confidential, and to prevent
those investors from trading on the basis of non-public holdings information.

There is no assurance that the Fund's policies and procedures with respect to
the disclosure of portfolio holdings information will protect the Fund from the
potential misuse of portfolio holdings information by those in possession of
that information.

                             MANAGEMENT OF THE FUND

Investment Advisor

Deutsche Investment Management Americas Inc. ("DIMA"), which is part of Deutsche
Asset Management ("DeAM"), is the investment advisor for the Fund. Under the
supervision of the Board of Trustees of the Trust, DIMA, with headquarters at
345 Park Avenue, New York, New York 10154, or the subadvisor makes the Fund's
investment decisions, buys and sells securities for the Fund and conducts
research that leads to these purchase and sale decisions. The Advisor manages
the Fund's daily investment and business affairs subject to the policies
established by the Trust's Board of Trustees. DIMA and its predecessors have
more than 80 years of experience managing mutual funds. DIMA provides a full
range of investment advisory services to institutional and retail clients. The
Advisor is also responsible for selecting brokers and dealers and for
negotiating brokerage commissions and dealer charges.

DeAM is the marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing expertise and resources, including hundreds of portfolio managers
and analysts and an office network that reaches the world's major investment
centers. This well-resourced global investment platform brings together a wide
variety of experience and investment insight, across industries, regions, asset
classes and investing styles. DIMA is an indirect, wholly owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment management,
mutual fund, retail, private and commercial banking, investment banking and
insurance. The term "DWS Scudder" is the designation given to the products and
services provided by DIMA and its affiliates to the DWS Mutual Funds.

Pursuant to an amended and restated Investment Management Agreement between the
Fund and DIMA (the "Investment Management Agreement"), the Advisor provides
continuing investment management of the assets of the Fund. In addition to the
investment management of the assets of the Fund, the Advisor determines the
investments to be made for the Fund, including what portion of its assets remain
uninvested in cash or cash equivalents, and with whom the orders for investments
are placed, consistent with the Fund's policies as stated in its Prospectus and
SAI, or as adopted by the Fund's Board. The Advisor will also monitor, to the
extent not monitored by the Fund's administrator or other agent, the Fund's
compliance with its investment and tax guidelines and other compliance policies.
The Investment Management Agreement was last approved by the Board on September
18, 2007 and became effective on October 1, 2007.

The Advisor provides assistance to the Fund's Board in valuing the securities
and other instruments held by the Fund, to the extent reasonably required by
valuation policies and procedures that may be adopted by the Fund.

                                       27
<PAGE>

Pursuant to the Investment Management Agreement, (unless otherwise provided in
the agreement or as determined by the Fund's Board and to the extent permitted
by applicable law), the Advisor pays the compensation and expenses of all the
Board members, officers, and executive employees of the Fund, including the
Fund's share of payroll taxes, who are affiliated persons of the Advisor.

The Investment Management Agreement provides that the Fund is generally
responsible for expenses that include: fees payable to the Advisor; outside
legal, accounting or auditing expenses, including with respect to expenses
related to negotiation, acquisition or distribution of portfolio investments;
maintenance of books and records that are maintained by the Fund, the Fund's
custodian, or other agents of the Fund; taxes and governmental fees; fees and
expenses of the Fund's accounting agent, custodian, sub-custodians,
depositories, transfer agents, dividend reimbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities or other
instruments of the Fund; and litigation expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.

The Investment Management Agreement allows the Advisor to delegate any of its
duties under the Agreement to a subadvisor, subject to a majority vote of the
Board of the Fund, including a majority of the Board who are not interested
persons of the Fund, and, if required by applicable law, subject to a majority
vote of the Fund's shareholders.

The Investment Management Agreement provides that the Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with matters to which the agreement relates, except a
loss resulting from willful malfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless disregard
by the Advisor of its obligations and duties under the agreement. The Investment
Management Agreement may be terminated at any time, without payment of penalty,
by either party or by vote of a majority of the outstanding voting securities of
the Fund on 60 days' written notice.

Effective October 1, 2007, under the amended and restated Investment Management
Agreement with the Advisor, the Fund pays a monthly investment management fee at
the annual rate of 0.885% of the first $500,000,000 of the average daily net
assets and 0.835% of such net assets in excess of $500,000,000, computed and
accrued daily and payable monthly.


The advisory fees paid by the Fund for its last three fiscal years are shown in
the table below.

<TABLE>
<CAPTION>
Fund                                  Fiscal 2007*       Fiscal 2006*        Fiscal 2005*
----                                  ------------       ------------        ------------

<S>                                    <C>                 <C>                <C>
DWS Gold & Precious Metals Fund        $6,130,900          $5,938,197         $4,728,588
</TABLE>

* Prior to July 1, 2006, these fees included an administrative service fee.

Through September 30, 2008, the Advisor has contractually agreed to waive all or
a portion of its fees and reimburse or pay operating expenses of the Fund so
that total operating expenses will not exceed 1.48% and 2.23% for Class A and
Class B shares, respectively, excluding certain expenses such as extraordinary
expense, taxes, brokerage, interest and expenses of acquired funds (underlying
funds). Although there can be no assurance that the current waiver/expense
reimbursement arrangement will be maintained beyond September 30, 2008, the
Advisor has committed to review the continuance of waiver/expense reimbursement
arrangements by September 30, 2008.

In addition, through September 30, 2008, the Advisor has contractually agreed to
waive all or a portion of its fees and reimburse or pay operating expenses of
the Fund so that total operating expenses will not exceed 1.23% for
Institutional Class shares, excluding certain expenses such as extraordinary
expenses, taxes, brokerage, interest and expenses of acquired funds (underlying
funds). Although there can be no assurance that the current waiver/expense
reimbursement arrangement will be maintained beyond September 30, 2008, the
Advisor has committed to review the continuance of waiver/ expense reimbursement
arrangements by September 30, 2008.

                                       28
<PAGE>

Under a separate agreement between Deutsche Bank AG and the Fund, Deutsche Bank
AG has granted a license to the Fund to utilize the trademark "DWS."

In reviewing the terms of each Agreement and in discussions with the Advisor
concerning such Agreement, the Directors of the Corporation who are not
"interested persons" of the Advisor are represented by independent counsel at
the Fund's expense.

The Agreement provides that the Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with matters to which the Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Advisor in
the performance of its duties or from reckless disregard by the Advisor of its
obligations and duties under the Agreement.

Officers and employees of the Advisor from time to time may have transactions
with various banks, including the Fund's custodian bank. It is the Advisor's
opinion that the terms and conditions of those transactions which have occurred
were not influenced by existing or potential custodial or other Fund
relationships.

The Advisor may serve as advisor to other funds with investment objectives and
policies similar to those of the Fund that may have different distribution
arrangements or expenses, which may affect performance.

None of the officers or Directors of the Corporation may have dealings with the
Fund as principals in the purchase or sale of securities, except as individual
subscribers to or holders of shares of the Fund.

The term "DWS Scudder" is the designation given to the services provided by the
Advisor and its affiliates to DWS Mutual Funds.

The Advisor may enter into arrangements with affiliates and third party service
providers to perform various administrative, back-office and other services
relating to client accounts. Such service providers may be located in the US or
in non-US jurisdictions.

In addition, the Board and shareholders recently approved a new subadvisor
approval policy for the Fund (the "Subadvisor Approval Policy"). The Subadvisor
Approval Policy permits the Advisor, subject to the approval of the Board,
including a majority of its independent board members, to appoint and replace
subadvisors and to amend sub-advisory contracts without obtaining shareholder
approval. Under the Subadvisor Approval Policy, the Board, including its
independent board members, will continue to evaluate and approve all new
sub-advisory contracts between the Advisor and any subadvisor, as well as all
changes to any existing sub-advisory contract. The Fund cannot implement the
Subadvisor Approval Policy without the SEC either adopting revisions to current
rules (as it proposed to do in October 2003) or granting the Fund exemptive
relief from existing rules. The Fund and the Advisor would be subject to certain
conditions imposed by the SEC (and certain conditions that may be imposed in the
future within either exemptive relief or a rule) to ensure that the interests of
the Fund and its shareholders are adequately protected whenever the Advisor acts
under the Subadvisor Approval Policy, including any shareholder notice
requirements.

Subadvisor

Deutsche Investments Australia Limited ("DIAL"), Level 16, 126 Phillip Street,
Sydney, NSW 200, Australia, an affiliate of the Advisor, is the subadvisor for
the DWS Gold & Precious Metals Fund. DIAL serves as subadvisor pursuant to the
terms of a Research and Advisory Agreement between it and the Advisor. DIAL has
served as subadvisor to the Fund since March 2001. On April 5, 2002, DIAL
changed its name from Scudder Investments Australia Limited.

Under the terms of the Research and Advisory Agreement, DIAL manages the
investment and reinvestment of the Fund's portfolio and will provide such
investment advice, research and assistance as the Advisor may, from time to
time, reasonably request.

                                       29
<PAGE>

The Research and Advisory Agreement provides that DIAL will not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which the Research and Advisory Agreement relates,
except a loss resulting from willful misconduct, bad faith or gross negligence
on the part of DIAL in the performance of its duties or from reckless disregard
by DIAL of its obligations and duties under the Research and Advisory Agreement.

The Research and Advisory Agreement was last approved by the Directors of DWS
Gold & Precious Metals Fund on September 18, 2007 and remains in effect until
September 30, 2007 unless sooner terminated or not annually approved as
described below. The Research and Advisory Agreement had an initial term ending
September 30, 2004 and shall continue in effect from year to year thereafter,
but only as long as such continuance is specifically approved at least annually
(a) by a majority of the Directors of the Corporation who are not parties to
such agreement or interested persons of any such party except in their capacity
as Directors of the Corporation, and (b) by the shareholders or the Board of
Directors of the Corporation. The Research and Advisory Agreement may be
terminated at any time upon 60 days' notice by the Advisor, by the Board of
Directors of the Corporation or by majority vote of the outstanding shares of
the Fund and will terminate automatically upon assignment or upon termination of
the Fund's Agreement. In connection with their approval of the Research and
Advisory Agreement with DIAL, the Directors considered substantially the same
factors as those considered in approving the continuation of the investment
management agreement, to the extent applicable. The Advisor compensates DIAL out
of the management fee it receives from the Fund.

The table below shows the total subadvisory fees paid by the Advisor to DIAL for
the last three fiscal periods.

<TABLE>
<CAPTION>
Fund                                            Fiscal 2007            Fiscal 2006               Fiscal 2005
----                                            -----------            -----------               -----------

<S>                                             <C>                     <C>                      <C>
DWS Gold & Precious Metals Fund                 $2,824,592              $2,841,608               $2,199,282
</TABLE>

Compensation of Portfolio Managers

Portfolio managers are eligible for total compensation comprised of base salary
and discretionary incentive compensation.

Base Salary - Base salary generally represents a smaller percentage of portfolio
managers' total compensation than discretionary incentive compensation. Base
salary is linked to job function, responsibilities and financial services
industry peer comparison through the use of extensive market data surveys.

Discretionary Incentive Compensation - Generally, discretionary incentive
compensation comprises a greater proportion of total compensation as a portfolio
manager's seniority and compensation levels increase. Discretionary incentive
compensation is determined based on an analysis of a number of factors,
including among other things, the performance of Deutsche Bank, the performance
of the Asset Management division, and the employee's individual contribution. In
evaluating individual contribution, management will consider a combination of
quantitative and qualitative factors. A portion of the portfolio manager's
discretionary incentive compensation may be delivered in long-term equity
programs (usually in the form or Deutsche Bank equity) (the "Equity Plan"). Top
performing portfolio managers may earn discretionary incentive compensation that
is a multiple of their base salary.

o        The quantitative analysis of a portfolio manager's individual
         performance is based on, among other factors, performance of all of the
         accounts managed by the portfolio manager (which includes the fund and
         any other accounts managed by the portfolio manager) over a one-,
         three-, and five-year period relative to the appropriate Morningstar
         and Lipper peer group universes and/or benchmark index(es) with respect
         to each account. Additionally, the portfolio manager's
         retail/institutional asset mix is weighted, as appropriate for
         evaluation purposes. Generally the benchmark index used is a benchmark
         index set forth in the fund's prospectus to which the fund's
         performance is compared. Additional or different appropriate peer group
         or benchmark indices may also be used. Primary weight is given to
         pre-tax portfolio performance over three-year and five-year time
         periods (adjusted as appropriate if the portfolio manager has served
         for less than


                                       30
<PAGE>

         five years) with lesser consideration given to portfolio performance
         over a one-year period. The increase or decrease in a fund's assets due
         to the purchase or sale of fund shares is not considered a material
         factor.

o        The qualitative analysis of a portfolio manager's individual
         performance is based on, among other things, the results of an annual
         management and internal peer review process, and management's
         assessment of overall portfolio manager contributions to investor
         relations, the investment process and overall performance (distinct
         from fund and other account performance). Other factors, including
         contributions made to the investment team, as well as adherence to
         Compliance Policies and Procedures, Risk Management procedures, the
         firm's Code of Ethics and "living the values" of the Advisor are also
         factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining discretionary incentive compensation that the qualitative
portion.

Certain portfolio managers may also participate in the Equity Plan. The amount
of equity awarded under the long-term equity programs is generally based on the
individual's total compensation package and may comprise from 0% to 30% of the
total compensation award. As discretionary incentive compensation increases, the
percentage of compensation awarded in Deutsche Bank equity also increases.
Portfolio managers may receive a portion of their equity compensation in the
form of shares in the proprietary mutual funds that they manage or support.

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned beneficially and of
record by each member of the Fund's portfolio management team in the Fund as
well as in all DWS Funds as a group (i.e. those funds advised by Deutsche Asset
Management or its affiliates), including investments by their immediate family
members sharing the same household and amounts invested through retirement and
deferred compensation plans. This information is provided as of the Fund's most
recent fiscal year end.

<TABLE>
<CAPTION>
                                                    Dollar Range of                 Dollar Range of All DWS
Name of Portfolio Manager                          Fund Shares Owned                   Fund Shares Owned
-------------------------                          -----------------                   -----------------
<S>                                                        <C>                                <C>
Euan Leckie                                                $0                             $1 - 10,001
Greg Foulis                                                $0                                  $0

Because the fund's portfolio managers are not resident in the US, they generally
do not invest in US registered investment companies, such as the Fund, on
account of US tax and other regulatory limitations applicable to foreign
investors.

Conflicts of Interest

In addition to managing the assets of the Fund, the Fund's portfolio managers
may have responsibility for managing other client accounts of the Advisor or its
affiliates. The tables below show, for each portfolio manager, the number and
asset size of (1) SEC registered investment companies (or series thereof) other
than the Fund, (2) pooled investment vehicles that are not registered investment
companies and (3) other accounts (e.g., accounts managed for individuals or
organizations) managed by each portfolio manager. Total assets attributed to
each portfolio manager in the tables below include total assets of each account
managed by them, although the manager may only manage a portion of such
account's assets. The tables also show the number of performance based fee
accounts, as well as the total assets of the accounts for which the advisory fee
is based on the performance of the account. This information is provided as of
the Fund's most recent fiscal year end.


                                       31
<PAGE>

Other SEC Registered Investment Companies Managed:

                                       Number of        Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with           Performance-Based
Name of Portfolio Manager              Companies           Companies       Performance-Based Fee     Fee Accounts
-------------------------              ---------           ---------       ---------------------     ------------

Euan Leckie                                0                  $0                     0                    $0
Greg Foulis                                0                  $0                     0                    $0

Other Pooled Investment Vehicles Managed:

                                                                              Number of Pooled
                                      Number of                              Investment Vehicle
                                       Pooled          Total Assets of         Accounts with        Total Assets of
                                     Investment       Pooled Investment      Performance-Based    Performance-Based
Name of Portfolio Manager             Vehicles             Vehicles                 Fee              Fee Accounts
-------------------------             --------             --------                 ---              ------------

Euan Leckie                             2                $34,758,916                  2               $34,758,916
Greg Foulis                             2                $34,758,916                  2               $34,758,916

Other Accounts Managed:

                                                                              Number of Other
                                                                               Accounts with      Total Assets of
                                      Number of     Total Assets of Other   Performance-Based      Performance-
Name of Portfolio Manager          Other Accounts          Accounts                 Fee          Based Fee Accounts
-------------------------          --------------          --------                 ---          ------------------

Euan Leckie                               0                   $0                     0                   $0
Greg Foulis                               0                   $0                     0                   $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Fund. The Advisor has in place a Code of Ethics
that is designed to address conflicts of interest and that, among other things,
imposes restrictions on the ability of portfolio managers and other "access
persons" to invest in securities that may be recommended or traded in the Fund
and other client accounts.

Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to
more than one fund or account, including the following:

o        Certain investments may be appropriate for the Fund and also for other
         clients advised by the Advisor, including other client accounts managed
         by the Fund's portfolio management team. Investment decisions for the
         Fund and other clients are made with a view to achieving their
         respective investment objectives and after consideration of such
         factors as their current holdings, availability of cash for investment
         and the size of their investments generally. A particular security may
         be bought or sold for only one client or in different amounts and at
         different times for more than one but less than all clients. Likewise,
         because clients of the Advisor may have differing investment
         strategies, a particular security may be bought for one or more clients
         when one or more other clients are selling the security. The investment
         results achieved for the Fund may differ from the results achieved for
         other clients of the Advisor. In addition, purchases or sales of the
         same security may be made for two or more clients on the same day. In
         such event, such transactions will be allocated among the clients in a
         manner believed by the Advisor to be most equitable to


                                       32
<PAGE>

         each client, generally utilizing a pro rata allocation methodology. In
         some cases, the allocation procedure could potentially have an adverse
         effect or positive effect on the price or amount of the securities
         purchased or sold by the Fund. Purchase and sale orders for the Fund
         may be combined with those of other clients of the Advisor in the
         interest of achieving the most favorable net results to the Fund and
         the other clients.

o        To the extent that a portfolio manager has responsibilities for
         managing multiple client accounts, a portfolio manager will need to
         divide time and attention among relevant accounts. The Advisor attempts
         to minimize these conflicts by aligning its portfolio management teams
         by investment strategy and by employing similar investment models
         across multiple client accounts.

o        In some cases, an apparent conflict may arise where the Advisor has an
         incentive, such as a performance-based fee, in managing one account and
         not with respect to other accounts it manages. The Advisor will not
         determine allocations based on whether it receives a performance-based
         fee from the client. Additionally, the Advisor has in place supervisory
         oversight processes to periodically monitor performance deviations for
         accounts with like strategies.

o        The Advisor and its affiliates and the investment team of the Fund may
         manage other mutual funds and separate accounts on a long-short basis.
         The simultaneous management of long and short portfolios creates
         potential conflicts of interest including the risk that short sale
         activity could adversely affect the market value of the long
         positions(and vice versa), the risk arising from sequential orders in
         long and short positions, and the risks associated with receiving
         opposing orders at the same time. The Advisor has adopted procedures
         that it believes are reasonably designed to mitigate these potential
         conflicts of interest. Included in these procedures are specific
         guidelines developed to ensure fair and equitable treatment for all
         clients whose accounts are managed by each Fund's portfolio management
         team. The Advisor and the portfolio management team have established
         monitoring procedures, a protocol for supervisory reviews, as well as
         compliance oversight to ensure that potential conflicts of interest
         relating to this type of activity are properly addressed.

The Advisor is owned by Deutsche Bank AG, a multi-national financial services
company. Therefore, the Advisor is affiliated with a variety of entities that
provide, and/or engage in commercial banking, insurance, brokerage, investment
banking, financial advisory, broker-dealer activities (including sales and
trading), hedge funds, real estate and private equity investing, in addition to
the provision of investment management services to institutional and individual
investors. Since Deutsche Bank AG, its affiliates, directors, officers and
employees (the "Firm") are engaged in businesses and have interests other than
managing asset management accounts, such other activities involve real,
potential or apparent conflicts of interest. These interests and activities
include potential advisory, transactional and financial activities and other
interests in securities and companies that may be directly or indirectly
purchased or sold by the Firm for its clients' advisory accounts. These are
considerations of which advisory clients should be aware and which may cause
conflicts that could be to the disadvantage of the Advisor's advisory clients.
The Advisor has instituted business and compliance policies, procedures and
disclosures that are designed to identify, monitor and mitigate conflicts of
interest and, as appropriate, to report them to the Fund's Board.

Codes of Ethics

The Fund, the Advisor, the subadvisor and the Fund's principal underwriter have
each adopted codes of ethics under Rule 17j-1 under the 1940 Act. Board members,
officers of the Corporation and employees of the Advisor and principal
underwriter are permitted to make personal securities transactions, including
transactions in securities that may be purchased or held by the Fund, subject to
requirements and restrictions set forth in the applicable Code of Ethics. The
Advisor's, the subadvisor's Code of Ethics contains provisions and requirements
designed to identify and address certain conflicts of interest between personal
investment activities and the interests of the Fund. Among other things, the
Advisor's, the subadvisor's Code of Ethics prohibits certain types of
transactions absent prior approval, imposes time periods during which personal
transactions may not be made in certain securities, and requires the submission
of duplicate broker confirmations and quarterly reporting of securities
transactions. Additional restrictions apply to portfolio managers, traders,
research analysts and others involved in the investment


                                       33
<PAGE>

advisory process. Exceptions to these and other provisions of the Advisor's and
the subadvisor's Code of Ethics may be granted in particular circumstances after
review by appropriate personnel.

Regulatory Matters and Legal Proceedings

On December 21, 2006, Deutsche Asset Management ("DeAM") settled proceedings
with the Securities and Exchange Commission ("SEC") and the New York Attorney
General on behalf of Deutsche Asset Management, Inc. ("DAMI") and DIMA, the
investment advisors to many of the DWS Scudder funds, regarding allegations of
improper trading of fund shares at DeAM and at the legacy Scudder and Kemper
organizations prior to their acquisition by DeAM in April 2002. These regulators
alleged that although the prospectuses for certain funds in the regulators' view
indicated that the funds did not permit market timing, DAMI and DIMA breached
their fiduciary duty to those funds in that their efforts to limit trading
activity in the funds were not effective at certain times. The regulators also
alleged that DAMI and DIMA breached their fiduciary duty to certain funds by
entering into certain market timing arrangements with investors. These trading
arrangements originated in businesses that existed prior to the currently
constituted DeAM organization, which came together as a result of various
mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the
arrangements were terminated prior to the start of the regulatory investigations
that began in the summer of 2003. No current DeAM employee approved these
trading arrangements. Under the terms of the settlements, DAMI and DIMA neither
admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.


                                       34
<PAGE>

On September 28, 2006, the SEC and the National Association of Securities
Dealers ("NASD") (now known as FINRA) announced final agreements in which
Deutsche Investment Management Americas Inc. ("DIMA"), Deutsche Asset
Management, Inc. ("DAMI") and Scudder Distributors, Inc. ("DWS-SDI") (now known
as DWS Scudder Distributors, Inc.) settled administrative proceedings regarding
disclosure of brokerage allocation practices in connection with sales of the
Scudder Funds' (now known as the DWS Scudder Funds) shares during 2001-2003. The
agreements with the SEC and NASD are reflected in orders which state, among
other things, that DIMA and DAMI failed to disclose potential conflicts of
interest to the funds' Boards and to shareholders relating to DWS-SDI's use of
certain funds' brokerage commissions to reduce revenue sharing costs to
broker-dealer firms with whom it had arrangements to market and distribute
Scudder Fund shares. These directed brokerage practices were discontinued in
October 2003.

Under the terms of the settlements, in which DIMA, DAMI and DWS-SDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DWS-SDI
agreed to pay disgorgement, prejudgment interest and civil penalties in the
total amount of $19.3 million. The portion of the settlements distributed to the
funds was approximately $17.8 million and was paid to the funds as prescribed by
the settlement orders based upon the amount of brokerage commissions from each
fund used to satisfy revenue sharing agreements with broker-dealers who sold
fund shares.

As part of the settlements, DIMA, DAMI and DWS-SDI also agreed to implement
certain measures and undertakings relating to revenue sharing payments including
making additional disclosures in the funds' Prospectuses or Statements of
Additional Information, adopting or modifying relevant policies and procedures
and providing regular reporting to the fund Boards.

Additional information announced by DeAM regarding the terms of the settlements
is available at www.dws-scudder.com/regulatory_settlements.

The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.

                             FUND SERVICE PROVIDERS

Administrator

For the period from December 29, 2000 to April 1, 2004, the Fund operated under
an administrative services agreement with the Advisor (each an "Administrative
Agreement") pursuant to which the Advisor provided or paid others to provide
substantially all of the administrative services required by the Fund (other
than those provided by the Advisor under its investment management agreement
with the Fund, as described above) in exchange for the payment by the Fund of an
administrative services fee (the "Administrative Fee").

The Administrative Agreement for the Fund was terminated effective March 31,
2004. For periods subsequent to April 1, 2004 until May 31, 2006, the Fund
directly bore the cost of those expenses formerly covered under the
Administrative Agreement. Without the Administrative Agreement, fees paid by
each class of shares for administrative services formerly paid and provided
pursuant to the Administrative Agreement may have been higher.

                                       35
<PAGE>

Certain expenses of the Fund were not borne by the Advisor under the
Administrative Agreement, such as taxes, brokerage, interest commitment fees,
and extraordinary expenses; and the fees and expenses of the Independent
Directors (including the fees and expenses of their independent counsel). In
addition, the Fund continued to pay the fees required by its investment
management agreement with the Advisor.

Effective June 1, 2006, the Fund entered into an administrative services
agreement with the Advisor (the "Administrative Services Agreement"), pursuant
to which the Advisor (or the "Administrator") provides administrative services
to a Fund including, among others, providing the Fund with personnel, preparing
and making required filings on behalf of a Fund, maintaining books and records
for the Fund, and monitoring the valuation of Fund securities. For all services
provided under the Administrative Services Agreement, the Fund pays the Advisor
a fee, computed daily and paid monthly, of 0.100% of the Fund's average daily
net assets.

Under the Administrative Services Agreement, the Advisor is obligated on a
continuous basis to provide such administrative services as the Board of DWS
Mutual Funds, Inc. reasonably deems necessary for the proper administration of
the Fund. The Advisor provides the Fund with personnel; arranges for the
preparation and filing of the Fund's tax returns; prepares and submits reports
and meeting materials to the Board and the Fund's shareholders; prepares and
files updates to the Fund's prospectuses and statements of additional
information as well as other reports required to be filed by the SEC; maintains
the Fund's records; provides the Fund with office space, equipment and services;
supervises, negotiates the contracts of and monitors the performance of third
parties contractors; oversees the tabulation of proxies; monitors the valuation
of portfolio securities and monitors compliance with Board-approved valuation
procedures; assists in establishing the accounting and tax policies of the Fund;
assists in the resolution of accounting issues that may arise with respect to
the Funds; establishes and monitors the Fund's operating expense budgets;
reviews and processes the Fund's bills; assists in determining the amount of
dividends and distributions available to be paid by the Fund, prepares and
arranges dividend notifications and provides information to agents to effect
payments thereof; provides to the Board periodic and special reports; provides
assistance with investor and public relations matters; and monitors the
registration of shares under applicable federal and state law. The Advisor also
performs certain fund accounting services under the Administrative Services
Agreement. The Administrative Services Agreement provides that the Advisor will
not be liable under the Administrative Services Agreement except for willful
misfeasance, bad faith or negligence in the performance of its duties or from
the reckless disregard by it of its duties and obligations thereunder.

For the fiscal year ended October 31, 2007, the Advisor received an
Administrative Fee of $682,147. For the period from July 1, 2006 through October
31, 2006, the Advisor received an Administrative Fee of $213,870.

The fees paid by the Fund to the Advisor pursuant to the Administrative Services
Agreement are reduced by the amount of any credits received from a Fund's
custodian for cash balances.

Pursuant to an agreement between the Administrator and State Street Bank and
Trust Company ("SSB"), the Administrator has delegated certain administrative
functions to SSB. The costs and expenses of such delegation are borne by the
Administrator, not by the Fund.

Distributor

Pursuant to separate Underwriting and Distribution Services Agreements (each a
"Distribution Agreement"), DWS Scudder Distributors, Inc. ("DWS-SDI"), 222 South
Riverside Plaza, Chicago, Illinois 60606, an affiliate of the Advisor, is the
principal underwriter and distributor for the Class A, Class B, Class C and
Institutional Class shares of the Fund and acts as agent of the Fund in the
continuous offering of its shares. The Distribution Agreements for the Fund,
dated April 5, 2002 were last approved by the Directors on September 18, 2007
for DWS Gold & Precious Metals Fund.

The Distribution Agreement continues from year to year only if its continuance
is approved for each class at least annually by a vote of the Board members of
the Fund, including the Directors who are not interested persons of the Fund and
who have no direct or indirect financial interest in the Distribution
Agreements.


                                       36
<PAGE>

The Distribution Agreement automatically terminates in the event of its
assignment and may be terminated for a class at any time without penalty by the
Fund or by DWS-SDI upon 60 days' notice. Termination by the Fund with respect to
a class may be by vote of (i) 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 Distribution Agreement, or (ii) a "majority of the outstanding
voting securities" of the class of the Fund, as defined under the 1940 Act. All
material amendments must be approved by the Board of Directors in the manner
described above with respect to the continuation of the Distribution Agreements.
The provisions concerning continuation, amendment and termination of a
Distribution Agreement are on a series by series and class by class basis.

DWS-SDI bears all of its expenses of providing services pursuant to the
Distribution Agreement, including the payment of any commissions. The Fund pays
the cost for the prospectus and shareholder reports to be typeset and printed
for existing shareholders, and DWS-SDI, as principal underwriter, pays for the
printing and distribution of copies thereof used in connection with the offering
of shares to prospective investors. DWS-SDI also pays for supplementary sales
literature and advertising costs. As indicated under "Purchase of Shares,"
DWS-SDI retains the sales charge upon the purchase of Class A shares and pays or
allows concessions or discounts to firms for the sale of the Fund's shares.
DWS-SDI receives no compensation from the Fund as principal underwriter for
Class A and Institutional shares. DWS-SDI receives compensation from the Fund as
principal underwriter for Class B and Class C shares.

Shareholder and administrative services are provided to the Fund on behalf of
Class A, Class B, Class C and Institutional Class shareholders under a
Shareholder Services Agreement (the "Services Agreement") with DWS-SDI. The
Services Agreement continues in effect from year to year so long as such
continuance is approved for the Fund at least annually by a vote of the Board of
the applicable Fund, including the Board members who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
Services Agreement. The Services Agreement automatically terminates in the event
of its assignment and may be terminated at any time without penalty by the Fund
or by DWS-SDI upon 60 days' notice. Termination with respect to the Class A, B
or C shares of the Fund may be by a vote of (i) the majority of the Board
members of the Fund who are not interested persons of the Fund and who have no
direct or indirect financial interest in the Services Agreement, or (ii) a
"majority of the outstanding voting securities" of the Class A, B, C or
Institutional shares, as defined under the 1940 Act. The Services Agreement may
not be amended for a class to increase materially the fee to be paid by the Fund
without approval of a majority of the outstanding voting securities of such
class of the Fund, and all material amendments must in any event be approved by
the Board of Directors in the manner described above with respect to the
continuation of the Services Agreement.

Under the Services Agreement, DWS-SDI may provide or appoint various
broker-dealer firms and other service or administrative firms ("firms") to
provide information and services to investors in the Fund. Typically, DWS-SDI
appoints firms that provide services and facilities for their customers or
clients who are investors in the Fund. Firms appointed by DWS-SDI provide such
office space and equipment, telephone facilities and personnel as is necessary
or beneficial for providing information and services to their clients. Such
services and assistance may include, but are not limited to, establishing and
maintaining accounts and records, processing purchase and redemption
transactions, answering routine inquiries regarding the Fund, providing
assistance to clients in changing dividend and investment options, account
designations and addresses and such other administrative services as may be
agreed upon from time to time and permitted by applicable statute, rule or
regulation.

DWS-SDI bears all of its expenses of providing those services pursuant to the
Services Agreement, including the payment of a service fee to firms (as defined
below). As indicated under each Rule 12b-1 Plan, as defined below, DWS-SDI
receives compensation from the Fund for its services under the Services
Agreement.

Rule 12b-1 Plans

The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (each a
"Rule 12b-1 Plan") that provides for fees payable as an expense of the Class B
shares and Class C shares that are used by DWS-SDI to pay for distribution
services for those classes. Pursuant to each Rule 12b-1 Plan, shareholder and
administrative services are provided to the applicable Fund on behalf of its
Class A, B and C shareholders under the Fund's Services


                                       37
<PAGE>

Agreement with DWS-SDI. Because 12b-1 fees are paid out of Fund assets on an
ongoing basis, they will, over time, increase the cost of an investment and may
cost more than other types of sales charges.

The Rule 12b-1 distribution plans for Class B and Class C shares provide
alternative methods for paying sales charges and may help funds grow or maintain
asset levels to provide operational efficiencies and economies of scale. Rule
12b-1 service plans provide compensation to DWS-SDI or intermediaries for
post-sales servicing. Since each Distribution Agreement provides for fees
payable as an expense of the Class B shares and the Class C shares that are used
by DWS-SDI to pay for distribution and services for those classes, the agreement
is approved and reviewed separately for the Class B shares and the Class C
shares in accordance with Rule 12b-1 under the 1940 Act, which regulates the
manner in which an investment company may, directly or indirectly, bear the
expenses of distributing its shares. The Distribution Agreement may not be
amended to increase the fee to be paid by the Fund with respect to a class
without approval by a majority of the outstanding voting securities of such
class of the Fund. Similarly, the Services Agreement is approved and reviewed
separately for the Class A shares, Class B shares and Class C shares in
accordance with Rule 12b-1.

If a Rule 12b-1 Plan is terminated in accordance with its terms, the obligation
of the Fund to make payments to DWS-SDI pursuant to the Rule 12b-1 Plan will
cease and the Fund will not be required to make any payments not previously
accrued past the termination date. Thus, there is no legal obligation for the
Fund to pay any expenses incurred by DWS-SDI other than fees previously accrued
and payable under a Rule 12b-1 Plan, if for any reason the Rule 12b-1 Plan is
terminated in accordance with its terms. Future fees under the Rule 12b-1 Plan
may or may not be sufficient to cover DWS-SDI for its expenses incurred. On the
other hand, under certain circumstances, DWS-SDI might collect in the aggregate
over certain periods more in fees under the Rule 12b-1 Plan than it has expended
over that same period in providing distribution services for the Fund. In
connection with Class B shares, for example, if shares of the Fund were to
appreciate (resulting in greater asset base against which Rule 12b-1 fees are
charged) and sales of the Fund's shares were to decline (resulting in lower
expenditures by DWS-SDI under the Rule 12b-1 Plan), fees payable could exceed
expenditures. This may also happen over certain periods shorter than the life of
the Rule 12b-1 Plan simply due to the timing of expenses incurred by DWS-SDI
that is not matched to the timing of revenues received (e.g., a sales commission
may be paid by DWS-SDI related to an investment in year 1, while the Rule 12b-1
fee to DWS-SDI related to that investment may accrue during year 1 through year
6 prior to conversion of the investment to Class A shares). As a result, if
DWS-SDI's expenses are less than the Rule 12b-1 fees, DWS-SDI will retain its
full fees and make a profit.

Class B and Class C Shares

Distribution Services. For its services under the Distribution Agreement,
DWS-SDI receives a fee from the Fund under its Rule 12b-1 Plan for Class B
shares, payable monthly, at the annual rate of 0.75% of average daily net assets
of the Fund attributable to its Class B shares. This fee is accrued daily as an
expense of Class B shares. DWS-SDI also receives any contingent deferred sales
charges paid with respect to Class B shares. DWS-SDI currently compensates firms
for sales of Class B shares at a commission rate of 3.75%.

For its services under the Distribution Agreement, DWS-SDI receives a fee from
the Fund under its Rule 12b-1 Plan for Class C shares, payable monthly, at the
annual rate of 0.75% of average daily net assets of the Fund attributable to
Class C shares. This fee is accrued daily as an expense of Class C shares.
DWS-SDI currently advances to firms the first year distribution fee at a rate of
0.75% of the purchase price of Class C shares. Effective January 1, 2006,
DWS-SDI no longer advances the first year distribution fee to firms for sales of
Class C shares to employer sponsored employee benefit plans using the OmniPlus
subaccount record keeping system made available through ADP, Inc. under an
alliance with DWS-SDI and its affiliates. For periods after the first year,
DWS-SDI currently pays firms for sales of Class C shares a distribution fee,
payable quarterly, at an annual rate of 0.75% of net assets attributable to
Class C shares maintained and serviced by the firm. This fee continues until
terminated by DWS-SDI or the applicable Fund. DWS-SDI also receives any
contingent deferred sales charges paid with respect to Class C shares.

                                       38
<PAGE>

Class A, Class B and Class C Shares

Shareholder Services. For its services under the Services Agreement, DWS-SDI
receives a shareholder services fee from the Fund under a Rule 12b-1 Plan,
payable monthly, at an annual rate of up to 0.25% of the average daily net
assets of Class A, B and C shares of that Fund.

With respect to Class A Shares of the Fund, DWS-SDI pays each firm a service
fee, payable quarterly, at an annual rate of up to 0.25% of the net assets in
Fund accounts that it maintains and services attributable to Class A Shares of
the Fund, commencing with the month after investment. With respect to Class B
and Class C Shares of the Fund, DWS-SDI currently advances to firms the
first-year service fee at a rate of up to 0.25% of the purchase price of such
shares. Effective January 1, 2006, DWS-SDI no longer advances the first year
service fee to firms for sales of Class C shares to employer sponsored employee
benefit plans using the OmniPlus subaccount record keeping system made available
through ADP, Inc. under an alliance with DWS-SDI and its affiliates. For periods
after the first year, DWS-SDI currently intends to pay firms a service fee at a
rate of up to 0.25% (calculated monthly and paid quarterly) of the net assets
attributable to Class B and Class C shares of the Fund maintained and serviced
by the firm. Firms to which service fees may be paid include affiliates of
DWS-SDI. In addition DWS-SDI may, from time to time, pay certain firms from its
own resources additional amounts for ongoing administrative services and
assistance provided to their customers and clients who are shareholders of the
Fund.

DWS-SDI also may provide some of the above services and may retain any portion
of the fee under the Services Agreement not paid to firms to compensate itself
for shareholder or administrative functions performed for the Fund. Currently,
the shareholder services fee payable to DWS-SDI is payable at an annual rate of
up to 0.25% of net assets based upon Fund assets in accounts for which a firm
provides administrative services and at the annual rate of 0.15% of net assets
based upon Fund assets in accounts for which there is no firm of record (other
than DWS-SDI) listed on the Fund's records. The effective shareholder services
fee rate to be charged against all assets of the Fund while this procedure is in
effect will depend upon the proportion of Fund assets that is held in accounts
for which a firm of record provides shareholder services. The Board of the Fund,
in its discretion, may approve basing the fee to DWS-SDI at the annual rate of
0.25% on all Fund assets in the future.

Expenses of the Fund paid in connection with the Rule 12b-1 Plans for each class
of shares are set forth below. A portion of the marketing and sales and
operating expenses shown below could be considered overhead expenses.


                                       39
<PAGE>

<TABLE>
<CAPTION>
                                                12b-1 Compensation to Underwriter for the
                                              Twelve-Month Period Ended September 30, 2007
                                              --------------------------------------------




                                              12b-1           12b-1
                                           Distribution    Shareholder     12b-1 Compensation
                                               Fees       Services Fees      Paid to Firms
                                               ----       -------------      -------------
<S>                            <C>                   <C>      <C>                     <C>
DWS Gold & Precious Metals   Class A                  $0       $472,941                $447,202
Fund
                             Class B            $351,786       $113,587                $236,992
                             Class C            $766,051       $248,592              $1,126,701





                                                         Other Expenses Paid by Underwriter for the
                                                        Twelve-Month Period Ended September 30, 2007
                                                        --------------------------------------------

                                            Advertising,
                                               Sales,
                                             Literature
                                                and                        Marketing
                                            Promotional     Prospectus     and Sales     Postage and   Imputed
                                             Materials       Printing       Expenses       Mailing      Interest
                                             ---------       --------       --------       -------      --------

DWS Gold & Precious Metals   Class A             $504,469        $43,954      $108,882        $27,639          $0
Fund
                             Class B              $31,985         $2,723        $7,306         $2,355     $89,740
                             Class C              $90,094         $7,683       $19,716         $6,171          $0



                                       40
<PAGE>


The following table shows, for Class A shares, the aggregate amount of
underwriting commissions paid to DWS-SDI, the amount in commissions it paid out
to brokers and the amount of underwriting commissions retained by DWS-SDI.

                                           Aggregate       Aggregate                                    Aggregate
                                             Sales        Commissions     Aggregate Commissions        Commissions
Fund                       Fiscal Year    Commissions    Paid to Firms   Paid to Affiliated Firms  Retained by DWS-SDI
----                       -----------    -----------    -------------   ------------------------              -------

DWS Gold & Precious
Metals Fund                  2007            $75,000        $22,000                $4,000                 $49,000
                             2006           $163,000        $44,000               $18,000                $101,000
                             2005           $143,000        $53,000               $15,000                 $75,000
</TABLE>


Independent Registered Public Accounting Firm

The financial highlights of DWS Gold & Precious Metals Fund included in the
Fund's prospectus and the Financial Statements incorporated by reference in this
Statement of Additional Information have been so included or incorporated by
reference in reliance on the report of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, 125 High Street, Boston, MA
02110-2624, given on the authority of said firm as experts in auditing and
accounting. PricewaterhouseCoopers LLP audits the financial statements of the
Fund and provides other audit, tax and related services. Shareholders will
receive annual audited financial statements and unaudited semi-annual financial
statements.

Legal Counsel

Ropes & Gray LLP, One International Place, Boston, MA 02110-2624, serves as
legal counsel to the Fund and the Independent Directors to the Corporation.

Custodian

Brown Brothers Harriman & Company ("BBH") 40 Water Street, Boston, Massachusetts
02109, serves as custodian to the Fund. BBHs attend to the collection of
principal and income, and payment for and collection of proceeds of securities
bought and sold by the Fund.

Custodian's fees may be reduced by certain earnings credits in favor of the
Fund.

Transfer Agent

DWS Scudder Investments Service Company ("DWS-SISC"), 210 W. 10th Street, Kansas
City, Missouri 64105-1614, an affiliate of the Advisor, serves as the Fund's
transfer, dividend-paying agent and shareholder service agent. The Transfer
Agent receives an annual service fee for each account of the Fund, based on the
type of account. For open retail accounts, the fee is a flat fee ranging from
$20.00 to $27.50 per account, for open wholesale money funds the fee is $32.50
per account, while for certain retirement accounts serviced on the recordkeeping
system of ADP, Inc., the fee is a flat fee up to $3.46 per account (as of
October 2006, indexed to inflation) plus an asset based fee of up to 0.25% of
average net assets. 1/12th of the annual service charge for each account is
charged and payable to the Transfer Agent each month. A fee is charged for any
account which at any time during the month had a share balance in the Fund.
Smaller fees are also charged for closed accounts for which information must be
retained on the Transfer Agent's system for up to 18 months after closing for
tax reporting purposes.

Certain out-of-pocket expenses incurred by the Transfer Agent, including
expenses of printing and mailing routine fund disclosure documents, costs of
record retention and transaction processing costs are reimbursed by the Fund or
are paid directly by the Fund. Certain additional out-of-pocket expenses,
including costs of computer hardware and


                                       41
<PAGE>

software, third party record-keeping and processing of proxy statements, may
only be reimbursed by the Fund with the prior approval of the Fund's Board.

For the fiscal year ended October 31, 2007, the amount charged to Classes A, B
and C aggregated $252,300, $57,420 and $80,230, respectively. For the fiscal
year ended October 31, 2006, the amount charged to Classes A, B and C aggregated
$232,451, $63,236 and $91,982, respectively. For the fiscal year ended October
31, 2005, the amount charged to Classes A, B and C aggregated $210,235, $59,942
and $98,755, respectively.

Pursuant to a sub-transfer agency agreement between DWS-SISC and DST Systems,
Inc. ("DST"), DWS-SISC has delegated certain transfer agent, dividend paying
agent and shareholder servicing agent functions to DST. The costs and expenses
of such delegation are borne by DWS-SISC, not by the Fund.

The Fund, or the Advisor (including any affiliate of the Advisor), or both, may
pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are generally
held in an omnibus account.

                             PORTFOLIO TRANSACTIONS

The Advisor is generally responsible for placing the orders for the purchase and
sale of portfolio securities, including the allocation of brokerage. With
respect to those funds for which a sub-investment advisor manages the fund's
investments, references in this section to the "Advisor" should be read to mean
the Sub-Advisor, except as noted below.

The policy of the Advisor in placing orders for the purchase and sale of
securities for the Funds is to seek best execution, taking into account such
factors, among others, as price; commission (where applicable); the
broker-dealer's ability to ensure that securities will be delivered on
settlement date; the willingness of the broker-dealer to commit its capital and
purchase a thinly traded security for its own inventory; whether the
broker-dealer specializes in block orders or large program trades; the
broker-dealer's knowledge of the market and the security; the broker-dealer's
ability to maintain confidentiality; the broker-dealer's ability to provide
access to new issues; the broker-dealer's ability to provide support when
placing a difficult trade; the financial condition of the broker-dealer; and
whether the broker-dealer has the infrastructure and operational capabilities to
execute and settle the trade. The Advisor seeks to evaluate the overall
reasonableness of brokerage commissions with commissions charged on comparable
transactions and compares the brokerage commissions (if any) paid by the Funds
to reported commissions paid by others. The Advisor routinely reviews commission
rates, execution and settlement services performed and makes internal and
external comparisons.

Commission rates on transactions in equity securities on U.S. securities
exchanges are subject to negotiation. Commission rates on transactions in equity
securities on foreign securities exchanges are generally fixed. Purchases and
sales of fixed-income securities and certain over-the-counter securities are
effected on a net basis, without the payment of brokerage commissions.
Transactions in fixed income and certain over-the-counter securities are
generally placed by the Advisor with the principal market makers for these
securities unless the Advisor reasonably believes more favorable results are
available elsewhere. Transactions with dealers serving as market makers reflect
the spread between the bid and asked prices. Purchases of underwritten issues
will include an underwriting fee paid to the underwriter. Money market
instruments are normally purchased in principal transactions directly from the
issuer or from an underwriter or market maker.

It is likely that the broker-dealers selected based on the considerations
described in this section will include firms that also sell shares of the Funds
to their customers. However, the Advisor does not consider sales of shares of
the Funds as a factor in the selection of broker-dealers to execute portfolio
transactions for the Funds and, accordingly, has implemented policies and
procedures reasonably designed to prevent its traders from considering sales of
shares of the Funds as a factor in the selection of broker-dealers to execute
portfolio transactions for the Funds.

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a Fund,
to cause the Fund to pay brokerage commissions in excess of that which another
broker-dealer might charge for executing the same transaction in order to obtain
research and brokerage

                                       42
<PAGE>
services if the Advisor determines that such commissions are reasonable in
relation to the overall services provided. The Advisor may from time to time, in
reliance on Section 28(e) of the 1934 Act, execute portfolio transactions with
broker-dealers that provide research and brokerage services to the Advisor.
Consistent with the Advisor's policy regarding best execution, where more than
one broker is believed to be capable of providing best execution for a
particular trade, the Advisor may take into consideration the receipt of
research and brokerage services in selecting the broker-dealer to execute the
trade. Although certain research and brokerage services from broker-dealers may
be useful to a Fund and to the Advisor, it is the opinion of the Advisor that
such information only supplements its own research effort since the information
must still be analyzed, weighed and reviewed by the Advisor's staff. To the
extent that research and brokerage services of value are received by the
Advisor, the Advisor may avoid expenses that it might otherwise incur. Research
and brokerage services received from a broker-dealer may be useful to the
Advisor and its affiliates in providing investment management services to all or
some of its clients, which includes a Fund. Services received from
broker-dealers that executed securities transactions for a Portfolio will not
necessarily be used by the Advisor specifically to service such Fund.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

The Advisor may also select broker-dealers and obtain from them research and
brokerage services that are used in connection with executing trades provided
that such services are consistent with interpretations under Section 28(e) of
the 1934 Act. Typically, these services take the form of computer software
and/or electronic communication services used by the Advisor to facilitate
trading activity with those broker-dealers.

Research and brokerage services may include products obtained from third parties
if the Advisor determines that such product or service constitutes brokerage and
research as defined in Section 28(e) and interpretations thereunder. Currently,
it is the Advisor's policy that Sub-Advisors may not execute portfolio
transactions on behalf of the Funds to obtain third party research and brokerage
services. The Advisor may, in the future, change this policy. Regardless,
certain Sub-Advisors may, as matter of internal policy, limit or preclude third
party research and brokerage services.

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

DIMA will monitor regulatory developments and market practice in the use of
client commissions to obtain research and brokerage services and may adjust its
portfolio transactions policies in response thereto.

Investment decisions for each Fund and for other investment accounts managed by
the Advisor are made independently of each other in light of differing
conditions. However, the same investment decision may be made for two or more of
such accounts. In such cases, simultaneous transactions are inevitable. To the
extent permitted by law, the Advisor may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other accounts in
executing transactions. Purchases or sales are then averaged as to price and
commission and allocated as to amount in a manner deemed equitable to each
account. While in some cases this practice could have a detrimental effect on
the price paid or received by, or on the size of the position obtained or
disposed of for, the Fund, in other cases it is believed that the ability to
engage in volume transactions will be beneficial to the Fund.


                                       43
<PAGE>

DIMA and its affiliates and the Funds' management team manage other mutual funds
and separate accounts, some of which use short sales of securities as a part of
its investment strategy. The simultaneous management of long and short
portfolios creates potential conflicts of interest including the risk that short
sale activity could adversely affect the market value of the long positions (and
vice versa), the risk arising from sequential orders in long and short
positions, and the risks associated with receiving opposing orders at the same
time.

DIMA has adopted procedures that it believes are reasonably designed to mitigate
these potential conflicts of interest. Incorporated in the procedures are
specific guidelines developed to ensure fair and equitable treatment for all
clients. DIMA and the investment team have established monitoring procedures and
a protocol for supervisory reviews, as well as compliance oversight to ensure
that potential conflicts of interest relating to this type of activity are
properly addressed.

Deutsche Bank AG or one of its affiliates (or in the case of a Sub-Advisor, the
Sub-Advisor or one of its affiliates) may act as a broker for the Funds and
receive brokerage commissions or other transaction-related compensation from the
Funds in the purchase and sale of securities, options or futures contracts when,
in the judgment of the Advisor, and in accordance with procedures approved by
the Funds' Boards, the affiliated broker will be able to obtain a price and
execution at least as favorable as those obtained from other qualified brokers
and if, in the transaction, the affiliated broker charges the Funds a rate
consistent with that charged to comparable unaffiliated customers in similar
transactions.

Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
sales or purchases to the monthly average value of securities owned during the
year, excluding all securities whose remaining maturities at the time of
acquisition were one year or less.

Higher levels of activity by the Fund result in higher transaction costs and may
also result in taxes on realized capital gains to be borne by the Fund's
shareholders. Purchases and sales are made whenever necessary, in the Advisor's
discretion, to meet the Fund's objective.

Portfolio turnover rates for fiscal years ended October 31, 2007 and 2006 were
52% and 69%, respectively.

                        PURCHASE AND REDEMPTION OF SHARES

General Information

Policies and procedures affecting transactions in Fund shares can be changed at
any time without notice, subject to applicable law. Transactions may be
contingent upon proper completion of application forms and other documents by
shareholders and their receipt by the Fund's agents. Transaction delays in
processing (and changing account features) due to circumstances within or beyond
the control of the Fund and its agents may occur. Shareholders (or their
financial service firms) are responsible for all losses and fees resulting from
bad checks, cancelled orders or the failure to consummate transactions effected
pursuant to instructions reasonably believed to be genuine.

A distribution will be reinvested in shares of the same Fund and class if the
distribution check is returned as undeliverable.

Orders will be confirmed at a price based on the net asset value of the Fund
next determined after receipt in good order by DWS-SDI of the order accompanied
by payment. Orders received by dealers or other financial services firms prior
to the determination of net asset value and received in good order by DWS-SDI
prior to the determination of net asset value will be confirmed at a price based
on the net asset value next determined after receipt by DWS-SDI ("trade date").


                                       44
<PAGE>

Certificates. Share certificates will not be issued. Share certificates now in a
shareholder's possession may be sent to the transfer agent for cancellation and
book-entry credit to such shareholder's account. Certain telephone and other
procedures require book-entry holdings. Shareholders with outstanding
certificates bear the risk of loss.

Use of Financial Services Firms. Investment dealers and other firms provide
varying arrangements for their clients to purchase and redeem the Fund's shares,
including higher minimum investments, and may assess transaction or other fees.
Firms may arrange with their clients for other investment or administrative
services. Such firms may independently establish and charge additional amounts
to their clients for such services. Firms also may hold the Fund's shares in
nominee or street name as agent for and on behalf of their customers. In such
instances, the Fund's transfer agent will have no information with respect to or
control over the accounts of specific shareholders. Such shareholders may obtain
access to their accounts and information about their accounts only from their
firm. Certain of these firms may receive compensation from the Fund through the
shareholder service agent for record-keeping and other expenses relating to
these nominee accounts. In addition, certain privileges with respect to the
purchase and redemption of shares or the reinvestment of dividends may not be
available through such firms. Some firms may participate in a program allowing
them access to their clients' accounts for servicing including, without
limitation, transfers of registration and dividend payee changes; and may
perform functions such as generation of confirmation statements and disbursement
of cash dividends. Such firms, including affiliates of DWS-SDI, may receive
compensation from the Fund through the Shareholder Service Agent for these
services.

The Fund has authorized one or more financial service institutions, including
certain members of the Financial Industry Regulatory Authority ("FINRA") other
than the Distributor ("financial institutions"), to accept purchase and
redemption orders for the Fund's shares. Such financial institutions may also
designate other parties, including plan administrator intermediaries, to accept
purchase and redemption orders on the Fund's behalf. Orders for purchases or
redemptions will be deemed to have been received by the Fund when such financial
institutions or, if applicable, their authorized designees accept the orders.
Subject to the terms of the contract between the Fund and the financial
institution, ordinarily orders will be priced at the Fund's net asset value next
computed after acceptance by such financial institution or its authorized
designees and accepted by the Fund. Further, if purchases or redemptions of the
Fund's shares are arranged and settlement is made at an investor's election
through any other authorized financial institution, that financial institution
may, at its discretion, charge a fee for that service. The Board of Directors
and the Distributor, also the Fund's principal underwriter, each have the right
to limit the amount of purchases by, and to refuse to sell to, any person. The
Directors and the Distributor may suspend or terminate the offering of shares of
the Fund at any time for any reason.

DWS-SDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Scudder Wholesalers"). Generally, DWS Scudder
Wholesalers market shares of the DWS funds to financial advisors, who in turn
may recommend that investors purchase shares of a DWS fund. The Plan is an
incentive program that combines a monthly incentive component with a quarterly
strategic bonus component. Under the Plan, DWS Scudder Wholesalers will receive
a monetary monthly incentive based on the amount of sales generated from their
marketing of the funds, and that incentive will differ depending on the product
category of the fund. Each fund is assigned to one of four product
categories--"Core," "Strategic," "Satellite" or "Non-CSS"-taking into
consideration, among other things, the following criteria, where applicable:

o        The Fund's 3-year performance;
o        The Fund's Morningstar rating;
o        Market size for the fund category;
o        The Fund's size, including sales and redemptions of the Fund's shares;
o        The length of time the Fund's Portfolio Managers have managed the Fund;
         and
o        The Fund's consistency with DWS Scudder's branding.

This information and other factors are presented to a committee comprised of
representatives from various groups within DWS Scudder, who review on a
quarterly basis the funds assigned to each product category described above, and
make any changes to those assignments at that time. No one factor, whether
positive or negative, determines a fund's placement in a given category; all
these factors together are considered, and the designation of funds in the Core,
Strategic and Satellite categories represents management's judgment based on the
above criteria. In addition,


                                       45
<PAGE>

management may consider a fund's profile over the course of several review
periods before making a change to its category assignment. These category
assignments will be posted quarterly to the DWS funds' Web site at
www.dws-scudder.com, approximately one month after the end of each quarter. DWS
Scudder Wholesalers will receive the highest compensation for Core and Strategic
funds, less for Satellite funds and the lowest for Non-CSS funds. The level of
compensation among these categories may differ significantly.

In the normal course of business, DWS Scudder will from time to time introduce
new funds into the DWS family of funds. As a general rule, all new funds will be
placed in the Strategic compensation category for a minimum period of four
consecutive quarters, and DWS Scudder Wholesalers will be paid at a rate that is
equivalent to that of the Core Fund category. After that four quarter period,
each new fund in the Strategic category will be reviewed by the committee and
either assigned to one of the four categories or continued as a Strategic fund
at that time.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Scudder Wholesaler under the Plan may provide an incentive to favor marketing
the Core, Strategic or Satellite funds over the Non-CSS funds. The Plan,
however, will not change the price that you pay for shares of a fund. The DWS
Scudder Compliance Department monitors DWS Scudder Wholesaler sales and other
activity in an effort to detect unusual activity in the context of the
compensation structure under the Plan. However, investors may wish to take the
Plan and the product category of the fund into account when considering
purchasing a fund or evaluating any recommendations relating to fund shares.

Telephone and Electronic Transaction Procedures. Shareholders have various
telephone, Internet, wire and other electronic privileges available. The Fund or
its agents will not be liable for any losses, expenses or costs arising out of
fraudulent or unauthorized instructions pursuant to these privileges if the Fund
or its agents reasonably believe, based upon reasonable verification procedures,
that the instructions were genuine. Verification procedures include recording
instructions, requiring certain identifying information before acting upon
instructions and sending written confirmations. During periods when it is
difficult to contact the Shareholder Service Agent, it may be difficult to use
telephone, wire and other privileges.

QuickBuy and QuickSell. QuickBuy and QuickSell permits the transfer of money via
the Automated Clearing House System (minimum $50 and maximum $250,000) from or
to a shareholder's bank, savings and loan, or credit union account in connection
with the purchase or redemption of Fund shares. Shares purchased by check or
through QuickBuy and QuickSell or Direct Deposit may not be redeemed under this
privilege until such Shares have been owned for at least 10 calendar days.
QuickBuy and QuickSell cannot be used with passbook savings accounts or for
certain tax-deferred plans.

Share Pricing. Purchases will be filled at the net asset value per share next
computed after receipt of the application in good order. The net asset value of
shares of each Fund is calculated at 4:00 p.m. Eastern time or the close of
business on each day the New York Stock Exchange (the "Exchange") is open for
trading. Orders received after the close of regular trading on the Exchange will
be executed at the next business day's net asset value. If the order has been
placed by a member of FINRA, other than the Distributor, it is the
responsibility of the member broker, rather than the Fund, to forward the
purchase order to Transfer Agent in Kansas City by the close of regular trading
on the Exchange.

Dividend Payment Option. Investors may have dividends and distributions
automatically deposited to their predesignated bank account through DWS
Scudder's Dividend Payment Option request form. Shareholders whose predesignated
checking account of record is with a member bank of Automated Clearing House
Network (ACH) can have income and capital gain distributions automatically
deposited to their personal bank account usually within three business days
after the Fund pays its distribution. A Dividend Payment Option request form can
be obtained by visiting our Web site at: www.dws-scudder.com or calling (800)
621-1048. Confirmation Statements will be mailed to shareholders as notification
that distributions have been deposited.

Tax-Sheltered Retirement Plans. The Shareholder Service Agent provides
retirement plan services and documents and DWS-SDI can establish investor
accounts in any of the following types of retirement plans:

                                       46
<PAGE>

o        Traditional, Roth and Education IRAs. This includes Savings Incentive
         Match Plan for Employees of Small Employers ("SIMPLE"), Simplified
         Employee Pension Plan ("SEP") IRA accounts and prototype documents.

o        403(b)(7) Custodial Accounts. This type of plan is available to
         employees of most non-profit organizations.

o        Prototype money purchase pension and profit-sharing plans may be
         adopted by employers.

Brochures describing these plans as well as model defined benefit plans, target
benefit plans, 457 plans, 401(k) plans, simple 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
Additional fees and transaction policies and procedures may apply to such plans.
Investors should consult with their own tax advisors before establishing a
retirement plan.

Purchases

The Fund reserves the right to withdraw all or any part of the offering made by
its prospectus and to reject purchase orders for any reason. Also, from time to
time, the Fund may temporarily suspend the offering of any class of its shares
to new investors. During the period of such suspension, persons who are already
shareholders of such class of such Fund may be permitted to continue to purchase
additional shares of such class and to have dividends reinvested.

To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. For
more information, please see "Policies You Should Know About" in the Fund's
prospectuses.

The Fund may waive the minimum for purchases by trustees, directors, officers or
employees of the Fund or the Advisor and its affiliates.

Financial Services Firms' Compensation. Banks and other financial services firms
may provide administrative services related to order placement and payment to
facilitate transactions in shares of the Fund for their clients, and DWS-SDI may
pay them a transaction fee up to the level of the discount or commission
allowable or payable to dealers.

DWS-SDI may, from time to time, pay or allow to firms a 1% commission on the
amount of shares of the Fund sold under the following conditions: (i) the
purchased shares are held in a DWS Scudder IRA account, (ii) the shares are
purchased as a direct "roll over" of a distribution from a qualified retirement
plan account maintained on the subaccount record keeping system maintained for
DWS-branded plans by ADP, Inc. under an alliance with DWS-SDI and its
affiliates, (iii) the registered representative placing the trade is a member of
Executive Council, a group of persons designated by DWS-SDI in acknowledgment of
their dedication to the employee benefit plan area; and (iv) the purchase is not
otherwise subject to a commission.

In addition to the discounts or commissions described herein and in the
prospectus, DWS-SDI, the Advisor, or its affiliates may pay or allow additional
discounts, commissions or promotional incentives, in the form of cash, to firms
that sell shares of the Fund. In some instances, such amounts may be offered
only to certain firms that sell or are expected to sell during specified time
periods certain minimum amounts of shares of the Fund, or other Funds
underwritten by DWS-SDI.

Upon notice to all dealers, DWS-SDI may re-allow to dealers up to the full
applicable Class A sales charge during periods and for transactions specified in
such notice and such re-allowances may be based upon attainment of minimum sales
levels. During periods when 90% or more of the sales charge is re-allowed, such
dealers may be deemed to be underwriters as that term is defined in the 1933
Act.


                                       47
<PAGE>

DWS-SDI may at its discretion compensate investment dealers or other financial
services firms in connection with the sale of Class A shares of the Fund in
accordance with the Large Order NAV Purchase Privilege and one of the four
compensation schedules up to the following amounts:

<TABLE>
<CAPTION>
               Compensation Schedule #1:                   Compensation Schedule #2: DWS Scudder
        Retail Sales and DWS Scudder Flex Plan(1)                   Retirement Plans(2)
        --------------------------------------                      ----------------
            Amount of             As a Percentage of Net     Amount of     As a Percentage of Net
           Shares Sold                  Asset Value         Shares Sold          Asset Value
           -----------                  -----------         -----------          -----------
<S>                                         <C>                 <C>                  <C>
$1 million to $3 million                   1.00%          Over $3 million        0.00%-0.50%
Over $3 million to $50 million             0.50%                 --                    --
Over $50 million                           0.25%                 --                    --
</TABLE>

                Compensation Schedule #3:
                DWS Scudder Choice Plan(3)
                --------------------------
                                  As a Percentage of Net
      Amount of Shares Sold             Asset Value
      ---------------------             -----------

All Amounts                                1.00%

(1)      For purposes of determining the appropriate commission percentage to be
         applied to a particular sale under the foregoing schedule, DWS-SDI will
         consider the cumulative amount invested by the purchaser in the Fund
         and other DWS Funds including purchases pursuant to the "Combined
         Purchases," "Letter of Intent" and "Cumulative Discount" features
         referred to below.

(2)      Compensation Schedules 2 and 3 apply to employer sponsored employee
         benefit plans using the OmniPlus subaccount record keeping system made
         available through ADP, Inc. under an alliance with DWS-SDI and its
         affiliates.

(3)      DWS-SDI compensates UBS Financial 2.



DWS-SDI compensates firms for sales of Class B shares at the time of sale at a
commission rate of up to 3.75% of the amount of Class B shares purchased.
DWS-SDI is compensated by the Fund for services as distributor and principal
underwriter for Class B shares. Except as provided below, for sales of Class C
shares, DWS-SDI advances to firms the first year distribution fee at a rate of
0.75% of the purchase price of such shares, and, for periods after the first
year, DWS-SDI currently pays firms for sales of Class C shares a distribution
fee, payable quarterly, at an annual rate of 0.75% of net assets attributable to
Class C shares maintained and serviced by the firm. For sales of Class C shares
to employer sponsored employee benefit plans using the OmniPlus subaccount
record keeping system made available through ADP, Inc. under an alliance with
DWS-SDI and its affiliates, DWS-SDI does not advance the first year distribution
fee and for periods after the date of sale, DWS-SDI currently pays firms a
distribution fee, payable quarterly, at an annual rate of 0.75% based on net
assets as of the last business day of the month attributable to Class C shares
maintained and serviced by the firm. DWS-SDI is compensated by the Fund for
services as distributor and principal underwriter for Class C shares.

Revenue Sharing

In light of recent regulatory developments, the Advisor, the Distributor and
their affiliates have undertaken to furnish certain additional information below
regarding the level of payments made by them to selected affiliated and
unaffiliated brokers, dealers, participating insurance companies or other
financial intermediaries ("financial advisors") in connection with the sale
and/or distribution of Fund shares or the retention and/or servicing of
investors and Fund shares ("revenue sharing").

The Advisor, the Distributor and/or their affiliates may pay additional
compensation, out of their own assets and not as an additional charge to each
Fund, to financial advisors in connection with the sale and/or distribution of
Fund

                                       48
<PAGE>

shares or the retention and/or servicing of Fund investors and Fund shares. Such
revenue sharing payments are in addition to any distribution or service fees
payable under any Rule 12b-1 or service plan of any fund, any record
keeping/sub-transfer agency/networking fees payable by each Fund (generally
through the Distributor or an affiliate) and/or the Distributor to certain
financial advisors for performing such services and any sales charges,
commissions, non-cash compensation arrangements expressly permitted under
applicable rules of FINRA or other concessions described in the fee table or
elsewhere in the Prospectuses or the SAI as payable to all financial advisors.
For example, the Advisor, the Distributor and/or their affiliates may compensate
financial advisors for providing each Fund with "shelf space" or access to a
third party platform or fund offering list, or other marketing programs
including, without limitation, inclusion of each Fund on preferred or
recommended sales lists, mutual fund "supermarket" platforms and other formal
sales programs; granting the Distributor access to the financial advisor's sales
force; granting the Distributor access to the financial advisor's conferences
and meetings; assistance in training and educating the financial advisor's
personnel; and, obtaining other forms of marketing support. The level of revenue
sharing payments made to financial advisors may be a fixed fee or based upon one
or more of the following factors: gross sales, current assets and/or number of
accounts of each Fund attributable to the financial advisor, the particular fund
or fund type or other measures as agreed to by the Advisor, the Distributor
and/or their affiliates and the financial advisors or any combination thereof.
The amount of these payments is determined at the discretion of the Advisor, the
Distributor and/or their affiliates from time to time, may be substantial, and
may be different for different financial advisors based on, for example, the
nature of the services provided by the financial advisor.

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Fund serviced and maintained by the financial advisor, .10% to
..25% of sales of the Fund attributable to the financial advisor, a flat fee of
$12,500 up to $500,000, or any combination thereof. These amounts are annual
figures typically paid on a quarterly basis and are subject to change at the
discretion of the Advisor, the Distributor and/or their affiliates. Receipt of,
or the prospect of receiving, this additional compensation, may influence your
financial advisor's recommendation of this Fund or of any particular share class
of the Fund. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of this
Fund.

The Advisor, the Distributor and/or their affiliates may also make such revenue
sharing payments to financial advisors under the terms discussed above in
connection with the distribution of both DWS funds and non-DWS funds by
financial advisors to retirement plans that obtain record keeping services from
ADP, Inc. on the DWS Scudder branded retirement plan platform (the "Platform")
with the level of revenue sharing payments being based upon sales of both the
DWS funds and the non-DWS funds by the financial advisor on the Platform or
current assets of both the DWS funds and the non-DWS funds serviced and
maintained by the financial advisor on the Platform.

As of the date hereof, each Fund has been advised that the Advisor, the
Distributor and their affiliates expect that the following firms will receive
revenue sharing payments at different points during the coming year as described
above:

Channel: Broker-Dealers and Financial Advisors

A G Edwards & Sons Inc.
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank Group
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Group
John Hancock Distributors LLC

                                       49
<PAGE>

LaSalle Financial Services, Inc. (dba ABN Amro)
Linsco/Private Ledger Corp.
M.L. Stern & Co.
Marsh Insurance and Investment Company
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform

Allegheny Investments LTD
Bank of New York (Hare & Co.)
Bear, Stearns Securities Corp.
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
Huntleigh Securities
Lincoln Investment Planning
LPL Financial Services
Mellon Financial Markets LLC
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions
Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
US Bancorp
UBS
William Blair & Company

Channel: Third Party Insurance Platforms

Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
American General Life Insurance Company
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company

                                       50
<PAGE>

Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
Mutual of America Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

Any additions, modifications or deletions to the financial advisors identified
above that have occurred since the date hereof are not reflected.

The Advisor, the Distributor or their affiliates may enter into additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

The prospect of receiving, or the receipt of additional compensation or
promotional incentives described above by financial advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS Funds or a particular DWS Fund over sales of shares of mutual
funds (or non-mutual fund investments) with respect to which the financial
advisor does not receive additional compensation or promotional incentives, or
receives lower levels of additional compensation or promotional incentives.
Similarly, financial advisors may receive different compensation or incentives
that may influence their recommendation of any particular share class of the
Fund or of other funds. These payment arrangements, however, will not change the
price that an investor pays for Fund shares or the amount that the Fund receives
to invest on behalf of an investor and will not increase Fund expenses. You may
wish to take such payment arrangements into account when considering and
evaluating any recommendations relating to Fund shares and you should discuss
this matter with your financial advisor and review your financial advisor's
disclosures.

Class A Purchases. The public offering price of Class A shares for purchasers
choosing the initial sales charge alternative is the net asset value plus a
sales charge, as set forth below.

                                       51
<PAGE>

<TABLE>
<CAPTION>
                                                         Sales Charge
                                                         ------------
                                                                                         Allowed to Dealers
                                           As a Percentage of    As a Percentage of     as a Percentage of
Amount of Purchase                           Offering Price*      Net Asset Value**        Offering Price
------------------                           ---------------      -----------------        --------------
<S>                                             <C>                    <C>                   <C>
Less than $50,000                                  5.75%                  6.10%                 5.20%
$50,000 but less than $100,000                     4.50                   4.71                  4.00
$100,000 but less than $250,000                    3.50                   3.63                  3.00
$250,000 but less than $500,000                    2.60                   2.67                  2.25
$500,000 but less than $1 million                  2.00                   2.04                  1.75
$1 million and over                                .00***                  .00***             ****
</TABLE>

*        The Offering Price includes the sales charge.

**       Rounded to the nearest one-hundredth percent.

***      Redemption of shares may be subject to a contingent deferred sales
         charge as discussed below.

****     Commission is payable by DWS-SDI as discussed below.

Class A NAV Sales. Class A shares may be sold at net asset value to:

(a)      a current or former director or trustee of Deutsche or DWS mutual
         funds;

(b)      an employee (including the employee's spouse or life partner and
         children or stepchildren age 21 or younger) of Deutsche Bank or its
         affiliates or of a subadvisor to any fund in the DWS family of funds or
         of a broker-dealer authorized to sell shares of the Fund or service
         agents of the Funds;

(c)      certain professionals who assist in the promotion of DWS mutual funds
         pursuant to personal services contracts with DWS-SDI, for themselves or
         members of their families. DWS-SDI in its discretion may compensate
         financial services firms for sales of Class A shares under this
         privilege at a commission rate of 0.50% of the amount of Class A shares
         purchased;

(d)      any trust, pension, profit-sharing or other benefit plan for only such
         persons listed under the preceding paragraphs (a) and (b);

(e)      persons who purchase such shares through bank trust departments that
         process such trades through an automated, integrated mutual fund
         clearing program provided by a third party clearing firm;

(f)      selected employees (including their spouses or life partners and
         children or stepchildren age 21 or younger) of banks and other
         financial services firms that provide administrative services related
         to order placement and payment to facilitate transactions in shares of
         the Fund for their clients pursuant to an agreement with DWS-SDI or one
         of its affiliates. Only those employees of such banks and other firms
         who as part of their usual duties provide services related to
         transactions in Fund shares qualify;

(g)      unit investment trusts sponsored by Ranson & Associates, Inc. and
         unitholders of unit investment trusts sponsored by Ranson & Associates,
         Inc. or its predecessors through reinvestment programs described in the
         prospectuses of such trusts that have such programs;

(h)      through certain investment advisors registered under the Investment
         Advisers Act of 1940 and other financial services firms acting solely
         as agent for their clients, that adhere to certain standards
         established by DWS-SDI, including a requirement that such shares be
         sold for the benefit of their clients participating in an investment
         advisory program or agency commission program under which such clients
         pay a fee to the investment advisor or other firm for portfolio
         management or agency brokerage services. Such shares are


                                       52
<PAGE>

         sold for investment purposes and on the condition that they will not be
         resold except through redemption or repurchase by the Fund;

(i)      employer sponsored employee benefit plans using the Flex subaccount
         recordkeeping system ("Flex Plans") made available through ADP under an
         alliance with DWS-SDI and its affiliates, established prior to October
         1, 2003, provided that the Flex Plan is a participant-directed plan
         that has not less than 200 eligible employees;

(j)      investors investing $1 million or more, either as a lump sum or through
         the "Combined Purchases," "Letter of Intent" and "Cumulative Discount"
         features referred to above (collectively, the "Large Order NAV Purchase
         Privilege"). The Large Order NAV Purchase Privilege is not available if
         another net asset value purchase privilege is available;

(k)      defined contribution investment only plans with a minimum of $1,000,000
         in plan assets regardless of the amount allocated to the DWS funds;

In addition, Class A shares may be sold at net asset value in connection with:

(l)      the acquisition of the assets of or merger or consolidation with
         another investment company, or to shareholders in connection with the
         investment or reinvestment of income and capital gain dividends, and
         under other circumstances deemed appropriate by DWS-SDI and consistent
         with regulatory requirements; and

(m)      a direct "roll over" of a distribution from a Flex Plan or from
         participants in employer sponsored employee benefit plans maintained on
         the OmniPlus subaccount record keeping system made available through
         ADP, Inc. under an alliance with DWS-SDI and its affiliates into a DWS
         Scudder IRA;

(n)      reinvestment of fund dividends and distributions;

(o)      exchanging an investment in Class A shares of another fund in the DWS
         family of funds for an investment in the fund.

Class A shares also may be purchased at net asset value in any amount by members
of the plaintiff class in the proceeding known as Howard and Audrey Tabankin, et
al. v. Kemper Short-Term Global Income Fund, et al., Case No. 93 C 5231 (N.D.
IL). This privilege is generally non-transferable and continues for the lifetime
of individual class members and for a ten-year period for non-individual class
members. To make a purchase at net asset value under this privilege, the
investor must, at the time of purchase, submit a written request that the
purchase be processed at net asset value pursuant to this privilege specifically
identifying the purchaser as a member of the "Tabankin Class." Shares purchased
under this privilege will be maintained in a separate account that includes only
shares purchased under this privilege. For more details concerning this
privilege, class members should refer to the Notice of (i) Proposed Settlement
with Defendants; and (ii) Hearing to Determine Fairness of Proposed Settlement,
dated August 31, 1995, issued in connection with the aforementioned court
proceeding. For sales of Fund shares at net asset value pursuant to this
privilege, DWS-SDI may in its discretion pay investment dealers and other
financial services firms a concession, payable quarterly, at an annual rate of
up to 0.25% of net assets attributable to such shares maintained and serviced by
the firm. A firm becomes eligible for the concession based upon assets in
accounts attributable to shares purchased under this privilege in the month
after the month of purchase and the concession continues until terminated by
DWS-SDI. The privilege of purchasing Class A shares of the Fund at net asset
value under this privilege is not available if another net asset value purchase
privilege also applies.

Class A Quantity Discounts. An investor or the investor's dealer or other
financial services firm must notify the Shareholder Service Agent or DWS-SDI
whenever a quantity discount or reduced sales charge is applicable to a
purchase. In order to qualify for a lower sales charge, all orders from an
organized group will have to be placed through a single investment dealer or
other firm and identified as originating from a qualifying purchaser.

                                       53
<PAGE>

Letter of Intent. The reduced sales charges for Class A shares, as shown in the
applicable prospectus, also apply to the aggregate amount of purchases of Class
A shares of DWS Funds that bear a sales charge made by any purchaser within a
24-month period under a written Letter of Intent ("Letter") provided by DWS-SDI.
The Letter, which imposes no obligation to purchase or sell additional Class A
shares, provides for a price adjustment depending upon the actual amount
purchased within such period. The Letter provides that the first purchase
following execution of the Letter must be at least 5% of the amount of the
intended purchase, and that 5% of the amount of the intended purchase normally
will be held in escrow in the form of shares pending completion of the intended
purchase. If the total investments under the Letter are less than the intended
amount and thereby qualify only for a higher sales charge than actually paid,
the appropriate number of escrowed shares are redeemed and the proceeds used
toward satisfaction of the obligation to pay the increased sales charge. The
Letter for an employer-sponsored employee benefit plan maintained on the
subaccount record keeping system available through ADP, Inc. under an alliance
with DWS-SDI and its affiliates may have special provisions regarding payment of
any increased sales charge resulting from a failure to complete the intended
purchase under the Letter. A shareholder may include the value (at the maximum
offering price, which is determined by adding the maximum applicable sales load
charged to the net asset value) of all Class A shares of such DWS Funds held of
record as of the initial purchase date under the Letter as an "accumulation
credit" toward the completion of the Letter, but no price adjustment will be
made on such shares.

Class A Cumulative Discount. Class A shares of the Fund may also be purchased at
the rate applicable to the discount bracket attained by adding to the cost of
shares being purchased, the value of all Class A shares of DWS Funds that bear a
sales charge (computed at the maximum offering price at the time of the purchase
for which the discount is applicable) already owned by the investor or his or
her immediate family member (including the investor's spouse or life partner and
children or stepchildren age 21 or younger).

For purposes of the Combined Purchases, Letter of Intent and Cumulative Discount
features described above, employer sponsored employee benefit plans using the
Flex subaccount record keeping system available through ADP, Inc. under an
alliance with DWS-SDI and its affiliates may include: (a) Money Market Funds as
"DWS Funds", (b) all classes of shares of any DWS Fund and (c) the value of any
other plan investments, such as guaranteed investment contracts and employer
stock, maintained on such subaccount record keeping system. Once eligible plan
assets under this provision reach the $1,000,000 threshold, a later decline in
assets below the $1,000,000 threshold will not affect the plan's ability to
continue to purchase Class A shares at net asset value.

Combined Purchases. The Fund's Class A shares may be purchased at the rate
applicable to the sales charge discount bracket attained by combining same day
investments in Class A shares of any DWS Funds that bear a sales charge.

Class B Purchases. Class B shares of the Fund are offered at net asset value. No
initial sales charge is imposed. Class B shares sold without an initial sales
charge allow the full amount of the investor's purchase payment to be invested
in Class B shares for his or her account. Class B shares have a contingent
deferred sales charge of 4.00% that declines over time (for shares sold within
six years of purchase) and Rule 12b-1 fees, as described in the Fund's
prospectus and SAI. Class B shares automatically convert to Class A shares after
six years.

Class C Purchases. Class C shares of the Fund are offered at net asset value. No
initial sales charge is imposed, which allows the full amount of the investor's
purchase payment to be invested in Class C shares for his or her account. Class
C shares are subject to a contingent deferred sales charge of 1.00% (for shares
sold within one year of purchase) and Rule 12b-1 fees, as described in the
Fund's Prospectus and this Statement of Additional Information.

Purchase of Institutional Class Shares. Information on how to buy Institutional
Class shares is set forth in the section entitled "Buying and Selling Shares" in
the Fund's prospectus. The following supplements that information. The minimum
initial investment for Institutional Class shares is $1,000,000. The minimum
initial investment may be waived in certain circumstances. The minimum amounts
may be changed at any time in management's discretion.

To sell shares in a retirement account other than an IRA, your request must be
made in writing, except for exchanges to other eligible funds in the DWS family
of funds, which can be requested by phone or in writing.

                                       54
<PAGE>

Multi-Class Suitability. DWS-SDI has established the following procedures
regarding the purchase of Class A, Class B and Class C shares. Orders to
purchase Class B shares of $100,000 or more and orders to purchase Class C
shares of $500,000 or more will be declined with the exception of orders
received from financial representatives acting for clients whose shares are held
in an omnibus account and employer-sponsored employee benefit plans using the
subaccount record keeping system ("System") maintained for DWS-branded plans
under an alliance with DWS-SDI and its affiliates ("DWS Scudder Flex Plans" and
"DWS Scudder Choice Plans").

The following provisions apply to DWS Scudder Flex Plans and DWS Scudder Choice
Plans.

a.       Class B Share DWS Scudder Flex Plans. Class B shares have not been sold
         to DWS Scudder Flex Plans that were established on the System after
         October 1, 2003. Orders to purchase Class B shares for a DWS Scudder
         Flex Plan established on the System prior to October 1, 2003 that has
         regularly been purchasing Class B shares will be invested instead in
         Class A shares at net asset value when the combined subaccount value in
         DWS Funds or other eligible assets held by the plan is $100,000 or
         more. This provision will be imposed for the first purchase after
         eligible plan assets reach the $100,000 threshold. A later decline in
         assets below the $100,000 threshold will not affect the plan's ability
         to continue to purchase Class A shares at net asset value.

b.       Class C Share DWS Scudder Flex Plans. Orders to purchase Class C shares
         for a DWS Scudder Flex Plan, regardless of when such plan was
         established on the System, will be invested instead in Class A shares
         at net asset value when the combined subaccount value in DWS Funds or
         other eligible assets held by the plan is $1,000,000 or more. This
         provision will be imposed for the first purchase after eligible plan
         assets reach the $1,000,000 threshold. A later decline in assets below
         the $1,000,000 threshold will not affect the plan's ability to continue
         to purchase Class A shares at net asset value.

c.       Class C Share DWS Scudder Choice Plans. Orders to purchase Class C
         shares for a DWS Scudder Choice Plan that has been regularly purchasing
         Class C shares will be invested instead in Class A shares at net asset
         value when the combined subaccount value in DWS Funds or other eligible
         assets held by the plan is $1,000,000 or more. This provision will be
         imposed for purchases made beginning in the month after eligible plan
         assets reach the $1,000,000 threshold. In addition, as a condition to
         being permitted to use the Choice Plan platform, plans must agree that,
         within one month after eligible plan assets reach the $1,000,000
         threshold, all existing Class C shares held in the plan will be
         automatically converted to Class A shares.

The procedures above do not reflect in any way the suitability of a particular
class of shares for a particular investor and should not be relied upon as such.
A suitability determination must be made by investors with the assistance of
their financial representative.

Automatic Investment Plan. A shareholder may purchase shares of the Fund through
an automatic investment program. With the Direct Deposit Purchase Plan ("Direct
Deposit"), investments are made automatically (minimum $500 and maximum $250,000
for initial investments) and a minimum of $50 and maximum of $250,000 for
subsequent investments from the shareholder's account at a bank, savings and
loan or credit union into the shareholder's Fund account. Termination by a
shareholder will become effective within thirty days after the Shareholder
Service Agent has received the request. The Fund may immediately terminate a
shareholder's Direct Deposit in the event that any item is unpaid by the
shareholder's financial institution.

Minimum Subsequent Investment Policies. For current shareholders of Class A, B
or C shares there is a $50 minimum investment requirement for subsequent
investments in the fund. There is no minimum subsequent investment requirement
in Class A shares for investments on behalf of participants in certain fee-based
and wrap programs offered through financial intermediaries approved by the
Advisor. There is no minimum subsequent investment required for Institutional
Class Shares.

Payroll Investment Plans. A shareholder may purchase shares through Payroll
Direct Deposit or Government Direct Deposit. Under these programs, all or a
portion of a shareholder's net pay or government check is invested each payment
period. A shareholder may terminate participation in these programs by giving
written notice to the


                                       55
<PAGE>

shareholder's employer or government agency, as appropriate. (A reasonable time
to act is required.) The Fund is not responsible for the efficiency of the
employer or government agency making the payment or any financial institutions
transmitting payments.

Expedited Purchase Procedures for Existing Shareholders. Shareholders of other
DWS Funds who have submitted an account application and have certified a tax
identification number, clients having a regular investment counsel account with
the Advisor or its affiliates and members of their immediate families, officers
and employees of the Advisor or of any affiliated organization and their
immediate families, members of FINRA, and banks may open an account by wire by
calling (800) 621-1048 for instructions. The investor must send a duly completed
and signed application to the Fund promptly. A subsequent purchase order may be
placed by established shareholders (except by DWS Scudder Individual Retirement
Account (IRA), DWS Scudder Horizon Plan, DWS Scudder Profit Sharing and Money
Purchase Pension Plans, DWS Scudder 401(k) and DWS Scudder 403(b) Plan holders),
members of FINRA, and banks.

Redemptions

Redemption fee. The Fund imposes a redemption fee of 2% of the total redemption
amount (calculated at net asset value, without regard to the effect of any
contingent deferred sales charge; any contingent deferred sales charge is also
assessed on the total redemption amount without regard to the assessment of the
2% redemption fee) on all Fund shares redeemed or exchanged within 15 days of
buying them (either by purchase or exchange). The redemption fee is paid
directly to the Fund, and is designed to encourage long-term investment and to
offset transaction and other costs associated with short-term or excessive
trading. For purposes of determining whether the redemption fee applies, shares
held the longest time will be treated as being redeemed first and shares held
the shortest time will be treated as being redeemed last. The redemption fee is
applicable to fund shares purchased either directly or through a financial
intermediary, such as a broker-dealer. Transactions through financial
intermediaries typically are placed with the Fund on an omnibus basis and
include both purchase and sale transactions placed on behalf of multiple
investors. These purchase and sale transactions are generally netted against one
another and placed on an aggregate basis; consequently the identities of the
individuals on whose behalf the transactions are placed generally are not known
to the Fund. For this reason, the Fund has undertaken to notify financial
intermediaries of their obligation to assess the redemption fee on customer
accounts and to collect and remit the proceeds to the Fund. However, due to
operational requirements, the intermediaries' methods for tracking and
calculating the fee may be inadequate or differ in some respects from the
Fund's.

Policies and procedures affecting transactions in Fund shares can be changed at
any time without notice, subject to applicable law. Transactions may be
contingent upon proper completion of application forms and other documents by
shareholders and their receipt by the Fund's agents. Transaction delays in
processing (and changing account features) due to circumstances within or beyond
the control of the Fund and its agents may occur. Shareholders (or their
financial service firms) are responsible for all losses and fees resulting from
bad checks, cancelled orders or the failure to consummate transactions effected
pursuant to instructions reasonably believed to be genuine.

A distribution will be reinvested in shares of the same Fund and class if the
distribution check is returned as undeliverable.

Orders will be confirmed at a price based on the net asset value (including any
applicable sales charge) of the Fund next determined after receipt in good order
by DWS-SDI of the order accompanied by payment. However, orders received by
dealers or other financial services firms prior to the determination of net
asset value and received in good order by DWS-SDI prior to the close of its
business day will be confirmed at a price based on the net asset value effective
on that day ("trade date").

The Fund may suspend the right of redemption or delay payment on a redemption
for more than seven days (a) during any period when the New York Stock Exchange
(the "Exchange") is closed other than customary weekend and holiday closings or
during any period in which trading on the Exchange is restricted, (b) during any
period when an emergency exists as a result of which (i) disposal of the Fund's
investments is not reasonably practicable, or (ii) it is not reasonably
practicable for the Fund to determine the value of its net assets, or (c) for
such other periods as the SEC may by order permit for the protection of the
Fund's shareholders.


                                       56
<PAGE>

A request for repurchase (confirmed redemption) may be communicated by a
shareholder through a financial services firm to DWS-SDI; firms must promptly
submit orders to be effective.

Redemption requests must be unconditional. Redemption requests (and a stock
power for certificated shares) must be duly endorsed by the account holder. As
specified in the prospectus, signatures may need to be guaranteed by a
commercial bank, trust company, savings and loan association, federal savings
bank, member firm of a national securities exchange or other financial
institution permitted by SEC rule. Additional documentation may be required,
particularly from institutional and fiduciary account holders, such as
corporations, custodians (e.g., under the Uniform Transfers to Minors Act),
executors, administrators, trustees or guardians.

If the proceeds of the redemption (prior to the imposition of any contingent
deferred sales charge) are $100,000 or less and the proceeds are payable to the
shareholder of record at the address of record, normally a telephone request or
a written request by any one account holder without a signature guarantee is
sufficient for redemptions by individual or joint account holders, and trust,
executor and guardian account holders, provided the trustee, executor or
guardian is named in the account registration. Other institutional account
holders may exercise this special privilege of redeeming shares by telephone
request or written request without signature guarantee subject to the same
conditions as individual account holders, provided that this privilege has been
pre-authorized by the institutional account holder by written instruction to the
Shareholder Service Agent with signatures guaranteed. This privilege may not be
used to redeem shares held in certificated form and may not be used if the
shareholder's account has had an address change within 15 days of the redemption
request.

Wires. Delivery of the proceeds of a wire redemption of $250,000 or more may be
delayed by the Fund for up to seven days if the Fund or the Shareholder Service
Agent deems it appropriate under then-current market conditions. The ability to
send wires is limited by the business hours and holidays of the firms involved.
The Fund is not responsible for the efficiency of the federal wire system or the
account holder's financial services firm or bank. The account holder is
responsible for any charges imposed by the account holder's firm or bank. To
change the designated account to receive wire redemption proceeds, send a
written request to the Fund Shareholder Service Agent with signatures guaranteed
as described above or contact the firm through which Fund shares were purchased.

Automatic Withdrawal Plan. An owner of $5,000 or more of a class of the Fund's
shares at the offering price (net asset value plus, in the case of Class A
shares, the initial sales charge) may provide for the payment from the owner's
account of any requested dollar amount to be paid to the owner or a designated
payee monthly, quarterly, semiannually or annually. The $5,000 minimum account
size is not applicable to IRAs. The minimum periodic payment is $50. The maximum
annual rate at which shares subject to CDSC may be redeemed is 12% of the net
asset value of the account. Shares are redeemed so that the payee should receive
payment approximately on the first of the month. Investors using this Plan must
reinvest Fund distributions.

Non-retirement plan shareholders may establish an Automatic Withdrawal Plan (the
"Plan") to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate
which day they want the automatic withdrawal to be processed. The check amounts
may be based on the redemption of a fixed dollar amount, fixed share amount,
percent of account value or declining balance. The Plan provides for income
dividends and capital gains distributions, if any, to be reinvested in
additional shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Any such requests must be
received by the Fund's transfer agent ten days prior to the date of the first
automatic withdrawal. An Automatic Withdrawal Plan may be terminated at any time
by the shareholder, the Trust or its agent on written notice, and will be
terminated when all shares of the Fund under the Plan have been liquidated or
upon receipt by the Trust of notice of death of the shareholder.

The purchase of Class A shares while participating in a systematic withdrawal
plan will ordinarily be disadvantageous to the investor because the investor
will be paying a sales charge on the purchase of shares at the same time that
the investor is redeeming shares upon which a sales charge may have already been
paid. Therefore,


                                       57
<PAGE>

the Fund will not knowingly permit additional investments of less than $2,000 if
the investor is at the same time making systematic withdrawals.

Contingent Deferred Sales Charge (CDSC). The following example will illustrate
the operation of the CDSC. Assume that an investor makes a single purchase of
$10,000 of the Fund's Class B shares and that 16 months later the value of the
shares has grown by $1,000 through reinvested dividends and by an additional
$1,000 of share appreciation to a total of $12,000. If the investor were then to
redeem the entire $12,000 in share value, the CDSC would be payable only with
respect to $10,000 because neither the $1,000 of reinvested dividends nor the
$1,000 of share appreciation is subject to the charge. The charge would be at
the rate of 3.00% ($300) because it was in the second year after the purchase
was made.

The rate of the CDSC is determined by the length of the period of ownership.
Investments are tracked on a monthly basis. The period of ownership for this
purpose begins the first day of the month in which the order for the investment
is received. For example, an investment made in March of the year of investment
will be eligible for the second year's charge if redeemed in or after March of
the following year. In the event no specific order is requested when redeeming
shares subject to a CDSC, the redemption will be made first from shares
representing reinvested dividends and then from the earliest purchase of shares.
DWS-SDI receives any CDSC directly. The charge will not be imposed upon
redemption of reinvested dividends or share appreciation.

The Class A CDSC will be waived in the event of:

(a)      redemptions by a participant-directed qualified retirement plan
         described in Code Section 401(a), a participant-directed non-qualified
         deferred compensation plan described in Code Section 457 or a
         participant-directed qualified retirement plan described in Code
         Section 403(b)(7) which is not sponsored by a K-12 school district;

(b)      redemptions by employer-sponsored employee benefit plans using the
         subaccount record keeping system made available through ADP, Inc. under
         an alliance with DWS-SDI and its affiliates;

(c)      redemption of shares of a shareholder (including a registered joint
         owner) who has died or is disabled (under certain circumstances);

(d)      redemption of shares of a shareholder (including a registered joint
         owner) who after purchase of the shares being redeemed becomes totally
         disabled (as evidenced by a determination by the federal Social
         Security Administration);

(e)      redemptions under the Fund's Automatic Withdrawal Plan at a maximum of
         12% per year of the net asset value of the account;

(f)      redemptions of shares whose dealer of record at the time of the
         investment notifies DWS-SDI that the dealer waives the discretionary
         commission applicable to such Large Order NAV Purchase; and

(g)      redemptions for certain loan advances, hardship provisions or returns
         of excess contributions from retirement plans.

The Class B CDSC will be waived for the circumstances set forth in items (c),
(d), (e) and (g) for Class A shares. In addition, this CDSC will be waived:

(h)      for redemptions made pursuant to any IRA systematic withdrawal based on
         the shareholder's life expectancy including, but not limited to,
         substantially equal periodic payments described in Internal Revenue
         Code Section 72(t)(2)(A)(iv) prior to age 59 1/2;

(i)      for redemptions to satisfy required minimum distributions after age 70
         1/2 from an IRA account (with the maximum amount subject to this waiver
         being based only upon the shareholder's DWS Scudder IRA accounts); and

                                       58
<PAGE>

(j)      in connection with the following redemptions of shares held by employer
         sponsored employee benefit plans maintained on the subaccount record
         keeping system made available through ADP under an alliance with
         DWS-SDI and its affiliates: (1) to satisfy participant loan advances
         (note that loan repayments constitute new purchases for purposes of the
         CDSC and the conversion privilege), (2) in connection with retirement
         distributions (limited at any one time to 12% of the total value of
         plan assets invested in the Fund), (3) in connection with distributions
         qualifying under the hardship provisions of the Internal Revenue Code,
         (4) representing returns of excess contributions to such plans and (5)
         in connection with direct "roll over" distributions from a Flex Plan
         into a DWS Scudder IRA under the Class A net asset value purchase
         privilege.

The Class C CDSC will be waived for the circumstances set forth in items (b),
(c), (d), (e) and (g) for Class A shares and for the circumstances set forth in
items (h) and (i) for Class B shares. In addition, this CDSC will be waived for:

(k)      redemption of shares by an employer sponsored employee benefit plan
         that offers funds in addition to DWS Funds and whose dealer of record
         has waived the advance of the first year administrative service and
         distribution fees applicable to such shares and agrees to receive such
         fees quarterly; and

(l)      redemption of shares purchased through a dealer-sponsored asset
         allocation program maintained on an omnibus record-keeping system
         provided the dealer of record had waived the advance of the first year
         administrative services and distribution fees applicable to such shares
         and has agreed to receive such fees quarterly.

In-kind Redemptions. The Fund reserves the right to honor any request for
redemption or repurchase by making payment in whole or in part in readily
marketable securities. These securities will be chosen by the Fund and valued as
they are for purposes of computing the Fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Exchanges

Shareholders may request a taxable exchange of their shares for shares of the
corresponding class of other DWS Funds without imposition of a sales charge,
subject to the provisions below. For purposes of calculating any CDSC, amounts
exchanged retain their original cost and purchase date.

Shares of money market funds that were acquired by purchase (not including
shares acquired by dividend reinvestment) are subject to the applicable sales
charge on exchange. Certain series of DWS Target Fund are available on exchange
only during the offering period for such series as described in the applicable
prospectus. Tax Free Money Fund -- Investment Class, NY Tax-Free Money Fund
--Investment Class, Treasury Money Fund -- Investment Class, Money Market Fund
-- Investment Class, Cash Management Fund Institutional, Cash Reserves Fund
Institutional, Treasury Money Fund -- Institutional Class, Cash Reserve Fund,
Inc. Prime Series, Tax-Exempt California Money Market Fund, Cash Account Trust
and Investors Cash Trust are available on exchange but only through a financial
services firm having a services agreement with DWS-SDI. All exchanges among
money funds must meet applicable investor eligibility and investment
requirements. Exchanges may only be made for funds that are available for sale
in the shareholder's state of residence. Currently, Tax-Exempt California Money
Market Fund is available for sale only in California.

Shareholders must obtain prospectuses of the Funds they are exchanging into from
dealers, other firms or DWS-SDI.

Automatic Exchange Plan. The owner of $1,000 or more of any class of shares of a
DWS Fund may authorize the automatic exchange of a specified amount ($50
minimum) of such shares for shares of the same class of another such DWS Fund.
Such exchanges will be made automatically until the shareholder or the Fund
terminates the privilege. Exchanges are subject to the terms and conditions
described above.

Multi-Class Conversions. After 6 years, Class B shares automatically convert to
Class A shares, which has the net effect of lowering the annual expenses from
the seventh year on. For purposes of conversion to Class A shares,


                                       59
<PAGE>

shares purchased through the reinvestment of dividends and other distributions
paid with respect to Class B shares in a shareholder's Fund account will be
converted to Class A shares on a pro rata basis.

                                    DIVIDENDS

The Fund intends to distribute substantially all of its net investment income,
including any excess of net realized short-term capital gains over net realized
long-term capital losses, at least annually. The Fund may distribute the entire
excess of net realized long-term capital gains over net realized short-term
capital losses, as reduced by any capital loss carryforwards, at least annually.
However, if the Fund determines that it is in the interest of shareholders, the
Fund may retain all or part of its net realized long-term capital gains for
reinvestment, after paying related federal income and excise taxes. In that
case, the Fund may elect to have such gains included in shareholders' taxable
income for the year. Shareholders may then claim a credit for their pro rata
share of the related federal income tax paid by the Fund; and a shareholder's
tax basis in Fund shares will be increased by the amount of gain less the amount
of tax allocated to those shares.

Any dividends or capital gains distributions declared in October, November or
December with a record date in such a month and paid during the following
January will be treated by shareholders for federal income tax purposes as if
received on December 31 of the calendar year declared.

Dividends paid by the Fund with respect to each class of its shares will be
calculated in the same manner, at the same time and on the same day.

The level of income dividends per share (as a percentage of net asset value)
will be lower for Class B and Class C shares than for Class A shares primarily
as a result of the distribution services fee applicable to Class B and Class C
shares. Distributions of capital gains, if any, will be paid in the same amount
for each class.

Income and capital gain distributions, if any, of the Fund will be credited to
shareholder accounts in full and fractional shares of the same class of the Fund
at net asset value on the reinvestment date, except that, upon written request
to the Shareholder Service Agent, a shareholder may select one of the following
options:

1.       To receive income and short-term capital gain distributions in cash and
         long-term capital gain distributions in shares of the same class at net
         asset value; or

2.       To receive income and capital gain distributions in cash.

Dividends will be reinvested in shares of the same class of the Fund unless
shareholders indicate in writing that they wish to receive them in cash or in
shares of other DWS funds with multiple classes of shares or DWS funds as
provided in the prospectus. To use this privilege of investing dividends of the
Fund in shares of another DWS Fund, shareholders must maintain a minimum account
value of $1,000 in the Fund distributing the dividends. The Fund will reinvest
dividend checks (and future dividends) in shares of that same Fund and class if
checks are returned as undeliverable. Dividends and other distributions of the
Fund in the aggregate amount of $10 or less are automatically reinvested in
shares of the same Fund and class unless the shareholder requests in writing
that a check be issued for that particular distribution.

If an investment is in the form of a retirement plan, all dividends and capital
gains distributions must be reinvested into the shareholder's account.

If a shareholder has elected to reinvest any dividends and/or other
distributions, such distributions will be made in shares of that Fund and
confirmations will be mailed to each shareholder. If a shareholder has chosen to
receive cash, a check will be sent. Distributions of income, capital gains and
dividends are taxable in the same manner, whether made in shares or cash.

Each distribution is accompanied by a brief explanation of the form and
character of the distribution. The characterization of distributions on such
correspondence may differ from the characterization for federal tax


                                       60
<PAGE>

purposes. In January of each year, the Fund issues to each shareholder a
statement of the federal income tax status of all distributions in the prior
calendar year.

The Fund may at any time vary its foregoing dividend practices and, therefore,
reserves the right from time to time to either distribute or retain for
reinvestment such of its net investment income and its net short-term and
long-term capital gains as its Board determines appropriate under the then
current circumstances. In particular, and without limiting the foregoing, the
Fund may make additional distributions of net investment income or capital gain
net income in order to satisfy the minimum distribution requirements contained
in the Code.

                                      TAXES

The following is intended to be a general summary of certain federal income tax
consequences of investing in the funds. It is not intended as a complete
discussion of all such consequences, it does not address foreign, state or local
taxes or the effects of possible changes in tax laws, nor does it deal with all
categories of investors. Investors are therefore advised to consult with their
tax advisors before making an investment in the Fund.

Taxation of the Fund. The Fund intends to elect to be treated and to qualify
each year as a regulated investment company under Subchapter M of the Code. In
order to qualify for the special tax treatment accorded regulated investment
companies and their shareholders, the Fund must, among other things:

(a)      derive at least 90% of its gross income for each taxable year from (i)
         dividends, interest, payments with respect to certain securities loans,
         and gains from the sale or other disposition of stock, securities or
         foreign currencies, or other income (including but not limited to gains
         from options, futures, or forward contracts) derived with respect to
         its business of investing in such stock, securities, or currencies and
         (ii) net income deprived from interests in "qualified publicly traded
         partnerships," (as defined below);

(b)      diversify its holdings so that, at the end of each quarter of the
         Fund's taxable year, (i) at least 50% of the market value of the Fund's
         total assets is represented by cash and cash items, US Government
         securities, securities of other regulated investment companies, and
         other securities limited in respect of any one issuer to a value not
         greater than 5% of the value of the Fund's total assets and not more
         than 10% of the outstanding voting securities of such issuer, and (ii)
         not more than 25% of the value of the Fund's total assets is invested
         (x) in the securities (other than those of the US Government or other
         regulated investment companies) of any one issuer or of two or more
         issuers which the Fund controls and which are engaged in the same,
         similar, or related trades or businesses, or (y) in the securities of
         one or more qualified publicly traded partnerships (as defined below);
         and

(c)      distribute with respect to each taxable year at least 90% of the sum of
         its investment company taxable income (as that term is defined in the
         Code without regard to the deduction for dividends paid -- generally,
         taxable ordinary income and the excess, if any, of net short-term
         capital gains over net long-term capital losses) and net tax-exempt
         interest income, for such year.

In general, for purposes of the 90% gross income requirement described in
paragraph (a) above, income derived from a partnership will be treated as
qualifying income only to the extent such income is attributable to items of
income of the partnership which would be qualifying income if realized by the
regulated investment company. However, 100% of the net income derived from an
interest in a "qualified publicly traded partnership" (defined as a partnership
(i) interests in which are traded on an established securities market or readily
tradable on a secondary market or the substantial equivalent thereof and (ii)
that derives less than 90% of its income from the qualifying income described in
paragraph (a) above) is treated as qualifying income. In addition, although in
general the passive loss rules of the Code do not apply to regulated investment
companies, such rules do apply to a regulated investment company with respect to
items attributable to an interest in a qualified publicly traded partnership.
Finally, for purposes of paragraph (b) above, the term "outstanding voting
securities of such issuer" will include the equity securities of a qualified
publicly traded partnership.

                                       61
<PAGE>

If the Fund qualifies as a regulated investment company that is accorded special
tax treatment, the Fund will not be subject to federal income tax on income
distributed in a timely manner to its shareholders in the form of dividends
(including Capital Gain Dividends, as defined below).

If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders), and all distributions from
earnings and profits, including any distributions of net tax-exempt income and
net long-term capital gains, will be taxable to shareholders as ordinary income.
Such distributions may be eligible (i) to be treated as qualified dividend
income in the case of shareholders taxed as individuals and (ii) for the
dividends received deduction in the case of corporate shareholders. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company that is accorded special tax treatment.

The Fund is subject to a 4% nondeductible excise tax on amounts that have been
retained rather than distributed, as required, under a prescribed formula. The
formula requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's taxable ordinary income for the calendar
year and at least 98% of the excess of its capital gains over capital losses
realized during the one-year period ending October 31 (in most cases) of such
year as well as amounts that were neither distributed nor taxed to the Fund
during the prior calendar year. Although the Fund's distribution policies should
enable it to avoid excise tax liability, the Fund may retain (and be subject to
income or excise tax on) a portion of its capital gain or other income if it
appears to be in the interest of such Fund.

Taxation of Fund Distributions. For federal income tax purposes, distributions
of investment income are generally taxable to shareholders as ordinary income.
Taxes on distributions of capital gains are determined by how long the Funds
owned the investments that generated them, rather than how long a shareholder
has owned his or her shares. Distributions of net capital gains from the sale of
investments that the Fund owned for more than one year and that are properly
designated by the Fund as capital gain dividends ("Capital Gain Dividends") will
be taxable to shareholders as long-term capital gains. Distributions of gains
from the sale of investments that the Fund owned for one year or less will be
taxable as ordinary income. For taxable years beginning before January 1, 2011,
distributions of investment income designated by the Fund as derived from
"qualified dividend income" will be taxed in the hands of individuals at the
rates applicable to long-term capital gain, provided holding period and other
requirements are met at both the shareholder and Fund levels.

In order for some portion of the dividends received by the Fund shareholder to
be "qualified dividend income," the Fund must meet holding period and other
requirements with respect to some portion of the dividend paying stocks in its
portfolio and the shareholder must meet holding period and other requirements
with respect to the Fund's shares. A dividend will not be treated as qualified
dividend income (at either the Fund or shareholder level) (1) if the dividend is
received with respect to any share of stock held for fewer than 61 days during
the 121-day period beginning on the date which is 60 days before the date on
which such share becomes ex-dividend with respect to such dividend (or, in the
case of certain preferred stock, 91 days during the 181-day period beginning 90
days before such date), (2) to the extent that the recipient is under an
obligation (whether pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related property,
(3) if the recipient elects to have the dividend income treated as investment
interest, or (4) if the dividend is received from a foreign corporation that is
(a) not eligible for the benefits of a comprehensive income tax treaty with the
United States (with the exception of dividends paid on stock of such a foreign
corporation readily tradable on an established securities market in the United
States) or (b) treated as a passive foreign investment company.

If the aggregate qualified dividends received by the Fund during any taxable
year are 95% or more of its gross income, then 100% of the Fund's dividends
(other than dividends properly designated as Capital Gain Dividends) will be
eligible to be treated as qualified dividend income. For this purpose, the only
gain included in the term "gross income" is the excess of net short-term capital
gain over net long-term capital loss.


                                       62
<PAGE>

Distributions are taxable whether shareholders receive them in cash or reinvest
them in additional shares through the reinvestment privilege. A shareholder
whose distributions are reinvested in shares will be treated as having received
a dividend equal to the fair market value of the new shares issued to the
shareholder.

Long-term capital gain rates applicable to individuals have been temporarily
reduced -- in general, to 15% with lower rates applying to taxpayers in the 10%
and 15% rate brackets -- for taxable years beginning before January 1, 2011.

Dividends from domestic corporations may comprise a substantial part of the
Fund's gross income. If any such dividends constitute a substantial portion of
the Fund's gross income, a portion of the income distributions of such fund may
be eligible for the 70% deduction for dividends received by corporations.
Shareholders will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent the shares of the Fund
with respect to which the dividends are received are treated as debt-financed
under federal income tax law and is eliminated if either the underlying shares
or the shares of the Fund are deemed to have been held by the Fund or the
shareholder, as the case may be, for less than 46 days during the 91-day period
beginning 45 days before the shares become ex-dividend.

Capital gains distributions may be reduced if Fund capital loss carryforwards
are available. Any capital loss carryforwards to which the Fund is entitled are
disclosed in the Fund's annual and semi-annual reports to shareholders.

All distributions by the Fund result in a reduction in the net asset value of
the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.

Transactions in Fund Shares. The sale, exchange or redemption of shares of the
Fund may give rise to a gain or loss. In general, any gain or loss realized upon
a taxable disposition of shares will be treated as long-term capital gain or
loss if the shares have been held for more than 12 months. Otherwise, the gain
or loss on the taxable disposition of shares of the Fund will be treated as
short-term gain or loss. However, any loss realized upon a taxable disposition
of shares held for six months or less will be treated as long-term, rather than
short-term, to the extent of any long-term capital gain distributions received
(or deemed received) by the shareholder with respect to the shares. All or a
portion of any loss realized upon a taxable disposition of shares of the Fund
will be disallowed if other substantially identical shares of the Fund are
purchased within 30 days before or after the disposition. In such a case, the
basis of the newly purchased shares will be adjusted to reflect the disallowed
loss.

Foreign Taxation. Foreign withholding or other foreign taxes with respect to
income (including, in some cases, capital gains) on certain foreign securities
may occur. These taxes may be reduced or eliminated under the terms of an
applicable US income tax treaty. If more than 50% of the Fund's assets at year
end consist of the securities of foreign corporations, the Fund may elect to
permit shareholders to claim a credit or deduction on their income tax returns
for their pro rata portion the qualified taxes paid by the Fund to foreign
countries in respect of foreign securities the Fund has held for at least the
minimum period specified in the Code. In such a case, shareholders will include
in gross income from foreign sources their pro rata shares of such taxes. A
shareholder's ability to claim a foreign tax credit or deduction in respect of
foreign taxes paid by the Fund may be subject to certain limitations imposed by
the Code, as a result of which a shareholder may not get a full credit or
deduction for the amount of such taxes. In particular, shareholders must hold
their fund shares (without protection from risk of loss) on the ex-dividend date
and for at least 15 additional days during the 30-day period surrounding the
ex-dividend date to be eligible to claim a foreign tax credit with respect to a
given dividend. Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign taxes.

Taxation of Certain Investments. Equity investments by the Fund in certain
"passive foreign investment companies" ("PFICs") could potentially subject the
Fund to a US federal income tax (including interest charges) on


                                       63
<PAGE>

distributions received from the company or on proceeds received from the
disposition of shares in the company, which tax cannot be eliminated by making
distributions to Fund shareholders. However, such Fund may elect to avoid the
imposition of that tax. For example, the Fund may elect to treat a PFIC as a
"qualified electing fund" (a "QEF election"), in which case the Fund would be
required to include its share of the company's income and net capital gains
annually, regardless of whether it receives any distribution from the company.
Such Fund also may make an election to mark the gains (and to a limited extent
losses) in PFIC holdings "to the market" as though it had sold and repurchased
its holdings in those PFICs on the last day of the Fund's taxable year. Such
gains and losses are treated as ordinary income and loss. The QEF and
mark-to-market elections may accelerate the recognition of income (without the
receipt of cash) and increase the amount required to be distributed by the Fund
to avoid taxation. Making either of these elections therefore may require such
Fund to liquidate other investments (including when it is not advantageous to do
so) to meet its distribution requirement, which also may accelerate the
recognition of gain and affect the Fund's total return. Dividends paid by PFICs
will not be eligible to be treated as "qualified dividend income."

The Fund's transactions in foreign currencies, foreign currency-denominated debt
obligations and certain foreign currency options, futures contracts and forward
contracts (and similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the value of the
foreign currency concerned.

The Fund's use of options, futures contracts, forward contracts (to the extent
permitted) and certain other Strategic Transactions will be subject to special
tax rules (including mark-to-market, constructive sale, straddle, wash sale,
short sale and other rules), the effect of which may be to accelerate the Fund's
income, defer losses, cause adjustments in the holding periods of portfolio
securities, convert capital gains into ordinary income and convert short-term
capital losses into long-term capital losses. These rules could therefore affect
the amount, timing and character of distributions to investors. The means by
which the Fund seeks exposure to commodities, both directly and indirectly,
including through derivatives, may be limited by the Fund's intention to qualify
as a regulated investment company under the Code.

Certain of the Fund's hedging activities (including transactions, if any, in
foreign currencies or foreign currency-denominated instruments) are likely to
produce a difference between its book income and its taxable income. If the
Fund's book income exceeds its taxable income, the distribution (if any) of such
excess will be treated as (i) a dividend to the extent of the Fund's remaining
earnings and profits (including earnings and profits arising from tax-exempt
income), (ii) thereafter as a return of capital to the extent of the recipient's
basis in the shares, and (iii) thereafter as gain from the sale or exchange of a
capital asset. If the Fund's book income is less than its taxable income, the
Fund could be required to make distributions exceeding book income to qualify as
a regulated investment company that is accorded special tax treatment.

The Fund's investment in zero coupon bonds and other debt obligations having
original issue discount may cause the Fund to recognize taxable income in excess
of any cash received from the investment. A portion of the difference between
the issue price of zero coupon securities and their face value ("original issue
discount") is considered to be income to the Fund each year, even though the
Fund will not receive cash interest payments from these securities. This
original issue discount imputed income will comprise a part of the investment
company taxable income of the Fund, which must be distributed to shareholders in
order to maintain the qualification of the Fund as a regulated investment
company and to avoid federal income tax at the Fund's level.

In addition, if the Fund invests in certain high yield original issue discount
obligations issued by corporations (including tax-exempt obligations), a portion
of the original issue discount accruing on the obligation may be treated as
taxable dividend income. In such event, dividends of investment company taxable
income received from the Fund by its shareholders, to the extent attributable to
such portion of accrued original issue discount, would be taxable. Any such
dividends received by the Fund's corporate shareholders may be eligible for the
deduction for dividends received by corporations.

Any market discount recognized on a bond is taxable as ordinary income. A market
discount bond is a bond acquired in the secondary market at a price below its
redemption value (or its adjusted issue price if issued with original issue
discount). Absent an election to include the market discount in income as it
accrues, gain on the


                                       64
<PAGE>

disposition of such an obligation will be treated as ordinary income (instead of
capital gain) to the extent of accrued market discount.

The Fund may invest to a significant extent in debt obligations that are in the
lowest rating categories or are unrated, including debt obligations of issuers
not currently paying interest or who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
Fund. Tax rules are not entirely clear about issues such as when the Fund may
cease to accrue interest, original issue discount or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities and
how payments received on obligations in default should be allocated between
principal and income. These and other related issues will be




addressed by the Fund when, as and if it invests in such securities, in order to
seek to ensure that it distributes sufficient income to preserve its status as a
regulated investment company and does not become subject to US federal income or
excise tax.

Withholding and Other Tax Considerations. Under the backup withholding
provisions of the Code, redemption proceeds as well as distributions may be
subject to federal income tax withholding for certain shareholders if (i) the
shareholder fails to furnish the Fund with a correct "taxpayer identification
number" (TIN) or has not certified to the Fund that withholding does not apply
or (ii) the IRS notifies the Fund that the shareholder's TIN is incorrect or the
shareholder is otherwise subject to backup withholding.

Shareholders of the Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.

Special tax rules apply to investments though defined contribution plans and
other tax-qualified plans. Shareholders should consult their tax adviser to
determine the suitability of shares of the Fund as an investment through such
plans and the precise effect of and investment on their particular tax
situation.

Under Treasury regulations, if a shareholder recognizes a loss with respect to
the Fund's shares of $2 million or more for an individual shareholder or $10
million or more for a corporate shareholder, the shareholder must file with the
Internal Revenue Service a disclosure statement on Form 8886. Direct
shareholders of portfolio securities are in many cases excepted from this
reporting requirement, but under current guidance, shareholders of a regulated
investment company are not excepted. Future guidance may extend the current
exception from this reporting requirement to shareholders of most or all
regulated investment companies. The fact that a loss is reportable under these
regulations does not affect the legal determination of whether the taxpayer's
treatment of the loss is proper. Shareholders should consult their tax advisors
to determine the applicability of these regulations in light of their individual
circumstances.

Non-US shareholders. In general, dividends (other than Capital Gain Dividends)
paid by the Fund to a shareholder that is not a "US person" within the meaning
of the Code (such shareholder, a "foreign person") are subject to withholding of
US federal income tax at a rate of 30% (or lower applicable treaty rate) even if
they are funded by income or gains (such as portfolio interest, short-term
capital gains, or foreign-source dividend and interest income) that, if paid to
a foreign person directly, would not be subject to withholding. However, for
taxable years beginning before January 1, 2008, the Fund will not be required to
withhold any amounts (i) with respect to distributions (other than distributions
to a foreign person (w) that has not provided a satisfactory statement that the
beneficial owner is not a US person, (x) to the extent that the dividend is
attributable to certain interest on an obligation if the foreign person is the
issuer or is a 10% shareholder of the issuer, (y) that is within certain foreign
countries that have inadequate information exchange with the United States, or
(z) to the extent the dividend is attributable to interest paid by a person that
is a related person of the foreign person and the foreign person is a controlled
foreign corporation) from US-source interest income that would not be subject to
US federal income tax if earned directly by an individual foreign person, to the
extent such distributions are properly designated by the Fund, and (ii) with
respect to distributions (other than distributions to an individual foreign
person who is present in the United States for a period or periods aggregating
183 days or more during the year of the distribution) of net short-term capital
gains in excess of net long-term capital losses, to the extent such
distributions are properly designated by the Fund. Legislation extending this
exemption was proposed but not enacted in 2007. It is unclear whether similar
legislation will be enacted in 2008.


                                       65
<PAGE>

Depending on the circumstances, the Fund may make such designations with respect
to all, some or none of its potentially eligible dividends and/or treat such
dividends, in whole or in part, as ineligible from this exemption from
withholding. In order to qualify for this exemption from withholding, a foreign
person will need to comply with applicable certification requirements relating
to its non-US status (including, in general, furnishing an IRS Form W-8BEN or
substitute form). In the case of shares held through an intermediary, the
intermediary may withhold even if the Fund makes a designation with respect to a
payment. Foreign persons should consult their intermediaries with respect to the
application of these rules to their accounts.

In addition, as indicated above, Capital Gain Dividends will not be subject to
withholding of US federal income tax. If a beneficial holder who is a foreign
person has a trade or business in the United States, and the dividends are
effectively connected with the conduct by the beneficial holder of a trade or
business in the United States, the dividend will be subject to US federal income
taxation at regular income tax rates.

Special rules apply to distributions to foreign shareholders from a Fund that is
either a "U.S. real property holding corporation" ("USRPHC") or would be a
USRPHC but for the operation of certain exceptions to the definition thereof.
Additionally, special rules apply to the sale of shares in a Fund that is a
USRPHC. Very generally, a USRPHC is a domestic corporation that holds U.S. real
property interests ("USRPIs") -- USRPIs are defined very generally as any
interest in U.S. real property or any equity interest in a USRPHC -- the fair
market value of which equals or exceeds 50% of the sum of the fair market values
of the corporation's USRPIs, interests in real property located outside the
United States and other assets. A Fund that holds (directly or indirectly)
significant interests in REITs may be a USRPHC. The special rules discussed
below will also apply to distributions from a Fund that would be a USRPHC absent
exclusions from USRPI treatment for interests in domestically controlled REITs
and not-greater-than-5% interests in publicly traded classes of stock in REITs.

In the case of a Fund that is a USRPHC or would be a USRPHC but for the
exclusions from USPRI treatment described above, amounts the Fund receives from
REITs derived from gains realized from USRPIs will retain their character as
gains realized from USPRIs in the hands of the Fund's foreign shareholders
(under current law, any direct USRPI gain the Fund recognizes does not retain
its character as USRPI gain in the hands of foreign shareholders of the Fund,
although this may change if certain proposed legislation is enacted). In the
hands of a foreign shareholder that holds (or has held in the prior year) more
than a 5% interest in the Fund, such amounts will be treated as gains
"effectively connected" with the conduct of a "U.S. trade or business," and
subject to tax at graduated rates. Moreover, such shareholders will be required
to file a U.S. income tax return for the year in which the gain was recognized
and the Fund will be required to withhold 35% of the amount of the such
distribution. In the case of all other foreign shareholders (i.e., those whose
interests in the Fund did not exceed 5% at any time during the prior year), the
USRPI distribution will be treated as ordinary income (regardless of any
designation by the Fund that such distribution is a Capital Gain Dividend), and
the Fund must withhold 30% (or a lower applicable treaty rate) of the amount of
the distribution paid to such foreign shareholder. Foreign shareholders of such
Funds are also subject to "wash sale" rules to prevent the avoidance of the
tax-filing and -payment obligations discussed above through the sale and
repurchase of Fund shares.

In addition, a Fund that is a USRPHC must withhold 10% of the amount realized in
a redemption by a greater-than-5% foreign shareholder, and that shareholder must
file a U.S. income tax return for the year of the disposition of the USRPI and
pay any additional tax due on the gain.

                                 NET ASSET VALUE

The net asset value of shares of the Fund is computed as of the close of regular
trading on the Exchange on each day the Exchange is open for trading (the "Value
Time"). The Exchange is scheduled to be closed on the following holidays: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on
the preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively. Net asset value per share is determined
separately for each class of shares by dividing the value of the total assets of
the Fund attributable to the shares of that class, less all liabilities
attributable to that class, by the total number of shares of that class
outstanding. The per share net asset value may be lower for certain classes of
the Fund because of higher expenses borne by these classes.


                                       66
<PAGE>

An equity security is valued at its most recent sale price on the security's
primary exchange or over-the-counter ("OTC") market as of the Value Time.
Lacking any sales, the security is valued at the calculated mean between the
most recent bid quotation and the most recent asked quotation (the "Calculated
Mean") on such exchange or OTC market as of the Value Time. If it is not
possible to determine the Calculated Mean, the security is valued at the most
recent bid quotation on such exchange or OTC market as of the Value Time. In the
case of certain foreign exchanges or OTC markets, the closing price reported by
the exchange or OTC market (which may sometimes be referred to as the "official
close" or the "official closing price" or other similar term) will be considered
the most recent sale price.

Debt securities are valued as follows. Money market instruments purchased with
an original or remaining maturity of 60 days or less, maturing at par, are
valued at amortized cost. Other money market instruments are valued based on
information obtained from an approved pricing agent or, if such information is
not readily available, by using matrix pricing techniques (formula driven
calculations based primarily on current market yields). Bank loans are valued at
prices supplied by an pricing agent (which are intended to reflect the mean
between the bid and asked prices), if available, and otherwise at the mean of
the most recent bid and asked quotations or evaluated prices, as applicable,
based on quotations or evaluated prices obtained from one or more
broker-dealers. Privately placed debt securities, other than Rule 144A debt
securities, initially are valued at cost and thereafter based on all relevant
factors, including type of security, size of holding and restrictions on
disposition. Municipal debt securities are valued at prices supplied by an
pricing agent (which are intended to reflect the mean between the bid and asked
prices), if available, and otherwise at the mean of the most recent bid and
asked quotations or evaluated price obtained from a broker-dealer. Other debt
securities are valued at prices supplied by an Independent Pricing Service, if
available, and otherwise at the most recent bid quotation or evaluated price, as
applicable, obtained from one or more broker-dealers. If it is not possible to
value a particular debt security pursuant to the above methods, the security is
valued on the basis of factors including (but not limited to) maturity, coupon,
creditworthiness, currency denomination, and the movement of the market in which
the security is normally traded.

An exchange-traded option contract on securities, currencies and other financial
instruments is valued at its most recent sale price on the relevant exchange.
Lacking any sales, the option contract is valued at the Calculated Mean. If it
is not possible to determine the Calculated Mean, the option contract is valued
at the most recent bid quotation in the case of a purchased option contract or
the most recent asked quotation in the case of a written option contract, in
each case as of the Value Time. An option contract on securities, currencies and
other financial instruments traded in the OTC market is valued on the Value Date
at the evaluated price provided by the broker-dealer with which it was traded.
Futures contracts (and options thereon) are valued at the most recent settlement
price, if available, on the exchange on which they are traded most extensively.
With the exception of stock index futures contracts which trade on the Chicago
Mercantile Exchange, closing settlement times are prior to the close of trading
on the New York Stock Exchange. For stock index futures contracts which trade on
the Chicago Mercantile Exchange, closing settlement prices are normally
available at approximately 4:20 p.m. Eastern time. If no settlement price is
available, the last traded price on such exchange will be used.

If market quotations for a portfolio asset are not readily available or the
value of a portfolio asset as determined in accordance with Board approved
procedures does not represent the fair market value of the portfolio asset, the
value of the portfolio asset is taken to be an amount which, in the opinion of
the Fund's Pricing Committee (or, in some cases, the Board's Valuation
Committee), represents fair market value. The value of other portfolio holdings
owned by the Fund is determined in a manner which is intended to fairly reflect
the fair market value of the asset on the valuation date, based on valuation
procedures adopted by the Trust's Board and overseen primarily by the Fund's
Pricing Committee.

                             DIRECTORS AND OFFICERS

The following table presents certain information regarding the Board Members of
the Corporation. Each Board Member's year of birth is set forth in parentheses
after his or her name. Unless otherwise noted, (i) each Board Member has engaged
in the principal occupation(s) noted in the table for at least the most recent
five years, although not necessarily in the same capacity, and (ii) the address
of each Board Member that is not an "interested person" (as defined in the 1940
Act) of the Corporation or the Advisor (each, an "Independent Board Member"), is
c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33904. The term of office
for each Board Member is until the election and qualification of a successor, or
until such Board Member sooner dies, resigns, is removed or as


                                       67
<PAGE>

otherwise provided in the governing documents of the Corporation. Because the
Fund does not hold an annual meeting of shareholders, each Board Member will
hold office for an indeterminate period. The Board Members may also serve in
similar capacities with other funds in the DWS fund complex. The Length of Time
Served represents the year in which the Board Member joined the board of one or
more DWS funds now overseen by the Board.

Independent Board Members

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the                                                                               Number of Funds
 Corporation and Length    Business Experience and                                               in DWS Fund
 of Time Served            Directorships During the Past 5 Years                                 Complex Overseen
-------------------------------------------------------------------------------------------------------------------
<S>                                <C>                                                                 <C>
Dawn-Marie Driscoll (1946) President, Driscoll Associates (consulting firm); Executive Fellow,          76
Chairperson since 2004     Center for Business Ethics, Bentley College; formerly, Partner,
Board Member since         Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and
1987                       General Counsel, Filene's (1978-1988). Directorships: Trustee of 8
                           open-end mutual funds managed by Sun Capital Advisers, Inc. (since
                           2007); Director of ICI Mutual Insurance Company (since 2007);
                           Advisory Board, Center for Business Ethics, Bentley College;
                           Trustee, Southwest Florida Community Foundation (charitable
                           organization); Former Directorships: Investment Company Institute
                           (audit, executive, nominating committees) and Independent Directors
                           Council (governance, executive committees)
-------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr.      Vice Chair, WGBH Educational Foundation. Directorships: Association          76
 (1943)                    of Public Television Stations; Becton Dickinson and Company(1)
 Board Member since        (medical technology company); Belo Corporation(1) (media company);
 1990                      Boston Museum of Science; Public Radio International. Former
                           Directorships: American Public Television; Concord Academy; New
                           England Aquarium; Mass. Corporation for Educational
                           Telecommunications; Committee for Economic Development; Public
                           Broadcasting Service
-------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)        Managing General Partner, Exeter Capital Partners (a series of               76
Board Member since         private equity funds). Directorships: Progressive Holding
1996                       Corporation (kitchen goods importer and distributor); Natural
                           History, Inc. (magazine publisher); Box Top Media Inc.
                           (advertising); The Kennel Shop (retailer)
-------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss        Clinical Professor of Finance, NYU Stern School of Business                  76
(1945)                     (1997-present); Member, Finance Committee, Association for Asian
Board Member since         Studies (2002-present); Director, Mitsui Sumitomo Insurance Group
2001                       (US) (2004-present); prior thereto, Managing Director, J.P. Morgan
                           (investment banking firm) (until 1996)
-------------------------------------------------------------------------------------------------------------------
Martin J. Gruber           Nomura Professor of Finance, Leonard N. Stern School of Business,            76
(1937)                     New York University (since September 1965); Director, Japan Equity
Board Member since         Fund, Inc. (since January 1992), Thai Capital Fund, Inc. (since
1992                       January 2000), Singapore Fund, Inc. (since January 2000), National
                           Bureau of Economic Research (since January 2006). Formerly, Trustee,
                           TIAA (pension funds) (January 1996-January 2000); Trustee, CREF and
                           CREF Mutual Funds (January 2000-March 2005); Chairman, CREF and CREF
                           Mutual Funds (February 2004-March 2005); and Director, S.G. Cowen
                           Mutual Funds (January 1985-January 2001)
-------------------------------------------------------------------------------------------------------------------

                                       68
<PAGE>

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the                                                                               Number of Funds
 Corporation and Length    Business Experience and                                               in DWS Fund
 of Time Served            Directorships During the Past 5 Years                                 Complex Overseen
-------------------------------------------------------------------------------------------------------------------
Richard J. Herring         Jacob Safra Professor of International Banking and Professor,                76
(1946)                     Finance Department, The Wharton School, University of Pennsylvania
Board Member since         (since July 1972); Co-Director, Wharton Financial Institutions
1990                       Center (since July 2000); Director, Japan Equity Fund, Inc. (since
                           September 2007), Thai Capital Fund, Inc. (since September 2007),
                           Singapore Fund, Inc. (since September 2007). Formerly, Vice Dean and
                           Director, Wharton Undergraduate Division (July 1995-June 2000);
                           Director, Lauder Institute of International Management Studies (July
                           2000-June 2006)
-------------------------------------------------------------------------------------------------------------------
Graham E. Jones            Senior Vice President, BGK Realty, Inc. (commercial real estate)             76
(1933)                     (since 1995). Formerly, Trustee of various investment companies
Board Member since         managed by Sun Capital Advisors, Inc. (1998-2005), Morgan Stanley
1993                       Asset Management (1985-2001) and Weiss, Peck and Greer (1985-2005)
-------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel           President and Chief Executive Officer, The Pew Charitable Trusts             76
(1951)                     (charitable organization) (1994 to present); Trustee, Thomas
Board Member since         Jefferson Foundation (charitable organization) (1994 to present);
1995                       Trustee, Executive Committee, Philadelphia Chamber of Commerce (2001
                           to present). Formerly, Executive Vice President, The Glenmede Trust
                           Company (investment trust and wealth management) (1983 to 2004);
                           Board Member, Investor Education (charitable organization)
                           (2004-2005); Director, Viasys Health Care(1) (January 2007-June 2007)
-------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.     Private investor since October 2003; Trustee of 8 open-end mutual            76
(1946)                     funds managed by Sun Capital Advisers, Inc. (since October 1998).
Board Member since         Formerly, Pension & Savings Trust Officer, Sprint Corporation((1))
1993                       (telecommunications) (November 1989-September 2003)
-------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg     Retired. Formerly, Consultant (1997-2001); Director, US Government           76
(1943)                     Accountability Office (1996-1997); Partner, Fulbright & Jaworski,
Board Member since         L.L.P. (law firm) (1978-1996). Directorships: The William and Flora
1997                       Hewlett Foundation; Service Source, Inc. Former Directorships:
                           Mutual Fund Directors Forum (2002-2004), American Bar Retirement
                           Association (funding vehicle for retirement plans) (1987-1990 and
                           1994-1996)
-------------------------------------------------------------------------------------------------------------------
Carl W. Vogt               Retired Senior Partner, Fulbright & Jaworski, L.L.P. (law firm);             74
(1936)                     formerly, President (interim) of Williams College (1999-2000);
Board Member since         formerly, President of certain funds in the Deutsche Asset
2002                       Management family of funds (formerly, Flag Investors family of
                           funds) (registered investment companies) (1999-2000). Directorships:
                           Yellow Corporation (trucking); American Science & Engineering (x-ray
                           detection equipment). Former Directorships: ISI Family of Funds
                           (registered investment companies, 4 funds overseen); National
                           Railroad Passenger Corporation (Amtrak) Waste Management, Inc.
                           (solid waste disposal); formerly, Chairman and Member, National
                           Transportation Safety Board
-------------------------------------------------------------------------------------------------------------------

                                       69
<PAGE>

Interested Board Member

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the                                                                               Number of Funds
 Corporation and Length    Business Experience and                                               in DWS Fund
 of Time Served            Directorships During the Past 5 Years                                 Complex Overseen
-------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(2)         Managing Director(4), Deutsche Asset Management; Head of Deutsche            82
 (1958)                    Asset Management Americas; CEO of DWS Scudder; formerly board member
 Board Member since        of DWS Investments, Germany (1999-2005); formerly, Head of Sales and
 2006                      Product Management for the Retail and Private Banking Division of
                           Deutsche Bank in Germany (1997-1999); formerly, various strategic
                           and operational positions for Deutsche Bank Germany Retail and
                           Private Banking Division in the field of investment funds, tax
                           driven instruments and asset management for corporates (1989-1996)
-------------------------------------------------------------------------------------------------------------------

Officers(3)

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the
 Corporation and Length     Business Experience and
 of Time Served             Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(5)        Managing Director(4), Deutsche Asset Management (2006-present); President of DWS
 (1965)                     family of funds; Director, ICI Mutual Insurance Company (since October 2007);
 President, 2006-present    formerly, Director of Fund Board Relations (2004-2006) and Director of Product
                            Development (2000-2004), Merrill Lynch Investment Managers; Senior Vice President
                            Operations, Merrill Lynch Asset Management (1999-2000)
-------------------------------------------------------------------------------------------------------------------
 John Millette(6) (1962)    Director(4), Deutsche Asset Management
 Vice President and
 Secretary, 1999-present
-------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(5)        Managing Director(4), Deutsche Asset Management (since July 2004); formerly,
 (1963)                     Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of
 Chief Financial Officer,   Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global
 2004-present               Asset Management (1994-1998)
 Treasurer, 2005-present
-------------------------------------------------------------------------------------------------------------------
 Patricia DeFilippis(5)     Vice President, Deutsche Asset Management (since June 2005); formerly, Counsel, New
 (1963)                     York Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co.
 Assistant Secretary,       LLC (1998-2003)
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Elisa D. Metzger(5)        Director(4), Deutsche Asset Management (since September 2005); formerly, Counsel,
 (1962)                     Morrison and Foerster LLP (1999-2005)
 Assistant Secretary,
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(6)        Managing Director(4), Deutsche Asset Management
 (1962)
 Assistant Secretary,
 1997-present
-------------------------------------------------------------------------------------------------------------------
 Paul Antosca(6)            Director(4), Deutsche Asset Management (since 2006); formerly, Vice President, The
 (1957)                     Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------



                                       70
<PAGE>

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the
 Corporation and Length     Business Experience and
 of Time Served             Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Jack Clark (6)             Director(4), Deutsche Asset Management (since 2007); formerly, Vice President, State
 (1967)                     Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Kathleen Sullivan          Director(4), Deutsche Asset Management
 D'Eramo(6)
 (1957)
 Assistant Treasurer,
 2003-present
-------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(6)         Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(5) (1972)    Vice President, Deutsche Asset Management (since 2006); formerly, AML Operations
 Anti-Money Laundering      Manager for Bear Stearns (2004-2006), Supervising Compliance Principal and
 Compliance Officer,        Operations Manager for AXA Financial (1999-2004)
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Robert Kloby(5) (1962)     Managing Director(4), Deutsche Asset Management (2004-present); formerly, Chief
 Chief Compliance           Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President, The
 Officer, 2006-present      Prudential Insurance Company of America (1988-2000); E.F. Hutton and Company
                            (1984-1988)
-------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(5)  Director(4), Deutsche Asset Management (2006-present); formerly, Director, Senior
 (1951)                     Vice President, General Counsel, and Assistant Secretary, Hansberger Global
 Chief Legal Officer,       Investors, Inc. (1996-2006); Director, National Society of Compliance Professionals
 2006-present               (2002-2005)(2006-2009)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      A publicly held company with securities registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

(2)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Funds.

(3)      As a result of their respective positions held with the Advisor, these
         individuals are considered "interested persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Funds.

(4)      Executive title, not a board directorship.

(5)      Address:  345 Park Avenue, New York, New York 10154.

(6)      Address: Two International Place, Boston, Massachusetts 02110.

Each Officer also holds similar positions for other investment companies for
which DIMA or an affiliate serves as the advisor.

                                       71
<PAGE>

Officer's Role with Principal Underwriter:  DWS Scudder Distributors, Inc.

 Paul H. Schubert:                         Vice President
 Caroline Pearson:                         Secretary

Information Concerning Committees and Meetings of Board Members

The Board of the Corporation met ten (10) times during the calendar year ended
December 31, 2007 and each Board Member attended at least 80% of the meetings of
the Board and meetings of the committees of the Board on which such Board Member
served.

Board Committees. Ms. Driscoll has served as Chair of the Board of the Funds
since June 2004.

The Board has established the following standing committees: Audit Committee,
Nominating/Corporate Governance Committee, Valuation Committee, Equity Oversight
Committee, Fixed Income Oversight Committee, Marketing/Distribution/Shareholder
Service Committee, Legal/Regulatory/Compliance Committee and Expense/Operations
Committee.

The Audit Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and financial
reporting practices of the applicable Fund. It also makes recommendations



regarding the selection of an independent registered public accounting firm for
a Fund, reviews the independence of such firm, reviews the scope of audit and
internal controls, considers and reports to the Board on matters relating to a
Fund's accounting and financial reporting practices, and performs such other
tasks as the full Board deems necessary or appropriate. The Audit Committee
receives annual representations from the independent registered public
accounting firm as to its independence. The members of the Audit Committee are
Keith R. Fox (Chair and Audit Committee Financial Expert), Kenneth C. Froewiss,
Richard J. Herring, William N. Searcy, Jr. and Jean Gleason Stromberg. The Audit
Committee held nine (9) meetings during the calendar year 2007.

The Nominating/Corporate Governance Committee (i) recommends to the Board
candidates to serve as Board Members and (ii) oversees and, as appropriate,
makes recommendations to the Board regarding other fund governance-related
matters, including but not limited to Board compensation practices, retirement
policies, self-evaluations of effectiveness, review of possible conflicts of
interest and independence issues involving Board Members, allocations of
assignments and functions of committees of the Board, and share ownership
policies. The members of the Nominating/Corporate Governance Committee are Henry
P. Becton, Jr. (Chair), Graham E. Jones, Rebecca W. Rimel and Jean Gleason
Stromberg. The Nominating/Corporate Governance Committee (previously known as
the Committee on Independent Directors) held three (3) meetings during the
calendar year 2007.

The Valuation Committee oversees Fund valuation matters, reviews valuation
procedures adopted by the Board, determines the fair value of the Fund's
securities as needed in accordance with the valuation procedures and performs
such other tasks as the full Board deems necessary or appropriate. The members
of the Valuation Committee are Keith R. Fox, Kenneth C. Froewiss (Chair), Martin
J. Gruber and Richard J. Herring. The Valuation Committee held 10 meetings
during the calendar year 2007.

The Board has established two Investment Oversight Committees, one focusing on
Funds primarily investing in equity securities (the "Equity Oversight
Committee") and one focusing on Funds primarily investing in fixed income
securities (the "Fixed Income Oversight Committee"). These Committees meet
regularly with Fund portfolio managers and other investment personnel to review
the relevant Funds' investment strategies and investment performance. The
members of the Equity Oversight Committee are Henry P. Becton, Jr., Martin J.
Gruber (Chair), Richard J. Herring, Rebecca W. Rimel and Carl W. Vogt. The
members of the Fixed Income Oversight Committee are Dawn-Marie Driscoll, Keith
R. Fox, Kenneth C. Froewiss, Graham E. Jones, William N. Searcy, Jr. (Chair) and
Jean Gleason Stromberg. Each Investment Oversight Committee held six (6)
meetings during the calendar year 2007.

The Marketing/Distribution/Shareholder Service Committee oversees (i) the
quality, costs and types of shareholder services provided to the Funds and their
shareholders, and (ii) the distribution-related services provided


                                       72
<PAGE>

to the Funds and their shareholders. The members of the
Marketing/Distribution/Shareholder Service Committee are Martin J. Gruber,
Richard J. Herring (Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Carl W.
Vogt. The Marketing/Distribution/Shareholder Service Committee held seven (7)
meetings during the calendar year 2007.

The Legal/Regulatory/Compliance Committee oversees (i) the significant legal
affairs of the Funds, including the handling of pending or threatened litigation
or regulatory action involving the Funds, (ii) general compliance matters
relating to the Funds and (iii) proxy voting. The members of the
Legal/Regulatory/Compliance Committee are Henry P. Becton, Jr., Dawn-Marie
Driscoll, Rebecca W. Rimel, William N. Searcy, Jr., Jean Gleason Stromberg and
Carl W. Vogt (Chair). The Legal/Regulatory/Compliance Committee held six (6)
meetings during the calendar year 2007.

The Expense/Operations Committee (i) monitors the Fund's total operating expense
levels, (ii) oversees the provision of administrative services to the Fund,
including the Fund's custody, fund accounting and insurance arrangements, and
(iii) reviews the Fund's investment advisers' brokerage practices, including the
implementation of related policies. The members of the Expense/Operations
Committee are Henry P. Becton, Jr., Dawn-Marie Driscoll, Keith R. Fox and
William N. Searcy, Jr. This committee held nine (9) meetings during the calendar
year 2007.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board also forms ad hoc committees to consider specific issues.

Remuneration. Each Independent Board Member receives compensation from the Fund
for his or her services, which includes an annual retainer and an attendance fee
for each meeting attended. No additional compensation is paid to any Independent
Board Member for travel time to meetings, attendance at directors' educational
seminars or conferences, service on industry or association committees,
participation as speakers at directors' conferences or service on special fund
industry director task forces or subcommittees. Independent Board Members do not
receive any employee benefits such as pension or retirement benefits or health
insurance from the Fund or any fund in the DWS fund complex.

Members of the Board who are officers, directors, employees or stockholders of
Deutsche Asset Management or its affiliates receive no direct compensation from
a Fund, although they are compensated as employees of Deutsche Asset Management,
or its affiliates, and as a result may be deemed to participate in fees paid by
the Funds. The following tables show compensation from the Fund and aggregate
compensation from all of the funds in the DWS fund complex received by each
Board Member during the calendar year 2007. Mr. Schwarzer became a member of the
Board on May 5, 2006, is an interested person of the Funds and received no
compensation from the Funds or any fund in the DWS fund complex during the
relevant periods.

<TABLE>
<CAPTION>
                                      Aggregate Compensation         Total Compensation
                                     from DWS Gold & Precious           from Fund and
Name of Board Member                       Metals Fund               DWS Fund Complex(1)
--------------------                       -----------               -------------------
<S>                                               <C>                         <C>
Henry P. Becton, Jr.(3)(4)                    $1,590                      $200,000
Dawn-Marie Driscoll(2)(3)(4)                  $1,998                      $253,000
Keith R. Fox(3)(4)                            $1,602                      $203,000
Kenneth C. Froewiss(3)(4)                     $1,578                      $200,000
Martin J. Gruber(3)(4)                        $1,531                      $198,000
Richard J. Herring(3)(4)                      $1,539                      $195,000
Graham E. Jones(3)                            $1,641                      $207,000
Rebecca W. Rimel(3)(4)                        $1,499                      $194,000
William N. Searcy, Jr.(3)(4)                  $1,578                      $200,000
Jean Gleason Stromberg(3)(4)                  $1,491                      $189,000
Carl W. Vogt(3)(4)                            $1,554                      $194,000
</TABLE>

(1)      The DWS Fund Complex is composed of 138 funds as of December 31, 2007.

(2)      Includes $50,000 in annual retainer fees in Ms. Driscoll's role as
         Chairperson of the Board.

                                       73
<PAGE>

(3)      For each Board Member, except Mr. Vogt, total compensation for calendar
         year 2007 includes compensation, as of December 31, 2007, for service
         on the boards of 30 trusts/corporations comprised of 76
         funds/portfolios. For Mr. Vogt total compensation for calendar year
         2007 includes compensation for service on the boards of 28
         trusts/corporations comprised of 74 funds/portfolios.

(4)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the board in connection with
         the possible consolidation of the various DWS Fund boards and funds,
         meetings for considering fund expense simplification initiatives, and
         consideration of issues specific to the Funds' direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $1,000 for Mr. Becton, $1,000 for
         Ms. Driscoll, $1,000 for Mr. Fox, $1,000 for Mr. Froewiss, $5,000 for
         Mr. Gruber, $1,000 for Dr. Herring, $5,000 for Ms. Rimel, $1,000 for
         Mr. Searcy, $1,000 for Ms. Stromberg and $1,000 for Mr. Vogt. These
         meeting fees were borne by the Advisor.

Board Member Ownership in the Fund

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Fund and DWS Fund Complex as of December 31,
2007.



<TABLE>
<CAPTION>
                                               Dollar Range of                Aggregate Dollar Range of
                                             Beneficial Ownership         Ownership in all Funds Overseen by
                                           in DWS Gold & Precious                    Board Member
Board Member                                     Metals Fund                 in the DWS Fund Complex(1)
------------                                     -----------                 --------------------------

Independent Board Member:
-------------------------
<S>                                                  <C>                             <C>
Henry P. Becton, Jr.                           $10,001-$50,000                    Over $100,000
Dawn-Marie Driscoll                               $1-$10,000                      Over $100,000
Keith R. Fox                                         None                         Over $100,000
Kenneth C. Froewiss                                  None                         Over $100,000
Martin J. Gruber                                     None                         Over $100,000
Richard J. Herring                                   None                         Over $100,000
Graham E. Jones                                $50,001-$100,00                    Over $100,000
Rebecca W. Rimel                                     None                         Over $100,000
William N. Searcy, Jr.                               None                         Over $100,000
Jean Gleason Stromberg                         $10,001-$50,000                    Over $100,000
Carl W. Vogt                                      $1-$10,000                      Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                                       None                           Over $100,000

(1)      Securities beneficially owned as defined under the 1934 Act include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities, employment ownership and
         securities when the Board Member can exert voting power and when the
         Board Member has authority to sell the securities. The dollar ranges
         are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, over
         $100,000.

Ownership in Securities of the Advisor and Related Companies

As reported to the Fund, the information in the following table reflects
ownership by the Independent Board Members and their immediate family members of
certain securities as of December 31, 2007. An immediate family member can be a
spouse, children residing in the same household including step and adoptive
children and any dependents. The securities represent ownership in the Advisor
or principal underwriter of the Fund and any persons


                                       74
<PAGE>

(other than a registered investment company) directly or indirectly controlling,
controlled by, or under common control with the Advisor or principal underwriter
of the Fund (including Deutsche Bank AG).

                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----

Henry P. Becton, Jr.                                None
Dawn-Marie Driscoll                                 None
Keith R. Fox                                        None
Kenneth C. Froewiss                                 None
Martin J. Gruber                                    None
Richard J. Herring                                  None
Graham E. Jones                                     None
Rebecca W. Rimel                                    None
William N. Searcy, Jr.                              None
Jean Gleason Stromberg                              None
Carl W. Vogt                                        None

Securities Beneficially Owned

As of February 9, 2008, the Board Members and officers of the Corporation owned,
as a group, less than 1% of the outstanding shares of the Fund.

To the best of the Fund's knowledge, as of February 9, 2008, no person owned of
record or beneficially 5% or more of any class of the Fund's outstanding shares,
except as noted below.

DWS Gold & Precious Metals Fund

Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MLPF&S FOR THE SOLE BENEFIT OF                                547,693.65                    5.07% of Class A
ITS CUSTOMERS
ATTN FUND ADM 9E8R4
JACKSONVILLE FL  32246-6484

MORGAN STANLEY & CO.                                          541,365.03                    5.01% of Class A
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CITIGROUP GLOBAL MARKETS INC                                  382,287.76                    14.70% of Class B
XXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MLPF&S FOR THE SOLE BENEFIT OF                                177,235.68                    6.82% of Class B
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 9E8R5
JACKSONVILLE FL  32246-6484

MORGAN STANLEY & CO.                                          158,204.86                    6.08% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311



                                       75
<PAGE>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MORGAN STANLEY & CO.                                         1,143,362.39                   21.99% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MLPF&S FOR THE SOLE BENEFIT OF                                597,822.19                    11.50% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION
SEC 9E8S2
JACKSONVILLE FL  32246-6484

CHARLES SCHWAB & CO INC                                      1,650,064.74                   9.34% of Class S
SAN FRANCISCO CA  94104-4151
</TABLE>

Agreement to Indemnify Independent Directors for Certain Expenses

In connection with litigation or regulatory action related to possible improper
market timing or other improper trading activity or possible improper marketing
and sales activity in the Funds, each Fund's investment advisor has agreed,
subject to applicable law and regulation, to indemnify and hold harmless the
applicable Funds against any and all loss, damage, liability and expense,
arising from market timing or marketing and sales matters alleged in any
enforcement actions brought by governmental authorities involving or potentially
affecting the Funds or the investment advisor ("Enforcement Actions") or that
are the basis for private actions brought by shareholders of the Funds against
the Funds, their directors and officers, the Funds' investment advisor and/or
certain other parties ("Private Litigation"), or any proceedings or actions that
may be threatened or commenced in the future by any person (including
governmental authorities), arising from or similar to the matters alleged in the
Enforcement Actions or Private Litigation. In recognition of its undertaking to
indemnify the applicable Funds and in light of the rebuttable presumption
generally afforded to independent directors/trustees of investment companies
that they have not engaged in disabling conduct, each Fund's investment advisor
has also agreed, subject to applicable law and regulation, to indemnify the
applicable Funds' Independent Directors against certain liabilities the
Independent Directors may incur from the matters alleged in any Enforcement
Actions or Private Litigation or arising from or similar to the matters alleged
in the Enforcement Actions or Private Litigation, and advance expenses that may
be incurred by the Independent Director in connection with any Enforcement
Actions or Private Litigation. The applicable investment advisor is not,
however, required to provide indemnification and advancement of expenses: (1)
with respect to any proceeding or action with respect to which the applicable
Fund's Board determines that the Independent Director ultimately would not be
entitled to indemnification or (2) for any liability of the Independent
Director to the Funds or their shareholders to which the Independent Director
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the Independent Director's duties as a
director or trustee of the Funds as determined in a final adjudication in such
action or proceeding. The estimated amount of any expenses that may be advanced
to the Independent Directors or indemnity that may be payable under the
indemnity agreements is currently unknown. These agreements by each Fund's
investment advisor will survive the termination of the investment management
agreements between the applicable investment advisor and the Funds.

                                FUND ORGANIZATION

Organizational Description

DWS Gold & Precious Metals Fund is a non-diversified series of DWS Mutual Funds,
Inc. a Maryland corporation organized in March 1988 (the "Corporation").

The Corporation is a Maryland corporation organized under the laws of Maryland
and is governed by Amended and Restated Articles of Incorporation that were
approved by shareholders in the second quarter of 2006, as may be further
amended from time to time (the "Articles of Incorporation"). All shares issued
and outstanding are fully paid and non-assessable, transferable, have no
pre-emptive rights (except as may be determined by the Board of Directors) or
conversion rights (except as described below) and are redeemable as described in
the SAI and in the


                                       76
<PAGE>

Fund's prospectus. Each share has equal rights with each other share of the same
class of the Fund as to voting, dividends, exchanges and liquidation.
Shareholders are entitled to one vote for each share held and fractional votes
for fractional shares held.

The Board of Directors may determine that shares of the Fund or a class of the
Fund shall be automatically converted into shares of another Fund of the
Corporation or of another class of the same or another Fund based on the
relative net assets of such Fund or class at the time of conversion. The Board
of Directors may also provide that the holders of shares of the Fund or a class
of the Fund shall have the right to convert or exchange their shares into shares
of one or more other Funds or classes on terms established by the Board of
Directors.

Each share of the Corporation may be subject to such sales loads or charges,
expenses and fees, account size requirements, and other rights and provisions,
which may be the same or different from any other share of the Corporation or
any other share of any Fund or class of the Fund (including shares of the same
Fund or class as the share), as the Board of Directors of the Corporation may
establish or change from time to time and to the extent permitted under the 1940
Act.

The Corporation is not required to hold an annual meeting of shareholders in any
year in which the election of Directors is not required by the 1940 Act. If a
meeting of shareholders of the Corporation is required by the 1940 Act to take
action on the election of Directors, then an annual meeting shall be held to
elect Directors and take such other action as may come before the meeting.
Special meetings of the shareholders of the Corporation, or of the shareholders
of one or more Funds or classes thereof, for any purpose or purposes, may be
called at any time by the Board of Directors or by the President, and shall be
called by the President or Secretary at the request in writing of shareholders
entitled to cast a majority of the votes entitled to be cast at the meeting.

Except as provided in the 1940 Act, the presence in person or by proxy of the
holders of one-third of the shares entitled to vote at a meeting shall
constitute a quorum for the transaction of business at meetings of shareholders
of the Corporation or of the Fund or class.

On any matter submitted to a vote of shareholders, all shares of the Corporation
entitled to vote shall be voted in the aggregate as a single class without
regard to series or classes of shares, provided, however, that (a) when
applicable law requires that one or more series or classes vote separately, such
series or classes shall vote separately and, subject to (b) below, all other
series or classes shall vote in the aggregate; and (b) when the Board of
Directors determines that a matter does not affect the interests of a particular
series or class, such series or class shall not be entitled to any vote and only
the shares of the affected series or classes shall be entitled to vote.

Notwithstanding any provision of Maryland corporate law requiring authorization
of any action by a greater proportion than a majority of the total number of
shares entitled to vote on a matter, such action shall be effective if
authorized by the majority vote of the outstanding shares entitled to vote.

Subject to the requirements of applicable law and any procedures adopted by the
Board of Directors from time to time, the holders of shares of the Corporation
or any one or more series or classes thereof may take action or consent to any
action by delivering a consent, in writing or by electronic transmission, of the
holders entitled to cast not less than the minimum number of votes that would be
necessary to authorize or take the action at a formal meeting.

The Articles of Incorporation provide that the Board of Directors may, in its
discretion, establish minimum investment amounts for shareholder accounts,
impose fees on accounts that do not exceed a minimum investment amount and
involuntarily redeem shares in any such account in payment of such fees. The
Board of Directors, in its sole discretion, also may cause the Corporation to
redeem all of the shares of the Corporation or one or more series or classes
held by any shareholder for any reason, to the extent permissible by the 1940
Act, including (a) if the shareholder owns shares having an aggregate net asset
value of less than a specified minimum amount, (b) if the shareholder's
ownership of shares would disqualify a series from being a regulated investment
company, (c) upon a shareholder's failure to provide sufficient identification
to permit the Corporation to verify the shareholder's identity, (d) upon a
shareholder's failure to pay for shares or meet or maintain the qualifications
for ownership of a particular series or class, (e) if the Board of Directors
determines (or pursuant to policies established by the Board of Directors it is
determined) that share ownership by a shareholder is not in the best interests
of the remaining


                                       77
<PAGE>

shareholders, (f) when the Corporation is requested or compelled to do so by
governmental authority or applicable law, or (g) upon a shareholder's failure to
comply with a request for information with respect to the direct or indirect
ownership of shares of the Corporation. By redeeming shares the Corporation may
terminate the Fund or any class without shareholder approval, and the
Corporation may suspend the right of shareholders to require the Corporation to
redeem shares to the extent permissible under the 1940 Act. Payment for shares
redeemed shall be made in cash or other property, or any combination thereof;
provided, however, that the composition of any such payment (e.g., cash,
securities and/or other assets) to any shareholder shall be determined by the
Corporation in its sole discretion, and may be different among shareholders
(including differences among shareholders in the same fund or class).

Except as otherwise permitted by the Articles of Incorporation of the
Corporation, upon liquidation or termination of the Fund or class, shareholders
of such Fund or class of the Fund shall be entitled to receive, pro rata in
proportion to the number of shares of such Fund or class held by each of them, a
share of the net assets of such Fund or class, and the holders of shares of any
other particular Fund or class shall not be entitled to any such distribution,
provided, however, that the composition of any such payment (e.g., cash,
securities and/or other assets) to any shareholder shall be determined by the
Corporation in its sole discretion, and may be different among shareholders
(including differences among shareholders in the same Fund or class).

                             PROXY VOTING GUIDELINES

The Fund has delegated proxy voting responsibilities to its investment advisor,
subject to the Board's general oversight. The Fund has delegated proxy voting to
the Advisor with the direction that proxies should be voted consistent with the
Fund's best economic interests. The Advisor has adopted its own Proxy Voting
Policies and Procedures ("Policies") and Proxy Voting Guidelines ("Guidelines")
for this purpose. The Policies address, among other things, conflicts of
interest that may arise between the interests of the Fund, and the interests of
the Advisor and its affiliates, including the Fund's principal underwriter. The
Guidelines set forth the Advisor's general position on various proposals, such
as:

o        Shareholder Rights -- The Advisor generally votes against proposals
         that restrict shareholder rights.

o        Corporate Governance -- The Advisor generally votes for confidential
         and cumulative voting and against supermajority voting requirements for
         charter and bylaw amendments. The Advisor generally votes for proposals
         to restrict a chief executive officer from serving on more than three
         outside boards of directors. The Advisor generally votes against
         proposals that require a company to appoint a Chairman who is an
         independent director.

o         Anti-Takeover Matters -- The Advisor generally votes for proposals
          that require shareholder ratification of poison pills or that request
          boards to redeem poison pills, and votes against the adoption of
          poison pills if they are submitted for shareholder ratification. The
          Advisor generally votes for fair price proposals.

o         Compensation Matters -- The Advisor generally votes for executive cash
          compensation proposals, unless they are unreasonably excessive. The
          Advisor generally votes against stock option plans that do not meet
          the Advisor's criteria.

o         Routine Matters -- The Advisor generally votes for the ratification of
          auditors, procedural matters related to the annual meeting and changes
          in company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. The
Advisor generally votes proxies solicited by investment companies in accordance
with the recommendations of an independent third party, except for proxies
solicited by or with respect to investment companies for which the Advisor or an
affiliate serves as investment advisor or principal underwriter ("affiliated
investment companies"). The Advisor votes affiliated investment company proxies
in the same proportion as the vote of the investment company's other
shareholders (sometimes called "mirror" or "echo" voting). Master fund proxies
solicited from feeder funds are voted in accordance with applicable requirements
of the 1940 Act.


                                       78
<PAGE>

Although the Guidelines set forth the Advisor's general voting positions on
various proposals, the Advisor may, consistent with the Fund's best interests,
determine under some circumstances to vote contrary to those positions.

The Guidelines on a particular issue may or may not reflect the view of
individual members of the Board or of a majority of the Board. In addition, the
Guidelines may reflect a voting position that differs from the actual practices



of the public companies within the Deutsche Bank organization or of the
investment companies for which the Advisor or an affiliate serves as investment
advisor or sponsor.

The Advisor may consider the views of a portfolio company's management in
deciding how to vote a proxy or in establishing general voting positions for the
Guidelines, but management's views are not determinative.

As mentioned above, the Policies describe the way in which the Advisor resolves
conflicts of interest. To resolve conflicts, the advisor, under normal
circumstances, votes proxies in accordance with its Guidelines. If the Advisor
departs from the Guidelines with respect to a particular proxy or if the
Guidelines do not specifically address a certain proxy proposal, a proxy voting
committee established by the advisor will vote the proxy. Before voting any such
proxy, however, the Advisor's conflicts review committee will conduct an
investigation to determine whether any potential conflicts of interest exist in
connection with the particular proxy proposal. If the conflicts review committee
determines that the Advisor has a material conflict of interest, or certain
individuals on the proxy voting committee should be recused from participating
in a particular proxy vote, it will inform the proxy voting committee. If
notified that the Advisor has a material conflict, or fewer than three voting
members are eligible to participate in the proxy vote, typically the Advisor
will engage an independent third party to vote the proxy or follow the proxy
voting recommendations of an independent third party.

Under certain circumstances, the Advisor may not be able to vote proxies or the
Advisor may find that the expected economic costs from voting outweigh the
benefits associated with voting. For example, the Advisor may not vote proxies
on certain foreign securities due to local restrictions or customs. The Advisor
generally does not vote proxies on securities subject to share blocking
restrictions.

You may obtain information about how the Fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-scudder.com (click on "proxy voting" at the bottom of the
page).

                              FINANCIAL STATEMENTS

The financial statements, including the portfolio of investments together with
the notes to financial statements in the Annual Report to the Shareholders of
the Fund for the year ended October 31, 2007, are incorporated herein by
reference and are hereby deemed to be a part of this Statement of Additional
Information.

                             ADDITIONAL INFORMATION

The CUSIP number of DWS Gold & Precious Metals Fund - Class A is 23337E105.

The CUSIP number of DWS Gold & Precious Metals Fund - Class B is 23337E204.

The CUSIP number of DWS Gold & Precious Metals Fund - Class C is 23337E303.

The CUSIP number of DWS Gold & Precious Metals Fund - Institutional Class is
23337E600.

The Fund has a fiscal year ending October 31.

Reference is hereby made to the Registration Statement which the Fund has filed
with the SEC under the Securities Act of 1933 for further information with
respect to the Fund and the securities offered hereby. This Registration
Statement and its amendments are available for inspection by the public at the
SEC in Washington, D.C.

                                       79
<PAGE>

                                    APPENDIX

Standard & Poor's Corporation Bond Ratings

AAA. Debt rated AAA had the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A. Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB. Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC and C. Debt rated BB, B, CCC, CC and C is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

CI. The rating CI is reserved for income bonds on which no interest is being
paid.

D. Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.

Moody's Investors Service, Inc. Bond Ratings

AAA. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.

A. Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well


                                       80
<PAGE>

safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca. Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Fitch Long-Term Debt Ratings

AAA. Highest credit quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong capacity for
timely payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.

AA. Very high credit quality. "AA"` ratings denote a very low expectation of
credit risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.

A. High credit quality. "A" ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB. Good credit quality. "BBB" ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.

BB. Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time; however, business or financial alternatives may be available to allow
financial commitments to be met. Securities rated in this category are not
investment grade.

B. Highly speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC, CC, C. High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of some
kind appears probable. "C" ratings signal imminent default.

DDD, DD, D. Default. The ratings of obligations in this category are based on
their prospects for achieving partial or full recovery in a reorganization or
liquidation of the obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the following serve as
general guidelines. "DDD" obligations have the highest potential for recovery,
around 90%-100% of outstanding amounts and accrued interest. "DD" indicates
potential recoveries in the range of 50%-90%, and "D" the lowest recovery
potential, i.e., below 50%.

Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization

                                       81
<PAGE>

process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.

Fitch Short-Term Debt Ratings

F1. Highest credit quality. Indicates the Best capacity for timely payment of
financial commitments; may have an added "+" to denote any exceptionally strong
credit feature.

F2. Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

F3. Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.

B. Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C. High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D. Default. Denotes actual or imminent payment default.

Commercial Paper Ratings

Commercial paper rated by Standard & Poor's Ratings Services ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a strong
position within the industry. The reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determine
whether the issuer's commercial paper is rated A-1 or A-2.

The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. ("Moody's"). Among the factors
considered by it in assigning ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be inherent in
certain areas; (3) evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet such
obligations. Relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated Prime-1 or 2.

                                       82
<PAGE>

Municipal Notes

Moody's: The highest ratings for state and municipal short-term obligations are
"MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3" in the case of
an issue having a variable rate demand feature). Notes rated "MIG 1" or "VMIG 1"
are judged to be of the "best quality". Notes rated "MIG 2" or "VMIG 2" are of
"high quality," with margins or protection "ample although not as large as in
the preceding group". Notes rated "MIG 3" or "VMIG 3" are of "favorable
quality," with all security elements accounted for but lacking the strength of
the preceding grades.

S&P: The "SP-1" rating reflects a "very strong or strong capacity to pay
principal and interest". Notes issued with "overwhelming safety characteristics"
will be rated "SP-1+". The "SP-2" rating reflects a "satisfactory capacity" to
pay principal and interest.

Fitch: The highest ratings for state and municipal short-term obligations are
"F-1+," "F-1," and "F-2."




                                       83
<PAGE>

                             DWS MUTUAL FUNDS, INC.

                         DWS Gold & Precious Metals Fund


                                     Class S














                       STATEMENT OF ADDITIONAL INFORMATION

                                  March 1, 2008

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Class S prospectus for DWS Mutual Funds, Inc. (the
"Corporation"), with respect to DWS Gold & Precious Metals Fund (the "Fund"),
dated March 1, 2008, as amended from time to time, a copy of which may be
obtained without charge by contacting 1-800-728-3337 or DWS Scudder
Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, or from
the firm from which this Statement of Additional Information was obtained. This
information is also available along with other related materials on the
Securities and Exchange Commission's Internet Web site (http://www.sec.gov).

Portions of the Annual Report to Shareholders of the Fund, dated October 31,
2007, are incorporated herein by reference, as specified herein. A copy of the
Fund's Annual Report may be obtained without charge from Shareholder Services by
calling (800) 728-3337.


This Statement of Additional Information is incorporated by reference into the
prospectus.





<PAGE>

                                TABLE OF CONTENTS
                                                                           Page
                                                                           ----

INVESTMENT RESTRICTIONS.......................................................1

INVESTMENT POLICIES AND TECHNIQUES............................................3
   Portfolio Holdings Information............................................25

MANAGEMENT OF THE FUND.......................................................26
   Investment Advisor........................................................26
   Compensation of Portfolio Managers........................................29

FUND SERVICE PROVIDERS.......................................................34
   Administrator.............................................................34
   Distributor...............................................................35
   Independent Registered Public Accounting Firm.............................36
   Legal Counsel.............................................................36
   Custodian.................................................................36
   Transfer Agent............................................................36

PORTFOLIO TRANSACTIONS.......................................................37

PURCHASE AND REDEMPTION OF SHARES............................................39

DIVIDENDS....................................................................50

TAXES........................................................................51

NET ASSET VALUE..............................................................56

DIRECTORS AND OFFICERS.......................................................57

FUND ORGANIZATION............................................................66

PROXY VOTING GUIDELINES......................................................68

FINANCIAL STATEMENTS.........................................................69

ADDITIONAL INFORMATION.......................................................69

APPENDIX.....................................................................70


                                       i
<PAGE>



                             INVESTMENT RESTRICTIONS

Except as otherwise indicated, the Fund's investment objective and policies are
not fundamental and may be changed without a vote of shareholders. There can be
no assurance that the Fund's objective will be met.

Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after and is caused by an acquisition or
encumbrance of securities or assets of, or borrowings by, the Fund.

The Fund has elected to be classified as a non-diversified series of an open-end
management investment company.

A non-diversified fund may invest a greater proportion of its assets in the
obligations of a small number of issuers, and may be subject to greater risk and
substantial losses as a result of changes in the financial condition or the
market's assessment of the issuers. While not limited by the Investment Company
Act of 1940, as amended (the "1940 Act") as to the proportion of its assets that
it may invest in obligations of a single issuer, the Fund will comply with the
diversification requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code") for qualification as a regulated investment company.

As a matter of fundamental policy, the Fund may not:

(1)      borrow money, except as permitted under the 1940 Act, as amended, and
         as interpreted or modified by regulatory authority having jurisdiction,
         from time to time;

(2)      issue senior securities, except as permitted under the 1940 Act, as
         amended, and as interpreted or modified by regulatory authority having
         jurisdiction, from time to time;

(3)      engage in the business of underwriting securities issued by others,
         except to the extent that a Fund may be deemed to be an underwriter in
         connection with the disposition of portfolio securities;

(4)      purchase or sell real estate, which term does not include securities of
         companies which deal in real estate or mortgages or investments secured
         by real estate or interests therein, except that a Fund reserves
         freedom of action to hold and to sell real estate acquired as a result
         of a Fund's ownership of securities;

(5)      purchase or sell commodities, except as permitted by the 1940 Act, as
         amended, and as interpreted or modified by the regulatory authority
         having jurisdiction from time to time.

(6)      make loans to other persons, except (i) loans of portfolio securities,
         and (ii) to the extent that entry into repurchase agreements and the
         purchase of debt instruments or interests in indebtedness in accordance
         with the Fund's investment objective and policies may be deemed to be
         loans; or

(7)      concentrate its investments in a particular industry, as that term is
         used in the 1940 Act, and as interpreted or modified by regulatory
         authority having jurisdiction, from time to time, except that the Fund
         may concentrate in securities issued by wholly owned subsidiaries of
         DWS Mutual Funds, Inc. and securities of companies that are primarily
         engaged in the exploration, mining, fabrication, processing or
         distribution of gold and other precious metals and in gold, silver,
         platinum and palladium bullion and coins.

A fundamental policy may not be changed without the approval of a majority of
the outstanding voting securities of the Fund which, under the 1940 Act and the
rules thereunder and as used in this Statement of Additional Information, means
the lesser of (1) 67% or more of the voting securities present at a meeting of
shareholders, if the holders of more than 50% of the outstanding voting
securities of the Fund are present or represented by proxy, or (2) more than 50%
of the outstanding voting securities of the Fund.


<PAGE>

The Directors of the Corporation have voluntarily adopted certain policies and
restrictions, which are observed in the conduct of the Fund's affairs. These
represent intentions of the Directors based upon current circumstances.
Non-fundamental policies may be changed by the Directors of the Corporation
without requiring prior notice to or approval of shareholders.

As a matter of non-fundamental policy, the Fund currently does not intend to:

(a)      borrow money in an amount greater than 5% of its total assets, except
         (i) for temporary or emergency purposes and (ii) by engaging in reverse
         repurchase agreements, dollar rolls, or other investments or
         transactions described in a Fund's registration statement which may be
         deemed to be borrowings;

(b)      enter into either reverse repurchase agreements or dollar rolls in an
         amount greater than 5% of its total assets;

(c)      purchase securities on margin or make short sales, except (i) short
         sales against the box, (ii) in connection with arbitrage transactions,
         (iii) for margin deposits in connection with futures contracts, options
         or other permitted investments, (iv) that transactions in futures
         contracts and options shall not be deemed to constitute selling
         securities short, and (v) that a Fund may obtain such short-term
         credits as may be necessary for the clearance of securities
         transactions;

(d)      purchase options, unless the aggregate premiums paid on all such
         options held by a Fund at any time do not exceed 20% of its total
         assets; or sell put options, if as a result, the aggregate value of the
         obligations underlying such put options would exceed 50% of its total
         assets;

(e)      enter into futures contracts or purchase options thereon unless
         immediately after the purchase, the value of the aggregate initial
         margin with respect to such futures contracts entered into on behalf of
         a Fund and the premiums paid for such options on futures contracts does
         not exceed 5% of the fair market value of a Fund's total assets;
         provided that in the case of an option that is in-the-money at the time
         of purchase, the in-the-money amount may be excluded in computing the
         5% limit;

(f)      purchase warrants if as a result, such securities, taken at the lower
         of cost or market value, would represent more than 5% of the value of a
         Fund's total assets (for this purpose, warrants acquired in units or
         attached to securities will be deemed to have no value);

(g)      lend portfolio securities in an amount greater than 33 1/3% of its
         total assets;

(h)      acquire securities of registered open-end investment companies or
         registered unit investment trusts in reliance on Sections 12(d)(1)(F)
         or 12(d)(1)(G) of the 1940 Act; or

(i)      invest more than 5% of its net assets directly in securities of local
         Russian issuers.

The Fund will not purchase illiquid securities, including repurchase agreements
maturing in more than seven days, if, as a result thereof, more than 15% of the
Fund's net assets, valued at the time of the transaction, would be invested in
such securities.

The Fund "concentrates" (for the purposes of the 1940 Act) its assets in
securities of companies that are primarily engaged in the exploration, mining,
fabrication, processing or distribution of gold and other precious metals and in
gold, silver, platinum and palladium bullion and coins. As a result, the Fund
may be subject to greater market fluctuation than a fund which has securities
representing a broader range of investment alternatives. The subsidiaries will
incur expenses for the storage and insurance of precious metals purchased.
However, the subsidiaries may realize capital gains from the sale of metals and
may pay distributions to the Fund from such gains. Currently, Scudder Precious
Metals, Inc. is the Corporation's only subsidiary. In general, in order to
qualify for special tax treatment as a regulated investment company, the Fund
must, among other things, derive 90% of its gross income from certain specified
sources ("good income"). The Fund's investment in a wholly owned Cayman
subsidiary is


                                       2
<PAGE>

expected to generate good income. However, there is a risk that the Internal
Revenue Service could recharacterize this investment in such a manner that it
could generate bad income. If this were to occur, the Fund could be subject to
federal income tax at regular corporate rates, reducing the yield to you. The
Fund believes that the risk of such a recharacterization is remote. Investments
in precious metals and in precious metals-related securities and companies
involve a relatively high degree of risk. Prices of gold and other precious
metals can be influenced by a variety of global economic, financial and
political factors and may fluctuate markedly over short periods of time. Among
other things, precious metals values can be affected by changes in inflation,
investment speculation, metal sales by governments or central banks, changes in
industrial and commercial demand, and any governmental restrictions on private
ownership of gold or other precious metals. In addition, when market conditions
warrant, the Fund reserves the freedom to concentrate its assets in securities
related to other precious metals and in those metals directly. The means by
which the Fund seeks exposure to commodities, both directly and indirectly,
including through derivatives, may be limited by the Fund's intention to qualify
as a regulated investment company under the Code.

The Fund has adopted an operating policy of limiting to 10% the portion of the
Fund's total assets that may be invested directly in gold, silver, platinum and
palladium bullion and in gold and silver coins. In addition, the Fund's assets
may be invested in wholly-owned subsidiaries of the Corporation that invest in
gold, silver, platinum and palladium bullion and in gold and silver coins.

With respect to 30% of its assets, the Fund may make short sales of common
stocks if, at all times when a short position is open, the Fund owns the stock
or owns preferred stocks or debt securities convertible or exchangeable, without
payment of further consideration, into the shares of common stock sold short.
Short sales of this kind are referred to as short sales "against the box." The
Fund may engage in short sales against-the-box, although it is the Fund's
current intention that no more than 5% of its net assets will be at risk.

Temporary Defensive Policy. When deemed appropriate by the Advisor, the Fund may
temporarily invest up to 30% of its assets to maintain liquidity. For temporary
defensive purposes, the Fund may vary from its investment policies during
periods when the Advisor determines that it is advisable to do so because of
conditions in the securities markets or other economic or political conditions.
For temporary purposes, the Fund may invest, without limit, in cash and cash
equivalents (including foreign money market instruments, such as bankers'
acceptances, certificates of deposit, commercial paper, short-term government
and corporate obligations, and repurchase agreements), obligations issued or
guaranteed by the US government, its agencies or instrumentalities ("Government
Securities"), domestic repurchase agreements, money market instruments,
high-quality debt securities without equity features.

The Fund may also, for hedging purposes, invest up to 10% of its assets in
foreign currencies in the form of bank deposits.

Master/Feeder Fund Structure. The Board of Directors has the discretion to
retain the current distribution arrangement for the Fund while investing in a
master fund in a master/feeder fund structure as described below.

A master/feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing directly in a portfolio of securities, invests most or all of its
investment assets in a separate registered investment company (the "master
fund") with substantially the same investment objective and policies as the
feeder fund. Such a structure permits the pooling of assets of two or more
feeder funds, preserving separate identities or distribution channels at the
feeder fund level. Based on the premise that certain of the expenses of
operating an investment portfolio are relatively fixed, a larger investment
portfolio may eventually achieve a lower ratio of operating expenses to average
net assets. An existing investment company is able to convert to a feeder fund
by selling all of its investments, which involves brokerage and other
transaction costs and realization of a taxable gain or loss, or by contributing
its assets to the master fund and avoiding transaction costs and, if proper
procedures are followed, the realization of taxable gain or loss.

                       INVESTMENT POLICIES AND TECHNIQUES

The Fund is a series of an open-end management investment company which
continuously offers and redeems shares at net asset value. The Fund is a company
of the type commonly known as a mutual fund. DWS Gold &

                                       3
<PAGE>

Precious Metals Fund is a series of DWS Mutual Funds, Inc. and offers five
classes of shares: Class A, Class B, Class C, Institutional Class and Class S.

Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which the Fund may engage (such as short
selling, hedging, etc.) or a financial instrument which the Fund may purchase
(such as options, forward currency contracts, etc.) are meant to describe the
spectrum of investments that the Advisor or subadvisor, in its discretion,
might, but is not required to, use in managing the Fund's portfolio assets. The
Advisor or subadvisor may, in its discretion, at any time, employ such practice,
technique or instrument for one or more funds but not for all funds advised by
it. Furthermore, it is possible that certain types of financial instruments
described herein may not be available, permissible, economically feasible or
effective for their intended purposes in all markets. Certain practices,
techniques, or instruments may not be principal activities of the Fund, but, to
the extent employed, could, from time to time, have a material impact on the
Fund's performance.

It is possible that certain investment practices and techniques described below
may not be permissible for the Fund based on its investment restrictions, as
described herein and in the prospectus of the Fund.

Advance Refunded Bonds. The Fund may purchase Municipal Securities that are
subsequently refunded by the issuance and delivery of a new issue of bonds prior
to the date on which the outstanding issue of bonds can be redeemed or paid. The
proceeds from the new issue of bonds are typically placed in an escrow fund
consisting of US Government obligations that are used to pay the interest,
principal and call premium on the issue being refunded. The Fund may also
purchase Municipal Securities that have been refunded prior to purchase by the
Fund.

Asset-Backed Securities. Asset-backed securities may include pools of mortgages
(mortgage-backed securities), loans, receivables or other assets. Payment of
principal and interest may be largely dependent upon the cash flows generated by
the assets backing the securities. For purposes of determining the percentage of
the Fund's total assets invested in securities of issuers having their principal
business activities in a particular industry, asset backed securities will be
classified separately, based on the nature of the underlying assets, according
to the following categories: captive auto, diversified, retail and consumer
loans, captive equipment and business, business trade receivables, nuclear fuel
and capital and mortgage lending. Asset-backed securities present certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of any security interest in the related
assets. Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. There is the possibility
that recoveries on repossessed collateral may not, in some cases, be available
to support payments on these securities. Asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. To lessen the effect of failures by obligors on underlying assets to
make payments, the securities may contain elements of credit support which fall
into two categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
results from payment of the insurance obligations on at least a portion of the
assets in the pool. This protection may be provided through guarantees, policies
or letters of credit obtained by the issuer or sponsor from third parties,
through various means of structuring the transaction or through a combination of
such approaches. The Fund will not pay any additional or separate fees for
credit support. The degree of credit support provided for each issue is
generally based on historical information respecting the level of credit risk
associated with the underlying assets. Delinquency or loss in excess of that
anticipated or failure of the credit support could adversely affect the return
on an investment in such a security. The availability of asset-backed
securities may be affected by legislative or regulatory developments. It is
possible that such developments may require the Fund to dispose of any then
existing holdings of such securities.

Asset-Indexed Securities. The fund may purchase asset-indexed securities which
are debt securities usually issued by companies in precious metals related
businesses such as mining, the principal amount, redemption terms, or interest
rates of which are related to the market price of a specified precious metal.
The Fund will only enter into transactions in publicly traded asset-indexed
securities. Market prices of asset-indexed securities will relate primarily to
changes in the market prices of the precious metals to which the securities are
indexed rather than to changes in market rates of interest. However, there may
not be a perfect correlation between the price movements of


                                       4
<PAGE>

the asset-indexed securities and the underlying precious metals. Asset-indexed
securities typically bear interest or pay dividends at below market rates (and
in certain cases at nominal rates). The fund may purchase asset-indexed
securities to the extent permitted by law.

Borrowing. As a matter of fundamental policy, the Fund will not borrow money,
except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time. While the fund's
Board of Directors does not currently intend to borrow for investment leveraging
purposes, if such a strategy were implemented in the future it would increase
the fund's volatility and the risk of loss in a declining market. Borrowing by
the Fund will involve special risk considerations. Although the principal of the
Fund's borrowings will be fixed, the fund's assets may change in value during
the time a borrowing is outstanding, thus increasing exposure to capital risk.

Collateralized Mortgage Obligations ("CMOs"). CMOs are hybrids between
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal are paid, in most cases, semiannually. CMOs may
be collateralized by whole mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
Fannie Mae, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments. The prices of certain CMOs,
depending on their structure and the rate of prepayments, can be volatile. Some
CMOs may also not be as liquid as other securities.

In a typical CMO transaction, a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

The principal risk of CMOs results from the rate of prepayments on underlying
mortgages serving as collateral and from the structure of the deal. An increase
or decrease in prepayment rates will affect the yield, average life and price of
CMOs.

Common Stocks. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate interest in the issuing companies.
Therefore, the Fund participates in the success or failure of any company in
which it holds stock. The market values of common stock can fluctuate
significantly, reflecting the business performance of the issuing company,
investor perception and general economic and financial market movements. Despite
the risk of price volatility, however, common stocks have historically offered a
greater potential for long-term gain on investment, compared to other classes of
financial assets such as bonds or cash equivalents, although there can be no
assurance that this will be true in the future.

Concentration. The Fund "concentrates," for purposes of the 1940 Act, its assets
in securities related to a particular industry or group of industries which
means that at least 25% of its net assets will be invested in these assets at
all times. As a result, the Fund may be subject to greater market fluctuation
than the Fund which has securities representing a broader range of investment
alternatives.

                                       5
<PAGE>

Convertible Securities. The Fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities which are
convertible into common stock. Investments in convertible securities can provide
an opportunity for capital appreciation and/or income through interest and
dividend payments by virtue of their conversion or exchange features.

The convertible securities in which the Fund may invest are either fixed income
or zero coupon debt securities which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock. The
exchange ratio for any particular convertible security may be adjusted from time
to time due to stock splits, dividends, spin-offs, other corporate distributions
or scheduled changes in the exchange ratio. Convertible debt securities and
convertible preferred stocks, until converted, have general characteristics
similar to both debt and equity securities. Although to a lesser extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest rates increase and, conversely, tends to increase as
interest rates decline. In addition, because of the conversion or exchange
feature, the market value of convertible securities typically changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow movements in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities, convertible securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with generally higher yields than common stocks. Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.

Of course, like all debt securities, there can be no assurance of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Corporate Obligations. Investment in corporate debt obligations involves credit
and interest rate risk. The value of fixed-income investments will fluctuate
with changes in interest rates and bond market conditions, tending to rise as
interest rates decline and to decline as interest rates rise. Corporate debt
obligations generally offer less current yield than securities of lower quality,
but lower-quality securities generally have less liquidity, greater credit and
market risk, and as a result, more price volatility. Longer-term bonds are,
however, generally more volatile than bonds with shorter maturities.

Correlation of Gold and Gold Securities. The Advisor believes that the value of
the securities of firms that deal in gold will correspond generally, over time,
with the prices of the underlying metal. At any given time, however, changes in
the price of gold may not strongly correlate with changes in the value of
securities related to gold, which are expected to constitute the principal part
of the Fund's assets. In fact, there may be periods in which the price of gold
stocks and gold will move in different directions. The reason for this potential
disparity is that political and economic factors, including behaviors of stock
markets, may have differing impacts on gold versus gold stocks.

Depositary Receipts. The Fund may invest in sponsored or unsponsored American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs), International Depositary Receipts (IDRs) and other
types of Depositary Receipts (which, together with ADRs, EDRs, GDRs and IDRs are
hereinafter referred to as Depositary Receipts). Depositary Receipts provide
indirect investment in securities of foreign issuers.


                                       6
<PAGE>

Prices of unsponsored Depositary Receipts may be more volatile than if they were
sponsored by the issuer of the underlying securities. Depositary Receipts may
not necessarily be denominated in the same currency as the underlying securities
into which they may be converted. In addition, the issuers of the stock of
unsponsored Depositary Receipts are not obligated to disclose material
information in the United States and, therefore, there may not be a correlation
between such information and the market value of the Depositary Receipts. ADRs
are Depositary Receipts which are bought and sold in the United States and are
typically issued by a US bank or trust company which evidence ownership of
underlying securities by a foreign corporation. GDRs, IDRs and other types of
Depositary Receipts are typically issued by foreign banks or trust companies,
although they may also be issued by United States banks or trust companies, and
evidence ownership of underlying securities issued by either a foreign or a
United States corporation. Generally, Depositary Receipts in registered form are
designed for use in the United States securities markets and Depositary Receipts
in bearer form are designed for use in securities markets outside the United
States. For purposes of the fund's investment policies, the fund's investments
in ADRs, GDRs and other types of Depositary Receipts will be deemed to be
investments in the underlying securities. Depositary Receipts, including those
denominated in US dollars will be subject to foreign currency exchange rate
risk. However, by investing in US dollar-denominated 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. However, certain Depositary Receipts may not be listed on an exchange
and therefore may be illiquid securities.

Dollar Roll Transactions. Dollar roll transactions consist of the sale by the
Fund to a bank or broker/dealer (the counterparty) of GNMA certificates or other
mortgage-backed securities together with a commitment to purchase from the
counterparty similar, but not identical, securities at a future date, at the
same price. The counterparty receives all principal and interest payments,
including prepayments, made on the security while it is the holder. The fund
receives a fee from the counterparty as consideration for entering into the
commitment to purchase. Dollar rolls may be renewed over a period of several
months with a different purchase and repurchase price fixed and a cash
settlement made at each renewal without physical delivery of securities.
Moreover, the transaction may be preceded by a firm commitment agreement
pursuant to which the Fund agrees to buy a security on a future date.

The Fund will segregate cash, US Government securities or other liquid assets in
an amount sufficient to meet its purchase obligations under the transactions. In
the alternative, the Fund may also maintain asset coverage of at least 300% for
all outstanding firm commitments, dollar rolls and other borrowings.

Dollar rolls may be treated for purposes of the 1940 Act, as borrowings of the
Fund because they involve the sale of a security coupled with an agreement to
repurchase. A dollar roll involves costs to the Fund. For example, while the
Fund receives a fee as consideration for agreeing to repurchase the security,
the Fund forgoes the right to receive all principal and interest payments while
the counterparty holds the security. These payments to the counterparty may
exceed the fee received by the fund, thereby effectively charging the Fund
interest on its borrowing. Further, although the Fund can estimate the amount of
expected principal prepayment over the term of the dollar roll, a variation in
the actual amount of prepayment could increase or decrease the cost of the
fund's borrowing.

The entry into dollar rolls involves potential risks of loss that are different
from those related to the securities underlying the transactions. For example,
if the counterparty becomes insolvent, the Fund's right to purchase from the
counterparty might be restricted. Additionally, the value of such securities may
change adversely before the Fund is able to purchase them. Similarly, the Fund
may be required to purchase securities in connection with a dollar roll at a
higher price than may otherwise be available on the open market. Since, as noted
above, the counterparty is required to deliver a similar, but not identical
security to the Fund, the security that the Fund is required to buy under the
dollar roll may be worth less than an identical security. Finally, there can be
no assurance that the Fund's use of the cash that it receives from a dollar roll
will provide a return that exceeds borrowing costs.

Eurodollar Instruments. The Fund may make investments in Eurodollar instruments
for hedging purposes or to enhance potential gain. Eurodollar instruments are US
dollar-denominated futures contracts or options thereon which are linked to the
London Interbank Offered Rate ("LIBOR"), although foreign currency-denominated
instruments are available from time to time. Eurodollar futures contracts enable
purchasers to obtain a fixed rate for the lending of funds and sellers to obtain
a fixed rate for borrowings. The Fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many interest rate
swaps and fixed income instruments are linked.

                                       7
<PAGE>

Eurodollar Obligations. Eurodollar bank obligations are US dollar-denominated
certificates of deposit and time deposits issued outside the US capital markets
by foreign branches of US banks and US branches of foreign banks. Eurodollar
obligations are subject to the same risks that pertain to domestic issues,
notably credit risk, market risk and liquidity risk. Additionally, Eurodollar
obligations are subject to certain sovereign risks.

Foreign Currencies. Because investments in foreign securities usually will
involve currencies of foreign countries, and because the Fund may hold foreign
currencies and forward contracts, futures contracts and options on foreign
currencies and foreign currency futures contracts, the value of the assets of
the Fund as measured in US dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
the Fund may incur costs and experience conversion difficulties and
uncertainties in connection with conversions between various currencies.
Fluctuations in exchange rates may also affect the earning power and asset value
of the foreign entity issuing the security.

The strength or weakness of the US dollar against these currencies is
responsible for part of the fund's investment performance. If the dollar falls
in value relative to the Japanese yen, for example, the dollar value of a
Japanese stock held in the portfolio will rise even though the price of the
stock remains unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the Japanese stock will fall. Many foreign
currencies have experienced significant devaluation relative to the dollar.

Although the Fund values its assets daily in terms of US dollars, it does not
intend to convert its holdings of foreign currencies into US dollars on a daily
basis. It will do so from time to time, and investors should be aware of the
costs of currency conversion. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer. The Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through entering into
options or forward or futures contracts to purchase or sell foreign currencies.

Foreign Fixed Income Securities. Since most foreign fixed income securities are
not rated, the Fund will invest in foreign fixed income securities based on the
Advisor's analysis without relying on published ratings. Since such investments
will be based upon the Advisor's analysis rather than upon published ratings,
achievement of the Fund's goals may depend more upon the abilities of the
Advisor than would otherwise be the case.

The value of the foreign fixed income securities held by the Fund, and thus the
net asset value of the Fund's shares, generally will fluctuate with (a) changes
in the perceived creditworthiness of the issuers of those securities, (b)
movements in interest rates, and (c) changes in the relative values of the
currencies in which the Fund's investments in fixed income securities are
denominated with respect to the US Dollar. The extent of the fluctuation will
depend on various factors, such as the average maturity of the Fund's
investments in foreign fixed income securities, and the extent to which the Fund
hedges its interest rate, credit and currency exchange rate risks. A longer
average maturity generally is associated with a higher level of volatility in
the market value of such securities in response to changes in market conditions.

Investments in sovereign debt, including Brady Bonds, involve special risks.
Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and the Fund may be unable to
collect all or any part of its investment in a particular issue. Foreign
investment in certain sovereign debt is restricted or controlled to varying
degrees, including requiring governmental approval for the repatriation of
income, capital or proceed of sales by foreign investors. These restrictions or
controls may at times limit or preclude foreign investment in certain sovereign
debt or increase the


                                       8
<PAGE>

costs and expenses of the Fund. Sovereign debt may be issued as part of debt
restructuring and such debt is to be considered speculative. There is a history
of defaults with respect to commercial bank loans by public and private entities
issuing Brady Bonds. All or a portion of the interest payments and/or principal
repayment with respect to Brady Bonds may be uncollateralized.

Foreign Investment. While the Fund that invests in foreign countries offers the
potential for substantial appreciation over time, it also involves above-average
investment risk in comparison to a mutual fund investing in a broad range of US
equity securities. The Fund is designed as a long-term investment and not for
short-term trading purposes. The Fund should not be considered a complete
investment program. The Fund's net asset value per share, or share price, can
fluctuate significantly with changes in stock market levels, political
developments, movements in currencies, global investment flows and other
factors.

Foreign Securities. Investing in foreign securities involves certain special
considerations, including those set forth below, which are not typically
associated with investing in US securities and which may favorably or
unfavorably affect the Fund's performance. As foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
companies, there may be less publicly available information about a foreign
company than about a domestic company. Many foreign securities markets, while
growing in volume of trading activity, have substantially less volume than the
US market, and securities of some foreign issuers are less liquid and more
volatile than securities of domestic issuers. Similarly, volume and liquidity in
most foreign bond markets is less than in the US and, at times, volatility of
price can be greater than in the US. Fixed commissions on some foreign
securities exchanges and bid to asked spreads in foreign bond markets are
generally higher than commissions or bid to asked spreads on US markets,
although the Advisor will endeavor to achieve the most favorable net results on
its portfolio transactions. There is generally less governmental supervision and
regulation of securities exchanges, brokers and listed companies in foreign
countries than in the US. It may be more difficult for the Fund's agents to keep
currently informed about corporate actions in foreign countries which may affect
the prices of portfolio securities. Communications between the US and foreign
countries may be less reliable than within the US, thus increasing the risk of
delayed settlements of portfolio transactions or loss of certificates for
portfolio securities. Payment for securities without delivery may be required in
certain foreign markets. In addition, with respect to certain foreign countries,
there is the possibility of expropriation or confiscatory taxation, political or
social instability, or diplomatic developments which could affect US investments
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. The management of the Fund seeks to mitigate the
risks associated with the foregoing considerations through continuous
professional management.

Gold or Precious Metals Custody. Gold and other precious metals held by or on
behalf of the Fund may be held on either an allocated or an unallocated basis
inside or outside the US. Placing gold or precious metals in an allocated
custody account gives the Fund a direct interest in specified gold bars or
precious metals, whereas an unallocated deposit does not and instead gives the
Fund a right only to compel the counterparty to deliver a specific amount of
gold or precious metals, as applicable. Consequently, the Fund could experience
a loss if the counterparty to an unallocated depository arrangement becomes
bankrupt or fails to deliver the gold or precious metals as requested. An
allocated gold or precious metals custody account also involves the risk that
the gold or precious metals will be stolen or damaged while in transit. Both
allocated and unallocated arrangements require the Fund as seller to deliver,
either by book entry or physically, the gold or precious metals sold in advance
of the receipt of payment.

High Yield/High Risk Bonds. The Fund may also purchase debt securities which are
rated below investment grade (commonly referred to as "junk bonds"), that is,
rated below Baa by Moody's Investors Service, Inc. ("Moody'") or below BBB by
Standard & Poor's Rating Services ("S&P") or Fitch Investors Services ("Fitch")
and unrated securities judged to be of equivalent quality as determined by the
Advisor or subadvisor. These securities usually entail greater risk (including
the possibility of default or bankruptcy of the issuers of such securities),
generally involve greater volatility of price and risk to principal and income,
and may be less liquid, than securities in the higher rating categories. The
lower the ratings of such debt securities, the more their risks render them like
equity securities. Securities rated D may be in default with respect to payment
of principal or interest. See the Appendix to


                                       9
<PAGE>

this Statement of Additional Information for a more complete description of the
ratings assigned by these ratings organizations and their respective
characteristics.

Issuers of such high-yield securities often are highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risk associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For example, during an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations may also be adversely affected by specific corporate developments,
or the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such securities are generally unsecured and are often subordinated to other
creditors of the issuer. Prices and yields of high yield securities will
fluctuate over time and, during periods of economic uncertainty, volatility of
high yield securities may adversely affect the Fund's net asset value. In
addition, investments in high yield zero coupon or paying kind bonds, rather
than income-bearing high yield securities, may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

The Fund may have difficulty disposing of certain high-yield securities because
they may have a thin trading market. Because not all dealers maintain markets in
all high yield securities, the Fund anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. The lack of
a liquid secondary market may have an adverse effect on the market price and the
Fund's ability to dispose of particular issues and may also make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing the Fund's assets. Market quotations generally are available on many
high yield issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield securities. These securities may also involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties.

Credit quality in the high yield securities market can change suddenly and
unexpectedly, and even recently issued credit ratings may not fully reflect the
actual risks posed by a particular high yield security. For these reasons, it is
generally the policy of the Advisor not to rely exclusively on ratings issued by
established credit rating agencies, but to supplement such ratings with its own
independent and on-going review of credit quality. The achievement of the Fund's
investment objective by investment in such securities may be more dependent on
the Advisor's credit analysis than is the case for higher quality bonds. Should
the rating of a portfolio security be downgraded, the Advisor will determine
whether it is in the best interests of the Fund to retain or dispose of such
security. Prices for below investment grade securities may be affected by
legislative and regulatory developments. Also, Congress has from time to time
considered legislation which would restrict or eliminate the corporate tax
deduction for interest payments in these securities and regulate corporate
restructurings. Such legislation may significantly depress the prices of
outstanding securities of this type.

Prices for high-yield securities may be affected by legislative and regulatory
developments. Also, Congress has from time to time considered legislation which
would restrict or eliminate the corporate tax deduction for interest payments in
these securities and regulate corporate restructurings. Such legislation may
significantly depress the prices of outstanding securities of this type.

A portion of the high-yield securities acquired by the Fund may be purchased
upon issuance, which may involve special risks because the securities so
acquired are new issues. In such instances, the Fund may be a substantial
purchaser of the issue and therefore have the opportunity to participate in
structuring the terms of the offering.

Although this may enable the Fund to seek to protect itself against certain
risks, the considerations discussed herein would nevertheless remain applicable.

Illiquid Securities and Restricted Securities. The fund may purchase securities
that are subject to legal or contractual restrictions on resale ("restricted
securities"). Generally speaking, restricted securities may be sold (i) only to
qualified institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers; (iii) in limited quantities after they have been
held for a specified period of time and other conditions are met pursuant to an
exemption from registration; or (iv) in a public offering for which a
registration statement is in effect under the


                                       10
<PAGE>

Securities Act of 1933, as amended (the "1933 Act"). Issuers of restricted
securities may not be subject to the disclosure and other investor protection
requirements that would be applicable if their securities were publicly traded.

Restricted securities are often illiquid, but they may also be liquid. For
example, restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid. Issuers of restricted securities may not be subject
to the disclosure and other investor protection requirement that would be
applicable if their securities were publicly traded. The Fund's Board has
approved guidelines for use by the Advisor in determining whether a security is
liquid or illiquid. Among the factors the Advisor or subadvisor may consider in
reaching liquidity decisions relating to Rule 144A securities are: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
wishing to purchase or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the security; and (4)
the nature of the security and the nature of the market for the security (i.e.,
the time needed to dispose of the security, the method of soliciting offers, and
the mechanics of the transfer). Where a registration statement is required for
the resale of restricted securities, the Fund may be required to bear all or
part of the registration expenses. The Fund may be deemed to be an "underwriter"
for purposes of the Securities Act of 1933, as amended when selling restricted
securities to the public and, in such event, the Fund may be liable to
purchasers of such securities if the registration statement prepared by the
issuer is materially inaccurate or misleading.

The Fund may also purchase securities that are not subject to legal or
contractual restrictions on resale, but that are deemed illiquid. Such
securities may be illiquid, for example, because there is a limited trading
market for them.

The Fund may be unable to sell a restricted or illiquid security. In addition,
it may be more difficult to determine a market value for restricted or illiquid
securities. Moreover, if adverse market conditions were to develop during the
period between the Fund's decision to sell a restricted or illiquid security and
the point at which the Fund is permitted or able to sell such security, the Fund
might obtain a price less favorable than the price that prevailed when it
decided to sell. This investment practice, therefore, could have the effect of
increasing the level of illiquidity of the Fund.

Impact of Large Redemptions and Purchases of Fund Shares. From time to time,
shareholders of the Fund (which may include affiliated and/or non-affiliated
registered investment companies that invest in the Fund) may make relatively
large redemptions or purchases of Fund shares. These transactions may cause the
Fund to have to sell securities or invest additional cash, as the case may be.
While it is impossible to predict the overall impact of these transactions over
time, there could be adverse effects on the Fund's performance to the extent
that the Fund may be required to sell securities or invest cash at times when it
would not otherwise do so. These transactions could also accelerate the
realization of taxable income if sales of securities resulted in capital gains
or other income and could also increase transaction costs, which may impact the
Fund's expense ratio.

Impact of Sub-Prime Mortgage Market. The Fund may invest in companies that may
be affected by the downturn in the sub-prime mortgage lending market in the US.
Sub-prime loans, which tend to have higher interest rates, are made to borrowers
who do not qualify for prime rate loans because of their low credit ratings or
other factors that suggest that they have a higher probability of defaulting.
The downturn in the sub-prime mortgage-lending market has had, and may continue
to have, a far-reaching impact on the broader securities market, especially in
the sub-prime, asset-backed and other debt related securities markets. In
addition to performance issues, the reduced investor demand for sub-prime,
asset-backed and other debt related securities as a result of the downturn has
created liquidity and valuation issues for these securities. The Fund's
investments related to or impacted by the downturn in the sub-prime mortgage
lending market may cause the overall value of the Fund to decrease.

IPO Risk. Securities issued through an initial public offering ("IPO") can
experience an immediate drop in value if the demand for the securities does not
continue to support the offering price. Information about the issuers of IPO
securities is also difficult to acquire since they are new to the market and may
not have lengthy operating histories. The funds may engage in short-term trading
in connection with its IPO investments, which could produce higher trading costs
and adverse tax consequences. The number of securities issued in an IPO is
limited, so it is likely that IPO securities will represent a smaller component
of the Fund's portfolio as the fund's assets increase (and thus have a more
limited effect on the fund's performance).

                                       11
<PAGE>

Interfund Borrowing and Lending Program. The fund has received exemptive relief
from the Securities and Exchange Commission ("SEC") which permits the Fund to
participate in an interfund lending program among certain investment companies
advised by the Advisor. The interfund lending program allows the participating
fund to borrow money from and loan money to each other for temporary or
emergency purposes. The program is subject to a number of conditions designed to
ensure fair and equitable treatment of all participating funds, including the
following: (1) no fund may borrow money through the program unless it receives a
more favorable interest rate than a rate approximating the lowest interest rate
at which bank loans would be available to any of the participating funds under a
loan agreement; and (2) no fund may lend money through the program unless it
receives a more favorable return than that available from an investment in
repurchase agreements and, to the extent applicable, money market cash sweep
arrangements. In addition, the Fund may participate in the program only if and
to the extent that such participation is consistent with the fund's investment
objectives and policies (for instance, money market funds would normally
participate only as lenders and tax exempt funds only as borrowers). Interfund
loans and borrowings may extend overnight, but could have a maximum duration of
seven days. Loans may be called on one day's notice. The fund may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional costs. The program is subject to the
oversight and periodic review of the Boards of the participating funds. To the
extent the Fund is actually engaged in borrowing through the interfund lending
program, the fund, as a matter of non-fundamental policy, may not borrow for
other than temporary or emergency purposes (and not for leveraging), except that
the Fund may engage in reverse repurchase agreements and dollar rolls for any
purpose.

Investing in Emerging Markets. The Fund's investments in foreign securities may
be in developed countries or in countries considered by the Fund's Advisor to
have developing or "emerging" markets, which involves 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 the 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,
the 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 Advisor
believes that these characteristics may be expected to continue in the future.
Most emerging securities markets have substantially less volume and are subject
to less governmental supervision than US securities markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than securities
of comparable domestic issuers. In addition, there is less regulation of
securities exchanges, securities dealers, and listed and unlisted companies in
emerging markets than in the US.

In addition, the Fund may be required to establish special custody or other
arrangements before making investments in securities traded in emerging markets.
For example, ownership of shares in foreign companies of certain countries may
be recorded by the companies themselves and by registrars instead of through a
central registration system. It is possible that the Fund's ownership rights
could be lost or diluted through fraud or negligence. Since certain foreign
banking institutions and registrars may not be guaranteed by the foreign
government in which the company is located, the Fund may be limited in its
ability to successfully pursue claims on behalf of the Fund's shareholders.

Emerging markets also have different clearance and settlement procedures, and in
certain markets there have been times when settlements have not kept pace with
the volume of securities transactions. Delays in settlement could result in
temporary periods when a portion of the assets of the Fund is uninvested and no
return is earned thereon. The inability of the Fund to make intended security
purchases due to settlement problems could cause the Fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Fund due to subsequent
declines in value of the portfolio security or, if the Fund has entered into a
contract to sell the security, could result in possible liability to the
purchaser. Costs associated with transactions in foreign securities are
generally higher than costs associated with transactions in US securities. Such
transactions also involve additional costs for the purchase or sale of foreign
currency.

                                       12
<PAGE>

Certain emerging markets require prior governmental approval of investments by
foreign persons, limit the amount of investment by foreign persons in a
particular company, limit the investment by foreign persons only to a specific
class of securities of a company that may have less advantageous rights than the
classes available for purchase by domiciliaries of the countries and/or impose
additional taxes on foreign investors. Certain emerging markets may also
restrict investment opportunities in issuers in industries deemed important to
national interest.

Certain emerging markets may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if a deterioration occurs in an emerging market's
balance of payments or for other reasons, a country could impose temporary
restrictions on foreign capital remittances. The Fund could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation of capital, as well as by the application to the Fund of any
restrictions on investments.

In the course of investment in emerging markets, the Fund will be exposed to the
direct or indirect consequences of political, social and economic changes in one
or more emerging markets. While the Fund will manage its assets in a manner that
will seek to minimize the exposure to such risks, there can be no assurance that
adverse political, social or economic changes will not cause the Fund to suffer
a loss of value in respect of the securities in the Fund's portfolio.

The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's securities in such markets may
not be readily available. The Fund may suspend redemption of its shares for any
period during which an emergency exists, as determined by the SEC. Accordingly
if the Fund believes that appropriate circumstances exist, it will promptly
apply to the SEC for a determination that an emergency is present. During the
period commencing from the Fund's identification of such condition until the
date of the SEC action, the Fund's securities in the affected markets will be
valued at fair value determined in good faith by or under the direction of the
Fund's Board.

Volume and liquidity in most foreign markets are less than in the US, and
securities of many foreign companies are less liquid and more volatile than
securities of comparable US companies. Fixed commissions on foreign securities
exchanges are generally higher than negotiated commissions on US exchanges,
although the Fund endeavors to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and
regulation of business and industry practices, securities exchanges, brokers,
dealers and listed companies than in the US. Mail service between the US and
foreign countries may be slower or less reliable than within the US, thus
increasing the risk of delayed settlements of portfolio transactions or loss of
certificates for certificated portfolio securities. In addition, with respect to
certain emerging markets, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect the Fund's investments in those countries.
Moreover, individual emerging market economies may differ favorably or
unfavorably from the US economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

The Fund may have limited legal recourse in the event of a default with respect
to certain debt obligations it holds. If the issuer of a fixed-income security
owned by the Fund defaults, the Fund may incur additional expenses to seek
recovery. Debt obligations issued by emerging market country governments differ
from debt obligations of private entities; remedies from defaults on debt
obligations issued by emerging market governments, unlike those on private debt,
must be pursued in the courts of the defaulting party itself. The Fund's ability
to enforce its rights against private issuers may be limited. The ability to
attach assets to enforce a judgment may be limited. Legal recourse is therefore
somewhat diminished. Bankruptcy, moratorium and other similar laws applicable to
private issuers of debt obligations may be substantially different from those of
other countries. The political context, expressed as an emerging market
governmental issuer's willingness to meet the terms of the debt obligation, for
example, is of considerable importance. In addition, no assurance can be given
that the holders of commercial bank debt may not contest payments to the holders
of debt obligations in the event of default under commercial bank loan
agreements.

Income from securities held by the Fund could be reduced by a withholding tax at
the source or other taxes imposed by the emerging market countries in which the
Fund makes its investments. The Fund's net asset value may also be affected by
changes in the rates or methods of taxation applicable to the Fund or to
entities in which the Fund has


                                       13
<PAGE>

invested. The Advisor will consider the cost of any taxes in determining whether
to acquire any particular investments, but can provide no assurance that the
taxes will not be subject to change.

Many emerging markets have experienced substantial, and, in some periods,
extremely high rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain emerging market
countries. In an attempt to control inflation, wage and price controls have been
imposed in certain countries. Of these countries, some, in recent years, have
begun to control inflation through prudent economic policies.

Emerging market governmental issuers are among the largest debtors to commercial
banks, foreign governments, international financial organizations and other
financial institutions. Certain emerging market governmental issuers have not
been able to make payments of interest on or principal of debt obligations as
those payments have come due. Obligations arising from past restructuring
agreements may affect the economic performance and political and social
stability of those issuers.

Governments of many emerging market countries have exercised and continue to
exercise substantial influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in any
given country. As a result, government actions in the future could have a
significant effect on economic conditions in emerging markets, which in turn,
may adversely affect companies in the private sector, general market conditions
and prices and yields of certain of the securities in the Fund's portfolio.
Expropriation, confiscatory taxation, nationalization, political, economic or
social instability or other similar developments have occurred frequently over
the history of certain emerging markets and could adversely affect the Fund's
assets should these conditions recur.

The ability of emerging market country governmental issuers to make timely
payments on their obligations is likely to be influenced strongly by the
issuer's balance of payments, including export performance, and its access to
international credits and investments. An emerging market whose exports are
concentrated in a few commodities could be vulnerable to a decline in the
international prices of one or more of those commodities. Increased
protectionism on the part of an emerging market's trading partners could also
adversely affect the country's exports and diminish its trade account surplus,
if any. To the extent that emerging markets receive payment for its exports in
currencies other than dollars or non-emerging market currencies, its ability to
make debt payments denominated in dollars or non-emerging market currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country. Fluctuations
in the level of these reserves affect the amount of foreign exchange readily
available for external debt payments and thus could have a bearing on the
capacity of emerging market countries to make payments on these debt
obligations.

To the extent that an emerging market country cannot generate a trade surplus,
it must depend on continuing loans from foreign governments, multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external funding may not be certain, and a withdrawal of external funding
could adversely affect the capacity of emerging market country governmental
issuers to make payments on their obligations. In addition, the cost of
servicing emerging market debt obligations can be affected by a change in
international interest rates since the majority of these obligations carry
interest rates that are adjusted periodically based upon international rates.

Investment Company Securities. The Fund may acquire securities of other
investment companies to the extent consistent with its investment objective and
subject to the limitations of the 1940 Act. The Fund will indirectly bear its
proportionate share of any management fees and other expenses paid by such other
investment companies.

For example, a fund may invest in a variety of investment companies which seek
to track the composition and performance of specific indexes or a specific
portion of an index. These index-based investments hold substantially all of
their assets in securities representing their specific index. Accordingly, the
main risk of investing in index-based investments is the same as investing in a
portfolio of equity securities comprising the index. The market prices of
index-based investments will fluctuate in accordance with both changes in the
market value of their underlying


                                       14
<PAGE>

portfolio securities and due to supply and demand for the instruments on the
exchanges on which they are traded (which may result in their trading at a
discount or premium to their NAVs). Index-based investments may not replicate
exactly the performance of their specified index because of transaction costs
and because of the temporary unavailability of certain component securities of
the index.

Examples of index-based investments include:

SPDRs(R): SPDRs, an acronym for "Standard & Poor's Depositary Receipts," are
based on the S&P 500 Composite Stock Price Index. They are issued by the SPDR
Trust, a unit investment trust that holds shares of substantially all the
companies in the S&P 500 in substantially the same weighting and seeks to
closely track the price performance and dividend yield of the Index.

MidCap SPDRs(R): MidCap SPDRs are based on the S&P MidCap 400 Index. They are
issued by the MidCap SPDR Trust, a unit investment trust that holds a portfolio
of securities consisting of substantially all of the common stocks in the S&P
MidCap 400 Index in substantially the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R): Select Sector SPDRs are based on a particular sector or
group of industries that are represented by a specified Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end management investment company with nine
portfolios that each seeks to closely track the price performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM): DIAMONDS are based on the Dow Jones Industrial Average(SM). They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100 Trust, a unit investment trust that holds a portfolio
consisting of substantially all of the securities, in substantially the same
weighting, as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

Investment-Grade Bonds. The Fund may purchase "investment-grade" bonds, which
are those rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or
Fitch or, if unrated, judged to be of equivalent quality as determined by the
Advisor or subadvisor. Moody's considers bonds it rates Baa to have speculative
elements as well as investment-grade characteristics. To the extent that the
Fund invests in higher-grade securities, the Fund will not be able to avail
itself of opportunities for higher income which may be available at lower
grades.

Investment of Uninvested Cash Balances. The Fund may have cash balances that
have not been invested in portfolio securities (Uninvested Cash). Uninvested
Cash may result from a variety of sources, including dividends or interest
received from portfolio securities, unsettled securities transactions, reserves
held for investment strategy purposes, scheduled maturity of investments,
liquidation of investment securities to meet anticipated redemptions and
dividend payments, and new cash received from investors. Uninvested Cash may be
invested directly in money market instruments or other short-term debt
obligations. Pursuant to an Exemptive Order issued by the SEC, the Fund may use
Uninvested Cash to purchase shares of affiliated funds including money market
funds, short-term bond funds and Cash Management QP Trust, or one or more future
entities for which the Advisor acts as trustee or investment advisor that
operate as cash management investment vehicles and that are excluded from the
definition of investment company pursuant to section 3(c)(1) or 3(c)(7) of the
1940 Act (collectively, the Central Funds) in excess of the limitations of
Section 12(d)(1) of the 1940 Act. Investment by the Fund in shares of the
Central Funds will be in accordance with the Fund's investment policies and
restrictions as set forth in its registration statement.

Certain of the Central Funds comply with rule 2a-7 under the 1940 Act. The other
Central Funds are or will be short-term bond funds that invest in fixed-income
securities and maintain a dollar weighted average maturity of three years or
less. Each of the Central Funds will be managed specifically to maintain a
highly liquid portfolio, and access to them will enhance the Fund's ability to
manage Uninvested Cash.

                                       15
<PAGE>

The Fund will invest Uninvested Cash in Central Funds only to the extent that
the Fund's aggregate investment in the Central Funds does not exceed 25% of its
total assets. Purchases and sales of shares of Central Funds are made at net
asset value.

Lending of Portfolio Securities. The Fund may lend its investment securities to
approved institutional borrowers who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities or completing arbitrage operations. By lending its
investment securities, the Fund attempts to increase its net investment income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would belong to the Fund. The Fund may lend its investment securities so long as
the terms, structure and the aggregate amount of such loans are not inconsistent
with the 1940 Act or the rules and regulations or interpretations of the SEC
thereunder, which currently require that (a) the borrower pledge and maintain
with the Fund collateral consisting of liquid, unencumbered assets having a
value at all times not less than 100% of the value of the securities loaned, (b)
the borrower add to such collateral whenever the price of the securities loaned
rises (i.e., the borrower "marks to the market" on a daily basis), (c) the loan
be made subject to termination by the Fund at any time, and (d) the Fund
receives reasonable interest on the loan (which may include the Fund's investing
any cash collateral in interest-bearing short-term investments), and
distributions on the loaned securities and any increase in their market value.
There may be risks of delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail financially.
However, loans will be made only to borrowers selected by the Fund's delegate
after a commercially reasonable review of relevant facts and circumstances,
including the creditworthiness of the borrower.

At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Directors. In addition, voting rights may pass
with the loaned securities, but if a material event occurs affecting an
investment on loan, the loan will be called and the securities voted. Pursuant
to an exemptive order granted by the SEC, cash collateral received by the Fund
may be invested in a money market fund managed by the Advisor (or one of its
affiliates).

Loan Participations and Assignments. The Fund may invest in fixed- and
floating-rate loans (Loans) arranged through private negotiations between an
issuer of debt instruments and one or more financial institutions (Lenders). The
Fund's investments in Loans are expected in most instances to be in the form of
participations in Loans (Participations) and assignments of portions of Loans
(Assignments) from third parties. Participations typically will result in the
Fund having a contractual relationship only with the Lender and not with the
borrower. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the Loan, nor any rights of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund will assume the
credit risk of both the borrower and the Lender that is selling the
Participation. In the event of the insolvency of the Lender selling a
Participation, the Fund may be treated as a general creditor of the Lender and
may not benefit from any set-off between the Lender and the borrower. The Fund
will acquire Participations only if the Lender interpositioned between the Fund
and the borrower is determined by the Advisor to be creditworthy.

When the Fund purchases Assignments from Lenders, it will acquire direct rights
against the borrower on the Loan. Because Assignments are arranged through
private negotiations between potential assignees and potential assignors,
however, the rights and obligations acquired by the Fund as the purchaser of an
Assignment may differ from, and may be more limited than, those held by the
assigning Lender.

The Fund may have difficulty disposing of Assignments and Participations.
Because no liquid market for these obligations typically exists, the Fund
anticipates that these obligations could be sold only to a limited number of
institutional investors. The lack of a liquid secondary market will have an
adverse effect on the Fund's ability to dispose of particular Assignments or
Participations when necessary to meet the Fund's liquidity needs or in response
to a specific economic event, such as a deterioration in the creditworthiness of
the borrower. The lack of a liquid



                                       16
<PAGE>

secondary market for Assignments and Participations may also make it more
difficult for the Fund to assign a value to those securities for purposes of
valuing the Fund's portfolio and calculating its net asset value.

Mining and Exploration Risks. The business of gold mining by its nature involves
significant risks and hazards, including environmental hazards, industrial
accidents, labor disputes, discharge of toxic chemicals, fire, drought, flooding
and natural acts. The occurrence of any of these hazards can delay production,
increase production costs and result in liability to the operator of the mines.
A mining operation may become subject to liability for pollution or other
hazards against which it has not insured or cannot insure, including those in
respect of past mining activities for which it was not responsible.

Exploration for gold and other precious metals is speculative in nature,
involves many risks and frequently is unsuccessful. There can be no assurance
that any mineralisation discovered will result in an increase in the proven and
probable reserves of a mining operation. If reserves are developed, it can take
a number of years from the initial phases of drilling and identification of
mineralisation until production is possible, during which time the economic
feasibility of production may change. Substantial expenditures are required to
establish ore reserves properties and to construct mining and processing
facilities. As a result of these uncertainties, no assurance can be given that
the exploration programs undertaken by a particular mining operation will
actually result in any new commercial mining.

Privatized Enterprises. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries have, to varying
degrees, embarked on privatization programs contemplating the sale of all or
part of their interests in state enterprises. The Fund's investments in the
securities of privatized enterprises may include privately negotiated
investments in a government or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the enterprises in which the Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.

Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization of management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as an enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.

Prior to privatization, most of the state enterprises in which the Fund may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering, these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
operate effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Repurchase Agreements. The Fund may invest in repurchase agreements pursuant to
its investment guidelines. In a repurchase agreement, the Fund acquires
ownership of a security and simultaneously commits to resell that security to
the seller, typically a bank or broker/dealer.


                                       17
<PAGE>

A repurchase agreement provides a means for the Fund to earn income on funds for
periods as short as overnight. It is an arrangement under which the purchaser
(i.e., a fund) acquires a security ("Obligation") and the seller agrees, at the
time of sale, to repurchase the Obligation at a specified time and price.
Securities subject to a repurchase agreement are held in a segregated account
and the value of such securities is kept at least equal to the repurchase price
on a daily basis. The repurchase price may be higher than the purchase price,
the difference being income to the Fund, or the purchase and repurchase prices
may be the same, with interest at a stated rate due to the Fund together with
the repurchase price upon repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the Obligation itself. Obligations will be
held by the custodian or in the Federal Reserve Book Entry System.

It is not clear whether a court would consider the Obligation purchased by the
Fund subject to a repurchase agreement as being owned by that fund or as being
collateral for a loan by that fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the Obligation before repurchase of the Obligation under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Delays may involve loss of interest or decline in price of
the Obligation. If the court characterizes the transaction as a loan and the
Fund has not perfected a security interest in the Obligation, that fund may be
required to return the Obligation to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for the Fund, the
Advisor seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
Obligation. Apart from the risk of bankruptcy or insolvency proceedings, there
is also the risk that the seller may fail to repurchase the Obligation, in which
case the Fund may incur a loss if the proceeds to that fund of the sale to a
third party are less than the repurchase price. However, if the market value
(including interest) of the Obligation subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Fund will
direct the seller of the Obligation to deliver additional securities so that the
market value (including interest) of all securities subject to the repurchase
agreement will equal or exceed the repurchase price.

Reverse Repurchase Agreements. The Fund may enter into "reverse repurchase
agreements," which are repurchase agreements in which the Fund, as the seller of
the securities, agrees to repurchase such securities at an agreed time and
price. The Fund segregates assets in an amount at least equal to its obligation
under outstanding reverse repurchase agreements. The Fund will enter into
reverse repurchase agreements only when the Advisor believes that the interest
income to be earned from the investment of the proceeds of the transaction will
be greater than the interest expense of the transaction. Such transactions may
increase fluctuations in the market value of fund assets and its yield.

Short Sales Against the Box. The Fund may make short sales of common stocks if,
at all times when a short position is open, the Fund owns the stock or owns
preferred stocks or debt securities convertible or exchangeable, without payment
of further consideration, into the shares of common stock sold short. Short
sales of this kind are referred to as short sales "against the box." The
broker/dealer that executes a short sale generally invests cash proceeds of the
sale until they are paid to the Fund. Arrangements may be made with the
broker/dealer to obtain a portion of the interest earned by the broker on the
investment of short sale proceeds. The Fund will segregate the common stock or
convertible or exchangeable preferred stock or debt securities in a special
account with the custodian. Uncertainty regarding the tax effects of short sales
of appreciated investments may limit the extent to which the Fund may enter into
short sales against the box.

Strategic Transactions and Derivatives. The Fund may, but is not required to,
utilize various other investment strategies as described below for a variety of
purposes, such as hedging various market risks, managing the effective maturity
or duration of the fixed-income securities in the Fund's portfolio or enhancing
potential gain. These strategies may be executed through the use of derivative
contracts.

In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon, enter into various transactions such as swaps,
caps, floors, collars, currency forward contracts, currency futures contracts,
currency swaps or options on currencies, or currency futures and various other
currency transactions (collectively, all the above are called "Strategic
Transactions"). In addition, Strategic Transactions may also include new
techniques, instruments or strategies that are permitted as regulatory


                                       18
<PAGE>

changes occur. Strategic Transactions may be used without limit (subject to
certain limits imposed by the 1940 Act) to attempt to protect against possible
changes in the market value of securities held in or to be purchased for the
Fund's portfolio resulting from securities markets or currency exchange rate
fluctuations, to protect the Fund's unrealized gains in the value of its
portfolio securities, to facilitate the sale of such securities for investment
purposes, to manage the effective maturity or duration of the Fund's portfolio,
or to establish a position in the derivatives markets as a substitute for
purchasing or selling particular securities. Some Strategic Transactions may
also be used to enhance potential gain although no more than 5% of the Fund's
assets will be committed to certain Strategic Transactions entered into for
non-hedging purposes. Any or all of these investment techniques may be used at
any time and in any combination, and there is no particular strategy that
dictates the use of one technique rather than another, as use of any Strategic
Transaction is a function of numerous variables including market conditions. The
ability of the Fund to utilize these Strategic Transactions successfully will
depend on the Advisor's ability to predict pertinent market movements, which
cannot be assured. The Fund will comply with applicable regulatory requirements
when implementing these strategies, techniques and instruments. Strategic
Transactions will not be used to alter fundamental investment purposes and
characteristics of the Fund, and the Fund will segregate assets (or as provided
by applicable regulations, enter into certain offsetting positions) as required
by law.

Strategic Transactions, including derivative contracts, have risks associated
with them including possible default by the other party to the transaction,
illiquidity and, to the extent the Advisor's view as to certain market movements
is incorrect, the risk that the use of such Strategic Transactions could result
in losses greater than if they had not been used. Use of put and call options
may result in losses to the Fund, force the sale or purchase of portfolio
securities at inopportune times or for prices higher than (in the case of put
options) or lower than (in the case of call options) current market values,
limit the amount of appreciation the Fund can realize on its investments or
cause the Fund to hold a security it might otherwise sell. The use of currency
transactions can result in the Fund incurring losses as a result of a number of
factors including the imposition of exchange controls, suspension of
settlements, or the inability to deliver or receive a specified currency. The
use of options and futures transactions entails certain other risks. In
particular, the variable degree of correlation between price movements of
futures contracts and price movements in the related portfolio position of the
Fund creates the possibility that losses on the hedging instrument may be
greater than gains in the value of the Fund's position. In addition, futures and
options markets may not be liquid in all circumstances and certain
over-the-counter options may have no markets. As a result, in certain markets,
the Fund might not be able to close out a transaction without incurring
substantial losses, if at all. Although the use of futures and options
transactions for hedging should tend to minimize the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any potential gain which might result from an increase in value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential financial risk than would purchases of
options, where the exposure is limited to the cost of the initial premium.
Losses resulting from the use of Strategic Transactions would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.

Risks of Strategic Transactions Outside the US. When conducted outside the US,
Strategic Transactions may not be regulated as rigorously as in the US, may not
involve a clearing mechanism and related guarantees, and are subject to the risk
of governmental actions affecting trading in, or the prices of, foreign
securities, currencies and other instruments. The value of such positions also
could be adversely affected by: (i) other complex foreign political, legal and
economic factors, (ii) lesser availability than in the US of data on which to
make trading decisions, (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during non-business hours in the US, (iv)
the imposition of different exercise and settlement terms and procedures and
margin requirements than in the US, and (v) lower trading volume and liquidity.

General Characteristics of Options. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold. Thus, the following
general discussion relates to each of the particular types of options discussed
in greater detail below. In addition, many Strategic Transactions involving
options require segregation of fund assets in special accounts, as described
below under "Use of Segregated and Other Special Accounts."

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, the Fund's purchase of a put option on a security might be designed to
protect its holdings in the


                                       19
<PAGE>

underlying instrument (or, in some cases, a similar instrument) against a
substantial decline in the market value by giving the Fund the right to sell
such instrument at the option exercise price. A call option, upon payment of a
premium, gives the purchaser of the option the right to buy, and the seller the
obligation to sell, the underlying instrument at the exercise price. The Fund's
purchase of a call option on a security, financial future, index, currency or
other instrument might be intended to protect the Fund against an increase in
the price of the underlying instrument that it intends to purchase in the future
by fixing the price at which it may purchase such instrument. An American style
put or call option may be exercised at any time during the option period while a
European style put or call option may be exercised only upon expiration or
during a fixed period prior thereto. The Fund is authorized to purchase and sell
exchange listed options and over-the-counter options ("OTC options"). Exchange
listed options are issued by a regulated intermediary such as the Options
Clearing Corporation ("OCC"), which guarantees the performance of the
obligations of the parties to such options. The discussion below uses the OCC as
an example, but is also applicable to other financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may become available. Index options and Eurodollar
instruments are cash settled for the net amount, if any, by which the option is
"in-the-money" (i.e., where the value of the underlying instrument exceeds, in
the case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. Frequently,
rather than taking or making delivery of the underlying instrument through the
process of exercising the option, listed options are closed by entering into
offsetting purchase or sale transactions that do not result in ownership of the
new option.

The Fund's ability to close out its position as a purchaser or seller of an OCC
or exchange listed put or call option is dependent, in part, upon the liquidity
of the option market. Among the possible reasons for the absence of a liquid
option market on an exchange are: (i) insufficient trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities including reaching daily
price limits; (iv) interruption of the normal operations of the OCC or an
exchange; (v) inadequacy of the facilities of an exchange or OCC to handle
current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. The
Fund will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Fund to require the Counterparty
to sell the option back to the Fund at a formula price within seven days. The
Fund expects generally to enter into OTC options that have cash settlement
provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with the Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, the Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Advisor must assess the creditworthiness of each
such Counterparty or any guarantor or credit enhancement of the Counterparty's
credit to determine the likelihood that the terms of the OTC option will be
satisfied. The Fund will engage in OTC option transactions only with US
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary dealers" or broker-dealers, domestic or foreign banks or other
financial institutions which have received (or the guarantors of the obligation
of which have received) a short-


                                       20
<PAGE>

term credit rating of A-1 from S&P or P-1 from Moody's or an equivalent rating
from any nationally recognized statistical rating organization ("NRSRO") or, in
the case of OTC currency transactions, are determined to be of equivalent credit
quality by the Advisor. The staff of the SEC currently takes the position that
OTC options purchased by the Fund, and portfolio securities "covering" the
amount of the Fund's obligation pursuant to an OTC option sold by it (the cost
of the sell-back plus the in-the-money amount, if any) are illiquid, and are
subject to the Fund's limitation on investing no more than 15% of its net assets
in illiquid securities.

If the Fund sells a call option, the premium that it receives may serve as a
partial hedge, to the extent of the option premium, against a decrease in the
value of the underlying securities or instruments in its portfolio or will
increase the Fund's income. The sale of put options can also provide income.

The Fund may purchase and sell call options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments that are traded on US and foreign securities
exchanges and in the over-the-counter markets, and on securities indices,
currencies and futures contracts. All calls sold by the Fund must be "covered"
(i.e., the Fund must own the securities or futures contract subject to the call)
or must meet the asset segregation requirements described below as long as the
call is outstanding. Even though the Fund will receive the option premium to
help protect it against loss, a call sold by the Fund exposes the Fund during
the term of the option to possible loss of opportunity to realize appreciation
in the market price of the underlying security or instrument and may require the
Fund to hold a security or instrument which it might otherwise have sold.

The Fund may purchase and sell put options on securities including US Treasury
and agency securities, mortgage-backed securities, foreign sovereign debt,
corporate debt securities, equity securities (including convertible securities)
and Eurodollar instruments (whether or not it holds the above securities in its
portfolio), and on securities indices, currencies and futures contracts other
than futures on individual corporate debt and individual equity securities. The
Fund will not sell put options if, as a result, more than 50% of the Fund's
total assets would be required to be segregated to cover its potential
obligations under such put options other than those with respect to futures and
options thereon. In selling put options, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price above the
market price.

General Characteristics of Futures. The Fund may enter into futures contracts or
purchase or sell put and call options on such futures as a hedge against
anticipated interest rate, currency or equity market changes, and for duration
management, risk management and return enhancement purposes. Futures are
generally bought and sold on the commodities exchanges where they are listed
with payment of initial and variation margin as described below. The sale of a
futures contract creates a firm obligation by the Fund, as seller, to deliver to
the buyer the specific type of financial instrument called for in the contract
at a specific future time for a specified price (or, with respect to index
futures and Eurodollar instruments, the net cash amount). Options on futures
contracts are similar to options on securities except that an option on a
futures contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract and obligates the seller to deliver such
position.

The Fund has claimed exclusion from the definition of the term "commodity pool
operator" under the Commodity Exchange Act. Therefore, the Fund is not subject
to commodity pool operator registration and regulation under the Commodity
Exchange Act. Futures and options on futures may be entered into for bona fide
hedging, risk management (including duration management) or other portfolio and
return enhancement management purposes to the extent consistent with the
exclusion from commodity pool operator registration. Typically, maintaining a
futures contract or selling an option thereon requires the Fund to deposit with
a financial intermediary or futures commissions merchant as security for its
obligations an amount of cash or other specified assets (initial margin) which
initially is typically 1% to 10% of the face amount of the contract (but may be
higher in some circumstances). Additional cash or assets (variation margin) may
be required to be deposited thereafter on a daily basis as the marked to market
value of the contract fluctuates. The purchase of an option on financial futures
involves payment of a premium for the option without any further obligation on
the part of the Fund. If the Fund exercises an option on a futures contract it
will be obligated to post initial margin (and potential subsequent variation
margin) for the resulting futures position just as it would for any position.
Futures contracts and options thereon are generally settled by entering into an
offsetting transaction but there can be no assurance that the position can be
offset prior to settlement at an advantageous price, nor that delivery will
occur.

                                       21
<PAGE>

Options on Securities Indices and Other Financial Indices. The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through the sale or purchase of options on individual securities or other
instruments. Options on securities indices and other financial indices are
similar to options on a security or other instrument except that, rather than
settling by physical delivery of the underlying instrument, they settle by cash
settlement, i.e., an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option (except if, in the case
of an OTC option, physical delivery is specified). This amount of cash is equal
to the excess of the closing price of the index over the exercise price of the
option, which also may be multiplied by a formula value. The seller of the
option is obligated, in return for the premium received, to make delivery of
this amount. The gain or loss on an option on an index depends on price
movements in the instruments making up the market, market segment, industry or
other composite on which the underlying index is based, rather than price
movements in individual securities, as is the case with respect to options on
securities.

Currency Transactions. The Fund may engage in currency transactions with
Counterparties primarily in order to hedge, or manage the risk of the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
exchange listed currency futures, exchange listed and OTC options on currencies,
and currency swaps. A forward currency contract involves a privately negotiated
obligation to purchase or sell (with delivery generally required) a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency swap is an agreement to exchange cash flows based on the
notional difference among two or more currencies and operates similarly to an
interest rate swap, which is described below. The Fund may enter into currency
transactions with Counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating from a NRSRO or (except
for OTC currency options) are determined to be of equivalent credit quality by
the Advisor.

The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps generally
will be limited to hedging involving either specific transactions or portfolio
positions except as described below. Transaction hedging is entering into a
currency transaction with respect to specific assets or liabilities of the Fund,
which will generally arise in connection with the purchase or sale of its
portfolio securities or the receipt of income therefrom. Position hedging is
entering into a currency transaction with respect to portfolio security
positions denominated or generally quoted in that currency.

The Fund generally will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.

The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage in proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for US dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. Currency hedging involves some of the same
risks and considerations as other transactions with similar instruments.
Currency transactions can result in losses to the Fund if the currency being
hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived correlation between
various currencies may not be present or may not be present during


                                       22
<PAGE>

the particular time that the Fund is engaging in proxy hedging. If the Fund
enters into a currency hedging transaction, the Fund will comply with the asset
segregation requirements described below.

Risks of Currency Transactions. Currency transactions are subject to risks
different from those of other portfolio transactions. Because currency control
is of great importance to the issuing governments and influences economic
planning and policy, purchases and sales of currency and related instruments can
be negatively affected by government exchange controls, blockages, and
manipulations or exchange restrictions imposed by governments. These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations and could also cause hedges it has entered into to be
rendered useless, resulting in full currency exposure as well as incurring
transaction costs. Buyers and sellers of currency futures are subject to the
same risks that apply to the use of futures generally. Further, settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter are interest rate, currency, index and other swaps and the
purchase or sale of related caps, floors and collars. The Fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Fund will not sell interest rate caps or floors where it does not own
securities or other instruments providing the income stream the Fund may be
obligated to pay. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

Use of Segregated and Other Special Accounts. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate cash or liquid
assets with its custodian to the extent fund obligations are not otherwise
"covered" through ownership of the underlying security, financial instrument or
currency. In general, either the full amount of any obligation by the Fund to
pay or deliver securities or assets must be covered at all times by the
securities, instruments or currency required to be delivered, or, subject to any
regulatory restrictions, an amount of cash or liquid assets at least equal to
the current amount of the obligation must be segregated with the custodian. The
segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. For
example, a call option written by the Fund will require the Fund to hold the
securities subject to the call (or securities convertible into the needed
securities without additional consideration) or to segregate cash or liquid
assets sufficient to purchase and deliver the securities if the call is
exercised. A call option sold by the Fund on an index will require the Fund to
own portfolio securities which correlate with the index or to segregate cash or
liquid assets equal to the excess of the index value over the exercise price on
a current basis. A put option written by the Fund requires the Fund to segregate
cash or liquid assets equal to the exercise price. Except when the Fund enters
into a forward contract for the purchase or sale of a security denominated in a
particular currency, which requires no segregation, a currency contract which
obligates the Fund to buy or sell currency will generally require the Fund to
hold an amount of that currency or liquid assets denominated in that currency
equal to the Fund's obligations or to segregate cash or liquid assets equal to
the amount of the Fund's obligation. OTC options entered into by the Fund,
including those on securities, currency, financial instruments or indices and
OCC issued and exchange listed index options, will generally provide for cash
settlement. As a result, when the Fund sells these instruments it will only
segregate an amount of cash or liquid assets equal to its accrued net
obligations, as there is no requirement for payment or delivery of amounts in
excess of the net amount. These amounts will equal 100% of the exercise price in
the case of a non cash-settled put, the same as an


                                       23
<PAGE>

OCC guaranteed listed option sold by the Fund, or the in-the-money amount plus
any sell-back formula amount in the case of a cash-settled put or call. In
addition, when the Fund sells a call option on an index at a time when the
in-the-money amount exceeds the exercise price, the Fund will segregate, until
the option expires or is closed out, cash or cash equivalents equal in value to
such excess. OCC issued and exchange listed options sold by the Fund other than
those above generally settle with physical delivery, or with an election of
either physical delivery or cash settlement and the Fund will segregate an
amount of cash or liquid assets equal to the full value of the option. OTC
options settling with physical delivery, or with an election of either physical
delivery or cash settlement, will be treated the same as other options settling
with physical delivery.

In the case of a futures contract or an option thereon, the Fund must deposit
initial margin and possible daily variation margin in addition to segregating
cash or liquid assets sufficient to meet its obligation to purchase or provide
securities or currencies, or to pay the amount owed at the expiration of an
index-based futures contract. Such liquid assets may consist of cash, cash
equivalents, liquid debt or equity securities or other acceptable assets. With
respect to swaps, the Fund will accrue the net amount of the excess, if any, of
its obligations over its entitlements with respect to each swap on a daily basis
and will segregate an amount of cash or liquid assets having a value equal to
the accrued excess. Caps, floors and collars require segregation of assets with
a value equal to the Fund's net obligation, if any.

Strategic Transactions may be covered by other means when consistent with
applicable regulatory policies. The Fund may also enter into offsetting
transactions so that its combined position, coupled with any segregated assets,
equals its net outstanding obligation in related options and Strategic
Transactions. For example, the Fund could purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover, instead of segregating cash or liquid assets if the
Fund held a futures or forward contract, it could purchase a put option on the
same futures or forward contract with a strike price as high or higher than the
price of the contract held. Other Strategic Transactions may also be offset in
combinations. If the offsetting transaction terminates at the time of or after
the primary transaction no segregation is required, but if it terminates prior
to such time, cash or liquid assets equal to any remaining obligation would need
to be segregated.

Combined Transactions. The Fund may enter into multiple transactions, including
multiple options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single Strategic
Transaction, as part of a single or combined strategy when, in the opinion of
the Advisor or subadvisor, it is in the best interests of the Fund to do so. A
combined transaction will usually contain elements of risk that are present in
each of its component transactions. Although combined transactions are normally
entered into based on the Advisor's or subadvisor's judgment that the combined
strategies will reduce risk or otherwise more effectively achieve the desired
portfolio management goal, it is possible that the combination will instead
increase such risks or hinder achievement of the portfolio management objective.

Supranational Entities. Supranational entities are international organizations
designated or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies. Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Coal and Steel Community, The
Asian Development Bank and the InterAmerican Development Bank. Obligations of
supranational entities are backed by the guarantee of one or more foreign
governmental parties which sponsor the entity.

Warrants. The holder of a warrant has the right, until the warrant expires, to
purchase a given number of shares of a particular issuer at a specified price.
Such investments can provide a greater potential for profit or loss than an
equivalent investment in the underlying security. Prices of warrants do not
necessarily move, however, in tandem with the prices of the underlying
securities and are, therefore, considered speculative investments. Warrants pay
no dividends and confer no rights other than a purchase option. Thus, if a
warrant held by the Fund were not exercised by the date of its expiration, the
Fund would lose the entire purchase price of the warrant.

When-Issued Securities. The Fund may from time to time purchase equity and debt
securities on a "when-issued," "delayed delivery" or "forward delivery" basis.
The price of such securities, which may be expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
securities takes place at a


                                       24
<PAGE>

later date. During the period between purchase and settlement, no payment is
made by the Fund to the issuer and no interest accrues to the Fund. When the
Fund purchases such securities, it immediately assumes the risks of ownership,
including the risk of price fluctuation. Failure to deliver a security purchased
on this basis may result in a loss or missed opportunity to make an alternative
investment.

To the extent that assets of the Fund are held in cash pending the settlement of
a purchase of securities, the Fund would earn no income. While such securities
may be sold prior to the settlement date, the Fund intends to purchase them with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
security on this basis, it will record the transaction and reflect the value of
the security in determining its net asset value. The market value of the
securities may be more or less than the purchase price. The Fund will segregate
cash or liquid assets at least equal in value to commitments for such
securities.

Zero Coupon Securities. The Fund may invest in zero coupon securities which pay
no cash income and are sold at substantial discounts from their value at
maturity. When held to maturity, their entire income, which consists of
accretion of discount, comes from the difference between the issue price and
their value at maturity. The effect of owning instruments which do not make
current interest payments is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount accretion during the
life of the obligation. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest distributions at a rate as high
as the implicit yield on the zero coupon bond, but at the same time eliminates
any opportunity to reinvest earnings at higher rates. For this reason, zero
coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than those of comparable securities
that pay interest currently, which fluctuation is greater as the period to
maturity is longer. Zero coupon securities which are convertible into common
stock offer the opportunity for capital appreciation (or depreciation) as
increases (or decreases) in market value of such securities closely follow the
movements in the market value of the underlying common stock. Zero coupon
convertible securities generally are expected to be less volatile than the
underlying common stocks, as they usually are issued with maturities of 15 years
or less and are issued with options and/or redemption features exercisable by
the holder of the obligation entitling the holder to redeem the obligation and
receive a defined cash payment.

Portfolio Holdings Information

In addition to the public disclosure of Fund portfolio holdings through required
Securities and Exchange Commission ("SEC") quarterly filings, the Fund may make
its portfolio holdings information publicly available on the DWS Funds' Web site
as described in the Fund's prospectus. The Fund does not disseminate non-public
information about portfolio holdings except in accordance with policies and
procedures adopted by the Fund.

The Fund's procedures permit non-public portfolio holdings information to be
shared with Deutsche Asset Management and its affiliates (collectively "DeAM"),
subadvisors, if any, custodians, independent registered public accounting firms,
attorneys, officers and directors and each of their respective affiliates and
advisers who require access to this information to fulfill their duties to the
Fund and are subject to the duties of confidentiality, including the duty not to
trade on non-public information, imposed by law or contract, or by the Fund's
procedures. This non-public information may also be disclosed, subject to the
requirements described below, to securities lending agents, financial printers,
proxy voting firms, mutual fund analysts and rating and tracking agencies, or to
shareholders in connection with in-kind redemptions (collectively, "Authorized
Third Parties").

Prior to any disclosure of the Fund's non-public portfolio holdings information
to Authorized Third Parties, a person authorized by the Fund's Directors must
make a good faith determination in light of the facts then known that the Fund
has a legitimate business purpose for providing the information, that the
disclosure is in the best interest of the Fund, and that the recipient assents
or otherwise has a duty to keep the information confidential and to not trade
based on the information received while the information remains non-public. No
compensation is received by the Fund or DeAM for disclosing non-public holdings
information. Periodic reports regarding these procedures will be provided to the
Fund's Directors.

Portfolio holdings information distributed by the trading desks of DeAM or a
subadvisor for the purpose of facilitating efficient trading of such securities
and receipt of relevant research is not subject to the foregoing


                                       25
<PAGE>

requirements. Non-public portfolio holding information does not include
portfolio characteristics (other than holdings or subsets of holdings) about the
Fund and information derived therefrom, including, but not limited to, how the
Fund's investments are divided among various sectors, industries, countries,
value and growth stocks, bonds, currencies and cash, types of bonds, bond
maturities, duration, bond coupons and bond credit quality ratings so long as
the Fund's holdings could not be derived from such information.

Registered investment companies that are subadvised by DeAM may be subject to
different portfolio holdings disclosure policies, and neither DeAM nor the
Trust's Directors exercise control over such policies. In addition, separate
account clients of DeAM have access to their portfolio holdings and are not
subject to the Fund's portfolio holdings disclosure policy. The portfolio
holdings of some of the Funds sub-advised by DeAM and some of the separate
accounts managed by DeAM may substantially overlap with the portfolio holdings
of the Fund.

DeAM also manages certain unregistered commingled trusts and creates model
portfolios, the portfolio holdings of which may substantially overlap with the
portfolio holdings of the Fund. To the extent that investors in these commingled
trusts or recipients of model portfolio holdings information may receive
portfolio holdings information of their trust or of a model portfolio on a
different basis from that on which Fund portfolio holdings information is made
public, DeAM has implemented procedures reasonably designed to encourage such
investors and recipients to keep such information confidential, and to prevent
those investors from trading on the basis of non-public holdings information.

There is no assurance that the Fund's policies and procedures with respect to
the disclosure of portfolio holdings information will protect the Fund from the
potential misuse of portfolio holdings information by those in possession of
that information.

                             MANAGEMENT OF THE FUND

Investment Advisor

Deutsche Investment Management Americas Inc. ("DIMA"), which is part of Deutsche
Asset Management ("DeAM"), is the investment advisor for the Fund. Under the
supervision of the Board of Trustees of the Trust, DIMA, with headquarters at
345 Park Avenue, New York, New York 10154, or the subadvisor makes the Fund's
investment decisions, buys and sells securities for the Fund and conducts
research that leads to these purchase and sale decisions. The Advisor manages
the Fund's daily investment and business affairs subject to the policies
established by the Trust's Board of Trustees. DIMA and its predecessors have
more than 80 years of experience managing mutual funds. DIMA provides a full
range of investment advisory services to institutional and retail clients. The
Advisor is also responsible for selecting brokers and dealers and for
negotiating brokerage commissions and dealer charges.

DeAM is the marketing name in the US for the asset management activities of
Deutsche Bank AG, DIMA, Deutsche Bank Trust Company Americas and DWS Trust
Company. DeAM is a global asset management organization that offers a wide range
of investing expertise and resources, including hundreds of portfolio managers
and analysts and an office network that reaches the world's major investment
centers. This well-resourced global investment platform brings together a wide
variety of experience and investment insight, across industries, regions, asset
classes and investing styles. DIMA is an indirect, wholly owned subsidiary of
Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is
engaged in a wide range of financial services, including investment management,
mutual fund, retail, private and commercial banking, investment banking and
insurance. The term "DWS Scudder" is the designation given to the products and
services provided by DIMA and its affiliates to the DWS Mutual Funds.

Pursuant to an amended and restated Investment Management Agreement between the
Fund and DIMA (the "Investment Management Agreement"), the Advisor provides
continuing investment management of the assets of the Fund. In addition to the
investment management of the assets of the Fund, the Advisor determines the
investments to be made for the Fund, including what portion of its assets remain
uninvested in cash or cash equivalents, and with whom the orders for investments
are placed, consistent with the Fund's policies as stated in its Prospectus and
SAI, or as adopted by the Fund's Board. The Advisor will also monitor, to the
extent not monitored


                                       26
<PAGE>

by the Fund's administrator or other agent, the Fund's compliance with its
investment and tax guidelines and other compliance policies. The Investment
Management Agreement was last approved by the Board on September 18, 2007 and
became effective on October 1, 2007.

The Advisor provides assistance to the Fund's Board in valuing the securities
and other instruments held by the Fund, to the extent reasonably required by
valuation policies and procedures that may be adopted by the Fund.

Pursuant to the Investment Management Agreement, (unless otherwise provided in
the agreement or as determined by the Fund's Board and to the extent permitted
by applicable law), the Advisor pays the compensation and expenses of all the
Board members, officers, and executive employees of the Fund, including the
Fund's share of payroll taxes, who are affiliated persons of the Advisor.

The Investment Management Agreement provides that the Fund is generally
responsible for expenses that include: fees payable to the Advisor; outside
legal, accounting or auditing expenses, including with respect to expenses
related to negotiation, acquisition or distribution of portfolio investments;
maintenance of books and records that are maintained by the Fund, the Fund's
custodian, or other agents of the Fund; taxes and governmental fees; fees and
expenses of the Fund's accounting agent, custodian, sub-custodians,
depositories, transfer agents, dividend reimbursing agents and registrars;
payment for portfolio pricing or valuation services to pricing agents,
accountants, bankers and other specialists, if any; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities or other
instruments of the Fund; and litigation expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.

The Investment Management Agreement allows the Advisor to delegate any of its
duties under the Agreement to a subadvisor, subject to a majority vote of the
Board of the Fund, including a majority of the Board who are not interested
persons of the Fund, and, if required by applicable law, subject to a majority
vote of the Fund's shareholders.

The Investment Management Agreement provides that the Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with matters to which the agreement relates, except a
loss resulting from willful malfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from reckless disregard
by the Advisor of its obligations and duties under the agreement. The Investment
Management Agreement may be terminated at any time, without payment of penalty,
by either party or by vote of a majority of the outstanding voting securities of
the Fund on 60 days' written notice.

Effective October 1, 2007, the Fund pays a monthly investment management fee at
the annual rate of 0.885% of the first $500,000,000 of the average daily net
assets and 0.835% of such net assets in excess of $500,000,000, computed and
accrued daily and payable monthly.

The advisory fees charged to the Fund for its last three fiscal years are shown
in the table below:

<TABLE>
<CAPTION>
Fund                                    2007*                    2006*                 Fiscal 2005*
----                                    -----                    -----                 ------------

<S>                                  <C>                      <C>                       <C>
DWS Gold & Precious Metals Fund      $6,130,900               $5,938,197                $4,728,588
</TABLE>

*        Prior to July 1, 2006, these fees included an administrative service
         fee.

Through September 30, 2008, the Advisor has contractually agreed to waive all or
a portion of its fees and reimburse or pay operating expenses of the fund to the
extent necessary to maintain the Fund's total operating expenses at 1.23% for
Class S shares, excluding certain expense such as extraordinary expenses, taxes,
brokerage, interest and expenses of acquired funds (underlying funds). Although
there can be no assurance that the current waiver/expense reimbursement
arrangement will be maintained beyond September 30, 2008, the Advisor has
committed to review the continuance of waiver/expense reimbursement arrangements
by September 30, 2008.


                                       27
<PAGE>

Under the Agreement the Fund is responsible for all of its other expenses
including: organizational costs, fees and expenses incurred in connection with
membership in investment company organizations; brokers' commissions; legal,
auditing and accounting expenses; insurance; taxes and governmental fees; the
fees and expenses of the Transfer Agent; any other expenses of issue, sale,
underwriting, distribution, redemption or repurchase of shares; the expenses of
and the fees for registering or qualifying securities for sale; the fees and
expenses of Directors, officers and employees of the Fund who are not affiliated
with the Advisor; the cost of printing and distributing reports and notices to
shareholders; and the fees and disbursements of custodians. The Fund may arrange
to have third parties assume all or part of the expenses of sale, underwriting
and distribution of shares of the Fund. The Fund is also responsible for
expenses of its shareholders' meetings, the cost of responding to shareholders'
inquiries, and its expenses incurred in connection with litigation, proceedings
and claims and the legal obligation it may have to indemnify its officers and
Directors with respect thereto.

Under a separate agreement between Deutsche Bank AG and the Fund, Deutsche Bank
AG has granted a license to the Fund to utilize the trademark "DWS."

In reviewing the terms of each Agreement and in discussions with the Advisor
concerning such Agreement, the Directors of the Corporation who are not
interested persons of the Advisor are represented by independent counsel at the
Funds' expense.

The Agreement provides that the Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with matters to which the Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Advisor in
the performance of its duties or from reckless disregard by the Advisor of its
obligations and duties under the Agreement.

Officers and employees of the Advisor from time to time may have transactions
with various banks, including the Funds' custodian bank. It is the Advisor's
opinion that the terms and conditions of those transactions which have occurred
were not influenced by existing or potential custodial or other Fund
relationships.

The Advisor may serve as advisor to other funds with investment objectives and
policies similar to those of the Fund that may have different distribution
arrangements or expenses, which may affect performance.

None of the officers or Directors of the Corporation may have dealings with the
Fund as principals in the purchase or sale of securities, except as individual
subscribers to or holders of shares of the Fund.

The term "DWS Scudder" is the designation given to the services provided by DIMA
and its affiliates to DWS Mutual Funds.

The Advisor may enter into arrangements with affiliates and third party service
providers to perform various administrative, back-office and other services
relating to client accounts. Such service providers may be located in the US or
in non-US jurisdictions.

In addition, the Board and shareholders recently approved a new subadvisor
approval policy for the Fund (the "Subadvisor Approval Policy"). The Subadvisor
Approval Policy permits the Advisor, subject to the approval of the Board,
including a majority of its independent board members, to appoint and replace
subadvisors and to amend sub-advisory contracts without obtaining shareholder
approval. Under the Subadvisor Approval Policy, the Board, including its
independent board members, will continue to evaluate and approve all new
sub-advisory contracts between the Advisor and any subadvisor, as well as all
changes to any existing sub-advisory contract. The Fund cannot implement the
Subadvisor Approval Policy without the SEC either adopting revisions to current
rules (as it proposed to do in October 2003) or granting the Fund exemptive
relief from existing rules. The Fund and the Advisor would be subject to certain
conditions imposed by the SEC (and certain conditions that may be imposed in the
future within either exemptive relief or a rule) to ensure that the interests of
the Fund and its shareholders are adequately protected whenever the Advisor acts
under the Subadvisor Approval Policy, including any shareholder notice
requirements.

                                       28
<PAGE>

Subadvisor. Deutsche Investments Australia Limited (DIAL), Level 16, 126 Phillip
Street, Sydney NSW 200, Australia, an affiliate of the Advisor, is the
subadvisor for the Fund. DIAL serves as subadvisor pursuant to the terms of a
Research and Advisory Agreement between it and the Advisor. DIAL has served as
subadvisor to the Fund since March 2001. On April 5, 2002, DIAL changed its name
from Scudder Investments Australia Limited.

Under the terms of the Research and Advisory Agreement, DIAL manages the
investment and reinvestment of the Fund's portfolio and will provide such
investment advice, research and assistance as the Advisor may, from time to
time, reasonably request.

The Research and Advisory Agreement provides that DIAL will not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which the Research and Advisory Agreement relates,
except a loss resulting from willful misconduct, bad faith or gross negligence
on the part of DIAL in the performance of its duties or from reckless disregard
by DIAL of its obligations and duties under the Research and Advisory Agreement.

The Research and Advisory Agreement was last approved by the Directors of DWS
Gold & Precious Metals Fund on September 18, 2007 and remains in effect until
September 30, 2007 unless sooner terminated or not annually approved as
described below. The Research and Advisory Agreement had an initial term ending
September 30, 2004 and shall continue in effect from year to year thereafter,
but only as long as such continuance is specifically approved at least annually
(a) by a majority of the Directors of the Corporation who are not parties to
such agreement or interested persons of any such party except in their capacity
as Directors of the Corporation, and (b) by the shareholders or the Board of
Directors of the Corporation. The Research and Advisory Agreement may be
terminated at any time upon 60 days' notice by the Advisor, by the Board of
Directors of the Corporation or by majority vote of the outstanding shares of
the Fund and will terminate automatically upon assignment or upon termination of
the Fund's Agreement. In connection with their approval of the Research and
Advisory Agreement with DIAL, the Directors considered substantially the same
factors as those considered in approving the continuation of the investment
management agreement, to the extent applicable.

The Advisor compensates DIAL out of the management fee it receives from the
Fund.

The table below shows the total subadvisory fees paid by the Advisor to DIAL for
the last three fiscal periods.

<TABLE>
<CAPTION>
Fund                                                  Fiscal 2007          Fiscal 2006           Fiscal 2005
----                                                  -----------          -----------           -----------

<S>                                                   <C>                   <C>                  <C>
DWS Gold & Precious Metals Fund                       $2,824,592            $2,841,608           $2,199,282
</TABLE>

Compensation of Portfolio Managers

Portfolio managers are eligible for total compensation comprised of base salary
and discretionary incentive compensation.

Base Salary - Base salary generally represents a smaller percentage of portfolio
managers' total compensation than discretionary incentive compensation. Base
salary is linked to job function, responsibilities and financial services
industry peer comparison through the use of extensive market data surveys.

Discretionary Incentive Compensation - Generally, discretionary incentive
compensation comprises a greater proportion of total compensation as a portfolio
manager's seniority and compensation levels increase. Discretionary incentive
compensation is determined based on an analysis of a number of factors,
including among other things, the performance of Deutsche Bank, the performance
of the Asset Management division, and the employee's individual contribution. In
evaluating individual contribution, management will consider a combination of
quantitative and qualitative factors. A portion of the portfolio manager's
discretionary incentive compensation may be delivered in long-term equity
programs (usually in the form or Deutsche Bank equity) (the "Equity Plan"). Top
performing portfolio managers may earn discretionary incentive compensation that
is a multiple of their base salary.

                                       29
<PAGE>

o        The quantitative analysis of a portfolio manager's individual
         performance is based on, among other factors, performance of all of the
         accounts managed by the portfolio manager (which includes the fund and
         any other accounts managed by the portfolio manager) over a one-,
         three-, and five-year period relative to the appropriate Morningstar
         and Lipper peer group universes and/or benchmark index(es) with respect
         to each account. Additionally, the portfolio manager's
         retail/institutional asset mix is weighted, as appropriate for
         evaluation purposes. Generally the benchmark index used is a benchmark
         index set forth in the fund's prospectus to which the fund's
         performance is compared. Additional or different appropriate peer group
         or benchmark indices may also be used. Primary weight is given to
         pre-tax portfolio performance over three-year and five-year time
         periods (adjusted as appropriate if the portfolio manager has served
         for less than five years) with lesser consideration given to portfolio
         performance over a one-year period. The increase or decrease in a
         fund's assets due to the purchase or sale of fund shares is not
         considered a material factor.

o        The qualitative analysis of a portfolio manager's individual
         performance is based on, among other things, the results of an annual
         management and internal peer review process, and management's
         assessment of overall portfolio manager contributions to investor
         relations, the investment process and overall performance (distinct
         from fund and other account performance). Other factors, including
         contributions made to the investment team, as well as adherence to
         Compliance Policies and Procedures, Risk Management procedures, the
         firm's Code of Ethics and "living the values" of the Advisor are also
         factors.

The quantitative analysis of a portfolio manager's performance is given more
weight in determining discretionary incentive compensation that the qualitative
portion.

Certain portfolio managers may also participate in the Equity Plan. The amount
of equity awarded under the long-term equity programs is generally based on the
individual's total compensation package and may comprise from 0% to 30% of the
total compensation award. As discretionary incentive compensation increases, the
percentage of compensation awarded in Deutsche Bank equity also increases.
Portfolio managers may receive a portion of their equity compensation in the
form of shares in the proprietary mutual funds that they manage or support.

Fund Ownership of Portfolio Managers

The following table shows the dollar range of shares owned beneficially and of
record by each member of the Fund's portfolio management team in the Fund as
well as in all DWS Funds as a group (i.e. those funds advised by Deutsche Asset
Management or its affiliates), including investments by their immediate family
members sharing the same household and amounts invested through retirement and
deferred compensation plans. This information is provided as of the Fund's most
recent fiscal year end.

<TABLE>
<CAPTION>
                                                    Dollar Range of                 Dollar Range of All DWS
Name of Portfolio Manager                          Fund Shares Owned                   Fund Shares Owned
-------------------------                          -----------------                   -----------------

<S>                                                        <C>                            <C>  <C>
Euan Leckie                                                $0                             $1 - 10,001
Greg Foulis                                                $0                                  $0
</TABLE>

Because the fund's portfolio managers are not resident in the US, they generally
do not invest in US registered investment companies, such as the Fund, on
account of US tax and other regulatory limitations applicable to foreign
investors.

Conflicts of Interest

In addition to managing the assets of the Fund, the Fund's portfolio managers
may have responsibility for managing other client accounts of the Advisor or its
affiliates. The tables below show, for each portfolio manager, the number and
asset size of (1) SEC registered investment companies (or series thereof) other
than the Fund, (2) pooled investment vehicles that are not registered investment
companies and (3) other accounts (e.g., accounts managed for individuals or
organizations) managed by each portfolio manager. Total assets attributed to
each portfolio manager in the tables below include total assets of each account
managed by them, although the manager may only manage a


                                       30
<PAGE>

portion of such account's assets. The tables also show the number of performance
based fee accounts, as well as the total assets of the accounts for which the
advisory fee is based on the performance of the account. This information is
provided as of the Fund's most recent fiscal year end.

Other SEC Registered Investment Companies Managed:

<TABLE>
<CAPTION>
                                      Number of        Total Assets of    Number of Investment
                                      Registered          Registered         Company Accounts       Total Assets of
                                      Investment          Investment               with            Performance-Based
Name of Portfolio Manager              Companies           Companies       Performance-Based Fee     Fee Accounts
-------------------------              ---------           ---------       ---------------------     ------------

<S>                                        <C>                <C>                    <C>                  <C>
Euan Leckie                                0                  $0                     0                    $0
Greg Foulis                                0                  $0                     0                    $0





Other Pooled Investment Vehicles Managed:

                                                                              Number of Pooled
                                     Number of                               Investment Vehicle
                                       Pooled          Total Assets of         Accounts with        Total Assets of
                                     Investment       Pooled Investment      Performance-Based     Performance-Based
Name of Portfolio Manager             Vehicles             Vehicles                 Fee              Fee Accounts
-------------------------             --------             --------                 ---              ------------

Euan Leckie                               2              $34,758,916                 2                $34,758,916
Greg Foulis                               2              $34,758,916                 2                $34,758,916

Other Accounts Managed:

                                                                              Number of Other
                                                                               Accounts with      Total Assets of
                                      Number of     Total Assets of Other    Performance-Based      Performance-
Name of Portfolio Manager          Other Accounts          Accounts                 Fee          Based Fee Accounts
-------------------------          --------------          --------                 ---          ------------------

Euan Leckie                               0                   $0                     0                   $0
Greg Foulis                               0                   $0                     0                   $0
</TABLE>

In addition to the accounts above, an investment professional may manage
accounts in a personal capacity that may include holdings that are similar to,
or the same as, those of the Fund. The Advisor has in place a Code of Ethics
that is designed to address conflicts of interest and that, among other things,
imposes restrictions on the ability of portfolio managers and other "access
persons" to invest in securities that may be recommended or traded in the Fund
and other client accounts.

Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to
more than one fund or account, including the following:

o        Certain investments may be appropriate for the Fund and also for other
         clients advised by the Advisor, including other client accounts managed
         by the Fund's portfolio management team. Investment decisions for the
         Fund and other clients are made with a view to achieving their
         respective investment objectives and after consideration of such
         factors as their current holdings, availability of cash for investment
         and the size of their investments generally. A particular security may
         be bought or sold for only one client or in different amounts and at
         different times for more than one but less than all clients. Likewise,
         because clients of the Advisor may have differing investment
         strategies, a particular security may be bought for one


                                       31
<PAGE>

         or more clients when one or more other clients are selling the
         security. The investment results achieved for the Fund may differ from
         the results achieved for other clients of the Advisor. In addition,
         purchases or sales of the same security may be made for two or more
         clients on the same day. In such event, such transactions will be
         allocated among the clients in a manner believed by the Advisor to be
         most equitable to each client, generally utilizing a pro rata
         allocation methodology. In some cases, the allocation procedure could
         potentially have an adverse effect or positive effect on the price or
         amount of the securities purchased or sold by the Fund. Purchase and
         sale orders for the Fund may be combined with those of other clients of
         the Advisor in the interest of achieving the most favorable net results
         to the Fund and the other clients.

o        To the extent that a portfolio manager has responsibilities for
         managing multiple client accounts, a portfolio manager will need to
         divide time and attention among relevant accounts. The Advisor attempts
         to minimize these conflicts by aligning its portfolio management teams
         by investment strategy and by employing similar investment models
         across multiple client accounts.

o        In some cases, an apparent conflict may arise where the Advisor has an
         incentive, such as a performance-based fee, in managing one account and
         not with respect to other accounts it manages. The Advisor will not
         determine allocations based on whether it receives a performance-based
         fee from the client. Additionally, the Advisor has in place supervisory
         oversight processes to periodically monitor performance deviations for
         accounts with like strategies.

o        The Advisor and its affiliates and the investment team of the Fund may
         manage other mutual funds and separate accounts on a long-short basis.
         The simultaneous management of long and short portfolios creates
         potential conflicts of interest including the risk that short sale
         activity could adversely affect the market value of the long
         positions(and vice versa), the risk arising from sequential orders in
         long and short positions, and the risks associated with receiving
         opposing orders at the same time. The Advisor has adopted procedures
         that it believes are reasonably designed to mitigate these potential
         conflicts of interest. Included in these procedures are specific
         guidelines developed to ensure fair and equitable treatment for all
         clients whose accounts are managed by each Fund's portfolio management
         team. The Advisor and the portfolio management team have established
         monitoring procedures, a protocol for supervisory reviews, as well as
         compliance oversight to ensure that potential conflicts of interest
         relating to this type of activity are properly addressed.

The Advisor is owned by Deutsche Bank AG, a multi-national financial services
company. Therefore, the Advisor is affiliated with a variety of entities that
provide, and/or engage in commercial banking, insurance, brokerage, investment
banking, financial advisory, broker-dealer activities (including sales and
trading), hedge funds, real estate and private equity investing, in addition to
the provision of investment management services to institutional and individual
investors. Since Deutsche Bank AG, its affiliates, directors, officers and
employees (the "Firm") are engaged in businesses and have interests other than
managing asset management accounts, such other activities involve real,
potential or apparent conflicts of interest. These interests and activities
include potential advisory, transactional and financial activities and other
interests in securities and companies that may be directly or indirectly
purchased or sold by the Firm for its clients' advisory accounts. These are
considerations of which advisory clients should be aware and which may cause
conflicts that could be to the disadvantage of the Advisor's advisory clients.
The Advisor has instituted business and compliance policies, procedures and
disclosures that are designed to identify, monitor and mitigate conflicts of
interest and, as appropriate, to report them to the Fund's Board.

Codes of Ethics

The Fund, the Advisor, the Subadvisor and the Fund's principal underwriter have
each adopted codes of ethics under Rule 17j-1 under the 1940 Act. Board members,
officers of the Corporation and employees of the Advisor/Subadvisor and
principal underwriter are permitted to make personal securities transactions,
including transactions in securities that may be purchased or held by the Fund,
subject to requirements and restrictions set forth in the applicable Code of
Ethics. The Advisor's, the Subadvisor's Code of Ethics contains provisions and
requirements designed to identify and address certain conflicts of interest
between personal investment activities and the interests of the Fund. Among
other things, the Advisor's, the Subadvisor's Code of Ethics prohibits certain
types


                                       32
<PAGE>

         of transactions absent prior approval, imposes time periods during
         which personal transactions may not be made in certain securities, and
         requires the submission of duplicate broker confirmations and quarterly
         reporting of securities transactions. Additional restrictions apply to
         portfolio managers, traders, research analysts and others involved in
         the investment advisory process. Exceptions to these and other
         provisions of the Advisor's and the Subadvisor's Code of Ethics may be
         granted in particular circumstances after review by appropriate
         personnel.

Regulatory Matters and Legal Proceedings

On December 21, 2006, Deutsche Asset Management ("DeAM") settled proceedings
with the Securities and Exchange Commission ("SEC") and the New York Attorney
General on behalf of Deutsche Asset Management, Inc. ("DAMI") and DIMA, the
investment advisors to many of the DWS Scudder funds, regarding allegations of
improper trading of fund shares at DeAM and at the legacy Scudder and Kemper
organizations prior to their acquisition by DeAM in April 2002. These regulators
alleged that although the prospectuses for certain funds in the regulators' view
indicated that the funds did not permit market timing, DAMI and DIMA breached
their fiduciary duty to those funds in that their efforts to limit trading
activity in the funds were not effective at certain times. The regulators also
alleged that DAMI and DIMA breached their fiduciary duty to certain funds by
entering into certain market timing arrangements with investors. These trading
arrangements originated in businesses that existed prior to the currently
constituted DeAM organization, which came together as a result of various
mergers of the legacy Scudder, Kemper and Deutsche fund groups, and all of the
arrangements were terminated prior to the start of the regulatory investigations
that began in the summer of 2003. No current DeAM employee approved these
trading arrangements. Under the terms of the settlements, DAMI and DIMA neither
admitted nor denied any wrongdoing.

The terms of the SEC settlement, which identified improper trading in the legacy
Deutsche and Kemper mutual funds only, provide for payment of disgorgement in
the amount of $17.2 million. The terms of the settlement with the New York
Attorney General provide for payment of disgorgement in the amount of $102.3
million, which is inclusive of the amount payable under the SEC settlement, plus
a civil penalty in the amount of $20 million. The total amount payable by DeAM,
approximately $122.3 million, will be distributed to shareholders of the
affected funds in accordance with a distribution plan to be developed by a
distribution consultant. The funds' investment advisors do not believe these
amounts will have a material adverse financial impact on them or materially
affect their ability to perform under their investment management agreements
with the DWS funds. The above-described amounts are not material to Deutsche
Bank, and have already been reserved.

Among the terms of the settled orders, DeAM is subject to certain undertakings
regarding the conduct of its business in the future, including formation of a
Code of Ethics Oversight Committee to oversee all matters relating to issues
arising under the advisors' Code of Ethics; establishment of an Internal
Compliance Controls Committee having overall compliance oversight responsibility
of the advisors; engagement of an Independent Compliance Consultant to conduct a
comprehensive review of the advisors' supervisory compliance and other policies
and procedures designed to prevent and detect breaches of fiduciary duty,
breaches of the Code of Ethics and federal securities law violations by the
advisors and their employees; and commencing in 2008, the advisors shall undergo
a compliance review by an independent third party.

In addition, DeAM is subject to certain further undertakings relating to the
governance of the mutual funds, including that at least 75% of the members of
the Boards of Trustees/Directors overseeing the DWS Funds continue to be
independent of DeAM; the Chairmen of the DWS Funds' Boards of Trustees/Directors
continue to be independent of DeAM; DeAM maintain existing management fee
reductions for certain funds for a period of five years and not increase
management fees for these certain funds during this period; the funds retain a
senior officer (or independent consultants, as applicable) responsible for
assisting in the review of fee arrangements and monitoring compliance by the
funds and the investment advisors with securities laws, fiduciary duties, codes
of ethics and other compliance policies, the expense of which shall be borne by
DeAM; and periodic account statements, fund prospectuses and the mutual funds'
web site contain additional disclosure and/or tools that assist investors in
understanding the fees and costs associated with an investment in the funds and
the impact of fees and expenses on fund returns.

                                       33
<PAGE>

DeAM has also settled proceedings with the Illinois Secretary of State regarding
market timing matters. The terms of the Illinois settlement provide for investor
education contributions totaling approximately $4 million and a payment in the
amount of $2 million to the Securities Audit and Enforcement Fund.

On September 28, 2006, the SEC and the National Association of Securities
Dealers ("NASD") (now known as FINRA) announced final agreements in which
Deutsche Investment Management Americas Inc. ("DIMA"), Deutsche Asset
Management, Inc. ("DAMI") and Scudder Distributors, Inc. ("DWS-SDI") (now known
as DWS Scudder Distributors, Inc.) settled administrative proceedings regarding
disclosure of brokerage allocation practices in connection with sales of the
Scudder Funds' (now known as the DWS Scudder Funds) shares during 2001-2003. The
agreements with the SEC and NASD are reflected in orders which state, among
other things, that DIMA and DAMI failed to disclose potential conflicts of
interest to the funds' Boards and to shareholders relating to DWS-SDI's use of
certain funds' brokerage commissions to reduce revenue sharing costs to
broker-dealer firms with whom it had arrangements to market and distribute
Scudder Fund shares. These directed brokerage practices were discontinued in
October 2003.

Under the terms of the settlements, in which DIMA, DAMI and DWS-SDI neither
admitted nor denied any of the regulators' findings, DIMA, DAMI and DWS-SDI
agreed to pay disgorgement, prejudgment interest and civil penalties in the
total amount of $19.3 million. The portion of the settlements distributed to the
funds was approximately $17.8 million and was paid to the funds as prescribed by
the settlement orders based upon the amount of brokerage commissions from each
fund used to satisfy revenue sharing agreements with broker-dealers who sold
fund shares.

As part of the settlements, DIMA, DAMI and DWS-SDI also agreed to implement
certain measures and undertakings relating to revenue sharing payments including
making additional disclosures in the funds' Prospectuses or Statements of
Additional Information, adopting or modifying relevant policies and procedures
and providing regular reporting to the fund Boards.

Additional information announced by DeAM regarding the terms of the settlements
is available at www.dws-scudder.com/regulatory_settlements.

The matters alleged in the regulatory settlements described above also serve as
the general basis of a number of private class action lawsuits involving the DWS
funds. These lawsuits name as defendants various persons, including certain DWS
funds, the funds' investment advisors and their affiliates, and certain
individuals, including in some cases fund Trustees/Directors, officers, and
other parties. Each DWS fund's investment advisor has agreed to indemnify the
applicable DWS funds in connection with these lawsuits, or other lawsuits or
regulatory actions that may be filed making similar allegations.

Based on currently available information, the funds' investment advisors believe
the likelihood that the pending lawsuits will have a material adverse financial
impact on a DWS fund is remote and such actions are not likely to materially
affect their ability to perform under their investment management agreements
with the DWS funds.

                             FUND SERVICE PROVIDERS

Administrator

For the period from December 29, 2000 to April 1, 2004, the Fund operated under
an administrative services agreement with the Advisor (each an "Administrative
Agreement") pursuant to which the Advisor provided or paid others to provide
substantially all of the administrative services required by the Fund (other
than those provided by the Advisor under its investment management agreement
with the Fund, as described above) in exchange for the payment by the Fund of an
administrative services fee (the "Administrative Fee").

The Administrative Agreement for the Fund was terminated effective March 31,
2004. For periods subsequent to April 1, 2004 until May 31, 2006, the Fund
directly bore the cost of those expenses formerly covered under the
Administrative Agreement. Without the Administrative Agreement, fees paid by
each class of shares for


                                       34
<PAGE>

administrative services formerly paid and provided pursuant to the
Administrative Agreement may have been higher.

Certain expenses of the Fund were not borne by the Advisor under the
Administrative Agreement, such as taxes, brokerage, interest commitment fees,
and extraordinary expenses; and the fees and expenses of the Independent
Directors (including the fees and expenses of their independent counsel). In
addition, the Fund continued to pay the fees required by its investment
management agreement with the Advisor.

Effective June 1, 2006, the Fund entered into an administrative services
agreement with the Advisor (the "Administrative Services Agreement"), pursuant
to which the Advisor (or the "Administrator") provides administrative services
to a Fund including, among others, providing the Fund with personnel, preparing
and making required filings on behalf of a Fund, maintaining books and records
for the Fund, and monitoring the valuation of Fund securities. For all services
provided under the Administrative Services Agreement, the Fund pays the Advisor
a fee, computed daily and paid monthly, of 0.100% of the Fund's average daily
net assets.

Under the Administrative Services Agreement, the Advisor is obligated on a
continuous basis to provide such administrative services as the Board of DWS
Mutual Funds, Inc. reasonably deems necessary for the proper administration of
the Fund. The Advisor provides the Fund with personnel; arranges for the
preparation and filing of the Fund's tax returns; prepares and submits reports
and meeting materials to the Board and the Fund's shareholders; prepares and
files updates to the Fund's prospectuses and statements of additional
information as well as other reports required to be filed by the SEC; maintains
the Fund's records; provides the Fund with office space, equipment and services;
supervises, negotiates the contracts of and monitors the performance of third
parties contractors; oversees the tabulation of proxies; monitors the valuation
of portfolio securities and monitors compliance with Board-approved valuation
procedures; assists in establishing the accounting and tax policies of the Fund;
assists in the resolution of accounting issues that may arise with respect to
the Funds; establishes and monitors the Fund's operating expense budgets;
reviews and processes the Fund's bills; assists in determining the amount of
dividends and distributions available to be paid by the Fund, prepares and
arranges dividend notifications and provides information to agents to effect
payments thereof; provides to the Board periodic and special reports; provides
assistance with investor and public relations matters; and monitors the
registration of shares under applicable federal and state law. The Advisor also
performs certain fund accounting services under the Administrative Services
Agreement. The Administrative Services Agreement provides that the Advisor will
not be liable under the Administrative Services Agreement except for willful
misfeasance, bad faith or negligence in the performance of its duties or from
the reckless disregard by it of its duties and obligations thereunder.

For the fiscal year ended October 31, 2007, the Advisor received an
Administrative Fee of $682,147. For the period from July 1, 2006 through October
31, 2006, the Advisor received an Administrative Fee of $213,870.

The fees paid by the Fund to the Advisor pursuant to the Administrative Services
Agreement are reduced by the amount of any credits received from a Fund's
custodian for cash balances.

Pursuant to an agreement between the Administrator and State Street Bank and
Trust Company ("SSB"), the Administrator has delegated certain administrative
functions to SSB. The costs and expenses of such delegation are borne by the
Administrator, not by the Fund.

Distributor

The Corporation, on behalf of the Fund, has an underwriting agreement with DWS
Scudder Distributors, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606
(the "Distributor" or "DWS-SDI"), a Massachusetts corporation, which is a
subsidiary of the Advisor, a Delaware corporation. The Corporation's
underwriting agreement dated April 5, 2002 was last approved by the Directors on
September 18, 2007, and will remain in effect until September 30, 2008 and from
year to year thereafter only if its continuance is approved annually by a
majority of the members of the Board of Directors who are not parties to such
agreement or interested persons of any such party and either by vote of a
majority of the Board of Directors or a majority of the outstanding voting
securities of the Fund.


                                       35
<PAGE>

Under the underwriting agreement, the Fund is responsible for: the payment of
all fees and expenses in connection with the preparation and filing with the SEC
of its registration statement and prospectus and any amendments and supplements
thereto; the registration and qualification of shares for sale in the various
states, including registering the Fund as a broker or dealer in various states,
as required; the fees and expenses of preparing, printing and mailing
prospectuses annually to existing shareholders (see below for expenses relating
to prospectuses paid by the Distributor); notices, proxy statements, reports or
other communications to shareholders of the Fund; the cost of printing and
mailing confirmations of purchases of shares and any prospectuses accompanying
such confirmations; any issuance taxes and/or any initial transfer taxes; a
portion of shareholder toll-free telephone charges and expenses of shareholder
service representatives; the cost of wiring funds for share purchases and
redemptions (unless paid by the shareholder who initiates the transaction); the
cost of printing and postage of business reply envelopes; and a portion of the
cost of computer terminals used by both the Funds and the Distributor.

The Distributor will pay for printing and distributing prospectuses or reports
prepared for its use in connection with the offering of the Fund's shares to the
public and preparing, printing and mailing any other literature or advertising
in connection with the offering of shares of the Fund to the public. The
Distributor will pay all fees and expenses in connection with its qualification
and registration as a broker or dealer under federal and state laws, a portion
of the cost of toll-free telephone service and expenses of shareholder service
representatives, a portion of the cost of computer terminals, and expenses of
any activity which is primarily intended to result in the sale of shares issued
by the Fund, unless a Rule 12b-1 Plan is in effect which provides that the Fund
shall bear some or all of such expenses.

The Distributor currently offers shares of the Fund on a continuous basis to
investors in all states in which shares of the Fund may from time to time be
registered or where permitted by applicable law. The underwriting agreement
provides that the Distributor accepts orders for shares at net asset value
because no sales commission or load is charged to the investor. The Distributor
has made no firm commitment to distribute shares of the Fund.

Independent Registered Public Accounting Firm

The financial highlights of the Fund included in the Fund's prospectus and the
Financial Statements incorporated by reference in this Statement of Additional
Information have been so included or incorporated by reference in reliance on
the report of PricewaterhouseCoopers LLP, an independent registered public
accounting firm, 125 High Street, Boston, MA 02110-2624, given on the authority
of said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP
audits the financial statements of the Fund and provides other audit, tax and
related services. Shareholders will receive annual audited financial statements
and unaudited semi-annual financial statements.

Legal Counsel

Ropes & Gray, LLP, One International Place, Boston, MA 02110-2624, serves as
legal counsel to the Fund and the Independent Directors to the Corporation.


Custodian

Brown Brothers Harriman & Company ("BBH") 40 Water Street, Boston, Massachusetts
02109, serves as custodian for the Fund. BBH attends to the collection of
principal and income, and payment for and collection of proceeds of securities
bought and sold by the Fund.

The Custodian's fee may be reduced by certain earnings credits in favor of the
Fund.

Transfer Agent

DWS Scudder Investments Service Company ("DWS-SISC"), 210 W. 10th Street, Kansas
City, Missouri 64105-1614, an affiliate of the Advisor, serves as the Fund's
transfer, dividend-paying agent and shareholder service agent. The Transfer
Agent receives an annual service fee for each account of the Fund, based on the
type of account. For open retail accounts, the fee is a flat fee ranging from
$20.00 to $27.50 per account, for open wholesale money


                                       36
<PAGE>

funds the fee is $32.50 per account, while for certain retirement accounts
serviced on the recordkeeping system of ADP, Inc., the fee is a flat fee up to
$3.46 per account (as of October 2006, indexed to inflation) plus an asset based
fee of up to 0.25% of average net assets. 1/12th of the annual service charge
for each account is charged and payable to the Transfer Agent each month. A fee
is charged for any account which at any time during the month had a share
balance in the Fund. Smaller fees are also charged for closed accounts for which
information must be retained on the Transfer Agent's system for up to 18 months
after closing for tax reporting purposes.

Certain out-of-pocket expenses incurred by the Transfer Agent, including
expenses of printing and mailing routine fund disclosure documents, costs of
record retention and transaction processing costs are reimbursed by the Fund or
are paid directly by the Fund. Certain additional out-of-pocket expenses,
including costs of computer hardware and software, third party record-keeping
and processing of proxy statements, may only be reimbursed by the Fund with the
prior approval of the Fund's Board.

For the fiscal year ended October 31, 2007, the amount charged to Class S
aggregated $328,133. For the fiscal year ended October 31, 2006, the amount
charged to Class S aggregated $244,960. For the fiscal year ended October 31,
2005, the amount charged to Class S aggregated $296,099.

Pursuant to a sub-transfer agency agreement between DWS-SISC and DST Systems,
Inc. ("DST"), DWS-SISC has delegated certain transfer agent, dividend paying
agent and shareholder servicing agent functions to DST. The costs and expenses
of such delegation are borne by DWS-SISC, not by the Fund.

The Fund, or the Advisor (including any affiliate of the Advisor), or both, may
pay unaffiliated third parties for providing recordkeeping and other
administrative services with respect to accounts of participants in retirement
plans or other beneficial owners of Fund shares whose interests are generally
held in an omnibus account.

                             PORTFOLIO TRANSACTIONS

The Advisor is generally responsible for placing the orders for the purchase and
sale of portfolio securities, including the allocation of brokerage. With
respect to those funds for which a sub-investment advisor manages the fund's
investments, references in this section to the "Advisor" should be read to mean
the Sub-Advisor, except as noted below.

The policy of the Advisor in placing orders for the purchase and sale of
securities for the Funds is to seek best execution, taking into account such
factors, among others, as price; commission (where applicable); the
broker-dealer's ability to ensure that securities will be delivered on
settlement date; the willingness of the broker-dealer to commit its capital and
purchase a thinly traded security for its own inventory; whether the
broker-dealer specializes in block orders or large program trades; the
broker-dealer's knowledge of the market and the security; the broker-dealer's
ability to maintain confidentiality; the broker-dealer's ability to provide
access to new issues; the broker-dealer's ability to provide support when
placing a difficult trade; the financial condition of the broker-dealer; and
whether the broker-dealer has the infrastructure and operational capabilities to
execute and settle the trade. The Advisor seeks to evaluate the overall
reasonableness of brokerage commissions with commissions charged on comparable
transactions and compares the brokerage commissions (if any) paid by the Funds
to reported commissions paid by others. The Advisor routinely reviews commission
rates, execution and settlement services performed and makes internal and
external comparisons.

Commission rates on transactions in equity securities on US securities exchanges
are subject to negotiation. Commission rates on transactions in equity
securities on foreign securities exchanges are generally fixed. Purchases and
sales of fixed-income securities and certain over-the-counter securities are
effected on a net basis, without the payment of brokerage commissions.
Transactions in fixed income and certain over-the-counter securities are
generally placed by the Advisor with the principal market makers for these
securities unless the Advisor reasonably believes more favorable results are
available elsewhere. Transactions with dealers serving as market makers reflect
the spread between the bid and asked prices. Purchases of underwritten issues
will include an underwriting fee paid to the underwriter. Money market
instruments are normally purchased in principal transactions directly from the
issuer or from an underwriter or market maker.

                                       37
<PAGE>

It is likely that the broker-dealers selected based on the considerations
described in this section will include firms that also sell shares of the Funds
to their customers. However, the Advisor does not consider sales of shares of
the Funds as a factor in the selection of broker-dealers to execute portfolio
transactions for the Funds and, accordingly, has implemented policies and
procedures reasonably designed to prevent its traders from considering sales of
shares of the Funds as a factor in the selection of broker-dealers to execute
portfolio transactions for the Funds.

The Advisor is permitted by Section 28(e) of the Securities Exchange Act of
1934, as amended ("1934 Act"), when placing portfolio transactions for a Fund,
to cause the Fund to pay brokerage commissions in excess of that which another
broker-dealer might charge for executing the same transaction in order to obtain
research and brokerage services if the Advisor determines that such commissions
are reasonable in relation to the overall services provided. The Advisor may
from time to time, in reliance on Section 28(e) of the 1934 Act, execute
portfolio transactions with broker-dealers that provide research and brokerage
services to the Advisor. Consistent with the Advisor's policy regarding best
execution, where more than one broker is believed to be capable of providing
best execution for a particular trade, the Advisor may take into consideration
the receipt of research and brokerage services in selecting the broker-dealer to
execute the trade. Although certain research and brokerage services from
broker-dealers may be useful to a Fund and to the Advisor, it is the opinion of
the Advisor that such information only supplements its own research effort since
the information must still be analyzed, weighed and reviewed by the Advisor's
staff. To the extent that research and brokerage services of value are received
by the Advisor, the Advisor may avoid expenses that it might otherwise incur.
Research and brokerage services received from a broker-dealer may be useful to
the Advisor and its affiliates in providing investment management services to
all or some of its clients, which includes a Fund. Services received from
broker-dealers that executed securities transactions for a Portfolio will not
necessarily be used by the Advisor specifically to service such Fund.

Research and brokerage services provided by broker-dealers may include, but are
not limited to, information on the economy, industries, groups of securities,
individual companies, statistical information, accounting and tax law
interpretations, political developments, legal developments affecting portfolio
securities, technical market action, pricing and appraisal services, credit
analysis, risk measurement analysis, performance analysis and measurement and
analysis of corporate responsibility issues. Research and brokerage services are
typically received in the form of written or electronic reports, access to
specialized financial publications, telephone contacts and personal meetings
with security analysts, but may also be provided in the form of access to
various computer software and meetings arranged with corporate and industry
representatives.

The Advisor may also select broker-dealers and obtain from them research and
brokerage services that are used in connection with executing trades provided
that such services are consistent with interpretations under Section 28(e) of
the 1934 Act. Typically, these services take the form of computer software
and/or electronic communication services used by the Advisor to facilitate
trading activity with those broker-dealers.

Research and brokerage services may include products obtained from third parties
if the Advisor determines that such product or service constitutes brokerage and
research as defined in Section 28(e) and interpretations thereunder. Currently,
it is the Advisor's policy that Sub-Advisors may not execute portfolio
transactions on behalf of the Funds to obtain third party research and brokerage
services. The Advisor may, in the future, change this policy. Regardless,
certain Sub-Advisors may, as matter of internal policy, limit or preclude third
party research and brokerage services.

The Advisor may use brokerage commissions to obtain certain brokerage products
or services that have a mixed use (i.e., it also serves a function that does not
relate to the investment decision-making process). In those circumstances, the
Advisor will make a good faith judgment to evaluate the various benefits and
uses to which it intends to put the mixed use product or service and will pay
for that portion of the mixed use product or service that it reasonably believes
does not constitute research and brokerage services with its own resources.

DIMA will monitor regulatory developments and market practice in the use of
client commissions to obtain research and brokerage services and may adjust its
portfolio transactions policies in response thereto.

Investment decisions for each Fund and for other investment accounts managed by
the Advisor are made independently of each other in light of differing
conditions. However, the same investment decision may be made


                                       38
<PAGE>

for two or more of such accounts. In such cases, simultaneous transactions are
inevitable. To the extent permitted by law, the Advisor may aggregate the
securities to be sold or purchased for a Fund with those to be sold or purchased
for other accounts in executing transactions. Purchases or sales are then
averaged as to price and commission and allocated as to amount in a manner
deemed equitable to each account. While in some cases this practice could have a
detrimental effect on the price paid or received by, or on the size of the
position obtained or disposed of for, the Fund, in other cases it is believed
that the ability to engage in volume transactions will be beneficial to the
Fund.

DIMA and its affiliates and the Funds' management team manage other mutual funds
and separate accounts, some of which use short sales of securities as a part of
its investment strategy. The simultaneous management of long and short
portfolios creates potential conflicts of interest including the risk that short
sale activity could adversely affect the market value of the long positions (and
vice versa), the risk arising from sequential orders in long and short
positions, and the risks associated with receiving opposing orders at the same
time.

DIMA has adopted procedures that it believes are reasonably designed to mitigate
these potential conflicts of interest. Incorporated in the procedures are
specific guidelines developed to ensure fair and equitable treatment for all
clients. DIMA and the investment team have established monitoring procedures and
a protocol for supervisory reviews, as well as compliance oversight to ensure
that potential conflicts of interest relating to this type of activity are
properly addressed.

Deutsche Bank AG or one of its affiliates (or in the case of a Sub-Advisor, the
Sub-Advisor or one of its affiliates) may act as a broker for the Funds and
receive brokerage commissions or other transaction-related compensation from the
Funds in the purchase and sale of securities, options or futures contracts when,
in the judgment of the Advisor, and in accordance with procedures approved by
the Funds' Boards, the affiliated broker will be able to obtain a price and
execution at least as favorable as those obtained from other qualified brokers
and if, in the transaction, the affiliated broker charges the Funds a rate
consistent with that charged to comparable unaffiliated customers in similar
transactions.

Portfolio Turnover

Portfolio turnover rate is defined by the SEC as the ratio of the lesser of
sales or purchases to the monthly average value of such securities owned during
the year, excluding all securities whose remaining maturities at the time of
acquisition were one year or less.

Higher levels of activity by the Fund result in higher transaction costs and may
also result in taxes on realized capital gains to be borne by the Fund's
shareholders. Purchases and sales are made whenever necessary, in the Advisor's
discretion, to meet the Fund's objective.

Portfolio turnover rates for fiscal years ended October 31, 2007 and 2006 were
52% and 69%, respectively.

                        PURCHASE AND REDEMPTION OF SHARES

General Information

Policies and procedures affecting transactions in Fund shares can be changed at
any time without notice, subject to applicable law. Transactions may be
contingent upon proper completion of application forms and other documents by
shareholders and their receipt by the Fund's agents. Transaction delays in
processing (and changing account features) due to circumstances within or beyond
the control of the Fund and its agents may occur. Shareholders (or their
financial service firms) are responsible for all losses and fees resulting from
bad checks, cancelled orders or the failure to consummate transactions effected
pursuant to instructions reasonably believed to be genuine.

A distribution will be reinvested in shares of the same Fund and class if the
distribution check is returned as undeliverable.

                                       39
<PAGE>

Orders will be confirmed at a price based on the net asset value of the Fund
next determined after receipt in good order by DWS-SDI of the order accompanied
by payment. Orders received by dealers or other financial services firms prior
to the determination of net asset value and received in good order by DWS-SDI
prior to the determination of net asset value will be confirmed at a price based
on the net asset value next determined after receipt by DWS-SDI (trade date).

Additional Minimum Balance Policies. For fiduciary accounts such as IRAs, and
custodial accounts such as Uniform Gifts to Minor Act and Uniform Transfers to
Minor Act accounts, the minimum balance is $1,000 for Class S. A shareholder may
open an account with at least $1,000 ($500 for fiduciary/custodial accounts), if
an automatic investment plan (AIP) of $50/month is established. DWS Scudder
group retirement plans and certain other accounts have similar or lower minimum
share balance requirements.

Shareholders with a combined household account balance in any of the DWS Funds
of $100,000 or more, as well as group retirement and certain other accounts,
will not be subject to an automatic redemption.

Fiduciary (e.g., IRA or Roth IRA) and custodial accounts (e.g., UGMA or UTMA)
with balances below $1,000are subject to automatic redemption following 60 days'
written notice to applicable shareholders.

Certificates. Share certificates will not be issued. Share certificates now in a
shareholder's possession may be sent to the Transfer Agent for cancellation and
book-entry credit to such shareholder's account. Certain telephone and other
procedures require book-entry holdings. Shareholders with outstanding
certificates bear the risk of loss.

Use of Financial Services Firms. Investment dealers and other firms provide
varying arrangements for their clients to purchase and redeem the Fund's shares,
including higher minimum investments, and may assess transaction or other fees.
Firms may arrange with their clients for other investment or administrative
services. Such firms may independently establish and charge additional amounts
to their clients for such services. Firms also may hold the Fund's shares in
nominee or street name as agent for and on behalf of their customers. In such
instances, the Fund's transfer agent, DWS Scudder Service Corporation (the
Transfer Agent) will have no information with respect to or control over the
accounts of specific shareholders. Such shareholders may obtain access to their
accounts and information about their accounts only from their firm. Certain of
these firms may receive compensation from the Fund through the Shareholder
Service Agent for record-keeping and other expenses relating to these nominee
accounts. In addition, certain privileges with respect to the purchase and
redemption of shares or the reinvestment of dividends may not be available
through such firms. Some firms may participate in a program allowing them access
to their clients' accounts for servicing including, without limitation,
transfers of registration and dividend payee changes; and may perform functions
such as generation of confirmation statements and disbursement of cash
dividends. Such firms, including affiliates of DWS-SDI, may receive compensation
from the Fund through the Shareholder Service Agent for these services.

The Fund has authorized one or more financial service institutions, including
certain members of the Financial Industry Regulatory Authority ("FINRA") other
than the Distributor ("financial institutions"), to accept purchase and
redemption orders for the Fund's shares. Such financial institutions may also
designate other parties, including plan administrator intermediaries, to accept
purchase and redemption orders on the Fund's behalf. Orders for purchases or
redemptions will be deemed to have been received by the Fund when such financial
institutions or, if applicable, their authorized designees accept the orders.
Subject to the terms of the contract between the Fund and the financial
institution, ordinarily orders will be priced at the Fund's net asset value next
computed after acceptance by such financial institution or its authorized
designees and accepted by the Fund. Further, if purchases or redemptions of the
Fund's shares are arranged and settlement is made at an investor's election
through any other authorized financial institution, that financial institution
may, at its discretion, charge a fee for that service. The Board of Directors
and the Distributor, also the Fund's principal underwriter, each has the right
to limit the amount of purchases by, and to refuse to sell to, any person. The
Directors and the Distributor may suspend or terminate the offering of shares of
the Fund at any time for any reason.

DWS-SDI has adopted an Incentive Plan (the "Plan") covering wholesalers that are
regional vice presidents ("DWS Scudder Wholesalers"). Generally, DWS Scudder
Wholesalers market shares of the DWS funds to financial advisors, who in turn
may recommend that investors purchase shares of a DWS fund. The Plan is an
incentive


                                       40
<PAGE>

program that combines a monthly incentive component with a quarterly strategic
bonus component. Under the Plan, DWS Scudder Wholesalers will receive a monetary
monthly incentive based on the amount of sales generated from their marketing of
the funds, and that incentive will differ depending on the product category of
the fund. Each fund is assigned to one of four product categories -- "Core,"
"Strategic," "Satellite" or "Non-CSS" - taking into consideration, among other
things, the following criteria, where applicable:

o        The Fund's 3-year performance;
o        The Fund's Morningstar rating;
o        Market size for the fund category;
o        The Fund's size, including sales and redemptions of the Fund's shares;
o        The length of time the Fund's Portfolio Managers have managed the Fund;
         and
o        The Fund's consistency with DWS Scudder's branding.

This information and other factors are presented to a committee comprised of
representatives from various groups within DWS Scudder, who review on a
quarterly basis the funds assigned to each product category described above, and
make any changes to those assignments at that time. No one factor, whether
positive or negative, determines a fund's placement in a given category; all
these factors together are considered, and the designation of funds in the Core,
Strategic and Satellite categories represents management's judgment based on the
above criteria. In addition, management may consider a fund's profile over the
course of several review periods before making a change to its category
assignment. These category assignments will be posted quarterly to the DWS
funds' Web site at www.dws-scudder.com, approximately one month after the end of
each quarter. DWS Scudder Wholesalers will receive the highest compensation for
Core and Strategic funds, less for Satellite funds and the lowest for Non-CSS
funds. The level of compensation among these categories may differ
significantly.

In the normal course of business, DWS Scudder will from time to time introduce
new funds into the DWS family of funds. As a general rule, all new funds will be
placed in the Strategic compensation category for a minimum period of four
consecutive quarters, and DWS Scudder Wholesalers will be paid at a rate that is
equivalent to that of the Core Fund category. After that four quarter period,
each new fund in the Strategic category will be reviewed by the committee and
either assigned to one of the four categories or continued as a Strategic fund
at that time.

The prospect of receiving, or the receipt of, additional compensation by a DWS
Scudder Wholesaler under the Plan may provide an incentive to favor marketing
the Core, Strategic or Satellite funds over the Non-CSS funds. The Plan,
however, will not change the price that you pay for shares of a fund. The DWS
Scudder Compliance Department monitors DWS Scudder Wholesaler sales and other
activity in an effort to detect unusual activity in the context of the
compensation structure under the Plan. However, investors may wish to take the
Plan and the product category of the fund into account when considering
purchasing a fund or evaluating any recommendations relating to fund shares.

Telephone and Electronic Transaction Procedures. Shareholders have various
telephone, Internet, wire and other electronic privileges available. The Fund or
its agents will not be liable for any losses, expenses or costs arising out of
fraudulent or unauthorized instructions pursuant to these privileges if the Fund
or its agents reasonably believe, based upon reasonable verification procedures,
that the instructions were genuine. Verification procedures include recording
instructions, requiring certain identifying information before acting upon
instructions and sending written confirmations. During periods when it is
difficult to contact the Shareholder Service Agent, it may be difficult to use
telephone, wire and other privileges.

QuickBuy and QuickSell. QuickBuy and QuickSell permits the transfer of money via
the Automated Clearing House System (minimum $50 and maximum $250,000) from or
to a shareholder's bank, savings and loan, or credit union account in connection
with the purchase or redemption of Fund shares. Shares purchased by check or
through QuickBuy and QuickSell or Direct Deposit may not be redeemed under this
privilege until such Shares have been owned for at least 10 calendar days.
QuickBuy and QuickSell cannot be used with passbook savings accounts or for
certain tax-deferred plans.

                                       41
<PAGE>

Share Pricing. Purchases will be filled at the net asset value per share next
computed after receipt of the application in good order. The net asset value of
shares of each Fund is calculated at 4:00 p.m. Eastern time or the close of
business on each day the New York Stock Exchange (the "Exchange") is open for
trading. Orders received after the close of regular trading on the Exchange will
be executed at the next business day's net asset value. If the order has been
placed by a member of FINRA, other than the Distributor, it is the
responsibility of the member broker, rather than the Fund, to forward the
purchase order to Transfer Agent in Kansas City by the close of regular trading
on the Exchange.

Dividend Payment Option. Investors may have dividends and distributions
automatically deposited to their predesignated bank account through DWS
Scudder's Dividend Payment Option request form. Shareholders whose predesignated
checking account of record is with a member bank of Automated Clearing House
Network (ACH) can have income and capital gain distributions automatically
deposited to their personal bank account usually within three business days
after the Fund pays its distribution. A Dividend Payment Option request form can
be obtained by visiting our Web site at: www.dws-scudder.com or calling (800)
728-3337. Confirmation Statements will be mailed to shareholders as notification
that distributions have been deposited.

Tax-Sheltered Retirement Plans. The Shareholder Service Agent provides
retirement plan services and documents and DWS-SDI can establish investor
accounts in any of the following types of retirement plans:

o        Traditional, Roth and Education IRAs. This includes Savings Incentive
         Match Plan for Employees of Small Employers (SIMPLE), Simplified
         Employee Pension Plan (SEP) IRA accounts and prototype documents.

o        403(b)(7) Custodial Accounts. This type of plan is available to
         employees of most non-profit organizations.

o        Prototype money purchase pension and profit-sharing plans may be
         adopted by employers.

Brochures describing these plans as well as model defined benefit plans, target
benefit plans, 457 plans, 401(k) plans, simple 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
Additional fees and transaction policies and procedures may apply to such plans.
Investors should consult with their own tax advisors before establishing a
retirement plan.

Purchases

The Fund reserves the right to withdraw all or any part of the offering made by
its prospectus and to reject purchase orders for any reason. Also, from time to
time, the Fund may temporarily suspend the offering of any class of its shares
to new investors. During the period of such suspension, persons who are already
shareholders of such class of such Fund may be permitted to continue to purchase
additional shares of such class and to have dividends reinvested.

To help the government fight the funding of terrorism and money laundering
activities, federal law requires all financial institutions to obtain, verify
and record information that identifies each person who opens an account. For
more information, please see "Policies You Should Know About" in the Fund's
prospectuses.

The Fund may waive the minimum for purchases by its trustees, directors,
officers or employees or the Advisor and its affiliates. DWS-SDI may, at its
discretion, require appropriate documentation that shows an investor is eligible
to purchase Class S shares. Clients having a regular investment counsel account
with the Advisor or its affiliates, members of the immediate families of such
clients, officers and employees of the Advisor or of any affiliated organization
and members of their immediate families, members of the FINRA and banks may, if
they prefer, subscribe initially for at least $2,500 for Class S through DeAM
Investor Services, Inc. by letter, fax, or telephone.

Eligible Class S Investors

A.        The following investors may purchase Class S shares of DWS Funds
          either (i) directly from DWS Scudder Distributors, Inc. ("DWS-SDI"),
          the Fund's principal underwriter; or (ii) through an intermediary

                                       42
<PAGE>

          relationship with a financial services firm established with respect
          to the DWS Funds as of December 31, 2004.

          1.      Existing shareholders of Class S shares of any DWS Fund as of
                  December 31, 2004, and household members residing at the same
                  address.

          2.      Shareholders of Class S of any DWS Fund who became Class S
                  shareholders in connection with the consolidation of Class
                  AARP and Class S on July 17, 2006 and household members
                  residing at the same address.

          3.      Shareholders who have owned Class S shares continuously since
                  December 31, 2004 and household members residing at the same
                  address may open new accounts for Class S shares of any DWS
                  Fund.

          4.      Any participant who has owned Class S shares of any DWS Fund
                  through an employee sponsored retirement, employee stock,
                  bonus, pension or profit sharing plan continuously since
                  December 31, 2004 may open a new individual account for Class
                  S shares of any DWS Fund.

          5.      Any participant who owns Class S shares of any DWS Fund
                  through a retirement, employee stock, bonus, pension or profit
                  sharing plan may complete a direct rollover to an IRA account
                  that will hold Class S shares. This applies to individuals who
                  begin their retirement plan investments with a DWS Fund at any
                  time, including after December 31, 2004.

          6.      Officers, Fund Trustees and Directors, and full-time employees
                  and their family members, of the Advisor and its affiliates.

          7.      Class S shares are available to any accounts managed by the
                  Advisor, any advisory products offered by the Advisor or
                  DWS-SDI and to DWS Allocation Series or other fund of funds
                  managed by the Advisor or its affiliates.

          8.      Shareholders of Class S of DWS Emerging Markets Equity Fund
                  who became shareholders of the fund in connection with the
                  fund's acquisition of Scudder New Asia Fund, Inc. on April 17,
                  2006.

          9.      Shareholders of Class S of any DWS Fund who became Class S
                  shareholders in connection with the consolidation of Class M
                  and Class S on August 18, 2006 and household members residing
                  at the same address.

          10.     Shareholders of Class S of any DWS Fund who became Class S
                  shareholders in connection with the renaming or conversion of
                  Investment Class to Class S on October 23, 2006.

B. The following additional investors may purchase Class S shares of DWS Funds.

          1.      Broker-dealers, banks and registered investment advisors
                  ("RIAs") may purchase Class S shares in connection with a
                  comprehensive or "wrap" fee program or other fee based
                  program.

          2.      Any group retirement, employee stock, bonus, pension or
                  profit-sharing plans.

          3.      Persons who purchase shares as part of an investment only
                  placement in a 529 College Savings Plan.

          4.      Persons who purchase shares through a Health Savings Account
                  or a Voluntary Employees' Benefit Association ("VEBA") Trust.

                                       43
<PAGE>

DWS-SDI may, at its discretion, require appropriate documentation that shows an
investor is eligible to purchase Class S shares.

Clients having a regular investment counsel account with the Advisor or its
affiliates and members of their immediate families, officers and employees of
the Advisor or of any affiliated organization and members of their immediate
families, members of FINRA and banks may, if they prefer, subscribe initially
for at least $2,500 for Class S through DeAM Investor Services, Inc. by letter,
fax, or telephone.

Revenue Sharing

In light of recent regulatory developments, the Advisor, the Distributor and
their affiliates have undertaken to furnish certain additional information below
regarding the level of payments made by them to selected affiliated and
unaffiliated brokers, dealers, participating insurance companies or other
financial intermediaries ("financial advisors") in connection with the sale
and/or distribution of Fund shares or the retention and/or servicing of
investors and Fund shares ("revenue sharing").

The Advisor, the Distributor and/or their affiliates may pay additional
compensation, out of their own assets and not as an additional charge to each
Fund, to financial advisors in connection with the sale and/or distribution of
Fund shares or the retention and/or servicing of Fund investors and Fund shares.
Such revenue sharing payments are in addition to any distribution or service
fees payable under any Rule 12b-1 or service plan of any fund, any record
keeping/sub-transfer agency/networking fees payable by each Fund (generally
through the Distributor or an affiliate) and/or the Distributor to certain
financial advisors for performing such services and any sales charges,
commissions, non-cash compensation arrangements expressly permitted under
applicable rules of FINRA or other concessions described in the fee table or
elsewhere in the Prospectuses or the SAI as payable to all financial advisors.
For example, the Advisor, the Distributor and/or their affiliates may compensate
financial advisors for providing each Fund with "shelf space" or access to a
third party platform or fund offering list, or other marketing programs
including, without limitation, inclusion of each Fund on preferred or
recommended sales lists, mutual fund "supermarket" platforms and other formal
sales programs; granting the Distributor access to the financial advisor's sales
force; granting the Distributor access to the financial advisor's conferences
and meetings; assistance in training and educating the financial advisor's
personnel; and, obtaining other forms of marketing support. The level of revenue
sharing payments made to financial advisors may be a fixed fee or based upon one
or more of the following factors: gross sales, current assets and/or number of
accounts of each Fund attributable to the financial advisor, the particular fund
or fund type or other measures as agreed to by the Advisor, the Distributor
and/or their affiliates and the financial advisors or any combination thereof.
The amount of these payments is determined at the discretion of the Advisor, the
Distributor and/or their affiliates from time to time, may be substantial, and
may be different for different financial advisors based on, for example, the
nature of the services provided by the financial advisor.

The Advisor, the Distributor and/or their affiliates currently make revenue
sharing payments from their own assets in connection with the sale and/or
distribution of DWS Fund shares, or the retention and/or servicing of investors,
to financial advisors in amounts that generally range from .01% up to .50% of
assets of the Fund serviced and maintained by the financial advisor, .10% to
..25% of sales of the Fund attributable to the financial advisor, a flat fee of
$12,500 up to $500,000, or any combination thereof. These amounts are annual
figures typically paid on a quarterly basis and are subject to change at the
discretion of the Advisor, the Distributor and/or their affiliates. Receipt of,
or the prospect of receiving, this additional compensation, may influence your
financial advisor's recommendation of this Fund or of any particular share class
of the Fund. You should review your financial advisor's compensation disclosure
and/or talk to your financial advisor to obtain more information on how this
compensation may have influenced your financial advisor's recommendation of this
Fund.

The Advisor, the Distributor and/or their affiliates may also make such revenue
sharing payments to financial advisors under the terms discussed above in
connection with the distribution of both DWS funds and non-DWS funds by
financial advisors to retirement plans that obtain record keeping services from
ADP, Inc. on the DWS Scudder branded retirement plan platform (the "Platform")
with the level of revenue sharing payments being based upon sales of both the
DWS funds and the non-DWS funds by the financial advisor on the Platform or
current assets of both the DWS funds and the non-DWS funds serviced and
maintained by the financial advisor on the Platform.

                                       44
<PAGE>

As of the date hereof, each Fund has been advised that the Advisor, the
Distributor and their affiliates expect that the following firms will receive
revenue sharing payments at different points during the coming year as described
above:

Channel: Broker-Dealers and Financial Advisors

A G Edwards & Sons Inc.
AIG Advisors Group
Ameriprise
Cadaret, Grant & Co. Inc.
Capital Analyst, Incorporated
Citigroup Global Markets, Inc. (dba Smith Barney)
Commonwealth Equity Services, LLP (dba Commonwealth Financial Network)
Deutsche Bank Group
First Clearing/Wachovia Securities
HD Vest Investment Securities, Inc.
ING Group
John Hancock Distributors LLC
LaSalle Financial Services, Inc. (dba ABN Amro)
Linsco/Private Ledger Corp.
M.L. Stern & Co.
Marsh Insurance and Investment Company
Meridien Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.
Morgan Stanley
Oppenheimer & Co., Inc.
Raymond James & Associates
Raymond James Financial Services
RBC Dain Rauscher, Inc
Securities America, Inc.
UBS Financial Services
Wells Fargo Investments, LLC

Channel: Cash Product Platform

Allegheny Investments LTD
Bank of New York (Hare & Co.)
Bear, Stearns Securities Corp.
Brown Brothers Harriman
Brown Investment Advisory & Trust Company
Cadaret Grant & Co.
Chicago Mercantile Exchange
D.A. Davidson & Company
Deutsche Bank Group
Emmett A. Larkin Company
Fiduciary Trust Co. - International
First Southwest Company
Huntleigh Securities
Lincoln Investment Planning
LPL Financial Services
Mellon Financial Markets LLC
Penson Financial Services
Pershing Choice Platform
ProFunds Distributors, Inc.
Ridge Clearing & Outsourcing Solutions

                                       45
<PAGE>

Romano Brothers and Company
SAMCO Capital Markets
Smith Moore & Company
Sungard Institutional Brokerage Inc.
US Bancorp
UBS
William Blair & Company

Channel: Third Party Insurance Platforms

Allstate Life Insurance Company of New York
Ameritas Life Insurance Group
American General Life Insurance Company
Annuity Investors Life Insurance Company
Columbus Life Insurance Company
Commonwealth Annuity and Life Insurance Company
Companion Life Insurance Company
Connecticut General Life Insurance Company
Farmers New World Life Insurance Company
Fidelity Security Life Insurance Company
First Allmerica Financial Life Insurance Company
First Great West Life and Annuity Company
Genworth Life Insurance Company of New York
Genworth Life and Annuity Insurance Company
Great West Life and Annuity Insurance Company
Hartford Life Insurance Company
Integrity Life Insurance Company
John Hancock Life Insurance companies
Kemper Investors Life Insurance Company
Lincoln Benefit Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln National Life Insurance Company
Massachusetts Mutual Life Insurance Group
MetLife Group
Minnesota Life Insurance Company
Mutual of America Life Insurance Company
National Life Insurance Company
National Integrity Life Insurance Company
Nationwide Group
New York Life Insurance and Annuity Corporation
Phoenix Life Insurance Company
Protective Life Insurance
Provident Mutual Life Insurance
Prudential Insurance Company of America
Sun Life Group
Symetra Life Insurance Company
Transamerica Life Insurance Company
Union Central Life Insurance Company
United of Omaha Life Insurance Company
United Investors Life Insurance Company
Western Southern Life Assurance Company

Any additions, modifications or deletions to the financial advisors identified
above that have occurred since the date hereof are not reflected.

                                       46
<PAGE>

The Advisor, the Distributor or their affiliates may enter into additional
revenue sharing arrangements or change or discontinue existing arrangements with
financial advisors at any time without notice.

The prospect of receiving, or the receipt of additional compensation or
promotional incentives described above by financial advisors may provide such
financial advisors and/or their salespersons with an incentive to favor sales of
shares of the DWS Funds or a particular DWS Fund over sales of shares of mutual
funds (or non-mutual fund investments) with respect to which the financial
advisor does not receive additional compensation or promotional incentives, or
receives lower levels of additional compensation or promotional incentives.
Similarly, financial advisors may receive different compensation or incentives
that may influence their recommendation of any particular share class of the
Fund or of other funds. These payment arrangements, however, will not change the
price that an investor pays for Fund shares or the amount that the Fund receives
to invest on behalf of an investor and will not increase Fund expenses. You may
wish to take such payment arrangements into account when considering and
evaluating any recommendations relating to Fund shares and you should discuss
this matter with your financial advisor and review your financial advisor's
disclosures.

Automatic Investment Plan. A shareholder may purchase shares of the Fund through
an automatic investment program. With the Direct Deposit Purchase Plan (Direct
Deposit), investments are made automatically (minimum $1,000 and maximum
$250,000 for initial investments) and a minimum of $50 and maximum of $250,000
for subsequent investments from the shareholder's account at a bank, savings and
loan or credit union into the shareholder's Fund account. Termination by a
shareholder will become effective within thirty days after the Shareholder
Service Agent has received the request. The Fund may immediately terminate a
shareholder's Direct Deposit in the event that any item is unpaid by the
shareholder's financial institution.

Minimum Subsequent Investment Policies. For current shareholders there is a $50
minimum investment requirement for subsequent investments in the fund. There is
no minimum subsequent investment requirement for investments on behalf of
participants in certain fee-based and wrap programs offered through financial
intermediaries approved by the Advisor.

Payroll Investment Plans. A shareholder may purchase shares through Payroll
Direct Deposit or Government Direct Deposit. Under these programs, all or a
portion of a shareholder's net pay or government check is invested each payment
period. A shareholder may terminate participation in these programs by giving
written notice to the shareholder's employer or government agency, as
appropriate. (A reasonable time to act is required.) The Fund is not responsible
for the efficiency of the employer or government agency making the payment or
any financial institutions transmitting payments.

Expedited Purchase Procedures for Existing Shareholders. Shareholders of other
DWS funds who have submitted an account application and have certified a tax
identification number, clients having a regular investment counsel account with
the Advisor or its affiliates and members of their immediate families, officers
and employees of the Advisor or of any affiliated organization and their
immediate families, members of FINRA, and banks may open an account by wire by
calling (800) 728-3337 for instructions. The investor must send a duly completed
and signed application to the Fund promptly. A subsequent purchase order may be
placed by established shareholders (except by DWS Scudder Individual Retirement
Account (IRA), DWS Scudder Horizon Plan, DWS Scudder Profit Sharing and Money
Purchase Pension Plans, DWS Scudder 401(k) and DWS Scudder 403(b) Plan holders),
members of FINRA, and banks.

It is our policy to offer purchase privileges to current or former directors or
trustees of the Deutsche or DWS mutual funds, employees, their spouses or life
partners and children or step-children age 21 or younger of Deutsche Bank or its
affiliates or a sub-advisor to any fund in the DWS family of funds or a
broker-dealer authorized to sell shares of the funds. Qualified individuals will
generally be allowed to purchase shares in the class with the lowest expense
ratio, usually the Institutional Class shares. If the Fund does not offer
Institutional Class shares, these individuals will be allowed to buy Class A
shares at NAV. The funds also reserve the right to waive the minimum account
balance requirement for employee and director accounts. Fees generally charged
to IRA accounts will be charged to accounts of employees and directors.

                                       47
<PAGE>

Redemptions

Redemption fee. The Fund imposes a redemption fee of 2% of the total redemption
amount (calculated at net asset value) on all Fund shares redeemed or exchanged
within 15 days of buying them (either by purchase or exchange). The redemption
fee is paid directly to the Fund, and is designed to encourage long-term
investment and to offset transaction and other costs associated with short-term
or excessive trading. For purposes of determining whether the redemption fee
applies, shares held the longest time will be treated as being redeemed first
and shares held the shortest time will be treated as being redeemed last. The
redemption fee is applicable to fund shares purchased either directly or through
a financial intermediary, such as a broker-dealer. Transactions through
financial intermediaries typically are placed with the Fund on an omnibus basis
and include both purchase and sale transactions placed on behalf of multiple
investors. These purchase and sale transactions are generally netted against one
another and placed on an aggregate basis; consequently the identities of the
individuals on whose behalf the transactions are placed generally are not known
to the Fund. For this reason, the Fund has undertaken to notify financial
intermediaries of their obligation to assess the redemption fee on customer
accounts and to collect and remit the proceeds to the Fund. However, due to
operational requirements, the intermediaries' methods for tracking and
calculating the fee may be inadequate or differ in some respects from the
Fund's.

Policies and procedures affecting transactions in Fund shares can be changed at
any time without notice, subject to applicable law. Transactions may be
contingent upon proper completion of application forms and other documents by
shareholders and their receipt by the Fund's agents. Transaction delays in
processing (and changing account features) due to circumstances within or beyond
the control of the Fund and its agents may occur. Shareholders (or their
financial service firms) are responsible for all losses and fees resulting from
bad checks, cancelled orders or the failure to consummate transactions effected
pursuant to instructions reasonably believed to be genuine.

A distribution will be reinvested in shares of the same Fund and class if the
distribution check is returned as undeliverable.

Orders will be confirmed at a price based on the net asset value (including any
applicable sales charge) of the Fund next determined after receipt in good order
by DWS-SDI of the order accompanied by payment. However, orders received by
dealers or other financial services firms prior to the determination of net
asset value and received in good order by DWS-SDI prior to the close of its
business day will be confirmed at a price based on the net asset value effective
on that day ("trade date").

The Fund may suspend the right of redemption or delay payment on a redemption
for more than seven days (a) during any period when the New York Stock Exchange
(the "Exchange") is closed other than customary weekend and holiday closings or
during any period in which trading on the Exchange is restricted, (b) during any
period when an emergency exists as a result of which (i) disposal of the Fund's
investments is not reasonably practicable, or (ii) it is not reasonably
practicable for the Fund to determine the value of its net assets, or (c) for
such other periods as the SEC may by order permit for the protection of the
Fund's shareholders.

A request for repurchase (confirmed redemption) may be communicated by a
shareholder through a financial services firm to DWS-SDI; firms must promptly
submit orders to be effective.

Redemption requests must be unconditional. Redemption requests (and a stock
power for certificated shares) must be duly endorsed by the account holder. As
specified in the prospectus, signatures may need to be guaranteed by a
commercial bank, trust company, savings and loan association, federal savings
bank, member firm of a national securities exchange or other financial
institution permitted by SEC rule. Additional documentation may be required,
particularly from institutional and fiduciary account holders, such as
corporations, custodians (e.g., under the Uniform Transfers to Minors Act),
executors, administrators, trustees or guardians.

If the proceeds of the redemption (prior to the imposition of any contingent
deferred sales charge) are $100,000 or less and the proceeds are payable to the
shareholder of record at the address of record, normally a telephone request or
a written request by any one account holder without a signature guarantee is
sufficient for redemptions by individual or joint account holders, and trust,
executor and guardian account holders, provided the trustee, executor or
guardian is named in the account registration. Other institutional account
holders may exercise this special


                                       48
<PAGE>

privilege of redeeming shares by telephone request or written request without
signature guarantee subject to the same conditions as individual account
holders, provided that this privilege has been pre-authorized by the
institutional account holder by written instruction to the Shareholder Service
Agent with signatures guaranteed. This privilege may not be used to redeem
shares held in certificated form and may not be used if the shareholder's
account has had an address change within 15 days of the redemption request.

Wires. Delivery of the proceeds of a wire redemption of $250,000 or more may be
delayed by the Fund for up to seven days if the Fund or the Shareholder Service
Agent deems it appropriate under then-current market conditions. The ability to
send wires is limited by the business hours and holidays of the firms involved.
The Fund is not responsible for the efficiency of the federal wire system or the
account holder's financial services firm or bank. The account holder is
responsible for any charges imposed by the account holder's firm or bank. To
change the designated account to receive wire redemption proceeds, send a
written request to the Fund Shareholder Service Agent with signatures guaranteed
as described above or contact the firm through which Fund shares were purchased.

Automatic Withdrawal Plan. An owner of $5,000 or more of a class of the Fund's
shares at the offering price (net asset value) may provide for the payment from
the owner's account of any requested dollar amount to be paid to the owner or a
designated payee monthly, quarterly, semiannually or annually. The $5,000
minimum account size is not applicable to IRAs. The minimum periodic payment is
$50. The maximum annual rate at which shares may be redeemed is 12% of the net
asset value of the account. Shares are redeemed so that the payee should receive
payment approximately the first of the month. Investors using this Plan must
reinvest Fund distributions.

Non-retirement plan shareholders may establish an Automatic Withdrawal Plan (the
"Plan") to receive monthly, quarterly or periodic redemptions from his or her
account for any designated amount of $50 or more. Shareholders may designate
which day they want the automatic withdrawal to be processed. The check amounts
may be based on the redemption of a fixed dollar amount, fixed share amount,
percent of account value or declining balance. The Plan provides for income
dividends and capital gains distributions, if any, to be reinvested in
additional Shares. Shares are then liquidated as necessary to provide for
withdrawal payments. Since the withdrawals are in amounts selected by the
investor and have no relationship to yield or income, payments received cannot
be considered as yield or income on the investment and the resulting
liquidations may deplete or possibly extinguish the initial investment and any
reinvested dividends and capital gains distributions. Any such requests must be
received by the Fund's transfer agent ten days prior to the date of the first
automatic withdrawal. An Automatic Withdrawal Plan may be terminated at any time
by the shareholder, the Trust or its agent on written notice, and will be
terminated when all shares of the Fund under the Plan have been liquidated or
upon receipt by the Trust of notice of death of the shareholder.

In-kind Redemptions. The Fund reserves the right to honor any request for
redemption or repurchase by making payment in whole or in part in readily
marketable securities. These securities will be chosen by the Fund and valued as
they are for purposes of computing the Fund's net asset value. A shareholder may
incur transaction expenses in converting these securities to cash.

Exchanges

Shareholders may request a taxable exchange of their shares for shares of the
corresponding class of other DWS Funds without imposition of a sales charge,
subject to the provisions below. For purposes of calculating any CDSC, amounts
exchanged retain their original cost and purchase date.

Shares of money market funds that were acquired by purchase (not including
shares acquired by dividend reinvestment) are subject to the applicable sales
charge on exchange. Certain series of DWS Target Fund are available on exchange
only during the offering period for such series as described in the applicable
prospectus. Tax Free Money Fund -- Investment Class, NY Tax-Free Money Fund
--Investment Class, Treasury Money Fund -- Investment Class, Money Market Fund
-- Investment Class, Cash Management Fund Institutional, Cash Reserves Fund
Institutional, Treasury Money Fund -- Institutional Class, Cash Reserve Fund,
Inc. Prime Series, Tax-Exempt California Money Market Fund, Cash Account Trust
and Investors Cash Trust are available on exchange but only through a financial
services firm having a services agreement with DWS-SDI. All exchanges among
money funds must meet applicable investor eligibility and investment
requirements. Exchanges may only be made for funds that

                                       49
<PAGE>

are available for sale in the shareholder's state of residence. Currently,
Tax-Exempt California Money Market Fund is available for sale only in
California.

Shareholders must obtain prospectuses of the Funds they are exchanging into from
dealers, other firms or DWS-SDI.

Automatic Exchange Plan. The owner of $1,000 or more of any class of shares of a
DWS Fund may authorize the automatic exchange of a specified amount ($50
minimum) of such shares for shares of the same class of another such DWS Fund.
Such exchanges will be made automatically until the shareholder or the Fund
terminates the privilege. Exchanges are subject to the terms and conditions
described above.

                                    DIVIDENDS

The Fund intends to distribute substantially all of its net investment income,
including any excess of net realized short-term capital gains over net realized
long-term capital losses, at least annually. The Fund may distribute the entire
excess of net realized long-term capital gains over net realized short-term
capital losses, as reduced by any capital loss carryforwards, at least annually.
However, if the Fund determines that it is in the interest of shareholders, the
Fund may retain all or part of its net realized long-term capital gains for
reinvestment, after paying related federal income and excise taxes. In that
case, the Fund may elect to have such gains included in shareholders' taxable
income for the year. Shareholders may then claim a credit for their pro rata
share of the related federal income tax paid by the Fund; and a shareholder's
tax basis in Fund shares will be increased by the amount of gain less the amount
of tax allocated to those shares.

Any dividends or capital gains distributions declared in October, November or
December with a record date in such a month and paid during the following
January will be treated by shareholders for federal income tax purposes as if
received on December 31 of the calendar year declared.

Dividends paid by the Fund with respect to each class of its shares will be
calculated in the same manner, at the same time and on the same day.

The level of income dividends per share (as a percentage of net asset value)
will be lower for Class B and Class C shares than for Class A shares primarily
as a result of the distribution services fee applicable to Class B and Class C
shares. Distributions of capital gains, if any, will be paid in the same amount
for each class.

Income and capital gain distributions, if any, of the Fund will be credited to
shareholder accounts in full and fractional shares of the same class of the Fund
at net asset value on the reinvestment date, except that, upon written request
to the Shareholder Service Agent, a shareholder may select one of the following
options:

1.       To receive income and short-term capital gain distributions in cash and
         long-term capital gain distributions in shares of the same class at net
         asset value; or

2.       To receive income and capital gain distributions in cash.

Dividends will be reinvested in shares of the same class of the Fund unless
shareholders indicate in writing that they wish to receive them in cash or in
shares of other DWS funds with multiple classes of shares or DWS funds as
provided in the prospectus. To use this privilege of investing dividends of the
Fund in shares of another DWS Fund, shareholders must maintain a minimum account
value of $1,000 in the Fund distributing the dividends. The Fund will reinvest
dividend checks (and future dividends) in shares of that same Fund and class if
checks are returned as undeliverable. Dividends and other distributions of the
Fund in the aggregate amount of $10 or less are automatically reinvested in
shares of the same Fund and class unless the shareholder requests in writing
that a check be issued for that particular distribution.

If an investment is in the form of a retirement plan, all dividends and capital
gains distributions must be reinvested into the shareholder's account.


                                       50
<PAGE>

If a shareholder has elected to reinvest any dividends and/or other
distributions, such distributions will be made in shares of that Fund and
confirmations will be mailed to each shareholder. If a shareholder has chosen to
receive cash, a check will be sent. Distributions of income, capital gains and
dividends are taxable in the same manner, whether made in shares or cash.

Each distribution is accompanied by a brief explanation of the form and
character of the distribution. The characterization of distributions on such
correspondence may differ from the characterization for federal tax purposes. In
January of each year, the Fund issues to each shareholder a statement of the
federal income tax status of all distributions in the prior calendar year.

The Fund may at any time vary its foregoing dividend practices and, therefore,
reserves the right from time to time to either distribute or retain for
reinvestment such of its net investment income and its net short-term and
long-term capital gains as its Board determines appropriate under the then
current circumstances. In particular, and without limiting the foregoing, the
Fund may make additional distributions of net investment income or capital gain
net income in order to satisfy the minimum distribution requirements contained
in the Code.

                                      TAXES

The following is intended to be a general summary of certain federal income tax
consequences of investing in the funds. It is not intended as a complete
discussion of all such consequences, it does not address foreign, state or local
taxes or the effects of possible changes in tax laws, nor does it deal with all
categories of investors. Investors are therefore advised to consult with their
tax advisors before making an investment in the Fund.

Taxation of the Fund. The Fund intends to elect to be treated and to qualify
each year as a regulated investment company under Subchapter M of the Code. In
order to qualify for the special tax treatment accorded regulated investment
companies and their shareholders, the Fund must, among other things:

(a)      derive at least 90% of its gross income for each taxable year from (i)
         dividends, interest, payments with respect to certain securities loans,
         and gains from the sale or other disposition of stock, securities or
         foreign currencies, or other income (including but not limited to gains
         from options, futures, or forward contracts) derived with respect to
         its business of investing in such stock, securities, or currencies and
         (ii) net income deprived from interests in "qualified publicly traded
         partnerships," (as defined below);

(b)      diversify its holdings so that, at the end of each quarter of the
         Fund's taxable year, (i) at least 50% of the market value of the Fund's
         total assets is represented by cash and cash items, US Government
         securities, securities of other regulated investment companies, and
         other securities limited in respect of any one issuer to a value not
         greater than 5% of the value of the Fund's total assets and not more
         than 10% of the outstanding voting securities of such issuer, and (ii)
         not more than 25% of the value of the Fund's total assets is invested
         (x) in the securities (other than those of the US Government or other
         regulated investment companies) of any one issuer or of two or more
         issuers which the Fund controls and which are engaged in the same,
         similar, or related trades or businesses, or (y) in the securities of
         one or more qualified publicly traded partnerships (as defined below);
         and

(c)      distribute with respect to each taxable year at least 90% of the sum of
         its investment company taxable income (as that term is defined in the
         Code without regard to the deduction for dividends paid -- generally,
         taxable ordinary income and the excess, if any, of net short-term
         capital gains over net long-term capital losses) and net tax-exempt
         interest income, for such year.

In general, for purposes of the 90% gross income requirement described in
paragraph (a) above, income derived from a partnership will be treated as
qualifying income only to the extent such income is attributable to items of
income of the partnership which would be qualifying income if realized by the
regulated investment company. However, 100% of the net income derived from an
interest in a "qualified publicly traded partnership" (defined as a partnership
(i) interests in which are traded on an established securities market or readily
tradable on a secondary market or the substantial equivalent thereof and (ii)
that derives less than 90% of its income from the qualifying income described in
paragraph (a) above) is treated as qualifying income. In addition, although in
general the

                                       51
<PAGE>
passive loss rules of the Code do not apply to regulated investment companies,
such rules do apply to a regulated investment company with respect to items
attributable to an interest in a qualified publicly traded partnership. Finally,
for purposes of paragraph (b) above, the term "outstanding voting securities of
such issuer" will include the equity securities of a qualified publicly traded
partnership.

If the Fund qualifies as a regulated investment company that is accorded special
tax treatment, the Fund will not be subject to federal income tax on income
distributed in a timely manner to its shareholders in the form of dividends
(including Capital Gain Dividends, as defined below).

If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders), and all distributions from
earnings and profits, including any distributions of net tax-exempt income and
net long-term capital gains, will be taxable to shareholders as ordinary income.
Such distributions may be eligible (i) to be treated as qualified dividend
income in the case of shareholders taxed as individuals and (ii) for the
dividends received deduction in the case of corporate shareholders. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying as a
regulated investment company that is accorded special tax treatment.

The Fund is subject to a 4% nondeductible excise tax on amounts that have been
retained rather than distributed, as required, under a prescribed formula. The
formula requires payment to shareholders during a calendar year of distributions
representing at least 98% of the Fund's taxable ordinary income for the calendar
year and at least 98% of the excess of its capital gains over capital losses
realized during the one-year period ending October 31 (in most cases) of such
year as well as amounts that were neither distributed nor taxed to the Fund
during the prior calendar year. Although the Fund's distribution policies should
enable it to avoid excise tax liability, the Fund may retain (and be subject to
income or excise tax on) a portion of its capital gain or other income if it
appears to be in the interest of such Fund.

Taxation of Fund Distributions. For federal income tax purposes, distributions
of investment income are generally taxable to shareholders as ordinary income.
Taxes on distributions of capital gains are determined by how long the Funds
owned the investments that generated them, rather than how long a shareholder
has owned his or her shares. Distributions of net capital gains from the sale of
investments that the Fund owned for more than one year and that are properly
designated by the Fund as capital gain dividends ("Capital Gain Dividends") will
be taxable to shareholders as long-term capital gains. Distributions of gains
from the sale of investments that the Fund owned for one year or less will be
taxable as ordinary income. For taxable years beginning before January 1, 2011,
distributions of investment income designated by the Fund as derived from
"qualified dividend income" will be taxed in the hands of individuals at the
rates applicable to long-term capital gain, provided holding period and other
requirements are met at both the shareholder and Fund levels.

In order for some portion of the dividends received by the Fund shareholder to
be "qualified dividend income," the Fund must meet holding period and other
requirements with respect to some portion of the dividend paying stocks in its
portfolio and the shareholder must meet holding period and other requirements
with respect to the Fund's shares. A dividend will not be treated as qualified
dividend income (at either the Fund or shareholder level) (1) if the dividend is
received with respect to any share of stock held for fewer than 61 days during
the 121-day period beginning on the date which is 60 days before the date on
which such share becomes ex-dividend with respect to such dividend (or, in the
case of certain preferred stock, 91 days during the 181-day period beginning 90
days before such date), (2) to the extent that the recipient is under an
obligation (whether pursuant to a short sale or otherwise) to make related
payments with respect to positions in substantially similar or related property,
(3) if the recipient elects to have the dividend income treated as investment
interest, or (4) if the dividend is received from a foreign corporation that is
(a) not eligible for the benefits of a comprehensive income tax treaty with the
United States (with the exception of dividends paid on stock of such a foreign
corporation readily tradable on an established securities market in the United
States) or (b) treated as a passive foreign investment company.

If the aggregate qualified dividends received by the Fund during any taxable
year are 95% or more of its gross income, then 100% of the Fund's dividends
(other than dividends properly designated as Capital Gain Dividends)


                                       52
<PAGE>

will be eligible to be treated as qualified dividend income. For this purpose,
the only gain included in the term "gross income" is the excess of net
short-term capital gain over net long-term capital loss.

Distributions are taxable whether shareholders receive them in cash or reinvest
them in additional shares through the reinvestment privilege. A shareholder
whose distributions are reinvested in shares will be treated as having received
a dividend equal to the fair market value of the new shares issued to the
shareholder.

Long-term capital gain rates applicable to individuals have been temporarily
reduced -- in general, to 15% with lower rates applying to taxpayers in the 10%
and 15% rate brackets -- for taxable years beginning before January 1, 2011.

Dividends from domestic corporations may comprise a substantial part of the
Fund's gross income. If any such dividends constitute a substantial portion of
the Fund's gross income, a portion of the income distributions of such fund may
be eligible for the 70% deduction for dividends received by corporations.
Shareholders will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent the shares of the Fund
with respect to which the dividends are received are treated as debt-financed
under federal income tax law and is eliminated if either the underlying shares
or the shares of the Fund are deemed to have been held by the Fund or the
shareholder, as the case may be, for less than 46 days during the 91-day period
beginning 45 days before the shares become ex-dividend.

Capital gains distributions may be reduced if Fund capital loss carryforwards
are available. Any capital loss carryforwards to which the Fund is entitled are
disclosed in the Fund's annual and semi-annual reports to shareholders.

All distributions by the Fund result in a reduction in the net asset value of
the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.

Transactions in Fund Shares. The sale, exchange or redemption of shares of the
Fund may give rise to a gain or loss. In general, any gain or loss realized upon
a taxable disposition of shares will be treated as long-term capital gain or
loss if the shares have been held for more than 12 months. Otherwise, the gain
or loss on the taxable disposition of shares of the Fund will be treated as
short-term gain or loss. However, any loss realized upon a taxable disposition
of shares held for six months or less will be treated as long-term, rather than
short-term, to the extent of any long-term capital gain distributions received
(or deemed received) by the shareholder with respect to the shares. All or a
portion of any loss realized upon a taxable disposition of shares of the Fund
will be disallowed if other substantially identical shares of the Fund are
purchased within 30 days before or after the disposition. In such a case, the
basis of the newly purchased shares will be adjusted to reflect the disallowed
loss.

Foreign Taxation. Foreign withholding or other foreign taxes with respect to
income (including, in some cases, capital gains) on certain foreign securities
may occur. These taxes may be reduced or eliminated under the terms of an
applicable US income tax treaty. If more than 50% of the Fund's assets at year
end consist of the securities of foreign corporations, the Fund may elect to
permit shareholders to claim a credit or deduction on their income tax returns
for their pro rata portion the qualified taxes paid by the Fund to foreign
countries in respect of foreign securities the Fund has held for at least the
minimum period specified in the Code. In such a case, shareholders will include
in gross income from foreign sources their pro rata shares of such taxes. A
shareholder's ability to claim a foreign tax credit or deduction in respect of
foreign taxes paid by the Fund may be subject to certain limitations imposed by
the Code, as a result of which a shareholder may not get a full credit or
deduction for the amount of such taxes. In particular, shareholders must hold
their fund shares (without protection from risk of loss) on the ex-dividend date
and for at least 15 additional days during the 30-day period surrounding the
ex-dividend date to be eligible to claim a foreign tax credit with respect to a
given dividend. Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign taxes.

                                       53
<PAGE>

Taxation of Certain Investments. Equity investments by the Fund in certain
"passive foreign investment companies" ("PFICs") could potentially subject the
Fund to a US federal income tax (including interest charges) on distributions
received from the company or on proceeds received from the disposition of shares
in the company, which tax cannot be eliminated by making distributions to Fund
shareholders. However, such Fund may elect to avoid the imposition of that tax.
For example, the Fund may elect to treat a PFIC as a "qualified electing fund"
(a "QEF election"), in which case the Fund would be required to include its
share of the company's income and net capital gains annually, regardless of
whether it receives any distribution from the company. Such Fund also may make
an election to mark the gains (and to a limited extent losses) in PFIC holdings
"to the market" as though it had sold and repurchased its holdings in those
PFICs on the last day of the Fund's taxable year. Such gains and losses are
treated as ordinary income and loss. The QEF and mark-to-market elections may
accelerate the recognition of income (without the receipt of cash) and increase
the amount required to be distributed by the Fund to avoid taxation. Making
either of these elections therefore may require such Fund to liquidate other
investments (including when it is not advantageous to do so) to meet its
distribution requirement, which also may accelerate the recognition of gain and
affect the Fund's total return. Dividends paid by PFICs will not be eligible to
be treated as "qualified dividend income."

The Fund's transactions in foreign currencies, foreign currency-denominated debt
obligations and certain foreign currency options, futures contracts and forward
contracts (and similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the value of the
foreign currency concerned.

The Fund's use of options, futures contracts, forward contracts (to the extent
permitted) and certain other Strategic Transactions will be subject to special
tax rules (including mark-to-market, constructive sale, straddle, wash sale,
short sale and other rules), the effect of which may be to accelerate the Fund's
income, defer losses, cause adjustments in the holding periods of portfolio
securities, convert capital gains into ordinary income and convert short-term
capital losses into long-term capital losses. These rules could therefore affect
the amount, timing and character of distributions to investors. The means by
which the Fund seeks exposure to commodities, both directly and indirectly,
including through derivatives, may be limited by the Fund's intention to qualify
as a regulated investment company under the Code.

Certain of the Fund's hedging activities (including transactions, if any, in
foreign currencies or foreign currency-denominated instruments) are likely to
produce a difference between its book income and its taxable income. If the
Fund's book income exceeds its taxable income, the distribution (if any) of such
excess will be treated as (i) a dividend to the extent of the Fund's remaining
earnings and profits (including earnings and profits arising from tax-exempt
income), (ii) thereafter as a return of capital to the extent of the recipient's
basis in the shares, and (iii) thereafter as gain from the sale or exchange of a
capital asset. If the Fund's book income is less than its taxable income, the
Fund could be required to make distributions exceeding book income to qualify as
a regulated investment company that is accorded special tax treatment.

The Fund's investment in zero coupon bonds and other debt obligations having
original issue discount may cause the Fund to recognize taxable income in excess
of any cash received from the investment. A portion of the difference between
the issue price of zero coupon securities and their face value ("original issue
discount") is considered to be income to the Fund each year, even though the
Fund will not receive cash interest payments from these securities. This
original issue discount imputed income will comprise a part of the investment
company taxable income of the Fund, which must be distributed to shareholders in
order to maintain the qualification of the Fund as a regulated investment
company and to avoid federal income tax at the Fund's level.

In addition, if the Fund invests in certain high yield original issue discount
obligations issued by corporations (including tax-exempt obligations), a portion
of the original issue discount accruing on the obligation may be treated as
taxable dividend income. In such event, dividends of investment company taxable
income received from the Fund by its shareholders, to the extent attributable to
such portion of accrued original issue discount, would be taxable. Any such
dividends received by the Fund's corporate shareholders may be eligible for the
deduction for dividends received by corporations.

Any market discount recognized on a bond is taxable as ordinary income. A market
discount bond is a bond acquired in the secondary market at a price below its
redemption value (or its adjusted issue price if issued with


                                       54
<PAGE>

original issue discount). Absent an election to include the market discount in
income as it accrues, gain on the disposition of such an obligation will be
treated as ordinary income (instead of capital gain) to the extent of accrued
market discount.

The Fund may invest to a significant extent in debt obligations that are in the
lowest rating categories or are unrated, including debt obligations of issuers
not currently paying interest or who are in default. Investments in debt
obligations that are at risk of or in default present special tax issues for the
Fund. Tax rules are not entirely clear about issues such as when the Fund may
cease to accrue interest, original issue discount or market discount, when and
to what extent deductions may be taken for bad debts or worthless securities and
how payments received on obligations in default should be allocated between
principal and income. These and other related issues will be addressed by the
Fund when, as and if it invests in such securities, in order to seek to ensure
that it distributes sufficient income to preserve its status as a regulated
investment company and does not become subject to US federal income or excise
tax.

Withholding and Other Tax Considerations. Under the backup withholding
provisions of the Code, redemption proceeds as well as distributions may be
subject to federal income tax withholding for certain shareholders if (i) the
shareholder fails to furnish the Fund with a correct "taxpayer identification
number" (TIN) or has not certified to the Fund that withholding does not apply
or (ii) the IRS notifies the Fund that the shareholder's TIN is incorrect or the
shareholder is otherwise subject to backup withholding.

Shareholders of the Fund may be subject to state and local taxes on
distributions received from the Fund and on redemptions of the Fund's shares.

Special tax rules apply to investments though defined contribution plans and
other tax-qualified plans. Shareholders should consult their tax adviser to
determine the suitability of shares of the Fund as an investment through such
plans and the precise effect of and investment on their particular tax
situation.

Under Treasury regulations, if a shareholder recognizes a loss with respect to
the Fund's shares of $2 million or more for an individual shareholder or $10
million or more for a corporate shareholder, the shareholder must file with the
Internal Revenue Service a disclosure statement on Form 8886. Direct
shareholders of portfolio securities are in many cases excepted from this
reporting requirement, but under current guidance, shareholders of a regulated
investment company are not excepted. Future guidance may extend the current
exception from this reporting requirement to shareholders of most or all
regulated investment companies. The fact that a loss is reportable under these
regulations does not affect the legal determination of whether the taxpayer's
treatment of the loss is proper. Shareholders should consult their tax advisors
to determine the applicability of these regulations in light of their individual
circumstances.

Non-US shareholders. In general, dividends (other than Capital Gain Dividends)
paid by the Fund to a shareholder that is not a "US person" within the meaning
of the Code (such shareholder, a "foreign person") are subject to withholding of
US federal income tax at a rate of 30% (or lower applicable treaty rate) even if
they are funded by income or gains (such as portfolio interest, short-term
capital gains, or foreign-source dividend and interest income) that, if paid to
a foreign person directly, would not be subject to withholding. However, for
taxable years beginning before January 1, 2008, the Fund will not be required to
withhold any amounts (i) with respect to distributions (other than distributions
to a foreign person (w) that has not provided a satisfactory statement that the
beneficial owner is not a US person, (x) to the extent that the dividend is
attributable to certain interest on an obligation if the foreign person is the
issuer or is a 10% shareholder of the issuer, (y) that is within certain foreign
countries that have inadequate information exchange with the United States, or
(z) to the extent the dividend is attributable to interest paid by a person that
is a related person of the foreign person and the foreign person is a controlled
foreign corporation) from US-source interest income that would not be subject to
US federal income tax if earned directly by an individual foreign person, to the
extent such distributions are properly designated by the Fund, and (ii) with
respect to distributions (other than distributions to an individual foreign
person who is present in the United States for a period or periods aggregating
183 days or more during the year of the distribution) of net short-term capital
gains in excess of net long-term capital losses, to the extent such
distributions are properly designated by the Fund. Legislation extending this
exemption was proposed but not enacted in 2007. It is unclear whether similar
legislation will be enacted in 2008.


                                       55
<PAGE>


Depending on the circumstances, the Fund may make such designations with respect
to all, some or none of its potentially eligible dividends and/or treat such
dividends, in whole or in part, as ineligible from this exemption from
withholding. In order to qualify for this exemption from withholding, a foreign
person will need to comply with applicable certification requirements relating
to its non-US status (including, in general, furnishing an IRS Form W-8BEN or
substitute form). In the case of shares held through an intermediary, the
intermediary may withhold even if the Fund makes a designation with respect to a
payment. Foreign persons should consult their intermediaries with respect to the
application of these rules to their accounts.

In addition, as indicated above, Capital Gain Dividends will not be subject to
withholding of US federal income tax. If a beneficial holder who is a foreign
person has a trade or business in the United States, and the dividends are
effectively connected with the conduct by the beneficial holder of a trade or
business in the United States, the dividend will be subject to US federal income
taxation at regular income tax rates.

Special rules apply to distributions to foreign shareholders from a Fund that is
either a "U.S. real property holding corporation" ("USRPHC") or would be a
USRPHC but for the operation of certain exceptions to the definition thereof.
Additionally, special rules apply to the sale of shares in a Fund that is a
USRPHC. Very generally, a USRPHC is a domestic corporation that holds U.S. real
property interests ("USRPIs") -- USRPIs are defined very generally as any
interest in U.S. real property or any equity interest in a USRPHC -- the fair
market value of which equals or exceeds 50% of the sum of the fair market values
of the corporation's USRPIs, interests in real property located outside the
United States and other assets. A Fund that holds (directly or indirectly)
significant interests in REITs may be a USRPHC. The special rules discussed
below will also apply to distributions from a Fund that would be a USRPHC absent
exclusions from USRPI treatment for interests in domestically controlled REITs
and not-greater-than-5% interests in publicly traded classes of stock in REITs.

In the case of a Fund that is a USRPHC or would be a USRPHC but for the
exclusions from USPRI treatment described above, amounts the Fund receives from
REITs derived from gains realized from USRPIs will retain their character as
gains realized from USPRIs in the hands of the Fund's foreign shareholders
(under current law, any direct USRPI gain the Fund recognizes does not retain
its character as USRPI gain in the hands of foreign shareholders of the Fund,
although this may change if certain proposed legislation is enacted). In the
hands of a foreign shareholder that holds (or has held in the prior year) more
than a 5% interest in the Fund, such amounts will be treated as gains
"effectively connected" with the conduct of a "U.S. trade or business," and
subject to tax at graduated rates. Moreover, such shareholders will be required
to file a U.S. income tax return for the year in which the gain was recognized
and the Fund will be required to withhold 35% of the amount of the such
distribution. In the case of all other foreign shareholders (i.e., those whose
interests in the Fund did not exceed 5% at any time during the prior year), the
USRPI distribution will be treated as ordinary income (regardless of any
designation by the Fund that such distribution is a Capital Gain Dividend), and
the Fund must withhold 30% (or a lower applicable treaty rate) of the amount of
the distribution paid to such foreign shareholder. Foreign shareholders of such
Funds are also subject to "wash sale" rules to prevent the avoidance of the
tax-filing and -payment obligations discussed above through the sale and
repurchase of Fund shares.

In addition, a Fund that is a USRPHC must withhold 10% of the amount realized in
a redemption by a greater-than-5% foreign shareholder, and that shareholder must
file a U.S. income tax return for the year of the disposition of the USRPI and
pay any additional tax due on the gain.

                                 NET ASSET VALUE

The net asset value of shares of the Fund is computed as of the close of regular
trading on the Exchange on each day the Exchange is open for trading (the "Value
Time"). The Exchange is scheduled to be closed on the following holidays: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on
the preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively. Net asset value per share is determined
separately for each class of shares by dividing the value of the total assets of
the Fund attributable to the shares of that class, less all liabilities
attributable to that class, by the total number of shares of that class
outstanding. The per share net asset value may be lower for certain classes of
the Fund because of higher expenses borne by these classes.

                                       56
<PAGE>


An equity security is valued at its most recent sale price on the security's
primary exchange or over-the-counter ("OTC") market as of the Value Time.
Lacking any sales, the security is valued at the calculated mean between the
most recent bid quotation and the most recent asked quotation (the "Calculated
Mean") on such exchange or OTC market as of the Value Time. If it is not
possible to determine the Calculated Mean, the security is valued at the most
recent bid quotation on such exchange or OTC market as of the Value Time. In the
case of certain foreign exchanges or OTC markets, the closing price reported by
the exchange or OTC market (which may sometimes be referred to by the exchange
or one or more pricing agents as the "official close" or the "official closing
price" or other similar term) will be considered the most recent sale price.

Debt securities are valued as follows. Money market instruments purchased with
an original or remaining maturity of 60 days or less, maturing at par, are
valued at amortized cost. Other money market instruments are valued based on
information obtained from an approved pricing agent or, if such information is
not readily available, by using matrix pricing techniques (formula driven
calculations based primarily on current market yields). Bank loans are valued at
prices supplied by an pricing agent (which are intended to reflect the mean
between the bid and asked prices), if available, and otherwise at the mean of
the most recent bid and asked quotations or evaluated prices, as applicable,
based on quotations or evaluated prices obtained from one or more
broker-dealers. Privately placed debt securities, other than Rule 144A debt
securities, initially are valued at cost and thereafter based on all relevant
factors, including type of security, size of holding and restrictions on
disposition. Municipal debt securities are valued at prices supplied by an
pricing agent (which are intended to reflect the mean between the bid and asked
prices), if available, and otherwise at the mean of the most recent bid and
asked quotations or evaluated price obtained from a broker-dealer. Other debt
securities are valued at prices supplied by an approved pricing agent, if
available, and otherwise at the most recent bid quotation or evaluated price, as
applicable, obtained from one or more broker-dealers. If it is not possible to
value a particular debt security pursuant to the above methods, the security is
valued on the basis of factors including (but not limited to) maturity, coupon,
creditworthiness, currency denomination, and the movement of the market in which
the security is normally traded.

An exchange-traded option contract on securities, currencies and other financial
instruments is valued at its most recent sale price on the relevant exchange.
Lacking any sales, the option contract is valued at the Calculated Mean. If it
is not possible to determine the Calculated Mean, the option contract is valued
at the most recent bid quotation in the case of a purchased option contract or
the most recent asked quotation in the case of a written option contract, in
each case as of the Value Time. An option contract on securities, currencies and
other financial instruments traded in the OTC market is valued on the Value Date
at the evaluated price provided by the broker-dealer with which it was traded.
Futures contracts (and options thereon) are valued at the most recent settlement
price, if available, on the exchange on which they are traded most extensively.
With the exception of stock index futures contracts which trade on the Chicago
Mercantile Exchange, closing settlement times are prior to the close of trading
on the New York Stock Exchange. For stock index futures contracts which trade on
the Chicago Mercantile Exchange, closing settlement prices are normally
available at approximately 4:20 p.m. Eastern time. If no settlement price is
available, the last traded price on such exchange will be used.

If market quotations for portfolio assets are not readily available or the value
of a portfolio asset as determined in accordance with Board approved procedures
does not represent the fair market value of the portfolio asset, the value of
the portfolio asset is taken to be an amount which, in the opinion of the Fund's
Pricing Committee (or, in some cases, the Board's Valuation Committee),
represents fair market value. The value of other portfolio holdings owned by the
Fund is determined in a manner which is intended to fairly reflect the fair
market value of the asset on the valuation date, based on valuation procedures
adopted by the Fund's Board and overseen primarily by the Fund's Pricing
Committee.

                             DIRECTORS AND OFFICERS

The following table presents certain information regarding the Board Members of
the Corporation. Each Board Member's year of birth is set forth in parentheses
after his or her name. Unless otherwise noted, (i) each Board Member has engaged
in the principal occupation(s) noted in the table for at least the most recent
five years, although not necessarily in the same capacity, and (ii) the address
of each Board Member that is not an "interested person" (as defined in the 1940
Act) of the Corporation or the Advisor (each, an "Independent Board Member"), is
c/o Dawn-Marie Driscoll, PO Box 100176, Cape Coral, FL 33904. The term of office
for each Board Member is until the

                                       57
<PAGE>

election and qualification of a successor, or until such Board Member sooner
dies, resigns, is removed or as otherwise provided in the governing documents of
the Corporation. Because the Fund does not hold an annual meeting of
shareholders, each Board Member will hold office for an indeterminate period.
The Board Members may also serve in similar capacities with other funds in the
DWS fund complex. The Length of Time Served represents the year in which the
Board Member joined the board of one or more DWS funds now overseen by the
Board.

Independent Board Members

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the                                                                               Number of Funds
 Corporation and Length    Business Experience and                                               in DWS Fund
 of Time Served            Directorships During the Past 5 Years                                 Complex Overseen
-------------------------------------------------------------------------------------------------------------------
<S>                        <C>                                                                          <C>
Dawn-Marie Driscoll (1946) President, Driscoll Associates (consulting firm); Executive Fellow,          76
Chairperson since 2004     Center for Business Ethics, Bentley College; formerly, Partner,
Board Member since         Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and
1987                       General Counsel, Filene's (1978-1988). Directorships: Trustee of 8
                           open-end mutual funds managed by Sun Capital
                           Advisers, Inc. (since 2007); Director of ICI Mutual
                           Insurance Company (since 2007); Advisory Board,
                           Center for Business Ethics, Bentley College; Trustee,
                           Southwest Florida Community Foundation (charitable
                           organization); Former Directorships: Investment
                           Company Institute (audit, executive, nominating
                           committees) and Independent Directors Council
                           (governance, executive committees)
-------------------------------------------------------------------------------------------------------------------
 Henry P. Becton, Jr.      Vice Chair, WGBH Educational Foundation. Directorships: Association          76
 (1943)                    of Public Television Stations; Becton Dickinson and Company(1)
 Board Member since        (medical technology company); Belo Corporation(1) (media company);
 1990                      Boston Museum of Science; Public Radio International. Former
                           Directorships: American Public Television; Concord Academy; New
                           England Aquarium; Mass. Corporation for Educational
                           Telecommunications; Committee for Economic Development; Public
                           Broadcasting Service
-------------------------------------------------------------------------------------------------------------------
Keith R. Fox (1954)        Managing General Partner, Exeter Capital Partners (a series of               76
Board Member since         private equity funds). Directorships: Progressive Holding
1996                       Corporation (kitchen goods importer and distributor); Natural
                           History, Inc. (magazine publisher); Box Top Media Inc.
                           (advertising); The Kennel Shop (retailer)
-------------------------------------------------------------------------------------------------------------------
Kenneth C. Froewiss        Clinical Professor of Finance, NYU Stern School of Business                  76
(1945)                     (1997-present); Member, Finance Committee, Association for Asian
Board Member since         Studies (2002-present); Director, Mitsui Sumitomo Insurance Group
2001                       (US) (2004-present); prior thereto, Managing Director, J.P. Morgan
                           (investment banking firm) (until 1996)
-------------------------------------------------------------------------------------------------------------------
Martin J. Gruber           Nomura Professor of Finance, Leonard N. Stern School of Business,            76
(1937)                     New York University (since September 1965); Director, Japan Equity
Board Member since         Fund, Inc. (since January 1992), Thai Capital Fund, Inc. (since
1992                       January 2000), Singapore Fund, Inc. (since January 2000), National
                           Bureau of Economic Research (since January 2006). Formerly, Trustee,
                           TIAA (pension funds) (January 1996-January 2000); Trustee, CREF and
                           CREF Mutual Funds (January 2000-March 2005); Chairman, CREF and CREF
                           Mutual Funds (February 2004-March 2005); and Director, S.G. Cowen
                           Mutual Funds (January 1985-January 2001)
-------------------------------------------------------------------------------------------------------------------

                                       58
<PAGE>


-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the                                                                               Number of Funds
 Corporation and Length    Business Experience and                                               in DWS Fund
 of Time Served            Directorships During the Past 5 Years                                 Complex Overseen
-------------------------------------------------------------------------------------------------------------------
Richard J. Herring         Jacob Safra Professor of International Banking and Professor,                76
(1946)                     Finance Department, The Wharton School, University of Pennsylvania
Board Member since         (since July 1972); Co-Director, Wharton Financial Institutions
1990                       Center (since July 2000); Director, Japan Equity Fund, Inc. (since
                           September 2007), Thai Capital Fund, Inc. (since September 2007),
                           Singapore Fund, Inc. (since September 2007). Formerly, Vice Dean and
                           Director, Wharton Undergraduate Division (July 1995-June 2000);
                           Director, Lauder Institute of International Management Studies (July
                           2000-June 2006)
-------------------------------------------------------------------------------------------------------------------
Graham E. Jones            Senior Vice President, BGK Realty, Inc. (commercial real estate)             76
(1933)                     (since 1995). Formerly, Trustee of various investment companies
Board Member since         managed by Sun Capital Advisors, Inc. (1998-2005), Morgan Stanley
1993                       Asset Management (1985-2001) and Weiss, Peck and Greer (1985-2005)
-------------------------------------------------------------------------------------------------------------------
Rebecca W. Rimel           President and Chief Executive Officer, The Pew Charitable Trusts             76
(1951)                     (charitable organization) (1994 to present); Trustee, Thomas
Board Member since         Jefferson Foundation (charitable organization) (1994 to present);
1995                       Trustee, Executive Committee, Philadelphia Chamber of Commerce (2001
                           to present). Formerly, Executive Vice President, The Glenmede Trust
                           Company (investment trust and wealth management) (1983 to 2004);
                           Board Member, Investor Education (charitable organization)
                           (2004-2005); Director, Viasys Health Care(1) (January 2007-June 2007)
-------------------------------------------------------------------------------------------------------------------
William N. Searcy, Jr.     Private investor since October 2003; Trustee of 8 open-end mutual            76
(1946)                     funds managed by Sun Capital Advisers, Inc. (since October 1998).
Board Member since         Formerly, Pension & Savings Trust Officer, Sprint Corporation((1))
1993                       (telecommunications) (November 1989-September 2003)
-------------------------------------------------------------------------------------------------------------------
Jean Gleason Stromberg     Retired. Formerly, Consultant (1997-2001); Director, US Government           76
(1943)                     Accountability Office (1996-1997); Partner, Fulbright & Jaworski,
Board Member since         L.L.P. (law firm) (1978-1996). Directorships: The William and Flora
1997                       Hewlett Foundation; Service Source, Inc. Former Directorships:
                           Mutual Fund Directors Forum (2002-2004), American Bar Retirement
                           Association (funding vehicle for retirement plans) (1987-1990 and
                           1994-1996)
-------------------------------------------------------------------------------------------------------------------
Carl W. Vogt               Retired Senior Partner, Fulbright & Jaworski, L.L.P. (law firm);             74
(1936)                     formerly, President (interim) of Williams College (1999-2000);
Board Member since         formerly, President of certain funds in the Deutsche Asset
2002                       Management family of funds (formerly, Flag Investors family of
                           funds) (registered investment companies) (1999-2000).
                           Directorships: Yellow Corporation (trucking);
                           American Science & Engineering (x-ray detection
                           equipment). Former Directorships: ISI Family of Funds
                           (registered investment companies, 4 funds overseen);
                           National Railroad Passenger Corporation (Amtrak)
                           Waste Management, Inc. (solid waste disposal);
                           formerly, Chairman and Member, National
                           Transportation Safety Board
-------------------------------------------------------------------------------------------------------------------

                                       59
<PAGE>

Interested Board Member

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the                                                                               Number of Funds
 Corporation and Length    Business Experience and                                               in DWS Fund
 of Time Served            Directorships During the Past 5 Years                                 Complex Overseen
-------------------------------------------------------------------------------------------------------------------
 Axel Schwarzer(2)         Managing Director(4), Deutsche Asset Management; Head of Deutsche            82
 (1958)                    Asset Management Americas; CEO of DWS Scudder; formerly board member
 Board Member since        of DWS Investments, Germany (1999-2005); formerly, Head of Sales and
 2006                      Product Management for the Retail and Private Banking Division of
                           Deutsche Bank in Germany (1997-1999); formerly,
                           various strategic and operational positions for
                           Deutsche Bank Germany Retail and Private Banking
                           Division in the field of investment funds, tax driven
                           instruments and asset management for corporates
                           (1989-1996)
-------------------------------------------------------------------------------------------------------------------

Officers(3)

-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the
 Corporation and Length     Business Experience and
 of Time Served             Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Michael G. Clark(5)        Managing Director(4), Deutsche Asset Management (2006-present); President of DWS
 (1965)                     family of funds; Director, ICI Mutual Insurance Company (since October 2007);
 President, 2006-present    formerly, Director of Fund Board Relations (2004-2006) and Director of Product
                            Development (2000-2004), Merrill Lynch Investment Managers; Senior Vice President
                            Operations, Merrill Lynch Asset Management (1999-2000)
-------------------------------------------------------------------------------------------------------------------
 John Millette(6) (1962)    Director(4), Deutsche Asset Management
 Vice President and
 Secretary, 1999-present
-------------------------------------------------------------------------------------------------------------------
 Paul H. Schubert(5)        Managing Director(4), Deutsche Asset Management (since July 2004); formerly,
 (1963)                     Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of
 Chief Financial Officer,   Funds (1998-2004); Vice President and Director of Mutual Fund Finance at UBS Global
 2004-present               Asset Management (1994-1998)
 Treasurer, 2005-present
-------------------------------------------------------------------------------------------------------------------
 Patricia DeFilippis(5)     Vice President, Deutsche Asset Management (since June 2005); formerly, Counsel, New
 (1963)                     York Life Investment Management LLC (2003-2005); legal associate, Lord, Abbett & Co.
 Assistant Secretary,       LLC (1998-2003)
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Elisa D. Metzger(5)        Director(4), Deutsche Asset Management (since September 2005); formerly, Counsel,
 (1962)                     Morrison and Foerster LLP (1999-2005)
 Assistant Secretary,
 2005-present
-------------------------------------------------------------------------------------------------------------------
 Caroline Pearson(6)        Managing Director(4), Deutsche Asset Management
 (1962)
 Assistant Secretary,
 1997-present
-------------------------------------------------------------------------------------------------------------------
 Paul Antosca(6)            Director(4), Deutsche Asset Management (since 2006); formerly, Vice President, The
 (1957)                     Manufacturers Life Insurance Company (U.S.A.) (1990-2006)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------


                                       60
<PAGE>


-------------------------------------------------------------------------------------------------------------------
 Name, Year of Birth,
 Position with the
 Corporation and Length     Business Experience and
 of Time Served             Directorships During the Past 5 Years
-------------------------------------------------------------------------------------------------------------------
 Jack Clark (6)             Director(4), Deutsche Asset Management (since 2007); formerly, Vice President, State
 (1967)                     Street Corporation (2002-2007)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Kathleen Sullivan          Director(4), Deutsche Asset Management
 D'Eramo(6)
 (1957)
 Assistant Treasurer,
 2003-present
-------------------------------------------------------------------------------------------------------------------
 Diane Kenneally(6)         Director(4), Deutsche Asset Management
 (1966)
 Assistant Treasurer,
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Jason Vazquez(5) (1972)    Vice President, Deutsche Asset Management (since 2006); formerly, AML Operations
 Anti-Money Laundering      Manager for Bear Stearns (2004-2006), Supervising Compliance Principal and
 Compliance Officer,        Operations Manager for AXA Financial (1999-2004)
 2007-present
-------------------------------------------------------------------------------------------------------------------
 Robert Kloby(5) (1962)     Managing Director(4), Deutsche Asset Management (2004-present); formerly, Chief
 Chief Compliance           Compliance Officer/Chief Risk Officer, Robeco USA (2000-2004); Vice President, The
 Officer, 2006-present      Prudential Insurance Company of America (1988-2000); E.F. Hutton and Company
                            (1984-1988)
-------------------------------------------------------------------------------------------------------------------
 J. Christopher Jackson(5)   Director(4), Deutsche Asset Management (2006-present); formerly, Director, Senior
 (1951)                      Vice President, General Counsel, and Assistant Secretary, Hansberger Global
 Chief Legal Officer,        Investors, Inc. (1996-2006); Director, National Society of Compliance Professionals
 2006-present               (2002-2005)(2006-2009)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      A publicly held company with securities registered pursuant to Section
         12 of the Securities Exchange Act of 1934.

(2)      The mailing address of Axel Schwarzer is c/o Deutsche Investment
         Management Americas Inc., 345 Park Avenue, New York, New York 10154.
         Mr. Schwarzer is an interested Board Member by virtue of his positions
         with Deutsche Asset Management. As an interested person, Mr. Schwarzer
         receives no compensation from the Funds.

(3)      As a result of their respective positions held with the Advisor, these
         individuals are considered "interested persons" of the Advisor within
         the meaning of the 1940 Act. Interested persons receive no compensation
         from the Funds.

(4)      Executive title, not a board directorship.

(5)      Address:  345 Park Avenue, New York, New York 10154.

(6)      Address: Two International Place, Boston, Massachusetts 02110.

Each Officer also holds similar positions for other investment companies for
which DIMA or an affiliate serves as the advisor.


                                       61
<PAGE>

Officer's Role with Principal Underwriter:  DWS Scudder Distributors, Inc.

 Paul H. Schubert:                         Vice President
 Caroline Pearson:                         Secretary

Information Concerning Committees and Meetings of Board Members

The Board of the Corporation met ten (10) times during the calendar year ended
December 31, 2007 and each Board Member attended at least 80% of the meetings of
the Board and meetings of the committees of the Board on which such Board Member
served.

Board Committees. Ms. Driscoll has served as Chair of the Board of the Funds
since June 2004.

The Board has established the following standing committees: Audit Committee,
Nominating/Corporate Governance Committee, Valuation Committee, Equity Oversight
Committee, Fixed Income Oversight Committee, Marketing/Distribution/Shareholder
Service Committee, Legal/Regulatory/Compliance Committee and Expense/Operations
Committee.

The Audit Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and financial
reporting practices of the applicable Fund. It also makes recommendations
regarding the selection of an independent registered public accounting firm for
a Fund, reviews the independence of such firm, reviews the scope of audit and
internal controls, considers and reports to the Board on matters relating to a
Fund's accounting and financial reporting practices, and performs such other
tasks as the full Board deems necessary or appropriate. The Audit Committee
receives annual representations from the independent registered public
accounting firm as to its independence. The members of the Audit Committee are
Keith R. Fox (Chair and Audit Committee Financial Expert), Kenneth C. Froewiss,
Richard J. Herring, William N. Searcy, Jr. and Jean Gleason Stromberg. The Audit
Committee held nine (9) meetings during the calendar year 2007.

The Nominating/Corporate Governance Committee (i) recommends to the Board
candidates to serve as Board Members and (ii) oversees and, as appropriate,
makes recommendations to the Board regarding other fund governance-related
matters, including but not limited to Board compensation practices, retirement
policies, self-evaluations of effectiveness, review of possible conflicts of
interest and independence issues involving Board Members, allocations of
assignments and functions of committees of the Board, and share ownership
policies. The members of the Nominating/Corporate Governance Committee are Henry
P. Becton, Jr. (Chair), Graham E. Jones, Rebecca W. Rimel and Jean Gleason
Stromberg. The Nominating/Corporate Governance Committee (previously known as
the Committee on Independent Directors) held three (3) meetings during the
calendar year 2007.

The Valuation Committee oversees Fund valuation matters, reviews valuation
procedures adopted by the Board, determines the fair value of the Fund's
securities as needed in accordance with the valuation procedures and performs
such other tasks as the full Board deems necessary or appropriate. The members
of the Valuation Committee are Keith R. Fox, Kenneth C. Froewiss (Chair), Martin
J. Gruber and Richard J. Herring. The Valuation Committee held 10 meetings
during the calendar year 2007.

The Board has established two Investment Oversight Committees, one focusing on
Funds primarily investing in equity securities (the "Equity Oversight
Committee") and one focusing on Funds primarily investing in fixed income
securities (the "Fixed Income Oversight Committee"). These Committees meet
regularly with Fund portfolio managers and other investment personnel to review
the relevant Funds' investment strategies and investment performance. The
members of the Equity Oversight Committee are Henry P. Becton, Jr., Martin J.
Gruber (Chair), Richard J. Herring, Rebecca W. Rimel and Carl W. Vogt. The
members of the Fixed Income Oversight Committee are Dawn-Marie Driscoll, Keith
R. Fox, Kenneth C. Froewiss, Graham E. Jones, William N. Searcy, Jr. (Chair) and
Jean Gleason Stromberg. Each Investment Oversight Committee held six (6)
meetings during the calendar year 2007.

The Marketing/Distribution/Shareholder Service Committee oversees (i) the
quality, costs and types of shareholder services provided


                                       62
<PAGE>

to the Funds and their shareholders, and (ii) the distribution-related services
provided to the Funds and their shareholders. The members of the
Marketing/Distribution/Shareholder Service Committee are Martin J. Gruber,
Richard J. Herring (Chair), Rebecca W. Rimel, Jean Gleason Stromberg and Carl W.
Vogt. The Marketing/Distribution/Shareholder Service Committee held seven (7)
meetings during the calendar year 2007.

The Legal/Regulatory/Compliance Committee oversees (i) the significant legal
affairs of the Funds, including the handling of pending or threatened litigation
or regulatory action involving the Funds, (ii) general compliance matters
relating to the Funds and (iii) proxy voting. The members of the
Legal/Regulatory/Compliance Committee are Henry P. Becton, Jr., Dawn-Marie
Driscoll, Rebecca W. Rimel, William N. Searcy, Jr., Jean Gleason Stromberg and
Carl W. Vogt (Chair). The Legal/Regulatory/Compliance Committee held six (6)
meetings during the calendar year 2007.

The Expense/Operations Committee (i) monitors the Fund's total operating expense
levels, (ii) oversees the provision of administrative services to the Fund,
including the Fund's custody, fund accounting and insurance arrangements, and
(iii) reviews the Fund's investment advisers' brokerage practices, including the
implementation of related policies. The members of the Expense/Operations
Committee are Henry P. Becton, Jr., Dawn-Marie Driscoll, Keith R. Fox and
William N. Searcy, Jr. This committee held nine (9) meetings during the calendar
year 2007.

Ad Hoc Committees. In addition to the standing committees described above, from
time to time the Board also forms ad hoc committees to consider specific issues.

Remuneration. Each Independent Board Member receives compensation from the Fund
for his or her services, which includes an annual retainer and an attendance fee
for each meeting attended. No additional compensation is paid to any Independent
Board Member for travel time to meetings, attendance at directors' educational
seminars or conferences, service on industry or association committees,
participation as speakers at directors' conferences or service on special fund
industry director task forces or subcommittees. Independent Board Members do not
receive any employee benefits such as pension or retirement benefits or health
insurance from the Fund or any fund in the DWS fund complex.

Members of the Board who are officers, directors, employees or stockholders of
Deutsche Asset Management or its affiliates receive no direct compensation from
a Fund, although they are compensated as employees of Deutsche Asset Management,
or its affiliates, and as a result may be deemed to participate in fees paid by
the Funds. The following tables show compensation from the Fund and aggregate
compensation from all of the funds in the DWS fund complex received by each
Board Member during the calendar year 2007. Mr. Schwarzer became a member of the
Board on May 5, 2006, is an interested person of the Funds and received no
compensation from the Funds or any fund in the DWS fund complex during the
relevant periods.

<TABLE>
<CAPTION>
                                      Aggregate Compensation         Total Compensation
                                    from DWS Gold & Precious           from Fund and
Name of Board Member                       Metals Fund               DWS Fund Complex(1)
--------------------                       -----------               -------------------

<S>                                           <C>                         <C>
Henry P. Becton, Jr.(3)(4)                    $1,590                      $200,000
Dawn-Marie Driscoll(2)(3)(4)                  $1,998                      $253,000
Keith R. Fox(3)(4)                            $1,602                      $203,000
Kenneth C. Froewiss(3)(4)                     $1,578                      $200,000
Martin J. Gruber(3)(4)                        $1,531                      $198,000
Richard J. Herring(3)(4)                      $1,539                      $195,000
Graham E. Jones(3)                            $1,641                      $207,000
Rebecca W. Rimel(3)(4)                        $1,499                      $194,000
William N. Searcy, Jr.(3)(4)                  $1,578                      $200,000
Jean Gleason Stromberg(3)(4)                  $1,491                      $189,000
Carl W. Vogt(3)(4)                            $1,554                      $194,000
</TABLE>

(1)      The DWS Fund Complex is composed of 138 funds as of December 31, 2007.

(2)      Includes $50,000 in annual retainer fees in Ms. Driscoll's role as
         Chairperson of the Board.

                                       63
<PAGE>

(3)      For each Board Member, except Mr. Vogt, total compensation for calendar
         year 2007 includes compensation, as of December 31, 2007, for service
         on the boards of 30 trusts/corporations comprised of 76
         funds/portfolios. For Mr. Vogt total compensation for calendar year
         2007 includes compensation for service on the boards of 28
         trusts/corporations comprised of 74 funds/portfolios.

(4)      Aggregate compensation includes amounts paid to the Board Members for
         special meetings of ad hoc committees of the board in connection with
         the possible consolidation of the various DWS Fund boards and funds,
         meetings for considering fund expense simplification initiatives, and
         consideration of issues specific to the Funds' direct shareholders
         (i.e., those shareholders who did not purchase shares through financial
         intermediaries). Such amounts totaled $1,000 for Mr. Becton, $1,000 for
         Ms. Driscoll, $1,000 for Mr. Fox, $1,000 for Mr. Froewiss, $5,000 for
         Mr. Gruber, $1,000 for Dr. Herring, $5,000 for Ms. Rimel, $1,000 for
         Mr. Searcy, $1,000 for Ms. Stromberg and $1,000 for Mr. Vogt. These
         meeting fees were borne by the Advisor.

Board Member Ownership in the Fund

The following table shows the dollar range of equity securities beneficially
owned by each Board Member in the Fund and DWS Fund Complex as of December 31,
2007.

<TABLE>
<CAPTION>
                                               Dollar Range of                Aggregate Dollar Range of
                                             Beneficial Ownership         Ownership in all Funds Overseen by
                                             in DWS Gold & Precious                 Board Member
Board Member                                     Metals Fund                  in the DWS Fund Complex(1)
------------                                     -----------                  --------------------------

Independent Board Member:
-------------------------

<S>                                            <C>     <C>                             <C>
Henry P. Becton, Jr.                           $10,001-$50,000                    Over $100,000
Dawn-Marie Driscoll                               $1-$10,000                      Over $100,000
Keith R. Fox                                         None                         Over $100,000
Kenneth C. Froewiss                                  None                         Over $100,000
Martin J. Gruber                                     None                         Over $100,000
Richard J. Herring                                   None                         Over $100,000
Graham E. Jones                                $50,001-$100,00                    Over $100,000
Rebecca W. Rimel                                     None                         Over $100,000
William N. Searcy, Jr.                               None                         Over $100,000
Jean Gleason Stromberg                         $10,001-$50,000                    Over $100,000
Carl W. Vogt                                      $1-$10,000                      Over $100,000

Interested Board Member:
------------------------

Axel Schwarzer                                       None                           Over $100,000
</TABLE>

(1)      Securities beneficially owned as defined under the 1934 Act include
         direct and/or indirect ownership of securities where the Board Member's
         economic interest is tied to the securities, employment ownership and
         securities when the Board Member can exert voting power and when the
         Board Member has authority to sell the securities. The dollar ranges
         are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, over
         $100,000.

Ownership in Securities of the Advisor and Related Companies

As reported to the Fund, the information in the following table reflects
ownership by the Independent Board Members and their immediate family members of
certain securities as of December 31, 2007. An immediate family member can be a
spouse, children residing in the same household including step and adoptive
children and any dependents. The securities represent ownership in the Advisor
or principal underwriter of the Fund and any persons


                                       64
<PAGE>

(other than a registered investment company) directly or indirectly controlling,
controlled by, or under common control with the Advisor or principal underwriter
of the Fund (including Deutsche Bank AG).

<TABLE>
<CAPTION>
                                                                                   Value of        Percent of
                                   Owner and                                     Securities on     Class on an
Independent                     Relationship to                     Title of     an Aggregate       Aggregate
Board Member                      Board Member         Company        Class          Basis            Basis
------------                      ------------         -------        -----          -----            -----
<S>                                       <C>           <C>              <C>            <C>            <C>
Henry P. Becton, Jr.                                None
Dawn-Marie Driscoll                                 None
Keith R. Fox                                        None
Kenneth C. Froewiss                                 None
Martin J. Gruber                                    None
Richard J. Herring                                  None
Graham E. Jones                                     None
Rebecca W. Rimel                                    None
William N. Searcy, Jr.                              None
Jean Gleason Stromberg                              None
Carl W. Vogt                                        None
</TABLE>

Securities Beneficially Owned

As of February 9, 2008, the Board Members and officers of the Corporation owned,
as a group, less than 1% of the outstanding shares of the Fund.

To the best of the Fund's knowledge, as of February 9, 2008, no person owned of
record or beneficially 5% or more of any class of the Fund's outstanding shares,
except as noted below.

DWS Gold & Precious Metals Fund

<TABLE>
<CAPTION>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

<S>                                                           <C>                           <C>
MLPF&S FOR THE SOLE BENEFIT OF                                547,693.65                    5.07% of Class A
ITS CUSTOMERS
ATTN FUND ADM 9E8R4
JACKSONVILLE FL  32246-6484

MORGAN STANLEY & CO.                                          541,365.03                    5.01% of Class A
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

CITIGROUP GLOBAL MARKETS INC                                  382,287.76                    14.70% of Class B
XXXXXXXXXX
ATTN PETER BOOTH 7TH FL
NEW YORK NY  10001-2402

MLPF&S FOR THE SOLE BENEFIT OF                                177,235.68                    6.82% of Class B
ITS CUSTOMERS
ATTN FUND ADMINISTRATION 9E8R5
JACKSONVILLE FL  32246-6484

MORGAN STANLEY & CO.                                          158,204.86                    6.08% of Class B
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311



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<PAGE>
Name and Address of Investor Ownership                          Shares                      % of Total Shares
--------------------------------------                          ------                      -----------------

MORGAN STANLEY & CO.                                         1,143,362.39                   21.99% of Class C
HARBORSIDE FINANCIAL CENTER
JERSEY CITY NJ  07311

MLPF&S FOR THE SOLE BENEFIT OF                                597,822.19                    11.50% of Class C
ITS CUSTOMERS
ATTN FUND ADMINISTRATION
SEC 9E8S2
JACKSONVILLE FL  32246-6484

CHARLES SCHWAB & CO INC                                      1,650,064.74                   9.34% of Class S
SAN FRANCISCO CA  94104-4151
</TABLE>

Agreement to Indemnify Independent Directors for Certain Expenses

In connection with litigation or regulatory action related to possible improper
market timing or other improper trading activity or possible improper marketing
and sales activity in the Funds, each Fund's investment advisor has agreed,
subject to applicable law and regulation, to indemnify and hold harmless the
applicable Funds against any and all loss, damage, liability and expense,
arising from market timing or marketing and sales matters alleged in any
enforcement actions brought by governmental authorities involving or potentially
affecting the Funds or the investment advisor ("Enforcement Actions") or that
are the basis for private actions brought by shareholders of the Funds against
the Funds, their directors and officers, the Funds' investment advisor and/or
certain other parties ("Private Litigation"), or any proceedings or actions that
may be threatened or commenced in the future by any person (including
governmental authorities), arising from or similar to the matters alleged in the
Enforcement Actions or Private Litigation. In recognition of its undertaking to
indemnify the applicable Funds and in light of the rebuttable presumption
generally afforded to independent directors/trustees of investment companies
that they have not engaged in disabling conduct, each Fund's investment advisor
has also agreed, subject to applicable law and regulation, to indemnify the
applicable Funds' Independent Directors against certain liabilities the
Independent Directors may incur from the matters alleged in any Enforcement
Actions or Private Litigation or arising from or similar to the matters alleged
in the Enforcement Actions or Private Litigation, and advance expenses that may
be incurred by the Independent Director in connection with any Enforcement
Actions or Private Litigation. The applicable investment advisor is not,
however, required to provide indemnification and advancement of expenses: (1)
with respect to any proceeding or action with respect to which the applicable
Fund's Board determines that the Independent Director ultimately would not be
entitled to indemnification or (2) for any liability of the Independent Director
to the Funds or their shareholders to which the Independent Director would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the Independent Director's duties as a
director or trustee of the Funds as determined in a final adjudication in such
action or proceeding. The estimated amount of any expenses that may be advanced
to the Independent Directors or indemnity that may be payable under the
indemnity agreements is currently unknown. These agreements by each Fund's
investment advisor will survive the termination of the investment management
agreements between the applicable investment advisor and the Funds.

                                FUND ORGANIZATION

Organizational Description

DWS Gold & Precious Metals Fund is a non-diversified series of DWS Mutual Funds,
Inc., a Maryland Corporation organized in March 1998 (the "Corporation"). The
Corporation is a Maryland corporation organized under the laws of Maryland and
is governed by Amended and Restated Articles of Incorporation that were approved
by shareholders in the second quarter of 2006, as may be further amended from
time to time (the "Articles of Incorporation"). All shares issued and
outstanding are fully paid and non-assessable, transferable, have no pre-emptive
rights (except as may be determined by the Board of Directors) or conversion
rights (except as described below) and are redeemable as described in the SAI
and in the Fund's prospectus. Each share has equal rights with


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<PAGE>

each other share of the same class of the Fund as to voting, dividends,
exchanges and liquidation. Shareholders are entitled to one vote for each share
held and fractional votes for fractional shares held.

The Board of Directors may determine that shares of the Fund or a class of the
Fund shall be automatically converted into shares of another Fund of the
Corporation or of another class of the same or another Fund based on the
relative net assets of such Fund or class at the time of conversion. The Board
of Directors may also provide that the holders of shares of the Fund or a class
of the Fund shall have the right to convert or exchange their shares into shares
of one or more other Funds or classes on terms established by the Board of
Directors.

Each share of the Corporation may be subject to such sales loads or charges,
expenses and fees, account size requirements, and other rights and provisions,
which may be the same or different from any other share of the Corporation or
any other share of any Fund or class of the Fund (including shares of the same
Fund or class as the share), as the Board of Directors of the Corporation may
establish or change from time to time and to the extent permitted under the 1940
Act.

The Corporation is not required to hold an annual meeting of shareholders in any
year in which the election of Directors is not required by the 1940 Act. If a
meeting of shareholders of the Corporation is required by the 1940 Act to take
action on the election of Directors, then an annual meeting shall be held to
elect Directors and take such other action as may come before the meeting.
Special meetings of the shareholders of the Corporation, or of the shareholders
of one or more Funds or classes thereof, for any purpose or purposes, may be
called at any time by the Board of Directors or by the President, and shall be
called by the President or Secretary at the request in writing of shareholders
entitled to cast a majority of the votes entitled to be cast at the meeting.

Except as provided in the 1940 Act, the presence in person or by proxy of the
holders of one-third of the shares entitled to vote at a meeting shall
constitute a quorum for the transaction of business at meetings of shareholders
of the Corporation or of the Fund or class.

On any matter submitted to a vote of shareholders, all shares of the Corporation
entitled to vote shall be voted in the aggregate as a single class without
regard to series or classes of shares, provided, however, that (a) when
applicable law requires that one or more series or classes vote separately, such
series or classes shall vote separately and, subject to (b) below, all other
series or classes shall vote in the aggregate; and (b) when the Board of
Directors determines that a matter does not affect the interests of a particular
series or class, such series or class shall not be entitled to any vote and only
the shares of the affected series or classes shall be entitled to vote.

Notwithstanding any provision of Maryland corporate law requiring authorization
of any action by a greater proportion than a majority of the total number of
shares entitled to vote on a matter, such action shall be effective if
authorized by the majority vote of the outstanding shares entitled to vote.

Subject to the requirements of applicable law and any procedures adopted by the
Board of Directors from time to time, the holders of shares of the Corporation
or any one or more series or classes thereof may take action or consent to any
action by delivering a consent, in writing or by electronic transmission, of the
holders entitled to cast not less than the minimum number of votes that would be
necessary to authorize or take the action at a formal meeting.

The Articles of Incorporation provide that the Board of Directors may, in its
discretion, establish minimum investment amounts for shareholder accounts,
impose fees on accounts that do not exceed a minimum investment amount and
involuntarily redeem shares in any such account in payment of such fees. The
Board of Directors, in its sole discretion, also may cause the Corporation to
redeem all of the shares of the Corporation or one or more series or classes
held by any shareholder for any reason, to the extent permissible by the 1940
Act, including (a) if the shareholder owns shares having an aggregate net asset
value of less than a specified minimum amount, (b) if the shareholder's
ownership of shares would disqualify a series from being a regulated investment
company, (c) upon a shareholder's failure to provide sufficient identification
to permit the Corporation to verify the shareholder's identity, (d) upon a
shareholder's failure to pay for shares or meet or maintain the qualifications
for ownership of a particular series or class, (e) if the Board of Directors
determines (or pursuant to policies established by the Board of Directors it is
determined) that share ownership by a shareholder is not in the best interests
of the remaining shareholders, (f) when the Corporation is requested or
compelled to do so by governmental authority or applicable


                                       67
<PAGE>

law, or (g) upon a shareholder's failure to comply with a request for
information with respect to the direct or indirect ownership of shares of the
Corporation. By redeeming shares the Corporation may terminate the Fund or any
class without shareholder approval, and the Corporation may suspend the right of
shareholders to require the Corporation to redeem shares to the extent
permissible under the 1940 Act. Payment for shares redeemed shall be made in
cash or other property, or any combination thereof; provided, however, that the
composition of any such payment (e.g., cash, securities and/or other assets) to
any shareholder shall be determined by the Corporation in its sole discretion,
and may be different among shareholders (including differences among
shareholders in the same fund or class).

Except as otherwise permitted by the Articles of Incorporation of the
Corporation, upon liquidation or termination of the Fund or class, shareholders
of such Fund or class of the Fund shall be entitled to receive, pro rata in
proportion to the number of shares of such Fund or class held by each of them, a
share of the net assets of such Fund or class, and the holders of shares of any
other particular Fund or class shall not be entitled to any such distribution,
provided, however, that the composition of any such payment (e.g., cash,
securities and/or other assets) to any shareholder shall be determined by the
Corporation in its sole discretion, and may be different among shareholders
(including differences among shareholders in the same Fund or class).

                             PROXY VOTING GUIDELINES

The Fund has delegated proxy voting responsibilities to its investment advisor,
subject to the Board's general oversight. The Fund has delegated proxy voting to
the advisor with the direction that proxies should be voted consistent with the
Fund's best economic interests. The advisor has adopted its own Proxy Voting
Policies and Procedures ("Policies"), and Proxy Voting Guidelines ("Guidelines")
for this purpose. The Policies address, among other things, conflicts of
interest that may arise between the interests of the Fund, and the interests of
the advisor and its affiliates, including the Fund's principal underwriter. The
Guidelines set forth the advisor's general position on various proposals, such
as:

o        Shareholder Rights -- The Advisor generally votes against proposals
         that restrict shareholder rights.

o        Corporate Governance -- The Advisor generally votes for confidential
         and cumulative voting and against supermajority voting requirements for
         charter and bylaw amendments. The Advisor generally votes for proposals
         to restrict a chief executive officer from serving on more than three
         outside boards of directors. The Advisor generally votes against
         proposals that require a company to appoint a Chairman who is an
         independent director.

o        Anti-Takeover Matters -- The Advisor generally votes for proposals that
         require shareholder ratification of poison pills or that request boards
         to redeem poison pills, and votes against the adoption of poison pills
         if they are submitted for shareholder ratification. The advisor
         generally votes for fair price proposals.

o        Compensation Matters -- The Advisor generally votes for executive cash
         compensation proposals, unless they are unreasonably excessive. The
         Advisor generally votes against stock option plans that do not meet the
         Advisor's criteria.

o        Routine Matters -- The Advisor generally votes for the ratification of
         auditors, procedural matters related to the annual meeting, and changes
         in company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. The
Advisor generally votes proxies solicited by investment companies in accordance
with the recommendations of an independent third-party, except for proxies
solicited by or with respect to investment companies for which the advisor or an
affiliate serves as investment advisor or principal underwriter ("affiliated
investment companies"). The Advisor votes affiliated investment company proxies
in the same proportion as the vote of the investment company's other
shareholders (sometimes called "mirror" or "echo" voting). Master fund proxies
solicited from feeder funds are voted in accordance with applicable requirements
of the Investment Company Act of 1940.


                                       68
<PAGE>

Although the Guidelines set forth the Advisor's general voting positions on
various proposals, the Advisor may, consistent with the Funds' best interests,
determine under some circumstances to vote contrary to those positions.

The Guidelines on a particular issue may or may not reflect the view of
individual members of the board, or of a majority of the board. In addition, the
Guidelines may reflect a voting position that differs from the actual practices
of the public company(ies) within the Deutsche Bank organization or of the
investment companies for which the advisor or an affiliate serves as investment
advisor or sponsor.

The Advisor may consider the views of a portfolio company's management in
deciding how to vote a proxy or in establishing general voting positions for the
Guidelines, but management's views are not determinative.

As mentioned above, the Policies describe the way in which the Advisor resolves
conflicts of interest. To resolve conflicts, the Advisor, under normal
circumstances, votes proxies in accordance with its Guidelines. If the Advisor
departs from the Guidelines with respect to a particular proxy or if the
Guidelines do not specifically address a certain proxy proposal, a proxy voting
committee established by the Advisor will vote the proxy. Before voting any such
proxy, however, the advisor's conflicts review committee will conduct an
investigation to determine whether any potential conflicts of interest exist in
connection with the particular proxy proposal. If the conflicts review committee
determines that the advisor has a material conflict of interest, or certain
individuals on the proxy voting committee should be recused from participating
in a particular proxy vote, it will inform the proxy voting committee. If
notified that the advisor has a material conflict, or fewer than three voting
members are eligible to participate in the proxy vote, typically advisor will
engage an independent third party to vote the proxy or follow the proxy voting
recommendations of an independent third party.

Under certain circumstances, the Advisor may not be able to vote proxies or the
Advisor may find that the expected economic costs from voting outweigh the
benefits associated with voting. For example, the Advisor may not vote proxies
on certain foreign securities due to local restrictions or customs. The Advisor
generally does not vote proxies on securities subject to share blocking
restrictions.

You may obtain information about how the Fund voted proxies related to its
portfolio securities during the 12-month period ended June 30 by visiting the
Securities and Exchange Commission's Web site at www.sec.gov or by visiting our
Web site at: www.dws-scudder.com (click on "proxy voting" at the bottom of the
page).

                              FINANCIAL STATEMENTS

The financial statements, including the portfolio of investments, together with
the notes to financial statements in the Annual Report to the Shareholders of
the Fund for the year ended October 31, 2007, are incorporated herein by
reference and are hereby deemed to be a part of this Statement of Additional
Information.

                             ADDITIONAL INFORMATION

The CUSIP number of DWS Gold & Precious Metals Fund -- Class S is: 23337E 501.

The Fund has a fiscal year end of October 31.

Reference is hereby made to the Registration Statement which the Fund has filed
with the SEC under the Securities Act of 1933 for further information with
respect to the Fund and the securities offered hereby. This Registration
Statement and its amendments are available for inspection by the public at the
SEC in Washington, D.C.


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<PAGE>

                                    APPENDIX

Standard & Poor's Corporation Bond Ratings

AAA. Debt rated AAA had the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A. Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB. Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC and C. Debt rated BB, B, CCC, CC and C is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

CI. The rating CI is reserved for income bonds on which no interest is being
paid.

D. Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.

Moody's Investors Service, Inc. Bond Ratings

AAA. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
gilt-edge. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.

A. Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well


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<PAGE>

safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca. Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Fitch Long-Term Debt Ratings

AAA. Highest credit quality. AAA ratings denote the lowest expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.

AA. Very high credit quality. AA ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.

A. High credit quality. A ratings denote a low expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB. Good credit quality. BBB ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.

BB. Speculative. BB ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade.

B. Highly speculative. B ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC, CC, C. High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A CC rating indicates that default of some
kind appears probable. C ratings signal imminent default.

DDD, DD, D. Default. The ratings of obligations in this category are based on
their prospects for achieving partial or full recovery in a reorganization or
liquidation of the obligor. While expected recovery values are highly
speculative and cannot be estimated with any precision, the following serve as
general guidelines. DDD obligations have the highest potential for recovery,
around 90%-100% of outstanding amounts and accrued interest. DD indicates
potential recoveries in the range of 50%-90%, and D the lowest recovery
potential, i.e., below 50%.

Entities rated in this category have defaulted on some or all of their
obligations. Entities rated DDD have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated DD and D are generally undergoing a formal
reorganization or liquidation process; those rated DD are


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<PAGE>

likely to satisfy a higher portion of their outstanding obligations, while
entities rated D have a poor prospect for repaying all obligations.

Fitch Short-Term Debt Ratings

F1. Highest credit quality. Indicates the Best capacity for timely payment of
financial commitments; may have an added + to denote any exceptionally strong
credit feature.

F2. Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

F3. Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.

B. Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C. High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D. Default. Denotes actual or imminent payment default.

Commercial Paper Ratings

Commercial paper rated by Standard & Poor's Ratings Services (S&P) has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated A or better. The issuer has access
to at least two additional channels of borrowing. Basic earnings and cash flow
have an upward trend with allowance made for unusual circumstances. Typically,
the issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determine whether the
issuer's commercial paper is rated A-1 or A-2.

The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. (Moody's). Among the factors
considered by it in assigning ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be inherent in
certain areas; (3) evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet such
obligations. Relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated Prime-1 or 2.

Municipal Notes

Moody's: The highest ratings for state and municipal short-term obligations are
MIG 1, MIG 2, and MIG 3 (or VMIG 1, VMIG 2 and VMIG 3 in the case of an issue
having a variable rate demand feature). Notes rated MIG 1 or VMIG 1 are judged
to be of the best quality. Notes rated MIG 2 or VMIG 2 are of high quality, with
margins or protection ample although not as large as in the preceding group.
Notes rated MIG 3 or VMIG 3 are of favorable quality, with all security elements
accounted for but lacking the strength of the preceding grades.

S&P: The SP-1 rating reflects a very strong or strong capacity to pay principal
and interest. Notes issued with overwhelming safety characteristics will be
rated SP-1+. The SP-2 rating reflects a satisfactory capacity to pay principal
and interest.

Fitch: The highest ratings for state and municipal short-term obligations are
F-1+, F-1, and F-2.


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